Legislature(1999 - 2000)
04/14/2000 01:20 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 273 - OIL SPILL RESPONSE; NONTANK VESSELS & RR CO-CHAIR MASEK announced that the committee would consider 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." CO-CHAIR MASEK indicated that there were five amendments before the committee for consideration. CO-CHAIR HUDSON said he believes the amendments have come before the committee as a way to improve the bill. He made a motion to adopt Amendment 1, which read: Page 4, following line 6: Insert a new subsection to read: "(g) A nontank vessel that is conducting, or is available only for conducting, oil discharge response operations is exempt from the requirements of (a) of this section if the nontank vessel has received prior approval of the department. The department may approve exemptions under this subsection upon application and presentation of information required by the department." CO-CHAIR MASEK asked if there were any objections. There being none, Amendment 1 was adopted. CO-CHAIR HUDSON made a motion to adopt Amendment 2, which read: Page 4, lines 1-6: Delete existing language. Insert: (f) In place of the requirements of (a)(1), (b)(1), and (c)(1) of this section, the department may adopt regulations by negotiated regulation making under AS 44.62.710 - 44.62.800 to provide for alternative means to obtain equivalent levels of spill prevention and response, including fleet plans, generic contingency plan contents established by regulation, and streamlined contingency plans with membership in a non-profit corporation that is a primary response action contractor. LETTER OF INTENT Nothing in this Bill is intended to alter the liability provisions of contingency plan holders, parties responsible for a discharge of oil, or oil spill response action contractors. Unless specifically identified as a contingency plan holder, a non-profit corporation that is primary response action contractor and provides a portion of a department-approved contingency plan is not by virtue of providing that portion of the contingency plan deemed a contingency plan holder for purposes of AS 46.04.030. REPRESENTATIVE BARNES objected for the purpose of discussion. She referred to Amendment 2, where it read, "the department may adopt regulations by negotiated regulation making under AS 44.62.710 - 44.62.800". She indicated that nothing in the amendment stops them [the department] from promulgating regulations that no one agrees with, especially with regard to the "may." PAT CARTER, Staff for Senator Drue Pearce, Alaska State Legislature, explained that it is not new language; the "may" has been there. The intent was to allow them [the department] to have maximum flexibility, but the intent has always been that they adopt the regulations through the negotiated regulation ["neg reg"] process. REPRESENTATIVE BARNES asked if she is to understand that the amendments have only been approved by the sponsor of the bill, since it is the bill sponsor's staff person speaking to them. CO-CHAIR HUDSON indicated that other people would be testifying. REPRESENTATIVE BARNES asked where the amendments came from. CO-CHAIR HUDSON indicated that the amendments did come from the prime sponsor [Senator Pearce]. Number 0814 MR. CARTER explained that the amendments are in response to discussions that have taken place in the working group meetings. They had three working group meetings prior to the meeting at the Department of Environmental Conservation (DEC), and at the DEC meeting there continued to be discussion about limiting the liability to a Primary Response Action Contractor (PRAC). Right now, the contingency plan [C-plan] holder is the responsible party; the cooperatives were concerned, if they provided all or large portions of the C-plan, as to whether they would be considered civilly and criminally liable. The actual correction to subsection (f), page 4, is the removal of the language on line 5, "and a contingency plan holder." REPRESENTATIVE BARNES wondered if the C-plan holder - being the contract group - is then exempt from liability. MR. CARTER explained that they had tried to figure out a way to bring them under the umbrella. However, through the working group, they had decided it was best if the C-plan holder was still the responsible party, even if the cooperatives provided a vast majority of the compliance measures. What they decided on, without going back and rewriting the whole statute, was that the responsible party would still be liable unless they opted to come under the umbrella of a cooperative. Mr. Carter added that the cooperative said, "Well, we'll be willing to provide all these things. We just don't want to be subject to criminal and civil liabilities." He said that was the intent of the correction. REPRESENTATIVE BARNES responded, "That's the most preposterous thing I've ever heard of." She pointed out that the carriers paying into groups like Alaska Chadux Corporation and other nonprofits would still get stuck with the liability if everything does not go according to plan. She said that to her something does not quite ring true. CO-CHAIR HUDSON expanded on Representative Barnes' question: I am a ... nontank vessel - say, a cruise ship vessel - and I have to go out and pay to have a ... response action contractor, or a group like SEAPRO [Southeast Alaska Prevention Response Organization], or Chadux, or something of this nature there; and in this exemption here, we would hold the response action contractor not liable. REPRESENTATIVE BARNES indicated that Representative Hudson did a good job interpreting what she was asking. Number 1160 LARRY DIETRICK, Acting Director, Division of Spill Prevention & Response, Department of Environmental Conservation, replied that the purpose of the change, as included in the letter of intent, is to clarify, to those who are concerned, that there is absolutely no change intended in the current underlying liability structure. With regard to responsibility for PRACs, they are already under a burden, under the existing law, such that if they fail to perform under their contracts, they are liable; therefore, there is still a shared liability here. He explained that if a nontank vessel signs up with a PRAC, they have a contractual arrangement. A PRAC, who is now immune to liability under law, would lose that immunity if the PRAC failed to perform those services. They have to live up to and respond as agreed with whomever they contract with. REPRESENTATIVE BARNES asked whether, if they do not totally perform for some reason, the person paying them money is still criminally liable. MR. CARTER indicated that is the way it currently works. However, under the proposed amendment [CSSB 273(RLS)(title am)], if the PRAC actually does provide a portion of the C-plan compliance, the civil and criminal penalty cannot go through the cooperatives. CO-CHAIR HUDSON restated that what Representative Barnes is asking is what liability the vessel owners will have, [under] the nontank vessel contracts with SEAPRO or Chadux to move on their behalf, should they have a grounding. MR. CARTER replied that if any particular PRAC did not fulfill its contractual obligations, then it would be subject to liability. CO-CHAIR HUDSON wondered whether, if [the PRAC] did the contract but made mistakes, there would be a shared liability. MR. CARTER explained that if [PRACs] do not fulfill their contractual obligations, then they are liable for whatever they do not fulfill. REPRESENTATIVE BARNES indicated she understands clearly what is being said: if a nonprofit has a contract and performs at whatever level, but is not totally able to respond, then the liability goes back to the vessel that has been paying the nonprofit. She said that in her way of looking at it, the vessel does not have much of an insurance policy. SENATOR DRUE PEARCE, Alaska State Legislature, sponsor of CSSB 273(RLS)(title am), clarified that under present law and under CSSB 273(RLS)(title am) if a vessel goes aground and is not a member of a cooperative the vessel is responsible and has the entire liability. For example, if Petro Star Inc. had a barge go aground and SEAPRO did not respond in a proper manner then SEAPRO is responsible for their response. Petro Star Inc. would then have the right of action against SEAPRO, but the owner is always responsible under CSSB 273(RLS)(title am) and under present law. REPRESENTATIVE BARNES indicated that she clearly understands that the owner of the vessel under present law is liable, but the proposed law is adding another layer. For example, she said, "You're still liable to a degree, but we forced you to pay into these nonprofits, and for whatever reason that they may not be adequately able to perform, we have gone right back to the owner of that vessel in the same manner as under present law." CO-CHAIR HUDSON replied that he reads it the same way, except with Amendment 2 he believes that it shares the culpability between the owners and whomsoever they contract with. He believes that Amendment 2 is a necessary piece, because without it they are placing the entire burden on the vessel owner, who would have to - by law, with the passage of CSSB 273(RLS)(title am) - have a C-plan in place. REPRESENTATIVE BARNES withdrew her objection, indicating agreement that Amendment 2 does make the bill a little bit better. She added that under