Legislature(1999 - 2000)

04/12/2000 02:03 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SB 273 - OIL SPILL RESPONSE; NONTANK VESSELS & RR                                                                             
CO-CHAIR MASEK announced that the  one item of business was CS FOR                                                              
SENATE  BILL  NO.  273(RLS)(title   am),  "An  Act  regarding  oil                                                              
discharge prevention, and relating  to contingency plans and proof                                                              
of  financial   responsibility  for  all  self-propelled   nontank                                                              
vessels exceeding  400 gross registered  tonnage and  for railroad                                                              
tank cars; authorizing  inspection of nontank vessels  and trains;                                                              
and providing for an effective date."                                                                                           
Number 0125                                                                                                                     
SENATOR DRUE PEARCE, Alaska State  Legislature, sponsor of SB 273,                                                              
explained the bill as follows:                                                                                                  
     Alaska   arguably  has  the   world's  best  oil   spill                                                                   
     prevention and response program,  mostly, unfortunately,                                                                   
     as a result of the Exxon Valdez  accident.  However, our                                                                   
     current program is limited to  vessels that carry oil as                                                                   
     cargo (tank vessels) and onshore  oil facilities such as                                                                   
     oil wells, pipelines, refineries and tank farms.                                                                           
     Specifically, nontank  vessels covered by this  bill are                                                                   
     defined as  self-propelled watercraft of 400  or greater                                                                   
     gross  registered  tons.   These vessels  would  include                                                                   
     larger  fishing   and  processing  vessels,   cargo  and                                                                   
     cruiseships  and  public vessels  engaged  in  commerce,                                                                   
     such as  all but one  of the Alaska  state ferries.   SB                                                                   
     273 requires  these vessels  to provide a response  plan                                                                   
     that would allow  for the cleanup of a spill  as quickly                                                                   
     as  possible with  minimum  damage to  the  environment.                                                                   
     The  legislation  also  requires   vessel  operators  to                                                                   
     provide  proof  of  financial   ability  to  respond  to                                                                   
     damages resulting from a spill.                                                                                            
     Alaska  is the  only  state  on the  West  Coast of  our                                                                   
     country  that has  not extended  their contingency  plan                                                                   
     [C-plan]  and financial responsibility  laws to  include                                                                   
     nontank vessels.   In light of recent spills  from these                                                                   
     vessels  in our  waters, and  from the  railroad on  our                                                                   
     land, I  believe it's time  to strengthen our  oil spill                                                                   
     laws and  include these vessels.   This bill  provides a                                                                   
     heightened   awareness   of  prevention   and   response                                                                   
     readiness,  and I  hope will  help reduce  and at  least                                                                   
     control  the number  and consequences  of oil spills  in                                                                   
     the future.                                                                                                                
     The railroad is  also included in the bill.   Just since                                                                   
     the  introduction  of  SB 273,  there  have  been  three                                                                   
     incidents involving  vessels in or near  Alaskan waters.                                                                   
     The fishing  vessel [F/V] American Star went  aground in                                                                   
     Unimak Pass.   The crew was airlifted off  by the [U.S.]                                                                   
     Coast Guard.  The vessel rolled  in the surf and remains                                                                   
     on the rock.  The M/V [motor  vessel] Pacsun, which is a                                                                   
     log  vessel, went  aground in  Icy Bay.   After  several                                                                   
     days,  it  was successfully  refloated;  however,  SERVS                                                                   
     [Special Escort Response Vessel  System] had to dispatch                                                                   
     one of  their large tugs  as well as response  equipment                                                                   
     to  assist in  this  effort.   Most  recently in  nearby                                                                   
     Prince  Rupert,  the  cargo   vessel  [M/V]  Bovec  went                                                                   
     aground,  and it's  our  understanding  that it  remains                                                                   
     We have  also had a number  of experiences in  our state                                                                   
     of  vessels  operating  without  pilots  aboard,  and  I                                                                   
     believe that there are marine  pilots online and present                                                                   
     here today to  talk about some of those.   I believe you                                                                   
     also  have  a  packet  in  your   file  that  documents,                                                                   
     including  Coast   Guard  documentation,  some   of  the                                                                   
     concerns  about  vessels in  our  waters that  have  had                                                                   
     movement that have been of concern.                                                                                        
     Of course, we all know the [M/V]  Kuroshima grounded out                                                                   
     near Dutch Harbor.   It spread 39,000 gallons  of bunker                                                                   
     fuel back in November of 1997.   The M/V Jacha, operated                                                                   
     in  heavy ice  floes, ustained  both  bow and  propeller                                                                   
     damage.   Despite  heavy damage, the  vessel was  loaded                                                                   
     and  failed to  report the  incident to  the U.S.  Coast                                                                   
     Guard.  I  believe that was in Togiak.   The Coast Guard                                                                   
     believes there  was a possible oil spill,  and the Coast                                                                   
     Guard has concluded that the  vessel master and officers                                                                   
     were aware of the problems.   That same ship, along with                                                                   
     the motor vessel  Mononok and the Mabah,  on February 17                                                                   
     of just  this year, 2000,  operated in state  waters and                                                                   
     anchored  without a  pilot onboard  during  a trip  that                                                                   
     should have had a pilot.                                                                                                   
SENATOR  PEARCE  emphasized that  ships  known  to be  in  Alaskan                                                              
waters probably  had a  spill that  was not  reported -  in waters                                                              
that  have some  of the  most precious  fishing  resources of  the                                                              
state.   They have  also been  moving without  a pilot onboard  in                                                              
