Legislature(1999 - 2000)
04/26/2000 05:06 PM WTR
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 273-OIL SPILL RESPONSE; NONTANK VESSELS & RR [Contains discussion of SCR 1 and what would become HCR 28.] Number 0089 CHAIR BARNES announced that the committee would hear 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." CHAIR BARNES noted that before the committee was Version Z [1- LS1464\Z, Chenoweth, 4/25/00], adopted as a proposed committee substitute (CS) the previous day. She stated that there would be limited public testimony. Number 0100 JOE KYLE, Executive Director, Alaska Steamship Association, came forward to testify. He said: We have agreed with Senator Pearce and [Department of Environmental Conservation] Commissioner Brown from the outset that a bill of this nature is necessary to help close the safety net that the state has in its oil spill response and prevention situation with the nontank vessels. However, we have been very concerned, from the very beginning, about the impact the bill as originally written would have on particularly our general cargo carriers that export our timber, minerals and fish products to market. We still have some concerns with the way that the CS is right now, but, in general, we're very supportive of the bill in the sense that it addresses the financial responsibility issues, which we have been prepared to take on from pretty early on in the bill, and we think the task force idea goes a long way toward alleviating our concerns about what the costs may be as the timber, mining and seafood exporters come into compliance with the needs the state has identified. Number 0226 CHAIR BARNES said she appreciated Mr. Kyle's mention of mining, timber and fish. She noted that he had said the steamship association is "almost completely there" on this bill. She invited him to point out "where you might not be completely there." Number 0240 MR. KYLE responded that the steamship association is in complete agreement with the letter Senator Pearce had sent Chair Barnes last Friday that said, in essence, "Let's address financial responsibility and deal with the rest of these issues in the task force." The association thinks the inspections section should be assigned to the task force as well. He said they [those in the shipping industry] need to understand better what the state's needs are with regard to inspection authority, because they now are "completely inspected" by the United States Coast Guard, and foreign flag vessels "can't even come into state waters without a certificate of responsibility." They would like those inspection issues addressed in the task force rather than in the statute at this time. That is the major area of concern they still have with the CS, he said. Number 0297 REPRESENTATIVE GREEN asked Mr. Kyle if he had said that foreign flag ships in Alaskan waters are required to have a certificate of [financial] responsibility. MR. KYLE affirmed that. REPRESENTATIVE GREEN then asked whether that is inspected when they are in harbors. Number 0318 MR. KYLE explained that foreign flag vessels are not routinely inspected on the high seas. But when they come into United States waters, they have to pass certain declarations, one being that they have a valid certificate of financial responsibility. That normally is transmitted to the ship's agent and then on to the Coast Guard. REPRESENTATIVE GREEN said it was his understanding that [the certification] was inspected only when the ship was in port, "not while it may just transcend to the three-mile limit." MR. KYLE said that was a generally correct way to look at it. Number 0389 PAUL FUHS, Lobbyist, representing CSX Lines (formerly Sealand), came forward to testify. He said: We have worked on this bill ever since it came out. We've pulled together about 20 industry representatives in Seattle to meet with Chadux, one of the contractors, to see what their past experience was. Then we got about 40 people together to meet with the [DEC} commissioner and her staff, to try to find out how they would handle the regulations, in an attempt to try to identify the costs of the legislation. In the process, we identified some things that could streamline the process and help hold down the cost. When the contingency plan requirements of the bill were taken out of SB 273 to create this CS, the references to those efficiencies - fleet plans, vessel agents, prevention credits, the ability of the response contractor to hold the sea plans - also were eliminated. We understand that you are contemplating including those in SCR 1 in the CS, and we hope that you do that, because that will help the department and us really try to bring down the costs of the program. Once we have done that, to that point, then I think you can determine, as policy makers, whether you determine that the cost of the program is worth the benefits of it. We'll do our best to cooperate with you. In addition, another cost driver on this would be the drills and exercises that would be required. I think it would be good to [leave that to the task force to] look