existing law, if they are talking about tank vessels, they are talking about giant vessels. However, most of the things covered under CSSB 273(RLS)(title am) are small potatoes compared to the tanker vessels, which do not have the same deep pockets that the oil companies have. CO-CHAIR HUDSON agreed with that explanation and restated the motion to adopt Amendment 2. There being no objection, Amendment 2 was adopted. Number 1730 CO-CHAIR HUDSON made a motion to adopt a conceptual amendment, Amendment 3, "[Under Section 7] that would require that the commissioner [of DEC] negotiate regulations establishing prevention credits, which could result in lower planning standards." CO-CHAIR HUDSON explained that a number of the "industry people" who will now be subject to this law believe that there are different circumstances for different vessels; for example, the Greens Creek Mine and Red Dog Mine vessels have different standards than the cruise ships. Therefore, this amendment would require the commissioner to establish prevention credits. REPRESENTATIVE WHITAKER indicated that he was having difficulty determining what [the "industry people"] are conceiving. CO-CHAIR HUDSON noted that [lobbyist] Paul Fuhs is the maker of the amendment and believes that it is pretty much exactly as he [Co-Chair Hudson] stated it. Number 1936 MR. DIETRICK pointed out that the fundamental concept is having prevention credits as a way to create an incentive for vessels to go beyond mandatory onboard requirements. The challenge is to create in the negotiated regulation process a means by which they can have a proper incentive to do that. He explained that in speaking with Mr. Fuhs, they conceptually agreed that they want to create the right economic incentive to do that; therefore, by having recommended prevention measures and having them weighted, they can create a system by which the insurers and the cooperatives then can discount their fees, based on the additional prevention measures that a vessel carries. REPRESENTATIVE WHITAKER said he understands and is in agreement. CO-CHAIR MASEK asked if there were any objections to adopting Amendment 3. There being none, Amendment 3 was adopted. CO-CHAIR HUDSON indicated that Amendment 4 comes from the Alaska Maritime Agencies, who have suggested that on page 4, line 7, the additional language, "For the purpose of this act, the department [DEC] is authorized to negotiate with vessel agents to assure compliance with the act by the vessels they represent." He made a motion to adopt Amendment 4. There being no objection, Amendment 4 was adopted. Number 2124 REPRESENTATIVE BARNES indicated that in the last meeting she had asked for a proper fiscal note from the railroad; she acknowledged receipt of that. For the first year, it would be $1,650,000, and for subsequent years, it would cost the railroad $750,000 a year. She pointed out that what she had figured on the other fiscal notes was $731,507. She stressed that it is a very expensive bill for the agencies of government. She also wondered what it was going to cost individual vessel [owners] to comply, and indicated something had been received from Chadux regarding a fee schedule. She asked if someone could relate how the vessels - and what they carry - relate to the fees; for example, Chadux has an annual fee, an initiation fee and a vessel capacity fee. Number 2278 MR. CARTER explained that he had broken it down using Chadux's proposed fee schedule. The biggest concerns that they have been addressing, as far as the fee schedule, have been with the tramper vessels, which are doing one-port calls. Under Chadux's fee schedule for a tramper vessel hauling 200 gallons of fuel and approximately 5,000 tons of fish, the fee would be $550 for a two-week port call. He noted that if [the vessel] is there only two days, the fee would still be $550 because there is a minimum charge. He calculated that for two weeks at $550 and 5,000 tons of fish, it would be 11 cents a ton. On a coal ship coming in and out of Seward, the loads vary from 50,000 to 80,000 tons. He had run the calculation at 60,000 tons of coal with a 200,000- gallon fuel capacity at $550, and it would be less than 1 cent per ton. REPRESENTATIVE BARNES asked Mr. Carter if he would give her the bottom line, because it is difficult to follow without the calculations in front of her. MR. CARTER said that he would give Representative Barnes a copy of his calculations. He continued, saying the cruise ships carry 2,000 passengers at 20 trips per year, over a four-month period, and have a million-gallon capacity for fuel. Calculated on a quarterly rate and a monthly rate at $6,050 divided by 40,000 passengers, it ends up being 15 cents per passenger. CO-CHAIR HUDSON wondered about the railroad. MR. CARTER indicated he was perplexed by the railroad's fiscal note as well. It shows $750,000 per annum after the initial capital improvements. He explained that the railroad hauls up to 50 cars at 22,000 gallons per car, which is about a million gallons, and under Chadux that would be $16,000 per year - quite a difference from $750,000. He said that in speaking with the railroad it seemed that they use cleanup costs as part of the assessment, assuming that they would have to hire other contractors. CO-CHAIR MASEK invited (DEC) Commissioner Michele Brown to the table. REPRESENTATIVE BARNES commented that she just did not want the railroad's fiscal note to be left unchallenged. Number 2530 MICHELE BROWN, Commissioner, Department of Environmental Conservation (DEC), read her testimony into the record: We're here today discussing this bill because we have a gaping hole in the state's oil spill prevention and response safety net. At the 10-year commemoration of the Exxon Valdez disaster, a number of us involved in this subject took a hard look at the significant improvements that have been made, what was working and what was not, and analyzed the remaining risks. A major remaining risk is that posed by the unregulated tank vessels and the railroad. Alaska has arguably the best oil spill prevention and response program in the United States, if not the world, for those vessels it covers. This excellence is demonstrated by the routine requests for program development assistance we get from around the world, and the favorable reception our oil support industry businesses get when they offer their services worldwide. But our program has no provisions whatsoever - that's zero requirements - for spill prevention and response preparedness for the nontank vessels operating in Alaska's waters and for the railroad, although both at times carry even greater amounts of oil. Over the last 20 years, we have had several railroad spills and 22 serious spills from the unregulated tank vessels, and a like number of incidents where spills were narrowly averted. When we compare this record with the record we have for the covered vessels, we know that the unregulated vessels are having far more incidents that could lead to spills, far more spills than the vessels the law currently covers, and far more volumes of oil actually spilled. This bill mends the hole in the safety net by requiring that all vessels carrying a significant volume of oil participate in the state's safety net. Surely, the terms of that participation in the safety net will be different than the currently covered vessels, but the basic obligation to prevent and be prepared to respond to a spill will be uniformly applied to all vessels operating in our waters and to the railroad. This is critical, both for the obvious protection enhancement it provides [and] to level the playing field on the marine side for the costs for spill preparedness and response. Right now, the backbone of the state's response network is provided by the covered vessels through their contractors and co-ops, and by the state's oil spill response fund, which is paid by the crude oil producers. If one of the unregulated vessels has a spill, it can try, after the fact, to get a contract for response from a co-op or a private contractor, or the state will have to step in using the response fund, or the Coast Guard will step in using public monies. Even if the owner of the vessel which had the spill ultimately pays back those costs, they are still gaining a benefit from the preparedness infrastructure that others had to develop at those companies' sole expense. It is time to have all involved participate in Alaska's oil spill safety net. Yes, there are many details to be worked out on how we do this so that it is not too costly, not too administratively burdensome, and addresses the risk in the most common-sense, practical manner. But to do that, we need to start at the basics by establishing the most fundamental principle: and the principle is that the railroad and all who carry large amounts of oil in Alaska's water need to be part of the safety net. Again, the levels and the means of participation should be tailored to the risks posed and to specific elements of each industry's operations and market realities. But what is before you today is the most basic policy question: should all who ply our waters carrying large amounts of oil be part of the safety net? Every other West Coast state and British Columbia [have] already made this choice. Only Alaska remains unprotected. I totally agree that there are many issues to be resolved in how to accomplish this