what  she considers  an unsafe  unsafe  manner.   For example,  in                                                              
January,  the  M/V Cherry  Star  moved  without a  required  pilot                                                              
aboard,  and  the  Coast  Guard sent  a  letter  expressing  grave                                                              
concern over the movement of that ship.                                                                                         
SENATOR  PEARCE noted  that when  first introduced,  the bill  was                                                              
consistent with  Coast Guard and  state requirements at  300 gross                                                              
tons; however,  that was  raised to 400  gross tons in  the Senate                                                              
Resources  Committee,  through an  amendment  proposed by  Senator                                                              
Taylor.  Senator  Pearce restated that the following  are covered:                                                              
cruiseships,  Alaska state ferries,  large fishing and  processing                                                              
vessels, and cargo ships.  Government-owned  and operated vessels,                                                              
if not  engaged in commerce, would  be exempt; that  would include                                                              
the university  vessel, but  the ferries that  are over  400 gross                                                              
tons would  be covered, as would  the the railroad, which  has oil                                                              
transportation and tanker cars.  She stated:                                                                                    
     Nontanker  vessels  frequently  carry more  volume  than                                                                   
     those  carrying fuel  as cargo.   They're not  currently                                                                   
     required  to have  a system  and equipment  in place  to                                                                   
     prevent  or respond to  spills.   And while cargo  ships                                                                   
     usually have  their cargo in  a double hull,  oftentimes                                                                   
     the area between  the outer hull and the  double hull is                                                                   
     the area that  is used as the actual fuel tank.   So, if                                                                   
     those ships go on the rocks,  while the cargo may not be                                                                   
     at risk to  be spilled - whatever that cargo  might be -                                                                   
     the fuel from  the ship is [at risk].  So,  when we talk                                                                   
     about  the safety  of a double-hulled  cargo vessel,  it                                                                   
     may not be  safe in terms of you're just  one hull away,                                                                   
     in terms of your fuel, from the rocks.                                                                                     
     At present, these  vessels are not required  to show us,                                                                   
     the  state, that  they  have the  ability  to finance  a                                                                   
     cleanup effort and any damages  resulting from the spill                                                                   
     or [to]  pay the  fines that  are already  in law.   And                                                                   
     nontanker   vessels,    unfortunately,   have    had   a                                                                   
     significant  spill history in  our waters.   We included                                                                   
     the  railroad  because  they've  had  three  derailments                                                                   
     since  1992 and three  spills in  the last four  months;                                                                   
     the  largest of  those  was 167,000  gallons.   It's  my                                                                   
     understanding  from the  railroad ...  today that  their                                                                   
     cleanup  costs  -  for the  spills  that  they're  still                                                                   
     presently  working  on, to  try to  keep  the fuel  from                                                                   
     getting to the Susitna River  - are running in the 13 to                                                                   
     14 million  dollar range, but  that's just of  the costs                                                                   
     that they know of to date.                                                                                                 
     Specifically,  under the bill,  nontank vessels  and the                                                                   
     railroad  would  have  to  have  a  oil  discharge,  ...                                                                   
     prevention and contingency plan  that would be submitted                                                                   
     to the  Department of Environmental Conservation  [DEC],                                                                   
     consistent with current requirements  of tankers and oil                                                                   
     facilities except  the planning standard is  much lower.                                                                   
     Tankers and all fuel barges  [and] tank farms throughout                                                                   
     the state presently have to  meet the standards that are                                                                   
     already in statute; those were  set back in 1990.  Those                                                                   
     include being  able to contain, control and  clean up 15                                                                   
     percent of  a spill to a  maximum of 300,000  barrels in                                                                   
     72 hours.                                                                                                                  
     The planning  standard in this  bill, for the  nontanker                                                                   
     vessels, takes a step back from  that.  It says you have                                                                   
     to  show that  you  can have  equipment  available -  it                                                                   
     doesn't have  to be onboard,  but equipment  available -                                                                   
     to  contain  and  control 15  percent  of  your  maximum                                                                   
     volume in 48 hours.  There is  not a cleanup requirement                                                                   
     as we have for the present tanker  vessels, whether they                                                                   
     be our crude  oil tankers or the fuel barges  that bring                                                                   
     fuel to  villages and communities throughout  the state,                                                                   
     whether  it's  on  the  river system  or  in  our  ocean                                                                   
     There are  presently five nonprofit cooperatives  in the                                                                   
     state  that  have  been  formed as  a  response  to  the                                                                   
     original  bill back  in  1990.   Some  of those  existed                                                                   
     before that  bill because  requirements were already  in                                                                   
     place.   We came in  and strengthened the  requirements,                                                                   
     but it's not as though tankers  didn't have requirements                                                                   
     before  1989;  we  just  found  out  that  they  weren't                                                                   
     working  very well.   We  also under  this bill  provide                                                                   
     that the ships  show - the owners show -  that they have                                                                   
     financial  responsibility or  the ability  to pay for  a                                                                   
     cleanup of  a spill, and  that's based on  their maximum                                                                   
     volume, carrying capacity, of their actual vessel.                                                                         
     And, under  the bill,  we allow  that DEC could  inspect                                                                   
     ...  whatever   prevention   equipment  that  might   be                                                                   
     required;  and I  think that  Larry  Dietrick can  speak                                                                   