at what drills and exercises are going to be required of the people covered by this. The commissioner and her staff were very forthcoming with this information, but perhaps everyone in industry would feel more comfortable if these are negotiated before the legislation is passed, which I understand is the approach you are taking now. Number 0509 CHAIR BARNES affirmed that. She said work is underway on SCR 1, and the pre-conference committee will meet immediately upon adjournment of this meeting to take up SCR 1. CHAIR BARNES turned attention to Amendment 1, being proposed by Representative Phillips [1-LS1464\Z.1, Chenoweth, 4/25/00]. It read: Page 1, lines 3 and 4: Delete "authorizing inspection of nontank vessels and trains;" Page 3, line 28, through page 4, line 15: Delete all material. Renumber the following bill sections accordingly. Page 5, line 30: Delete "secs. 1 - 6" Insert "secs. 1 - 4" Page 5, line 31: Delete "Sections 7 and 8" Insert "Sections 5 and 6" Page 6, line 1: Delete "sec. 9" Insert "sec. 7" Number 0562 REPRESENTATIVE PHILLIPS made a motion to adopt Amendment 1. She explained that the basic purpose of the amendment is to remove the issue of inspections from the bill before the committee. The amendment deletes the reference to inspections in the title and deletes a section in the bill that deal with inspections. She stated: In Senator Pearce's letter to Chair Barnes, she did not discuss the issue of inspections to be included in the bill, only the financial responsibility and the creation of a task force. I do not think this inspection authority is needed to check the certificate of financial responsibility, and that this [inspection] definitely is something that should be left up to the task force. To set procedures for inspections could find us and the department in a matter of great cost .... REPRESENTATIVE PHILLIPS said she had questioned, since early in the session, whether it is the DEC's role to be involved in inspections. The Coast Guard already does inspections, and the observer program already inspects the processor ships. She asked where the DEC fits in here, doing inspections. She said there are a lot of questions there, and it is something that the task force should address and come back with recommendations on. Number 0652 REPRESENTATIVE JOULE asked whether it is the intent of the amendment to remove inspections from the railroad, too. REPRESENTATIVE PHILLIPS said she was addressing the issue of inspections in relation to the whole bill, and leaving it to the task force to come back with recommendations [including both ships and trains]. CHAIR BARNES, at the request of Representative Masek, invited Senator Pearce to come forward. [Senator Pearce deferred to the representative from DEC to answer the questions regarding inspection.] Number 0718 LARRY V. DIETRICK, Director, Division of Spill Prevention and Response, Department of Environmental Conservation, came forward to testify. He said the inspection section of the proposed legislation does not create or make any new activities subject to inspection. It simply extends the existing [DEC] authority to nontank vessels and to the railroad. He added, "The language that you have here is actually the language that was crafted in 1990 in HB 567, when there was also quite a debate." He said the existing inspection language focuses DEC inspections on areas over which that agency has jurisdiction, which basically consist of the response capability and prevention aspects. The department has reviewed this inspection language; it is not in conflict with the recent U.S. Supreme Court decision that allows states to verify and have continued oversight for spill- contingency plans and proof of financial responsibility. Mr. Dietrick stated: Because this has been such an important issue to Alaska over the years, DEC since 1992 has developed a detailed memorandum of agreement with the Coast Guard that outlines in explicit terms our respective roles for vessel inspection activities to ensure coordination, eliminate duplication, prevent overlap and avoid any jurisdictional conflicts under state, federal or international law. In addition, ... we have a very small staff of people who conduct these activities, all of whom have had the appropriate training or extensive prior experience conducting vessel inspections with the Coast Guard. MR. DIETRICK handed out copies of the existing agreement with the Coast Guard that outlines current procedures and coordination. He said DEC would prefer to have the inspection language left in the bill, "but we also understand the possibility that the further things that would be subject to inspection would be identified in the work group, as indicated." Until the task force outlines anything more detailed, the only things that would be checked by DEC would be to verify [each ship's] certificate of financial responsibility and oil cargo capacity. Number 0862 REPRESENTATIVE MASEK asked Mr. Dietrick how this will affect the inspection work DEC is currently doing. MR. DIETRICK said the proposed CS [Version Z] provides