basic policy. The questions posed are valid and important points, to be thoroughly vetted and addressed as we collectively develop the most efficient and effective way to mend the safety net without unduly burdening our important industries. I truly believe, though, that the best way to get there is by first establishing the policy that we need universal participation in the safety net and in the dialogue on how best to achieve the goal. We are not asking people - as I have heard say - to simply trust us. This is not a trust issue; that implies a passivity that we don't want, because we do not want to develop this program without the active collaboration of those affected by it. Rather, in my view, this is a participation and a responsibility issue. The nontank vessels and the railroad need to be part of the solution. The best way to predict the future is to create it. If we can start, with this bill, establishing the policy that the railroad and all who operate in our waters need to help protect them, I have no doubt that the creative minds in our industries and our agency can devise a program that accomplishes the goal effectively and practically, and can be a model like the rest of the oil spill prevention and response program. Number 2802 CO-CHAIR HUDSON asked how the negotiated rule making process will go forward, when going into a totally new system which requires that vessels that have operated for many years in Alaska must assume financial responsibility and take action to be prepared to clean up a spill. COMMISSIONER BROWN explained that they see the negotiated rule making process as the embodiment of the working groups that they have seen a lot of in DEC. If they are going to have a program that makes new requirements on people, then the only way it is going to work is to have those people help in the drafting of the regulations. CO-CHAIR HUDSON surmised that [DEC] would develop the regulations in coordination with professional agencies like the U.S. Coast Guard. COMMISSIONER BROWN affirmed that. CO-CHAIR HUDSON said he understands that it is a give-and-take system where people come to the table and understand what their capabilities are; it is negotiated and ultimately embodied in regulation. COMMISSIONER BROWN explained that there are three places for input: in the negotiation session, during the formal public comment [period], and during one or two legislative check-ins to make sure the process is working. CO-CHAIR HUDSON wondered if the participation includes all the parties that have an interest in it, including the shipping companies and public interest groups. TAPE 00-35, SIDE B COMMISSIONER BROWN [begins midspeech because of tape change] said, "... these are charged with actually promulgating regulation, but that's why there's legislative check-in times in this process." CO-CHAIR HUDSON wondered if the process has been used in the past. COMMISSIONER BROWN replied that this particular negotiated regulation process in statute has not been used, because it was just passed. But they have used negotiated rule making and working groups extensively in the last several years. CO-CHAIR HUDSON wondered if Commissioner Brown felt confident that it would be a good, democratic process. COMMISSIONER BROWN responded that it is a good process. It can be a bit painful at times, but it always produces a far better result. CO-CHAIR HUDSON wondered if it would be akin to when they developed the Forest Practices Act. COMMISSIONER BROWN agreed that it would be very much like that. Number 2907 DOUG DONEGAN, Trident Seafoods Corporation, came forward to testify. He stated: Alaska is a large state with a tremendous coastline and a limited road system. As a consequence, our citizens and businesses are extraordinarily dependent on vessels to move supplies and products. We are especially aware of this in the seafood industry. Seafood processing occurs over a vast geographical area of the state, including many operations in remote areas. During the coarse of a year, a single processing vessel may operate in Norton Sound, Bristol Bay, the Pribilofs and Southeast Alaska. Freighters from throughout the world come to these operations to receive and ship [the] finished product. Tender vessels collect fish from fishermen and deliver it to floating and land-based facilities. This bill will affect all of these types of operations. Unfortunately, at this state, we do not know what will be required if this law is passed or how much it will cost. In theory, operators will be able to join response groups, but we do no know if they can provide a level of response the department will accept in remote areas far from airports and roads. It may be impossible to find response providers in some areas, or fees may be prohibitively expensive. We have no clear [concept] of how the Act will apply to foreign freighters that come into Alaska on short notice to pick up finished [the] seafood product. This Act may reduce the number of these vessels available to ship product. Potentially, these requirements might force fundamental changes in how and where seafood is processed. I think we are moving far too quickly on a bill that is going to have unpredictable consequences. Legislation that is this significant must be carefully and cautiously developed. It is not safe to assume that what works in California and Washington is going to work in Alaska. I know that Senator Pearce has made a great effort to address the many concerns with this bill. She has established work sessions in an attempt to identify potential problems and solutions. But, frankly, we did not get started soon enough, and we do not have enough time left. More and more questions keep popping up, and there are many fundamental uncertainties. Why can't we take the time to do this right? I do not think there is any compelling evidence that the current system is egregiously inadequate or deficient. We must remember that many of these vessels fall under current federal regulations enforced by the Coast Guard. These include financial responsibility, reporting requirements, and response capability requirements that are based on risk. If necessary, the Coast Guard responds to spills, cleans them up and bills the responsible party. It seems to me that they do a good job, and I would hazard to guess they have more resources at their disposal than any private response provider could ever provide. This bill will not prevent spills. Vessels run aground, operators make mistakes, systems and equipment fail. These things will continue to occur, with or without this bill. The vessels that would fall under this Act's requirements are much smaller than oil tankers and carry comparatively tiny amounts of fuel. Most of them use lighter fraction fuels that pose less risk to our environment, and even in the worst case scenario, their potential to damage the environment is completely insignificant compared to an oil tanker. Alaska certainly has a legitimate interest in protecting its waters. There may be inadequacies and gaps in the current system that need to be addressed. But this is a large state with a heavy reliance on vessels. We need to proceed cautiously. I suggest that we fund the study to look at this in a little bit different way. Just back up, put the nontank vessels in a category that (indisc.) and report back to the legislature. I think the study should include the following: 1. A comprehensive review of nontank vessels, including existing regulations and requirements, areas and types of operations, and a general review of current private and government response capabilities. 2. Identify inadequacies and associated risks in the current system. 3. Propose new requirements that would eliminate or reduce inadequacies and risks. 4. Consider various options that operators could use to meet proposed requirements. 5. Perform a cost/benefit analysis that evaluates the level of risk posed by inadequacies versus the cost of implementing new requirements. 6. Review the effectiveness and problems of similar legislation in other states. This study should provide the essential information we need to have a bill that fixes the problems with the least impact on our industries. Number 2907 PETE CARAY, Captain, testified via teleconference from Homer. He indicated that he works with Alaskan marine pilots in Western Alaska. He stated: Our state-piloted waters are unique for a variety of reasons, one of which is because of the remote location throughout our state waters where commercial shipping activity takes place. This is particularly true in Western Alaska. Normally in the Lower 48 or, for that matter, the rest of the world, ships go to established ports that have infrastructures that can accommodate the commerce which takes place. Out West, that's not always the case. We oftentimes take our ports out to the remote locations where the ships conduct activities. Because ports out in Western Alaska are sometimes set up in Timbuktu, if you will, this results in commercial shipping activity in extremely remote and environmentally sensitive areas where there is no shoreside infrastructure to respond to any sort of environmental calamities when they occur as a result of these activities. I choose my words here carefully - "when" instead of "if" - because, politely stated, in my business, stuff happens. Western Alaska is a region of extremes and hazards, and there's a