     more  specifically to  this,  but it  sounds as  though,                                                                   
     maximum,  we're  probably  talking about  ...  what  the                                                                   
     [U.S.] Coast Guard appears to  be headed toward in their                                                                   
     requirements  anyway,  which  is  ...  a  portable  pump                                                                   
     onboard so that you can handle  pumping, off-loading, or                                                                   
     even pumping amongst tanks in  the vessel, and also some                                                                   
     sort  of a towing  package so  that they  could get  the                                                                   
     ships under tow if necessary. ...                                                                                          
     Larry [Dietrick] can speak more  closely to this, but it                                                                   
     is not our  expectation nor our intent to  have to carry                                                                   
     any sort of booming or those  sorts of materials onboard                                                                   
     the  nontanker   vessels.    And,  in  fact,   with  the                                                                   
     exception  of  the  barges  that  are  pulled  by  tugs,                                                                   
     present  standards do  not require  booms be carried  on                                                                   
     the  actual tanker  vessels that you  see moving  around                                                                   
     the  big tankers,  because there  is no  way they  could                                                                   
     deploy it.   So, DEC would  be allowed to  inspect, just                                                                   
     to make sure that the equipment  was onboard as required                                                                   
     and the response contractors  do go through drills.  And                                                                   
     those would continue  to be allowed as they  are already                                                                   
     happening around the state.                                                                                                
     The bill  not only allows  but actually requires  DEC to                                                                   
     adopt alternative  ways to achieve equivalent  levels of                                                                   
     spill  prevention and  response in  place of certain  C-                                                                   
     plan  requirements  if  there   are  areas  where  those                                                                   
     requirements cannot  be met.  Mr. Dietrick  can give you                                                                   
     a more specific  example, but under the present  law and                                                                   
     the requirement  for fuel  barges to go  to some  of the                                                                   
     remote areas  of the  state, their present  requirements                                                                   
     are,  under the  present law,  that they  would have  to                                                                   
     show that  they could  actually clean up  a spill  in 72                                                                   
     It's apparent  to everyone concerned that in  our remote                                                                   
     waters  that is  not going to  be possible,  so DEC  has                                                                   
     already used  an alternative compliance and  has allowed                                                                   
     the fuel carriers in those remote  areas of the state to                                                                   
     adopt   lower  planning   standards,   because  we   all                                                                   
     understand that there are some  events that you are just                                                                   
     not going  to be  able to plan  for, and  to try to  get                                                                   
     equipment  that  would  actually  clean  up,  within  72                                                                   
     hours, a spill  to every port in the state  or along all                                                                   
     the coastline of the state is impossible.                                                                                  
     This bill has even lower standards,  so the requirements                                                                   
     in terms of  equipment that's already out  in the remote                                                                   
     areas  - there's  equipment in  Nome, there's  equipment                                                                   
     sitting  in  Bethel,  there's  equipment  in  Naknek,  I                                                                   
     believe, in Dillingham, there's  equipment in Unalaska -                                                                   
     we would  not expect to  see more equipment  be required                                                                   
     because of this spill; it's already out there.                                                                             
     Financial  responsibility:    the vessel  operators  and                                                                   
     owners and the  railroad would be required  to show that                                                                   
     they can respond and clean up  a major spill to the tune                                                                   
     of  300 dollars  per  barrel of  persistent  oil or  100                                                                   
     dollars per barrel  of nonpersistent.  We  use the Coast                                                                   
     Guard  definitions of  persistent versus  nonpersistent.                                                                   
     After  much discussion  on  the Senate  side,  everybody                                                                   
     agreed  that those  ... [were]  the  ... definitions  to                                                                   
     use.  We  have complied with Coast Guard  standards that                                                                   
     are  already in  place, wherever  possible,  to make  it                                                                   
     easy for everybody  to understand how to  comply, and so                                                                   
     they understand the terms.   And, Representative Hudson,                                                                   
     you  would probably  understand  those certainly  better                                                                   
     than I.                                                                                                                    
     The new law,  we made changes on the Senate  side ... to                                                                   
     have compliance  and have the  laws take effect  so that                                                                   
     we would  have an opportunity  at the legislative  level                                                                   
     to  look at  what the  draft regulations  next year  and                                                                   
     then a second time of the following  years.  So, for the                                                                   
     moment, in this  bill, September 1, 2000,  would be when                                                                   
     we   would    have   to   have   proof    of   financial                                                                   
     responsibility, but the actual  date for the contingency                                                                   
     plans to  go into effect has  been pushed back  to April                                                                   
     1, 2002, so  that's two years out.  I know  that we have                                                                   
     some of  the pilots online,  as I mentioned,  to discuss                                                                   
     the realities in our state of  some of the ships that we                                                                   
     see coming and going.                                                                                                      
     ... We have  excluded deck barges by  defining nontanker                                                                   
     vessels  as vessels  that are self-propelled.   We  have                                                                   
     raised  the  gross tonnage  threshold  from  300 to  400                                                                   
     gross tons.  We have removed  the existing direct action                                                                   
     clause that's in present law  to allow P & I [Protection                                                                   