for financial responsibility to begin in December of this year, so DEC would have to go through rule making and disseminate that information to allow compliance with the financial responsibility provisions by the effective date. Between that time and the time the legislature reconvenes would be the only window [of time] in which DEC might conduct spot inspections for financial responsibility. However, the DEC probably would not be doing much during that window; the department's efforts will be toward working on the task force. Number 0914 REPRESENTATIVE MASEK, inquired, "Then this amendment won't affect too much of what you are planning to do?" MR. DIETRICK said it would not, because initially it would cover only that which immediately takes effect, the financial responsibility provisions. CHAIR BARNES clarified, "Then it really wouldn't hurt anything if the amendment passed and it [inspection] was taken up as part of the task force, in the task force report?" MR. DIETRICK said that was correct: the only thing DEC would not be able to do would be to actually check to make sure the financial responsibility existed for the vessels [and railroad]. Number 0958 CHAIR BARNES asked, "Couldn't you require financial compliance without inspecting the vessels - through certification, through an affidavit, or some other manner - without having to physically board a vessel?" MR. DIETRICK replied that DEC would have to look to other means, perhaps working with the Coast Guard, to corroborate how some single-voyage vessels have met the requirement. Number 0990 REPRESENTATIVE COWDERY recalled that he previously had asked about bonding, "which seems to be the way that most inspections or requirements of contracts or whatever is handled where there have to be some guarantees." He then asked how far offshore DEC has jurisdiction. MR. DIETRICK said state waters extend three miles offshore. He added that DEC would not be boarding offshore. The inspections are coordinated with the Coast Guard ahead of time, and they typically take place while the vessels are in port. CHAIR BARNES asked, "So, if this amendment were adopted, you could probably work out something with the Coast Guard that when they board to check for federal waters beyond the three-mile [limit], that they supply you with that information?" MR. DIETRICK said DEC has a good working relationship with District 17 of the U.S. Coast Guard in Alaska, and he thinks it is likely that they could work something out. Number 1055 REPRESENTATIVE PHILLIPS observed that Joe Kyle had just said the foreign ships have to submit financial responsibility through the ship's representative to the Coast Guard. "The Coast Guard has that information," she concluded. "I can't imagine in any case that the Coast Guard wouldn't be supplying DEC with the information if they requested." MR. DIETRICK pointed out that the Coast Guard would have to add a procedure to their duties to check for the state certificate of financial responsibility. "The one for which they check is the one that's required under federal law, under the Oil Pollution Act," he added, "and so we would be asking them ... to also check for the state certificate." Number 1099 REPRESENTATIVE JOULE noted that the effective date on this legislation, with or without the [inspection] section, is September 1 of this year. He said he was wondering how many nontank vessels would be involved. Also, if the task force comes back with proposed legislation, would anything prohibit the legislature from shooting for an immediate effective date? MR. DIETRICK said the estimated number, discussed in Senator Pearce's work group sessions, has been about 1,000 nontank vessel voyages per year. Number 1190 REPRESENTATIVE COWDERY asked Mr. Dietrick whether DEC had personnel capable of determining if the financial responsibility was valid, or if that work would need to be subcontracted. CHAIR BARNES asked Mr. Dietrick to answer another question at the same time: "Since you already have tanker vessels that have to comply with this provision, would you not already have that means in place?" MR. DIETRICK said he was sure that was correct. Those procedures in place now are to receive from tankers the documentation that demonstrates their financial responsibility. They [tanker owners] submit that to DEC ahead of time, it is reviewed, and then DEC issues a certificate of financial responsibility, he explained. Number 1250 CHAIR BARNES summarized, "They are literally going to have to show you that they have financial responsibility, and if our amendment were to pass, they'd still have to do that. The only thing you wouldn't have is boarding the vessels?" MR. DIETRICK said that is correct. Under the law, they should still provide DEC with that information up front, and DEC should still issue the certificate up front for them to be in compliance. Number 1275 CHAIR BARNES followed up: "And then you could, if her amendment were to pass, take that up in the working group [task force] under SCR 1, correct? You'd really not lose anything if our amendment