lot of risk that comes along with moving ships out there. In the areas where little or, in some cases, no infrastructure exists, a plan - such as this piece of legislation provides for - would prevent some marine casualties from happening in the first place. And, in the unfortunate event of others taking place, I believe it would limit their destructive effects. I believe people's intentions are admittedly always for the best, but good intentions alone are not enough to prevent marine casualty. Self-regulation of the shipping industry by the shipping industry to police after themselves, when and where necessary, is not a responsible solution. There needs to be accountability. Without it, there will never be 100 percent compliance, because there's always going to be [a] rogue operator. I recently submitted a proposal to the Board of Marine Pilots and several other people in the state, in the form of a regulatory reform package which promotes a proactive approach of preventing marine casualties through licensing and registration of vessel agents. Basically, what it'll do is provide for accountability. Briefly, in it I describe this state's shipping safety matrix and point out the different participants and their respective roles in this matrix. As an example, a pilot's job or responsibility is to exercise maritime judgment and move ships. While ships' agents are not expected to exercise maritime judgment, they are responsible for being the primary couriers of information between all parties involved in this system (indisc.) do. Rendered down, my argument is where that information impacts and is vital to the safety of shipping; agents should be held accountable to see that it is effectively communicated to the other participants in the matrix. Oftentimes, as things stand now, this is not effectively communicated. I've included in my proposal, and I think you guys have some of those examples which illustrate this fact: self-regulation does not work. Some of the examples are more innocent than others. I think a not-so- innocent example is the narrative of the [M/V] Jacha, which I believe Senator Pearce discussed yesterday. This is a case which demonstrates the fact that some ship operators will not only not report marine casualties, they will attempt to cover them up. Again, I think the plan such as the one that you're talking about with CSSB 273(RLS) (title am) would help prevent these sort of shenanigans from continuing out West. I encourage you to shepherd this bill into law because, from a professional mariner's point of view simply stated, I think it's a darn good piece of common sense that has been successfully rendered down into the language of the law. Number 2463 JIM BURNS testified via teleconference from Anchorage. Indicating he was representing himself, he said his interest in CSSB 273(RLS) (title am) was to streamline some of the issues so that vessels which enter into Alaska waters could do that more easily than what he has experienced in the oil industry. He has been involved in the oil industry for about 30 years. He had objected to the direct-action language as it was changed, Mr. Burns noted. He had read it repeatedly and is now satisfied. In response to a question by Representative Barnes, he said that he still has some concern regarding whether or not additional equipment will have to be purchased to set up the prevention criteria for responding to the additional class of vessels. He said he is still concerned that a company like Chadux or SEAPRO currently has equipment for the customers and members they have now. There may well have to be additional equipment purchased, but he is not sure what that would be at this time. REPRESENTATIVE BARNES commented: I have read in here where ... it says just exactly what he said, that the equipment they presently have is for a response to the present customers they have, and that they would require additional equipment for them to respond to the new ones, and it may be .... CO-CHAIR MASEK asked Mr. Carter to speak while Representative Barnes located the information she was referring to. MR. CARTER informed the committee that the issue of whether or not additional equipment would be needed has been discussed with the department. He stated, "For instance, Chadux currently has 37-odd members. And what would happen if they ended up with 60 members or 100 members: would they need additional equipment?" He indicated the department has responded that no additional equipment would be required because the equipment Chadux currently has would be adequate to respond to any spill by any of the additional vessels that would be brought into the safety net. REPRESENTATIVE BARNES responded that she does not believe what Mr. Carter stated. She added, "I have read in these documents where the people that are responsible for it have clearly said - and I will find it - that they have to have additional equipment because the pool that they serve would be much larger and it would require ...." Number 2236 MR. CARTER interjected and said the bottom line comes down to whether or not the desire is to have them plan for two spills at one time. He noted that DEC said, "No, we would not require additional equipment." Mr. Carter suggested that Commissioner [Brown] from DEC could state that for the record if Representative Barnes would like. REPRESENTATIVE BARNES maintained that she has read something where it is clearly laid out that additional equipment would be required for the addition of vessels that would fall under CSSB 273(RLS) (title am). MR. CARTER said he is not sure which document Representative Barnes is referring to. REPRESENTATIVE BARNES reiterated that she will find it. MR. DIETRICK commented that the current regulated industry in the state is required to meet a certain response planning standard. The new standard being proposed to the nontank vessels does not exceed that standard, so they are "piggy-backing" on the existing capability. The fundamental, threshold planning requirement is already in place by the current regulated industry, and that is being built on. CO-CHAIR HUDSON said he does not think they are taking into consideration the fact that the requirement is being expanded to many of the operations in Western Alaska. He stated: I'm afraid that you're wrong if you believe there's not going to be new equipment, particularly up out of, say, the Kodiak area, and up out of Bethel and places like that, because we've got these nontanker operations, the ore ships that'll be calling in on the Red Dog Mine, up there - even the ability to take a C130 up into some of the smaller fields where they'd have to be landed in order to cart it out if you had a grounding, say, somewhere off of Hooper Bay or something like that. I don't want the department to say that there won't be new equipment required, because there's going to be, I believe. MR. DIETRICK answered that the department has been through two alternative compliance schedules of the existing non-crude industry in dealing with this issue. The existing fuel barges that go up to Nome, even prior to this legislation, had to deal with the very same issues of remoteness and access with respect to launching a response if necessary. The framework proposed for handling that now is a hub system that includes hubs at Nome, Bethel, Dillingham, Naknek, Kodiak and Dutch Harbor. The current response planning standard for nontank vessels is fairly minimal and basically requires getting booms out to a boat within 48 hours, and cleanup in the shortest possible time. The capability to launch out of those hubs is the framework that handles the Western Alaska and Aleutian regions, and Kodiak. It was designed so the response would be launched to hit the remote areas of the state, backed up by equipment that is positioned in Anchorage. A tiered response capability calls for getting the initial containment out within 24 hours and requires backup from Anchorage to the hub within 24 hours; then, if necessary, it requires additional equipment within 72 hours. This exceeds what has to be done for the new nontank vessels. Number 1973 JOE LEBEAU, Alaska Center for the Environment, testified via teleconference from the Matanuska-Susitna Legislative Information Office (LIO). He stated: I live in the Mat-Su Borough near Palmer, where I've resided since 1979. I recently retired from the state government with over 23 years of service. Twenty of those years were in the areas of the Railbelt; the remainder was in coastal communities. During my state career, I responded to hundreds of oil spills. On March 24, 1989, I traveled to Valdez by car over three mountain passes and flew out to the Exxon Valdez within 10 hours of the grounding. I stood on the bridge waiting for the oil spill equipment to arrive. There was no oil spill equipment in sight until after 2:30 in the afternoon. Then the equipment that did arrive was filled to capacity in a few minutes. Nontank vessels without contingency plans currently spill more oil than the vessels with contingency plans. Nontank vessels need to have contingency plans and certificates of financial assurance to make the state whole when their vessels run aground again. Nontank vessels and the railroads need to have contingency plans so we can responsibly say we tried to protect our resources. While working in the Mat-Su area, I responded to at least three train wrecks. At