Legislature(1999 - 2000)

04/14/2000 01:20 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  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                                                                        
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.                                                                                             
               (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                                                                   
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                                                              
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                                                              
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                                                              
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                                                              
CO-CHAIR  MASEK invited  (DEC) Commissioner  Michele Brown  to the                                                              
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                                                                   
     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                                                              
CO-CHAIR HUDSON surmised that [DEC]  would develop the regulations                                                              
in coordination  with professional  agencies  like the U.S.  Coast                                                              
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                                                              
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                                                              
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                                                              
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                                                                   
     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                                                                   
     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                                                                   
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                                                                   
     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                                                              
     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                                                              
MR. RUETER  indicated Mr. Butler's  explanation had  addressed his                                                              
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                                                              
     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                                                              
MR.  PIPER replied  that it  sounds well  within the  range.   The                                                              
fiscal note,  however, was prepared  fairly quickly and  some time                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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 [90].                                                                               
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                                                              
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                                                              
CO-CHAIR MASEK, hearing  no response to her invitation  to further                                                              
public testimony,  announced that public  testimony on SB  273 was                                                              
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                                                              
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                                                                   
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                                                              
     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                                                                       
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                                                              
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]                                                              
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.                                                                 

Document Name Date/Time Subjects