HOUSE RESOURCES STANDING COMMITTEE March 27, 2000 1:05 p.m. MEMBERS PRESENT Representative Bill Hudson, Co-Chair Representative John Cowdery, Vice Chair Representative John Harris Representative Carl Morgan Representative Jim Whitaker Representative Reggie Joule Representative Mary Kapsner MEMBERS ABSENT Representative Beverly Masek, Co-Chair Representative Ramona Barnes COMMITTEE CALENDAR HOUSE BILL NO. 359 "An Act relating to notice requirements for certain final findings concerning the disposal of an interest in state land or resources for oil and gas; relating to administrative appeals and petitions for reconsideration of decisions of the Department of Natural Resources; and providing for an effective date." - MOVED HB 359 OUT OF COMMITTEE CS FOR SENATE BILL NO. 266(RES) "An Act relating to the use of a TBT-based marine antifouling paint or coating on certain vessels; and providing for an effective date." - MOVED CSSB 266(RES) OUT OF COMMITTEE PREVIOUS ACTION BILL: HB 359 SHORT TITLE: DEPT NAT RES ADMIN APPEALS/ OIL & GAS Jrn-Date Jrn-Page Action 2/09/00 2148 (H) READ THE FIRST TIME - REFERRALS 2/09/00 2148 (H) RES, JUD, FIN 2/09/00 2148 (H) ZERO FISCAL NOTE (DNR) 2/09/00 2148 (H) GOVERNOR'S TRANSMITTAL LETTER 3/27/00 (H) RES AT 1:00 PM CAPITOL 124 BILL: SB 266 SHORT TITLE: MARINE ANTI-FOULING PAINTS Jrn-Date Jrn-Page Action 2/11/00 2281 (S) READ THE FIRST TIME - REFERRALS 2/11/00 2281 (S) RES 3/01/00 (S) RES AT 3:00 PM BUTROVICH 205 3/01/00 (S) Moved CS(Res) Out of Committee 3/01/00 (S) MINUTE(RES) 3/02/00 (S) RLS AT 11:45 AM FAHRENKAMP 203 3/02/00 (S) MINUTE(RLS) 3/02/00 2492 (S) RES RPT CS 1DP 3NR NEW TITLE 3/02/00 2492 (S) NR: HALFORD, PETE KELLY, GREEN; 3/02/00 2492 (S) DP: PARNELL 3/02/00 2493 (S) ZERO FISCAL NOTE (DEC) 3/03/00 2509 (S) RLS TO CALENDAR 03/03/00 3/03/00 2512 (S) READ THE SECOND TIME 3/03/00 2512 (S) RES CS ADOPTED UNAN CONSENT 3/03/00 2512 (S) ADVANCED TO THIRD READING UNAN CONSENT 3/03/00 2512 (S) READ THE THIRD TIME CSSB 266(RES) 3/03/00 2512 (S) PASSED Y17 N1 E2 3/03/00 2513 (S) EFFECTIVE DATE(S) SAME AS PASSAGE 3/03/00 2513 (S) TAYLOR NOTICE OF RECONSIDERATION 3/06/00 2533 (S) RECONSIDERATION NOT TAKEN UP 3/06/00 2533 (S) TRANSMITTED TO (H) 3/08/00 2443 (H) READ THE FIRST TIME - REFERRALS 3/08/00 2443 (H) RES 3/08/00 2464 (H) CROSS SPONSOR(S): KERTTULA 3/27/00 (H) RES AT 1:00 PM CAPITOL 124 WITNESS REGISTER BOB LOEFFLER, Director Division of Mining, Land and Water Department of Natural Resources 3601 C Street, Suite 800 Anchorage, Alaska 99503-5935 POSITION STATEMENT: Testified on HB 359. JIM HANSEN, Lease Manager Division of Oil & Gas Department of Natural Resources 550 West Seventh Avenue, Suite 800 Anchorage, Alaska 99501-3510 POSITION STATEMENT: Testified on HB 359. ANNETTE KREITZER, Staff for Senator Loren Leman Alaska State Legislature Capitol Building, Room 115 Juneau, Alaska 99801 POSITION STATEMENT: Introduced SB 266 on behalf of the sponsor. JOHN HANSEN, President Northwest Cruise Ship Association (NWCSA) (Address not provided) POSITION STATEMENT: Testified in support of CSSB 266(RES). JOHN KELLY Technical Director International Paints (Address not provided) POSITION STATEMENT: Answered questions regarding antifouling paints and SB 266. ACTION NARRATIVE TAPE 00-25, SIDE A Number 0001 CO-CHAIR HUDSON called the House Resources Standing Committee meeting to order at 1:05 p.m. Members present at the call to order were Representatives Hudson, Cowdery, Harris, Morgan, Whitaker, Joule and Kapsner. HB 359 - DEPT NAT RES ADMIN APPEALS/ OIL & GAS Number 0094 CO-CHAIR HUDSON announced that the first order of business would be HOUSE BILL NO. 359, "An Act relating to notice requirements for certain final findings concerning the disposal of an interest in state land or resources for oil and gas; relating to administrative appeals and petitions for reconsideration of decisions of the Department of Natural Resources; and providing for an effective date." Number 0152 BOB LOEFFLER, Director, Division of Mining, Land and Water, Department of Natural Resources (DNR), testified via teleconference from Anchorage. He explained that the bill does two things. First, it provides for a uniform appeal process for DNR. Second, it fixes a technical error that sometimes confuses the public with respect to oil and gas notices. Right now, the appeal process in DNR is split between Title 38 and the Administrative Procedure Act; those two, passed at different times, tend to create duplicative and overlapping requirements that apply to different things. MR. LOEFFLER explained that as a result, there is an appeals process that gives someone multiple bites at the apple for the same issue. In most cases, one can appeal a decision to the director, then to the