each of these derailments, I was frustrated when I saw the railroad trying to clean up a spill with no spill response equipment or training. Railroad workers were frustrated too. Railroad workers are good people, just like you and me. During the winter of 1999 and 2000, the railroad had two more derailments. At one of these derailments, Mother Nature provided some beaver ponds for oil spill containment. The railroad finally had some equipment. At the second spill this winter, over 120,000 gallons of oil was discharged. Mother Nature failed to provide the beaver ponds for this one, but provided lots of snow that contributed to the accident. Again, the railroad had inadequate equipment to deal with the immediate response. To date, the railroad has only been able to recover 10 to 12 percent of its spilled oil. The railroad needs to have the capacity to respond to oil and hazardous substance spills in the Railbelt communities. Please vote to pass this bill out of committee. Number 1794 TOM RUETER, North Star Maritime Agencies, testified via teleconference from Anchorage. He stated that he is a steamship agent representing various nontank vessels which mostly intermittently call in Alaska, including frozen-fish carriers and bulk carriers that take Alaska's resources to the world market. He has been working with the SB 273 since its introduction. MR. RUETER agreed that significant progress has been made. There are still some key questions, however, and he is hopeful that through the negotiated regulation process those issues can be addressed. He indicated there have presentations by the PRACs regarding the costs for entry into their associations by intermittent vessels. He asked whether the a bi-weekly or monthly or quarterly fee was in addition to the one-time initiation fee; if so, he said, the $5,000 initiation fee plus the bi-weekly fee would again be an extreme different than just the bi-weekly fee or at that lower level. This is a concern because a majority of the vessels call one time per year, possibly two times, and anything of that nature drives up the cost. The consideration has not been made for the cost of developing the C-plan itself, or for the vessel, and the costs of any other contracts that might be associated with that. He concluded: I think, again, it has a start of a good, basic statute; however, I believe there is more attention that needs to be paid to what vessels are actually stowing. I believe, by the way this is written, it has precluded a lot of vessels which have spilled perhaps a larger volume than the vessels that are affected by this proposed statute. CO-CHAIR MASEK informed Mr. Rueter that all the committee members have a copy of his e-mail regarding CSSB 273(RLS) (title am). MR. RUETER thanked the committee and said he hopes the committee will reconsider more amendments to the bill. REPRESENTATIVE BARNES pointed out that Mr. Rueter had asked a question that is worthy of an answer. She stated, "Of course, this is just from Chadux. Chadux shows an initiation fee - one- time initiation fee per company - then the annual fee for vessel capacity, bi-weekly, monthly, quarterly, and annually, and then a second-year fee as well. CO-CHAIR MASEK asked whether anyone from Chadux online could respond to Mr. Rueter's question. Number 1569 JIM BUTLER, General Counsel, Alaska Chadux Corporation, testified via teleconference from Anchorage. He answered that a proposed fee schedule that was promulgated after a few meetings allowed for non-member vessel coverage, which would not include a requirement for an initiation fee. There is essentially a bi- weekly or monthly fee that has a little bit of a premium to offset the administrative costs. The company is considering how it can best serve the needs of these operators in a cost- effective way. The initiation fee would not be part of that cost. MR. RUETER indicated Mr. Butler's explanation had addressed his question. Number 1458 JEFF THOMPSON, Alaska Maritime Agencies, testified via teleconference from Anchorage. He indicated the committee has a copy of his letter which outlines Amendment 4 regarding the formal participation of vessel agents with DEC in the process of regulation rule making. He appreciates that the committee considered this amendment and passed it, he said. If CSSB 273(RLS) (title am) passes, he looks forward to working with DEC in complying with this legislation. Number 1401 JOE KYLE, Executive Director, Alaska Steamship Association, testified via teleconference from an off-net site in Anchorage. He noted that the Alaska Steamship Association includes the Northwest Cruise Ship Association. The association, he said, is opposed to CSSB 273(RLS)(title am), as presently written. MR. KYLE further stated that he feels he must respond to the remarks made by Captain Pete Caray, in which he imputed motives to action that a tramper vessel took in the Bering Sea. He pointed out that there are humans involved in the system, and one of Captain Caray's ex-pilots is currently in a state court for abandoning his ship when it was in extremis in Dutch Harbor. Mr. Kyle said there are three issues relating to CSSB 273(RLS)(title am): 1) The state feels there is a gap in its ability to recover costs in relation to spills; 2) The spills need to be responded to; and 3) The nontank vessel sector of the industry is being a "Freddy Freeloader" in relation to the tank vessels and the apparatus that is set up for them. MR. KYLE told listeners it is understood that the state cannot get paid through the federal funds from the Coast Guard as fast as it would like. And, from the Coast Guard's perspective, the state seeks reimbursement for funds that the federal government wouldn't normally think are appropriate for reimbursement. In that regard, the association is sympathetic with the state and has tried to work on the language in the bill; while it is not totally to their liking, it is language that they can live with. MR. KYLE said the association has a severe problem with the language in the bill that sends them into the hands of the oil industry with very little legislative guidance in relation to the cooperatives and contingency plans. As DEC Commissioner Brown has indicated, there are many details that need to be worked out; there are numerous issues that need to be thoroughly vetted; and the bill sends the industry to DEC with very little legislative guidance. The industry doesn't want to be a "Freddy Freeloader" in the state's safety net, nor do they want to be taken advantage of. If there is a problem with the industry not paying its way, he said, then that needs to be studied. Number 1150 HANS ANTONSEN, Captain, President, Southeast Alaska Pilots' Association [SEAPA]; and Co-Chairman, Marine Safety Task Force, testified via teleconference from an off-net site in Ketchikan. The Southeast region is the largest contiguous pilot authority in Alaska, he told members. Approximately 96 percent of the ship traffic subject to state pilotage is from cruise ships, which carry more than a million gallons of products. The increase in ship size and vessel traffic congestion also results in an increased risk of a marine casualty, despite the best planning efforts in relation to risk management. Some companies, he said, do an excellent job in relation to risk management; others need vast improvement. He has participated in the last three years of cruise disaster exercises, and each exercise points to an improvement in communication in every area of spill and casualty response. In that regard, SEAPA supports SB 273 in its present form; it provides accountability on the part of industry for oil spill contingency planning and increases communications and expectations in responding to a spill, if one should occur. Number 1014 ERNEST PIPER, Vice President, Safety and Environment, Alaska Railroad Corporation [ARRC], Department of Community & Economic Development (DCED), testified via teleconference from Anchorage. He said ARRC believes that the purpose behind CSSB 273(RLS)(title am) and the intent to increase the safety net are sensible. In that regard, ARRC believes that it can comply, particularly through the negotiated regulation process. Although ARRC is interested to see how equivalency would be determined when dealing with the rail industry as opposed to the marine industry, Mr. Piper said he thinks it can be worked out well with DEC. Number 0997 REPRESENTATIVE BARNES pointed out that she went directly to ARRC yesterday for a fiscal note. She asked Mr. Piper whether the fiscal note is correct. MR. PIPER replied yes, the fiscal note is correct, if Representative Barnes is referring to one that extends through to FY [fiscal year] 2004 and shows several categories of items. REPRESENTATIVE BARNES replied that the fiscal note that she has extends through to FY 06; it shows $1,650.0 [thousand] for FY 00 and $750.0 [thousand] for every fiscal year thereafter through FY 06. MR. PIPER replied that it sounds well within the range. The fiscal note, however, was prepared fairly quickly and some time ago. REPRESENTATIVE BARNES asked Mr. Piper why she had to insist yesterday on a fiscal note that didn't contain zeros, if one was prepared some time ago. MR. PIPER replied that he thinks it is because of the confusion in relation to the general fund use and railroad fund use. From the standpoint of the general fund, there is indeed no cost; but