     &  Indemnity]  clubs  to participate  in  the  financial                                                                   
     responsibility  section   of  the  bill.     We've  also                                                                   
     extended the effective date  to April 1, as I mentioned;                                                                   
     that  will   allow  additional  time  for   industry  to                                                                   
     participate  in  the  process,   as  well  as  providing                                                                   
     legislative oversight  during the process of  drawing up                                                                   
     the [regulations] and getting compliance.                                                                                  
     We  have proposed  liability language  that you have  in                                                                   
     your packet, ... liability language  that will allow the                                                                   
     co-ops ... to have an umbrella  response in the response                                                                   
     plan  that they have,  being an  umbrella response  that                                                                   
     everybody  can use as  that portion  of their plan  that                                                                   
     would then limit  the liability of the other  members of                                                                   
     the nonprofit co-op.  ... In  response to request by the                                                                   
     industry,  we specifically  would like  to see  language                                                                   
     that requires  that tramp vessels making  one-time calls                                                                   
     have  to be allowed  to come  into our  waters under  an                                                                   
     umbrella plan  and costs must be reasonable.   Now, that                                                                   
     is  not anything  new.   At present,  Tesoro brings  ...                                                                   
     tramp vessels into Cook Inlet,  as do the oil companies,                                                                   
     as have,  in the  past, other  companies that have  been                                                                   
     bringing  fuel   either  in   or  out  of  our   waters,                                                                   
     particularly jet fuel.                                                                                                     
     We also  support the language  that would say  that it's                                                                   
     not our  intent that we  force nontank vessel  owners to                                                                   
     join  any  particular  PRAC   [Primary  Response  Action                                                                   
     Contractor].    These  response  contractors  that  have                                                                   
     [sprung up around the state  have done so in response to                                                                   
     the  present  laws that  are  in  place.   They  include                                                                   
     Alaska Clean Sea; SERVS, which  is the one primarily for                                                                   
     the Valdez  oil terminal of  Alyeska, along  with Chadux                                                                   
     [Alaska  Chadux Corporation];  CISPRI [Cook Inlet  Spill                                                                   
     Prevention  Response Incorporated],  which  is the  Cook                                                                   
     Inlet response  contractor that has grown up  because of                                                                   
     the petroleum tankers and the  jet fuel handling in Cook                                                                   
     Inlet;  and then  in Southeast  Alaska  you have  SEAPRO                                                                   
     [Southeast  Alaska  Prevention  Response  Organization],                                                                   
     which is also primarily because  fuel, of course, is, as                                                                   
     all of  you are painfully  aware and  so are we  when we                                                                   
     are down here -- all the fuel  in this area of the state                                                                   
     has to  be brought in, and  it's waterborne.   Those are                                                                   
     already  in  place; it's  not  our  intent to  tell  any                                                                   
     entity  that  they have  to  join  any specific  one  of                                                                   
     those.  We think that there  is competition amongst them                                                                   
     and, as  has been mentioned  in our work sessions,  some                                                                   
     of the folks in the industry  may decide that they would                                                                   
     rather  form  their  own  co-ops   and  have  their  own                                                                   
     response contractors ....                                                                                                  
Number 1560                                                                                                                     
REPRESENTATIVE  COWDERY  requested  confirmation  that  they  were                                                              
addressing primarily water vessels and the railroad.                                                                            
SENATOR PEARCE answered that he was correct.                                                                                    
REPRESENTATIVE  COWDERY  asked  whether it  includes  trucks  that                                                              
deliver fuel to service stations or to private residences.                                                                      
SENATOR PEARCE responded no.                                                                                                    
Number 1595                                                                                                                     
REPRESENTATIVE  BARNES referred  to  the fiscal  notes, which  she                                                              
totaled up to $731,507.   She noted that there was  no fiscal note                                                              
in  the committee  packet for  the  railroad.   She asked  Senator                                                              
Pearce to address how SB 273 interacts  with the Oil Pollution Act                                                              
of 1990 (OPA 90); she said under  that law there were considerable                                                              
burdens placed on all the people  that would fall under this bill.                                                              
SENATOR  PEARCE  explained  that  OPA  90  only  covered  the  oil                                                              
tankers;  therefore, the  ships brought  in under  SB 273 are  not                                                              
under OPA 90 requirements.                                                                                                      
Number 1667                                                                                                                     
REPRESENTATIVE  BARNES  referred  to  a letter  in  the  committee                                                              
packet from the Alaska Steamship Association (ASA), and read:                                                                   
     ASA offers  the following comments  relative to  SB 273.                                                                   
     Many  of  the member  companies  (cargo,  container  and                                                                   
     cruise) in ASA operate nontank  vessels, and thus we are                                                                   
     directly  impacted  by the  proposed  legislation.   Our                                                                   
     members  also provide  maritime transportation  services                                                                   
     to the Alaskan  timber, mining, and fishing  industries.                                                                   
     Our  specific  concerns  are  the  additional  financial                                                                   
     burden this  bill places on  us, over and above  what we                                                                   
     already  bear under  existing federal  statute; [it]  is                                                                   
     not clear and may be substantial.                                                                                          
REPRESENTATIVE BARNES commented that  obviously the non-oil tanker                                                              
vessels do  fall under  the federal Act  because according  to the                                                              