commissioner; then one can ask for reconsideration by the commissioner. This takes up a lot of time but frequently has little public benefit. This bill fixes that by creating a uniform appeal whereby there is one appeal, to the commissioner, and that is it. MR. LOEFFLER explained a second problem: different appeals apply to different types of decisions. With disposals, there is one bite of the apple; with nondisposals, however, there are multiple bites and the timelines are slightly different. This creates confusion for the public, especially. Furthermore, it is a problem when a project has multiple permits, with some being some disposals and some nondisposals. Therefore, this bill creates a straightforward administrative appeals process. There is one appeal to the commissioner, and a person has 20 days to appeal. Mr. Loeffler said he believes the uniform appeal process will be better for the public and for his own staff. MR. LOEFFLER deferred to Jim Hansen to explain the technical error relating to oil and gas notices. Number 0454 JIM HANSEN, Lease Manager, Division of Oil & Gas, Department of Natural Resources, testified via teleconference from Anchorage. He stated: What Section 4 of this bill does is repeal noticing under [AS 38.05].945(a)(3)(B). A number of years ago the Ninth Court filing notice statute was changed to require a preliminary best-interest finding prior to an oil and gas lease sale. And there's a noticing requirement for that finding. When that was done, they left in the requirement to notice a final written finding. The final written finding is noticed at the same time the preliminary finding is noticed, but by leaving this (a)(3)(B) in the law, it requires us, 30 days prior to issuing the final finding, to issue another notice saying we're issuing a final finding. At the time the finding is issued, we ... issue a notice of sale, so essentially the public has a preliminary finding notice and a notice of sale to let them know that there is going to be a sale. The notice that there is going to be issued a finding, to us, is kind of an unnecessary expense. It costs in excess of $5,000 - up to $10,000 - to do these notices. And just to let people know there's a final finding coming out 30 days prior to it, when they've already been informed 90 days prior to it, to us, is unnecessary, which is why we believe this specific statute should be repealed. Number 0711 REPRESENTATIVE WHITAKER indicated that the bill serves a purely administrative function and he has no objection to it. CO-CHAIR HUDSON said he views HB 359 as a streamlining process to get rid of duplicative reporting. Number 0798 REPRESENTATIVE COWDERY made a motion to move HB 359 from committee with individual recommendations and attached zero fiscal note; he asked for unanimous consent. There being no objection, HB 359 moved from the House Resources Standing Committee. SB 266 - MARINE ANTI-FOULING PAINTS Number 0841 CO-CHAIR HUDSON announced that the next order of business would be CS for SENATE BILL NO. 266(RES), "An Act relating to the use of a TBT-based marine antifouling paint or coating on certain vessels; and providing for an effective date." ANNETTE KREITZER, Staff for Senator Loren Leman, Alaska State Legislature, presented CSSB 266(RES) on behalf of Senator Leman, the sponsor. She pointed out that the Alaska State Legislature had outlawed the use of paints based on TBT [tributyltin] in 1987, anticipating the federal Organotin Antifouling Paint Control Act. She explained that Alaska law made exceptions for vessels of the U.S. Government, foreign vessels in state waters fewer than 90 consecutive days, and vessels of 4,000 gross tons or more. The bill [SB 266] phases those exemptions from law effective 2001, putting those vessels in the same class as small [boats] that had to meet the ban in 1987. MS. KREITZER indicated the committee substitute [CSSB 266(RES)] does not allow repainting between 2001 and 2003, when the International Maritime Organization (IMO) ban is expected to take effect. In other words, on the international level there is already a move to ban TBT-based paints from these vessels, but their ban would take effect in 2003; Alaska's stand on SB 266 would just be more aggressive. She noted that the industry's testimony in the Senate was that the January 1, 2001, deadline would still allow companies that have pre-purchased their paint the opportunity to use it; therefore, it would not cause financial hardship. MS. KREITZER pointed out that the Alaska Marine Highway had reported that they do not use TBT-based paint. The Northwest Cruise Ship Association has reported that some of the ships are still using TBT-based paint, but they will be TBT-based-paint- free by the IMO phaseout date