from the standpoint of ARRC, there are costs associated with the bill that come solely from its revenues. REPRESENTATIVE BARNES asked Mr. Piper whether he concurs with the statement that ARRC is owned by the State of Alaska and its people. MR. PIPER replied, "Yes." REPRESENTATIVE BARNES further asked whether any expenditure has an effect upon a state asset owned by the people of this state. MR. PIPER replied in the affirmative. Number 0820 REPRESENTATIVE BARNES said, "I still haven't figured out how we got from a February 22 fiscal note that was proper ... to one that was given to us yesterday that was all zeros, to getting back to the one that was proper. I suppose I'll figure that out in time." Number 0596 MR. BUTLER offered some history regarding Alaska Chadux Corporation, a not-for-profit corporation formed in 1993 to assist members in managing the cost associated with compliance in response to state and federal laws in the post-Exxon Valdez era. He said the not-for-profit corporation concept was used because it allowed for member companies to come together in the most practical, cost-effective way to meet a variety of compliance elements. Members participate and control their costs when they are a part of a not-for-profit corporation. He noted that primary cargo operators were the original founding members; involved in expanding operations into Western Alaska, they have a five-year capital equipment expansion that is part of meeting the alternative compliance worked out in a manner similar to the negotiated rule making that has been proposed with the Coast Guard and the state. MR. BUTLER continued. After OPA 90 [the Oil Pollution Act of 1990], some nontank vessels were required to have contingency plans. After the demise of a for-profit company that provided some service, many operators turned to Chadux for assistance. In 1995, Chadux created the membership class; in 2000 there are 17 member companies, approximately 17 facilities, and 15 different vessels operating in Western Alaska. Since Chadux was formed, it has successfully provided response services in Prince William Sound, Cook Inlet, Kodiak, Unalaska and Western Alaska using the logistical systems developed via road, rail, vessel and cargo aircraft. MR. BUTLER said Chadux recognizes that CSSB 273(RLS)(title am) represents many new challenges for the PRAC. He appreciates the committee's consideration of the amendment today that addresses those issues. In that regard, the PRACs can continue to think creatively in assisting the newly regulated operators. The board, he said, has met over the last couple of days to discuss the implications of CSSB 273(RLS)(title am), and has conceptually begun to look at accepting new members, which means being able to provide seasonal and trip coverage for some operators. It also means considering providing coverage for non-member operators on a limited service, and working to provide a fee structure that provides competent service coverage to a variety of operators. Once those operators join the organization, there will be a better understanding of their needs. Mr. Butler noted that he can provide additional information to the committee regarding the fee schedule. CO-CHAIR HUDSON asked Mr. Butler to provide information in relation to the overall types of equipment and response actions around the state. Number 0168 MR. BUTLER indicated he would do so. He noted that Chadux is organized by its members to try to manage the cost of compliance. In that regard, they have acquired specialized capital equipment such as skimming devices and booms, and have developed a network of contractors developed through a series of exercises and drills. Number 0025 REPRESENTATIVE BARNES asked Mr. Butler how much new equipment will be required as new members are acquired. TAPE 00-36, SIDE A MR. BUTLER related his understanding that through the work group process - if SB 273 passes - the acquisition of that equipment may be structured in such a way that maximizes the use for barge operators as well as ensuring its availability for nontank vessels. Therefore, the planned acquisition of capital equipment and expansion doesn't anticipate the need for additional equipment, to his understanding from the current information. Number 0080 CO-CHAIR HUDSON asked whether there would be a recurrent reduction on an overall basis to the tanker vessels currently under contract with Chadux, if all of the nontank vessels are added. MR. BUTLER addressed the question of whether current members will realize a lower cost if additional people join the organization as a result of this bill's passage. He said he believes that it possible. He also believes that the cost rate that has been prepared today may decrease. He explained that the members set the rate, and the different classifications as there are different planning standards. However, the overall objective with all the members is to keep their costs down. Therefore, the administrative cost of the organization may decrease some and, hopefully, that will be reflected in the rates of nontank vessels if a number of nontank vessels join. CO-CHAIR MASEK recalled [testimony] that the equipment would be located in Anchorage and the C130 would deploy it to remote areas. She asked whether a C130 could land in remote areas such as Hooper Bay or Good News Bay. She further asked, "Will DEC guarantee that only this is required to meet spill response requirements in rural Alaska?" Number 0237 MR. DIETRICK specified that the "backbone system" that would be built upon is the one envisioned for the nontank vessels. Therefore, those hubs are logistically located at spots that can be flown into and out of. He indicated the hub system is designed so that equipment can be expedited from Anchorage to a hub that serves a certain geographic shoreline of the state - the site from which the response is launched. In further response to Co-Chair Masek, Mr. Dietrick clarified that the equipment placement is located at these hubs. He noted, "The analysis for that has been the subject of discussions of the alternative compliance for the existing regulating community, our existing fuel barges." He informed the committee that there have been lengthy discussions and a multi-year process, as well as two rounds discussing how best to respond in rural Alaska. This framework is the result of that process and is [felt to be] the most efficient way to launch a response in the remote areas of the state. CO-CHAIR MASEK asked whose control that would be under. MR. DIETRICK answered that the hub system is currently being put together by the Alaskan Petroleum Distributors; for the most part, Chadux is their agent in this. In regard to who is in charge of the deployment of the equipment, Mr. Dietrick explained that the deployment of the equipment would occur through the respective cooperative with which it is signed up. He indicated that it seems, logically, that operators in Southeast would sign up with SEAPRO, whereas operators going around Western Alaska would probably sign up with Chadux. However, "the door is open on that" in order that fleet operators can have the option to develop new cooperatives or their own cooperatives. CO-CHAIR MASEK asked whether ship personnel, as under OPA 90, [will have] mandatory annual training. MR. DIETRICK answered that "we" haven't reached that detail yet. However, the general discussions through the work groups have led him to believe that the onboard requirements would be the current international and federal requirements. At the last committee hearing, he noted, there was discussion regarding stepping over the line of the Coast Guard. Therefore, he surmised that the state would likely adopt those as the mandatory [training] requirements, and any others would be recommended requirements. CO-CHAIR MASEK asked if that training would be in addition to OPA 90 training. MR. DIETRICK responded that any training that would be in addition to what is required at the international or federal level would be recommended additional training. Number 0550 CO-CHAIR MASEK asked: Will each vessel have a separate C-plan, or will the response contractor develop one plan that applies to all of its members, as is the case with the State of Washington? MR. DIETRICK noted that, here again, the door has been left open for individual plans, fleet plans or operating under a "plan by rule." He identified the latter as probably being the most simple under this [legislation]; there would be a four-part plan: First would be the onboard response plan for which the Ship On- Board, Preparedness, and Emergency Prevention (SOPEP) plan under federal and international law could be substituted. Second would be to provide for the response capability (indisc.) the membership of the cooperative. Third would be the prevention requirements, both mandatory and recommended, which would be the function of the rule making and which would be an affidavit attesting that those requirements have been met. Fourth would be a certificate of financial responsibility. Therefore, the individual C-plan would be, perhaps, a few pages for which the hope is to have a rapid approval process in order to turn this around in a five-to-ten-day time frame. That has been the indication of the conceptual discussions thus far in order to keep the administrative burden down. CO-CHAIR MASEK asked: Does the current OPA 90 certificate