ASA  they are  already  paying under  the  federal  statute.   She                                                              
continued to read from the letter"                                                                                              
     The practical  impact of  this bill is  that we  will be                                                                   
     forced  to join  the only  statewide co-op  in place  at                                                                   
     this  time, Chadux;  to our knowledge,  Chadux does  not                                                                   
     have the  equipment that may  be required to  respond to                                                                   
     spills  of the persistent  oils that  many of our  cargo                                                                   
     vessels carry as bunkers.                                                                                                  
REPRESENTATIVE BARNES  asked why the ASA is saying  that they fall                                                              
under  OPA 90,  when Senator  Pearce says  they don't.   She  also                                                              
asked what  the impact  is on  timber, mining  and fishing  in the                                                              
SENATOR PEARCE responded that the  railroad should have provided a                                                              
fiscal  note, which  would  show that  the  cost would  be to  the                                                              
railroad, not  to the general  fund.  It  does not go  through the                                                              
state's budget,  because they are  not under the  Executive Budget                                                              
Act.  Second, OPA 90 does not cover  ships, but that does not mean                                                              
that the U.S. Coast Guard does not  have requirements for ships in                                                              
terms of  response capabilities  and  costs.   She does not  think                                                              
that the ASA  letter is dealing with OPA 90  requirements, Senator                                                              
Pearce said.   She  indicated it  is true that  there is  only one                                                              
statewide co-op  at this  time, but that  does not mean  that they                                                              
have to join that one.                                                                                                          
REPRESENTATIVE BARNES  said she is very aware of  how the railroad                                                              
is funded  and that they  do not fall  under the Executive  Budget                                                              
Act; however,  the railroad is a  state asset that  is continually                                                              
having  to  turn  to  the  federal  government  to  upgrade  their                                                              
equipment.   This  will have  an impact  of some  nature, and  she                                                              
thinks they  should be privy  to that.   In addition, it  seems to                                                              
her that  there is considerable  impact to  the state  budget from                                                              
the fiscal notes that she has totaled  up.  More important is what                                                              
the impact is going  to be on the Red Dog Mine,  Greens Creek Mine                                                              
and basically  any mining operation that  moves in and out  of the                                                              
state, because it is very difficult  for these entities to compete                                                              
in the world  market.  So any additional cost  in transmitting the                                                              
ore has a tremendous impact on them.   She indicated that her main                                                              
concern is that  under SB 273 everything that moves  in and out of                                                              
the state  on the water, with  regard to resource  development, is                                                              
affected.   She wondered what the  economic impact will  be on all                                                              
those industries.                                                                                                               
Number 1973                                                                                                                     
SENATOR PEARCE indicated someone  from Chadux was online and would                                                              
be willing to talk about the estimated costs.                                                                                   
REPRESENTATIVE  BARNES stated  that she  wants any testimony  from                                                              
Chadux  or  any  other  entity  that  collects  money  from  these                                                              
companies in writing so that she  can analyze it on a case-by-case                                                              
basis.  She said  she resents the railroad or  anybody else giving                                                              
her a zero fiscal note.  She added:                                                                                             
     It  says SB  273 will  create  no fiscal  impact to  the                                                                   
     state general fund.   I know that; I'm not an  idiot.  I                                                                   
     want  a  correct  fiscal note  from  the  railroad  that                                                                   
     clearly  lays out  what it's  going to  cost, and  never                                                                   
     mind the general fund.  The  railroad is an asset of the                                                                   
     state, and please,  in the future, don't give  me a zero                                                                   
     fiscal note  expecting me  to look at  it like I'm  some                                                                   
     kind of an idiot.                                                                                                          
Number 2104                                                                                                                     
CO-CHAIR HUDSON  wondered about the  relationship of  vessels that                                                              
would be affected  by SB 273 to not only OPA 90  but perhaps other                                                              
federal  maritime  requirements  of  the  U.S. Coast  Guard.    He                                                              
invited Captain  Ed Page  of the U.S.  Coast Guard to  come before                                                              
the committee.                                                                                                                  
REPRESENTATIVE  BARNES requested  that Commissioner Michele  Brown                                                              
from the Department of Environmental  Conservation come before the                                                              
CO-CHAIR  HUDSON  indicated  that   Commissioner  Brown  had  been                                                              
SENATOR PEARCE  explained that Commissioner  Brown was  in transit                                                              
to  Anchorage  from  a meeting  in  Philadelphia,  where  she  was                                                              
working on getting Cominco's air quality permits.                                                                               
Number 2200                                                                                                                     
CO-CHAIR  HUDSON requested  clarification that  OPA 90 relates  to                                                              
bulk  oil  transport  and  the  associated  maritime  requirements                                                              
surrounding that.                                                                                                               
CAPTAIN ED  PAGE, United States Coast  Guard, replied that  OPA 90                                                              
predominantly  focused on  oil tankers  in the  wake of the  Exxon                                                              
Valdez incident;  however, it also  had some influence  on nontank                                                              
vessels,  although he  thinks there  is some confusion  as  to how                                                              
much.   It was certainly  not to the  level envisioned  by Senator                                                              
Pearce's bill,  he said,  with respect  to the pollution  response                                                              
caches  of   equipment;  however,   OPA  90  further   raised  the                                                              
liability, and the certificate of  financial responsibility had to                                                              
be carried by non-petroleum vessels.                                                                                            
CAPTAIN PAGE  said there  is a suite  of regulations to  deal with                                                              