of 2003, and also will be able to meet the 2001 deadline set out in SB 266. Contact with Holland America Line/ Westours indicates they use TBT-based paint, but they will be able to meet the IMO deadline. MS. KREITZER indicated Lieutenant Commander John Bingaman would be speaking on behalf of the U.S. Coast Guard. She said that they spoke with Newport Petroleum, a barge line that brings freight into the state, which is TBT-based-paint-free. She further stated that the U.S. Navy does not use TBT-based paint any longer. As for the large oil tankers, ARCO Alaska, Inc. said it would meet the IMO deadline; Exxon said its tankers are already TBT-based-paint-free; and BP Amoco said it isn't using TBT-based paint. She added that Dr. John Kelly, who is a representative to the IMO and of the International Paint Company - which provides TBT-based paint to 50 percent of the world's tonnage - was on teleconference to answer technical questions. Number 1122 REPRESENTATIVE JOULE wondered how [the state] would know if people were in compliance after the deadline. MS. KREITZER indicated that between 2001 and 2003, the enforcement responsibility would be on the Department of Environmental Conservation (DEC). She added that DEC foresees - similar to what the U.S. Coast Guard currently has - that when a ship comes into Alaska waters, certain paperwork will be required to be filled out regarding whether or not TBT-based paint is being used; then a certificate would be issued. CO-CHAIR HUDSON noted that every vessel that leaves the yard is also inspected. Number 1231 JOHN HANSEN, President, Northwest Cruise ship Association (NWCSA), testified via teleconference. He stated that the NWCSA represents the following companies: Holland America, Carnival, Norwegian Cruise lines, Princess, Celebrity, Royal Caribbean, World Explorer and Crystal Cruises. He explained that this summer those companies will operate a total of 22 ships roughly between mid-May and the end of September. These cruise ships operate in a number of different jurisdictions around the world, which means that the safety and environmental standards are agreed upon by the IMO. The IMO has deliberated extensively over the last few years regarding antifouling paints, specifically, the concerns raised over the TBT-based paints. He indicated that the companies that the NWCSA represents agree and comply with the IMO regulations involving the gradual replacement of TBT-based paint. He noted that the January 1, 2001, deadline should not be a problem. He added that they [NWCSA] support CSSB 266(RES). CO-CHAIR HUDSON wondered if Canadian law restricts the use of TBT-based paint at the present time. MR. HANSEN indicated that at the present time he does not believe there is a restriction, but the IMO restrictions apply in Canadian waters as well. REPRESENTATIVE COWDERY wondered about the new products that have come out, such as trilux (ph). MR. HANSEN explained that approximately half of the cruise ships in Alaska do not use TBT-based paint. REPRESENTATIVE COWDERY wondered how often the bottoms of cruise ships must be repainted. MR. HANSEN replied, "Once every three years." CO-CHAIR HUDSON wondered if they can paint over the TBT-based paint with the newer restrictive paints. MR. HANSEN replied that there are paints that will paint satisfactorily over TBT-based paint. Number 1630 JOHN KELLY, Technical Director, International Paints, testified via teleconference. He indicated that all antifouling paints used in Canada and in the United States have to be registered. At the moment, the Canadian and United States regulations allow tributyltin antifouling paints that have a particular low release rate; the trilux (ph) antifouling [paint] does release copper into the water, but all the antifouling [paints] used in Alaska are registered with the U.S. Environmental Protection Agency (EPA) and with the State of Alaska. The proposal, with regard to the IMO regulations, is that as of January 1, 2003, there will be no tributyltin applications allowed. He added that there is also supposed to be a five-year period for those vessels that still have the tributyltin on, to get the life out of the tributyltin; however, by January 1, 2008, there should be no exposed tributyltin on those vessels. Mr. Kelly also indicated support for SB 266. [Lieutenant Commander John Bingaman came forward and offered to answer questions.] Number 1886 REPRESENTATIVE COWDERY made a motion to move CSSB 266(RES) from committee with individual recommendations and attached zero fiscal note. There being no objection, CSSB 266(RES) moved from the House Resources Standing Committee. ADJOURNMENT Number 1946 CO-CHAIR HUDSON adjourned the House Resources Standing Committee meeting at 1:35 p.m.