of responsibility qualify under CSSB 273(RLS)(title am) or will a separate certificate will be required? MR. DIETRICK answered that a separate state certificate would be required. He informed the committee that the federal certificate is merely a certificate issued back to the operator saying that the operator has met the federal requirement for financial responsibility. The same insurance package submitted to the federal government for the federal certificate can also be submitted to the state; that can be accepted, but the state would issue a separate certificate. CO-CHAIR MASEK commented that this is going to create a fairly substantial financial impact for the rural areas that have little vessel traffic. MR. DIETRICK reiterated that the response system for the remote rural areas in Alaska will be based out of the hubs that Mr. Butler mentioned. He noted a number of [hubs] will be completed shortly, and all of them will be completed by the effective date of CSSB 273(RLS)(title am). He explained, "That is the basis in the rural area; it's a logistical hub from which response would be launched with both aircraft and/or vessels." Number 0812 REPRESENTATIVE BARNES pointed out that Co-Chair Masek's initial question regarding the use of C130s was not answered by Mr. Dietrick. Representative Barnes noted that she is very familiar with C130s and the type of runway they require. She informed the committee that in most areas in rural Alaska, there is no way a C130 could land. Surmising that [the response] would have to occur via boat, she asked what size of boat would be required, whether those boats would be available, and whether they would have to be purchased in order to move the equipment from the discharge to the hub. MR. DIETRICK requested that Mr. Butler help [answer] this. He said he could not recall if Chadux, regarding the "resupply" from Anchorage to the hub, is using the C130 or other aircraft. However, he informed the committee that typically from the hub areas or any areas in the state for significant spills, the vessels that would be relied upon are so-called vessels of opportunity. He believes that there are 4,000-plus fishing vessels registered in Alaska with the Commercial Fisheries Entry Commission. Therefore, the local vessels are the first source of support for the response. CO-CHAIR HUDSON related his understanding that the prior question was in regard to transporting the heavy equipment such as skimmers, booms, and so forth to these areas where a C130 could not land. He said he did not think the committee wanted to try to digest the whole plan, but was pointing out that there are some very serious questions about whether this could be put together, particularly for nonpersistent spills. Persistent spills are one thing, he said, because the spill remains long enough for one to get to it and maybe pick up some of it. However, with nonpersistent spills such as diesel, there is just a limited period of opportunity, [after which] no matter what one uses, there is nothing to pick up. CO-CHAIR MASEK asked how vessels of opportunity meet Chadux's personnel training requirements. Number 1071 MR. BUTLER said Chadux has established a contractor network involving a vessel-of-opportunity program in which vessels can be prequalified to participate. They are typically involved in training and are available on a prescribed basis to provide lifting capability via water. MR. BUTLER turned to the questions about aircraft. He said that as stated a couple of times, Chadux keeps a fairly large inventory of equipment that is commonly referred to as the "fly- away," but it is not limited to flying away on C130s. It certainly can be loaded on a C130 and lifted to a location, but it is set up to assist the barge operators who have had to plan for just these scenarios. Much of the equipment can be broken down into aircraft as small as 206s or certainly moved by helicopter. An example of when that system was put to the test involved a nonregulated barge that ran aground about 18 to 20 miles south of Togiak right after a herring season. Aircraft lifted the equipment to Dillingham, the equipment was broken down, and the heavy stuff was moved by a vessel that had been pre-identified. Other equipment was brought into Togiak, and the two met at the site and were able to accomplish the recovery of the nonpersistent product, which had begun to leak from the barge. MR. BUTLER said that was the first time that a multiple layer of logistical support was tested in real life, in terms of breaking it from large aircraft to small aircraft and to vessels of opportunity. The Western hubs are going to depend upon using locals as much as possible, and Chadux is going to be developing a training program to work with locals; therefore, the local people are going to be the ones who are best prepared to help utilize and get that equipment moving in the field. Additional support can come out of Anchorage, if and when needed. The process also will involve training the people in whose communities this equipment resides to use it to the best advantage until help can come in. Number 1257 MR. CARTER emphasized that this is not reinventing the wheel. He emphasized, "We currently have vessels hauling far greater fuel than the vessels we're trying to include in the safety net." He said those vessels are now operating in remote areas that include Western Alaska. Also, the hubs currently exist. The system currently in place is something that the DEC and the industry have developed to the degree possible. He concluded, "We are not asking anything in addition to that." CO-CHAIR MASEK asked Mr. Dietrick about possible confusion and errors by ship personnel that might be caused by inconsistency of reporting requirements under SB 273 and OPA . MR. DIETRICK stated that CSSB 273(RLS)(title am) does not impose any new reporting requirements. The requirements for reporting spills, under which all vessels are now operating, all exist in state and federal law. This bill will not change those and, therefore, should not cause any confusion. REPRESENTATIVE BARNES asked Co-Chair Hudson if he could answer a question for her. "We can request information from the Coast Guard," she said, "but when we had the captain from the Coast Guard here testifying, in his testimony he referred to the recent Intertanko decision by the U.S. Supreme Court and said the decision may have implications for this bill." She asked exactly what that court case is about and how it impacts this legislation. She suggested it might be pertinent to obtain an opinion from the Office of the Attorney General on that issue. Number 1421 CO-CHAIR HUDSON noted that Captain Page was the gentleman who had testified, and he said that was a good question. He mentioned an inspection provision within this bill in case the state finds that other agencies, such as the federal agencies, are not providing adequate inspections. "That already exists for the terminals and for tankers and things of that nature," he explained, "and so now we're adding the nontank vessels that the state could actually inspect." He told Representative Barnes that he thinks Captain Page was referring to the U.S. Supreme Court [opinion] that says the Coast Guard has the national responsibility for vessel standards and for the assurance of compliance with vessel standards. He concluded, "I wouldn't want to see anything in here that tried to impose or even suppose that the State of Alaska would have on board, its own staff, people who would supplant the professionals in the Coast Guard as relates to these vessels, and I would want that record firmly established." MR. CARTER said that both [Legislative Legal Services] and the Office of the Attorney General have looked at the Supreme Court decision. He briefly outlined the Intertanko decision: Washington State was requiring what the federal government and the courts determined to be inappropriate requirements for vessels operating in that state's waters; for example, that state required crew training and drug inspections of the crew. He asked Mr. Tostevin to explain further. BRECK TOSTEVIN, Assistant Attorney General, Environmental Section, Civil Division (Anchorage), Department of Law, testified by teleconference. He said the Intertanko decision involved Washington State oil prevention regulations, which specified the type of equipment that had to be on the oil tanker, the training for the tanker crew, and the casualty reporting requirements that applied to the tankers. The Supreme Court found that those requirements went into areas that are the sole regulatory province of the United States Coast Guard. MR. TOSTEVIN then addressed CSSB 273(RLS)(title am) and oil spill contingency planning, explaining that there is separate regulatory authority in the federal Water Pollution Control Act, in which Congress has required contingency planning. "When Congress did that," he said, "they specifically included some provisions in the federal law that said that states could require additional requirements with respect to oil discharges in state waters, so oil discharge cleanup planning as well as oil spill liability laws including financial responsibility for oil spills, those areas are areas in which the state can regulate as well." He offered the opinion that this legislation does not go beyond into those areas that the U.S. Supreme Court found to be