prevention, and there  is also regulation to deal  with prevention                                                              
and  response  for  tank  vessels.   However,  Senator  Pearce  is                                                              
discussing  the non-petroleum  vessels with  respect to  requiring                                                              
contingent plans  and shore equipment.   There is  internationally                                                              
an oil  spill pollution emergency  plan requirement that  has been                                                              
adopted by  the IMO  for vessels  over 400  gross tons,  which has                                                              
some information on how to respond  to a spill.  It is essentially                                                              
a two- or three- page document.                                                                                                 
CAPTAIN  PAGE  informed  members  that Senator  Pearce's  bill  is                                                              
looking  at something  more comprehensive  with  respect to  spill                                                              
response.   It is an  area that the  U.S. Coast Guard,  other than                                                              
through  the   liability  of  provisions,  has   not  specifically                                                              
addressed.   He added that, as  addressed previously, OPA  90 does                                                              
have some application to it.  The  only area he would have concern                                                              
would be  with the  inspection provisions  of prevention  measures                                                              
that now requires  equipment on vessels; it was  referenced in the                                                              
ASA letter regarding the U.S. Supreme  Court Intertanko case, with                                                            
respect  to carrying  equipment being  beyond the  purview of  the                                                              
U.S. Coast Guard.                                                                                                               
CO-CHAIR HUDSON reflected on the  Exxon Valdez oil spill, which he                                                              
said  really  was the  aegis  of  significant  oil spill  laws  in                                                              
Alaska.   He  always took  the position  that a  state should  not                                                              
statutorily,  or  in any  other  way,  inject itself  into  actual                                                              
vessel inspections, he said.  He  believes that vessel inspection,                                                              
whether of  an oil tanker or  a large passenger vessel,  should be                                                              
left up  to a specialist.   He agreed that  the DEC does  not have                                                              
the expertise  to go  on a  vessel and  determine if a  particular                                                              
tank is gas-free or whether there  is a hardly detectable crack or                                                              
metal fatigue.   He  noted that they  do not want  any of  that in                                                              
their statutory  language.  He referred to  Representative Barnes'                                                              
question about  the relationship  with OPA 90.   He asked  Captain                                                              
Page if he would address that question.                                                                                         
CAPTAIN PAGE  indicated he  does not see  any real conflicts  with                                                              
OPA 90.   In fact,  the one area  that is somewhat  duplicative in                                                              
state legislation, as  far as the liability caps,  is covered, and                                                              
that is  allowed for; Congress  has specifically given  the states                                                              
that  authority  to  add  on  or   to  have  their  own  liability                                                              
provisions  with respect  to vessels.   He  noted that  it is  one                                                              
provision  that he  sees  that exists  and  is  acceptable.   With                                                              
respect to the  provision of spill response equipment,  that would                                                              
not be addressed by OPA 90 for non-petroleum tank vessels.                                                                      
REPRESENTATIVE  BARNES asked Captain  Page if  he does  admit that                                                              
there is some overlap in liability  between the federal law and SB                                                              
273, even though the state has been  given the opportunity to make                                                              
laws of its own through OPA 90.                                                                                                 
Number 2453                                                                                                                     
CAPTAIN  PAGE indicated  that  the only  overlap  he has  concerns                                                              
with, as he  mentioned before, is with the  inspection provisions.                                                              
He  commented on  Senator Pearce's  reference  to prevention  with                                                              
regard  to  pumps  onboard  vessels; he  said  that  is  dangerous                                                              
territory  with  respect to  the  Intertanko  case because  it  is                                                            
requiring equipment  on vessels that are engaged  in international                                                              
trade, and  that is  usually considered under  the purview  of the                                                              
U.S. Coast  Guard to determine.   He said  that is an area  he has                                                              
concern with and where he would expect some overlap.                                                                            
SENATOR  PEARCE   explained  that  the  financial   responsibility                                                              
requirements under  OPA 90 are to  the federal government,  not to                                                              
the state.  Therefore, they have  to show financial responsibility                                                              
but it  is for  the fines under  federal law,  and the  money that                                                              
they would  spend on the cleanup  for a vessel could be  paid back                                                              
to the  U.S. Coast Guard.   The  inspection provision  follows the                                                              
requirements  of SB 273,  not inspecting for  safety of  a vessel,                                                              
although  under  present law  regarding  crude oil  tankers,  tank                                                              
farms, barges and oil field equipment,  DEC has the right to go in                                                              
if nobody  else is doing  an inspection.   Therefore, that  law is                                                              
not being  changed.   They are  just allowing  DEC to inspect  any                                                              
requirements of a  contingency plan and anything  that the vessels                                                              
have agreed  to do  with respect  to prevention  credits; DEC  can                                                              
inspect that  they are  actually doing what  they said  they would                                                              
do, and  that is what  the inspection  provisions in SB  273 does.                                                              
It  has nothing  to do  with inspecting  for whether  a vessel  is                                                              
seaworthy, Senator Pearce added.                                                                                                
REPRESENTATIVE BARNES referred to  an article out of the Anchorage                                                            
Daily News titled "Facts Needed to  Form Cruise Ship Regulations,"                                                            
dated March  17, 2000, in  which Commissioner Michele  Brown says,                                                              
"Once  we have  accurate  facts that  we know  are  sound, we  can                                                              
structure  management  and regulatory  decision  making upon  that                                                              
foundation.   The working group will  make public reports  on that                                                              
aspect  (indisc.)  as well."    Representative Barnes  noted  that                                                              
Commissioner  Brown  also says  in  the  article that  before  any                                                              