preempted. CO-CHAIR MASEK, hearing no response to her invitation to further public testimony, announced that public testimony on SB 273 was closed. Number 1722 REPRESENTATIVE WHITAKER noted that testimony indicates expense will result from this bill; a certain amount will be borne by governmental agencies, the Alaska [Railroad Corporation], vessel owners and, ultimately, the users. He said it comes down to the question of what the people of Alaska would gain as a result of this legislation. MR. DIETRICK replied that the benefits to the state are to get a more rapid response to containing petroleum discharge, to reduce the impact, to mitigate the damages to the natural resources, and to minimize the costs of spill response. REPRESENTATIVE WHITAKER whether there would be a more rapid response before or after [passage of the legislation]. Number 1812 MR. DIETRICK said a more rapid response with the nontank vessels will give the state the certainty that all of these vessels now have access to Alaska's backbone response capability, which has been built over the last ten years. The state will know that those vessels have direct access to it, and the call-up of those resources, hopefully, will be from the bridge to activate that [call-up] on immediate notice. That notice can turn on the response network, utilizing the existing hubs and cooperative system to immediately get resources to the scene. Number 1847 REPRESENTATIVE WHITAKER said he understands that access to the system is germane. However, testimony indicates access to that system exists today. Assuming that there now is direct access, what would be the difference between the response time before and after SB 273? Number 1886 MR. CARTER said he thinks what it comes down to is that right now, there is a nontank vessel industry whose response capabilities - and the expense - are borne by the non-crude haulers. REPRESENTATIVE WHITAKER interjected that he agrees regarding the fairness factor, and that certainly weighs very heavily upon his decision. Now, however, he is dealing with the benefit in timeliness. He asked how much more quickly a response will take place after [passage of] SB 273. Number 1922 MR. CARTER replied: The response planning standard is that we will have them on-site, and they will contain and control a spill of up to 15 percent within 48 hours. We've heard testimony throughout today that we operate throughout Alaska - all of our miles of coastline, the remote areas- and the difficulty in reaching some of those regions. The fact of the matter is that we are going to have spills; ... nothing prevents that. [Senate Bill] 273 will not prevent that. What [SB] 273 will provide, though, is a plan of attack when we do have those spills. Most of these people right now operate in and out of our state. Alaska is currently the only state that does not have a contingency plan requirement for nontanker vessels. This law brings Alaska in line with all of the rest of the states. Senator Pierce finds a . . . [indisc.--coughing] some of these vessels that operate out of Seattle are willing to pay for the expense of being covered to protect the waters in Seattle and around Puget Sound, but they are not willing to pay the expense to cover the waters of Alaska. REPRESENTATIVE WHITAKER persisted: "That relates to the fairness factor, and I agree with you on the fairness factor. But I still need to know the differential in response time." Number 2006 COMMISSIONER BROWN provided the example of the Kuroshima, a vessel that went aground in Dutch Harbor, causing substantial spillage: We had a responsible ship owner who wanted to be able to respond, and they lost several valuable days in scrambling to find someone to come and respond. I think there would have been an extremely good chance to prevent some shoreline impact had we had the contracts in place. They would have immediately known who to call, the equipment would have been deployed, and we would have had a difference in the outcome of that spill. REPRESENTATIVE WHITAKER asked how many days' difference SB 273 would have made. COMMISSIONER BROWN estimated two days. She deferred to Mr. Dietrick, who had been at the scene. Number 2067 MR. DIETRICK said what is key to designing the system to get the response time is the response planning standard. That standard is to design a system to have containment/control equipment on the scene within 48 hours. If that can be met in rural Alaska, "we" are doing well. The cleanup, as part of the planning standards, is to clean up in the shortest possible time. So the standard itself that is included in the bill is, to some extent, already taking into account the fact of Alaska's extensive shorelines and the difficulty in getting equipment there. That is why it is at 48 hours right now. A 48-hour response time would be very good. REPRESENTATIVE WHITAKER summarized: "Certainty, then, appears to be the key word. Would you agree with that?" MR. DIETRICK said yes, they are designing the system to provide that certainty, within 48 hours, to have that initial capability on the scene. REPRESENTATIVE WHITAKER asked whether that is in contrast to the current situation, which does not provide certainty of a 48-hour response. MR. DIETRICK said that is correct. REPRESENTATIVE WHITAKER directed the same question to the railroad, asking what is in place now and what is envisioned to be in place after passage of SB 273. Number 2159 MR. DIETRICK answered that the railroad is under the same response planning standard, so the goal there is to design for a comparable response. It is a very different situation, more akin to the response planning that has been for the pipeline, because there is a lineal source crossing a variety of watersheds, so the tactics and strategy and approach for the railroad will be different from the marine coastal routes, where there will be a hub system. The railroad now has "a bit of a contingency plan" and has done some preliminary work. The logistical hub approach along the railroad will have to be designed to meet that 48-hour requirement. There already has been discussion about whether that can be done by having equipment with each train, by pre- positioning gear at strategic locations at certain sidings. The driving force in that design will be to launch a response to achieve containment and control within 48 hours anywhere along the length of that right-of-way. Number 2220 COMMISSIONER BROWN called attention to the fiscal note provided by the railroad. Because of the recent mishaps involving the railroad, she noted, the railroad wants to have a better contingency plan. The figures in the fiscal note are corporate commitments they have made, independent of this bill. She said she did not know if they had done any analyses of whether this legislation would cause them costs incremental to what they had already decided to invest in spill-prevention contingency plans, because [spill prevention] will be cheaper than [spill] responses. Number 2256 REPRESENTATIVE COWDERY asked: If the railroad had had this in place at the time, could they have contained the December mishap? MR. DIETRICK said they would hope that with more preparedness and planning, they can get on those scenes faster and do the containment and control more rapidly once they are there. By comparison, Tesoro had a 2,000-5,000 gallon spill last night in Anchorage. They have a very aggressive posture now, he said, and they literally had that taken care of with five trucks in a very short time, avoiding huge problems. The intent here, he said, is "to get a more aggressive initial response, try to get that containment, so the problem does not become bigger, spread farther, cause more damage, increase costs, et cetera." REPRESENTATIVE COWDERY questioned whether anything could have "solved anything" regarding the Globe Creek mishap. Number 2352 REPRESENTATIVE BARNES asked, "Before the Exxon Valdez ran aground, what did we do about following around fishing boats and nontanker vessels?" COMMISSIONER BROWN specified that [the state] has not had requirements for those vessels, either before or since the Exxon Valdez oil spill. After that oil spill, laws were passed to cover the tank vessels, but they did not cover nontank vessels. REPRESENTATIVE BARNES said she is very aware that they did not cover the nontank vessels. She added, "It is absolutely amazing to me that we survived without it." CO-CHAIR HUDSON asked if there was a list or some account of the spills that have come from these types of vessels, perhaps in the past ten years. COMMISSIONER BROWN said that information is available. CO-CHAIR HUDSON suggested it would be helpful to see that information, because he would like to know "what is happening out there that is calling for us to put a whole new regime in place." CO-CHAIR MASEK asked the will of the committee. Number 2460 CO-CHAIR HUDSON said he thinks that the committee has created a good record of some serious questions and enlightened answers, and that the policy question for this committee is whether "we" have adequately documented the need for this legislation. He said he could see no constructiveness in holding SB 273 in committee this close to adjournment [of the session]. CO-CHAIR HUDSON made a motion to move CSSB 273(RLS)(title am), as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HCS CSSB 273(RES) was moved from the House Resources Standing Committee.