legislation  is  developed, they  need  to address  four  specific                                                              
concerns.  Noting the date of the  article, she suggested they had                                                              
not had time to identify those concerns.                                                                                        
Number 2766                                                                                                                     
REPRESENTATIVE HARRIS  asked whether  the vessels in  service that                                                              
are maintaining an  oil spill response capability  have to provide                                                              
their own C-plans.                                                                                                              
SENATOR  PEARCE  indicated  response   vessels  are  exempt  under                                                              
present law.                                                                                                                    
LARRY DIETRICK,  Acting Director,  Division of Spill  Prevention &                                                              
Response, Department  of Environmental  Conservation, stated  that                                                              
they  have  been  in  contact  with   Alyeska,  and  that  in  the                                                              
negotiated rule making  they would make it explicit  that response                                                              
vessels are exempt.                                                                                                             
REPRESENTATIVE  BARNES requested  clarification  that even  though                                                              
the oil spill  money was used to build the ferry  [the Kennicott],                                                              
it is not an "oil-sucking ferry."                                                                                               
SENATOR PEARCE pointed  out that it only provides  a platform that                                                              
can  be used  as a  command center.   The  ferry itself  is not  a                                                              
"skimmer," and  the marine architects  laughed at the  idea, quite                                                              
frankly.   She explained that what  the ferry system has  done, in                                                              
conjunction with  DEC, is to  have roll-on/roll-off  containers at                                                              
ports around the state.                                                                                                         
REPRESENTATIVE  BARNES indicated  that  when the  funding for  the                                                              
ferry  was  before the  state,  she  was  serving on  the  Finance                                                              
Committee, and  the way  they got around  using federal  funds was                                                              
that  they were  going to  make it  an "oil-sucking  ferry."   She                                                              
wondered how [the state] had managed to use federal funds.                                                                      
SENATOR PEARCE  agreed that the  early discussion  and utilization                                                              
of money  was supposedly to  build a natural-response  vessel, and                                                              
that is not what they ended up building.                                                                                        
TAPE 00-33, SIDE B                                                                                                              
CO-CHAIR  HUDSON  recalled  that   the  ferry  was  built  with  a                                                              
combination  of federal  highway money.   What  they did with  the                                                              
Kennicott that they did with no other  vessel was take $12 million                                                              
out of  the nickel-a-barrel  fund or one  of the other  oil funds.                                                              
The Kennicott has  the capability of hauling booming  material; it                                                              
also has redundant communication  systems and the ability to bring                                                              
onboard 100  to 150 workers who  could provide a  floating command                                                              
center.  He indicated Representative  Barnes was right that it was                                                              
the first time,  and it was characterized beyond  what it actually                                                              
Number 2851                                                                                                                     
CO-CHAIR  MASEK  wondered what  the  process is  regarding  tanker                                                              
vessels operating  in Western Alaska and  what they have  to do to                                                              
comply with requirements.                                                                                                       
MR. DIETRICK explained that in Western  Alaska they currently have                                                              
a  plan in  place  with the  non-crew  operators,  which was  just                                                              
negotiated;  it provides  for a  hub-based  system to  get to  the                                                              
remote areas  of Alaska, which  allows a tiered  response anywhere                                                              
from Nome,  Bethel, Naknek,  Dillingham,  Dutch Harbor, Kodiak  or                                                              
Cook  Inlet.   With any  spill in  the  state, 80  percent of  the                                                              
problem  is  logistics, he  noted,  so  that  is what  drives  the                                                              
response strategy.   The hub-based  system is designed  to provide                                                              
for 24-hour delivery  to a scene from any one of the  hubs.  It is                                                              
also backed up by the ability to  deliver equipment from Anchorage                                                              
to that hub  within the same  24 hours and [to  deliver] equipment                                                              
from out-of-state within 72 hours.                                                                                              
CO-CHAIR MASEK wondered how a vessel  that is only in Alaska for a                                                              
few days would comply with the provisions under SB 273.                                                                         
Number 2742                                                                                                                     
MR. DIETRICK  responded that  in working  with the sponsors,  they                                                              
recognize that everyone  is aiming for a streamlined  process, and                                                              
they envision a  four-part plan:  one, an onboard  vessel response                                                              
plan;  two, the  membership in  a  cooperative; three,  negotiated                                                              
prevention  measures for onboard;  four, financial  responsibility                                                              
that the ship could execute through the existing infrastructure.                                                                
SENATOR PEARCE  added that  under the  present tanker vessel  law,                                                              
she had mentioned  Tesoro as one example of an  entity that brings                                                              
spot charter vessels  into the state.  Tesoro is  the owner of the                                                              
crude  oil  onboard  and the  holder  of  the  actual plan.    She                                                              
believes that  under SB 273, for  the non-crude carriers,  for the                                                              
non-tanker vessels,  they could build an umbrella  ability so that                                                              
every vessel  does not  have to have  a plan.  She noted  that the                                                              
oil-tankers  turn around  C-plan approvals  in 24  hours for  huge                                                              
crude tankers.                                                                                                                  
CO-CHAIR MASEK said in looking at  some of the C-plan requirements                                                              
in SB 273, she wonders how the operators  and owners can develop a                                                              
C-plan if the guidelines have not yet been developed.                                                                           
MR. DIETRICK  explained that the  intent with the  nontank vessels                                                              
would  be  to   basically  have  a  single  plan   that  would  be                                                              
incorporated  in  the regulations.    The  four-part  notification                                                              
requirement that he had just discussed  would be the activation of                                                              
the  plan.   It  is  a  plan  by  rule; when  they  negotiate  the                                                              
regulations, that  is when the  guidelines would be  discussed and                                                              
incorporated into the rule.                                                                                                     
Number 2541                                                                                                                     
CO-CHAIR  HUDSON  asked what  the  window  of opportunity  is  for                                                              
nonpersistent fuel cleanup.                                                                                                     
CAPTAIN PAGE answered  that with regard to the  refined products -                                                              
the diesels - the  majority of that oil within 24  hours will have                                                              
dissipated and evaporated,  although a fraction will  remain for a                                                              
few days.  He  explained that when they are talking  about 300- to                                                              
400- foot  vessels, they  are moving  into heavy persistent  oils,                                                              
such as  from bulkers and cruiseships.   The persistent  fuel oils                                                              
stay  in  the water  a  lot  longer,  and they  have  the  heavier                                                              
fraction  of petroleum  products.    He indicated  that  low-speed                                                              
diesels tend  to be the choice  these days because of  lower cost,                                                              
but they  also have  lower quality.   Therefore,  they are  seeing                                                              
more and more of the persistent oils.                                                                                           
CO-CHAIR HUDSON  indicated that  the concern he  has heard  from a                                                              
number of  people is  with the unknown  factors in the  negotiated                                                              
regulations, for example, "Trust  me, we are going to sit down and                                                              
negotiate  something that  you'll be  able to  live with and  that                                                              
we'll  do what  you  want to  do  in the  legislation  here."   He                                                              
understood why Representative Barnes  wanted Commissioner Brown to                                                              
come before  the committee  to discuss  the negotiated  regulation                                                              
process, he added, because it looks  as though that is going to be                                                              
a concern.                                                                                                                      
Number 2337                                                                                                                     
SENATOR PEARCE  informed the committee  that she was chair  of the                                                              
Oil & Gas Committee  on the Senate side when the  Exxon Valdez oil                                                              
spill happened.   House Bill 567,  which went through  the Senate,                                                              
required  a C-plan  and had  planning  standards and  requirements                                                              
that were  extreme.  They fought  to get standards in  present law                                                              
for the  crude carriers and the  petroleum industry that  were not                                                              
ridiculous  and that  would  help  to protect  the  waters of  the                                                              
state, she recalled, and thought they came up with a balance.                                                                   
SENATOR  PEARCE  indicated she  finds  herself in  an  interesting                                                              
position  of defending  DEC, because  after  HB 567  was put  into                                                              
effect DEC  tried to help the  statewide fuel carriers  that found                                                              
themselves covered  under HB  567.  The  area was vast,  and there                                                              
was  no   way  for  those  entities   that  carry  fuel   to  meet                                                              
requirements  to clean  up 15  percent  of their  total volume,  a                                                              
maximum  of 300,000  barrels,  in 72  hours;  therefore, DEC  went                                                              
through an alternative compliance effort.                                                                                       
SENATOR PEARCE pointed out that those  communities are able to get                                                              
their  fuel  today at  a  price  that is  not  totally  outrageous                                                              
because DEC set  up a cascading hub-system and  was willing, under                                                              
alternative  compliance,  to back  off  on the  absolute  planning                                                              
standard.   She noted taht  SB 273 also  pushes out  the effective                                                              
date to April  1, 2002.  The legislature will  have an opportunity                                                              
next year  or the following year  to take action to  make changes.                                                              
She reiterated that they have seen  DEC work with the industry and                                                              
come to some  rational decisions.   She noted that there  are some                                                              
costs involved, but  protecting the waters of  Alaska is important                                                              
enough  that [the  legislature]  should make  sure  that they  are                                                              
Number 2059                                                                                                                     
REPRESENTATIVE BARNES wondered how  much a company like Petro Star                                                              
Inc.  has  to pay  for  being  a  member  of SEAPRO  and  on  each                                                              
individual run they make.  She indicated  her real concern is what                                                              
the economic impact is going to have  on the state in moving goods                                                              
and services.                                                                                                                   
SENATOR PEARCE  replied that Petro  Star Inc. has to  meet greater                                                              
standards than those in SB 273; the  latter will cost less.  Petro                                                              
Star Inc. is  carrying fuel under the tanker-vessel  law, and they                                                              
have to prove they can clean up the fuel in 72 hours.                                                                           
REPRESENTATIVE BARNES said she understands  that, but she is still                                                              
trying to get an  idea of what the associated cost  will be on the                                                              
industry in  the state.  She knows  it is going to cost  the state                                                              
close to a billion  dollars, she added, pointing  out that she had                                                              
totaled the fiscal notes to be $731,507.                                                                                        
SENATOR PEARCE reiterated that Chadux was online.                                                                               
MR. DIETRICK asked the committee  to consider the three associated                                                              
rule  makings:    one,  alternative   compliance;  two,  the  best                                                              
available technology  regulations; and, three, the  efforts on the                                                              
North Slope  to try to get  the response situation and  broken ice                                                              
taken out.  He  addressed the question of whether  nontank vessels                                                              
would have to carry booms and skimmers  onboard, saying the answer                                                              
is no because  those would be served  by the hub-system.   [SB 273                                                              
was held over.]                                                                                                                 

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