passed, ... other than boarding the vessels." MR. DIETRICK said that is correct. He added that DEC would have serious concern if the inspection language were taken out now, because the financial responsibility requirements would take effect, leaving DEC without the ability over the long haul to do the spot checks if the legislature chose not to act next session. Number 1315 REPRESENTATIVE COWDERY asked whether DEC has people trained in accounting and financial matters, qualified to determine the validity of documents and things like that. MR. DIETRICK said DEC has one person who specializes in that area, who works with the risk management division and other insurers to validate the documents and determine that they [ship owners] have the financial resources and that the money is available. CHAIR BARNES invited further questions and comments. Hearing none, she asked if there was any objection to Representative Phillips's motion to adopt Amendment 1. Number 1362 REPRESENTATIVE MASEK objected. Upon a roll call vote, Representatives Cowdery, Phillips, Green, Joule and Barnes voted in favor of Amendment 1. Representative Masek voted against it. Therefore, Amendment 1 was adopted by a vote of 5-1. Number 1396 REPRESENTATIVE PHILLIPS moved to adopt a House concurrent resolution (HCR) that would provide authority to delete the inspection phrase from the title. She indicated a draft HCR to allow the title change, version A, was before the committee. REPRESENTATIVE MASEK objected. Upon a roll call vote, Representatives Cowdery, Phillips, Green, Joule and Barnes voted in favor of adopting a House concurrent resolution; Representative Masek voted against it. Therefore, it was adopted by a vote of 5-1. [This HCR later was numbered HCR 28; version D (1-LS1638\D) of HCR 28 was labeled as having been introduced 4/28/00 by the House Finance Committee.] Number 1445 CHAIR BARNES addressed fiscal notes in committee packets. She acknowledged that a new fiscal note had been received the previous day from DEC, which is proposing that DEC be given a new person under this legislation. She stated, "I would propose to the committee that we zero out the new person, that they should be able to accomplish this, since they have been working on it." Number 1467 REPRESENTATIVE PHILLIPS asked if that [person] was for the task force or for the bill. [There was inconclusive informal discussion.] Number 1474 CHAIR BARNES said the fiscal note to which she was referring was at the top of the packet and marked HCS CSSB 273(WTR). She explained: They're asking for $210,600, and I think that personal services line should be zeroed out. I'd like to know why they need $125,400 for contractual [work], and I'd like to know why they need new equipment .... I'm wanting us to authorize the travel, because I know there will be travel. I want to understand what the contractual is going to be used for, and zero out everything else, because we are at a point where any huge fiscal note coming tied to anything may be zeroed out altogether. Number 1524 SENATOR PEARCE said the conference committee on the operating budget has been keeping track of the fiscal notes and has had this number plugged in. CHAIR BARNES interjected, "They didn't have this number. They had the original $125,000." Number 1543 SENATOR PEARCE reminded the committee that there had been two fiscal notes (plus the railroad's) with the original bill. "Those two added together were more than $210,000," she said. CHAIR BARNES replied, "But the railroad was non-general fund dollars, so that wouldn't fall into our budget. SENATOR PEARCE said that is right, but in addition [to the railroad dollars], there were two fiscal notes accompanying the original SB 273. She suggested that Mr. Dietrick can speak to the [issue of the] environmental specialist. Regarding the contractual services, there are some technical issues to be resolved. She stated: One of the reasons that we haven't been able to go forward with the actual bill was because the industry was complaining that they didn't know what the specifics were going to be that were required under the planning standards. There needs to be some work ... done to figure out what the best technology ... CHAIR BARNES interjected, "So that's what the contractual is." SENATOR PEARCE continued, "... the contractual language is to try to get us to that point." CHAIR BARNES stated, "And that was the original." SENATOR PEARCE explained that the position in the fiscal note for the bill is for a person to work with the task force, since the task force fiscal note does not provide for a person to staff the task force. Number 1601 REPRESENTATIVE PHILLIPS said she was a little confused, explaining, "I have two fiscal notes from DEC, both signed by Larry Dietrick; one is for $338,000 ..." CHAIR BARNES said that was correct. REPRESENTATIVE PHILLIPS continued, " ... and that's for the bill." CHAIR BARNES emphasized, "The original bill." REPRESENTATIVE PHILLIPS continued, "And the other is for $210,000, and that's specifically for the task force." SENATOR PEARCE said no, the $338,000 figure is no longer valid, and the $210,000 is for the bill. REPRESENTATIVE PHILLIPS countered, "No, it says, 'will assist with the task force on motorized oil transport,' and then, 'is tasked with managing participating in, and staffing the task force.'" SENATOR PEARCE called attention to the upper right-hand corner of the fiscal note in question. "It's the fiscal note for the bill," she explained. "The bill also speaks to the task force." The task force also has a fiscal note, she said, but it does not include funding for a person to work on the task force. CHAIR BARNES explained that she has no problem with the contractual and travel expenses, but she thinks DEC should be able to handle the work with the personnel it already has, especially with [the state] being tight on money. She recommended that the committee approve the fiscal note for $143,700. REPRESENTATIVE PHILLIPS pointed out that the original fiscal note for the task force work was for $130,000. REPRESENTATIVE JOULE asked, "You are taking out the personnel services to have the department [DEC] just absorb that with their existing personnel? Is that right?" CHAIR BARNES indicated that was correct; there were general comments about the two fiscal notes. Number 1769 MR. DIETRICK explained that there are two fiscal notes because there are two pieces of legislation. The original bill [SB 273] had a fiscal note for $338,000. That is now obsolete. After SB 273 was replaced with a proposed CS [Version Z], that fiscal note was revised downward to $210,000. The third fiscal note in the packet, for $132,000, goes with the resolution, SCR 1. The $210,000 will kick in with the proposed CS in the fall; it includes funding for DEC to document the nontankers' financial responsibility. The $132,000 provides funding for the task force, which was mandated both in the CS and ... CHAIR BARNES interjected, "And that's what I was trying to give you the money to do, to do the task force." She addressed Mr. Dietrick: You have tanker response right now, that you have a person that has to do that. And you can't tell me that that person is busy all the time. We're looking at the bonding, et cetera, of the tankers, because it couldn't possibly be 100 percent of a person's time they spend working on seeing that the tankers are certified. There couldn't be that many tankers in the whole world. MR. DIETRICK explained that DEC estimates that 400 additional vessels [the nontank ships] will be required to go through the financial responsibility review. Many of them are tramp freighters that operate on 24-hour notice over the weekend. He said it is going to be difficult to stretch DEC's current resources to get the additional vessels reviewed and processed and to keep up with the turnaround times so as not to impede the trade. Number 1854 REPRESENTATIVE PHILLIPS referred to the analysis section in the fiscal note for SB 273, and read: One Environmental Specialist III in Juneau will initially assist with the Task Force on Motorized Oil Transport and will subsequently review financial responsibility documentation, maintain the associated database, and issue certificates of financial responsibility for nontank vessels and the railroad. SENATOR PEARCE then read from the same document: The DEC is tasked with managing, participating in, and staffing a Task Force on Motorized Oil Transport. The task force is directed to meet as frequently as needed to prepare a report to the Twenty-second Alaska State Legislature. Contractual services will be for assistance with technical issues in applying the oil spill prevention and response rules to the Alaska Railroad and the various classes and categories of nontank vessels operating in the different areas of the state. The completed report will include recommendations on changes to the statutes and regulations. Additionally, a facilitator will be retained to assist with the complexities in bringing together the divergent and often contentious views of the participating task force members. Travel and per diem is for department staff to participate in task force meetings. REPRESENTATIVE PHILLIPS concluded that three-fourths of the analysis is based on the task force work, rather than just the person or job of reviewing financial responsibility documentation, maintaining the associated database and issuing certificates of financial responsibility. She asked, "What percent of this $210,000 can be removed [be] here and attributed to the task force fiscal note in SCR 1?" MR. DIETRICK explained that it is roughly the difference between the two. The reason it was bumped up was to accommodate the Environmental Specialist III position was to process the financial responsibility. The difference between the two is to cover the cost of that Environmentalist III position. REPRESENTATIVE PHILLIPS asked if the $210,000 would cover both the task force and processing the bill. MR. DIETRICK said that is correct, processing the 400 financial responsibility requirements for the new vessels. CHAIR BARNES pointed out that the fiscal note previously had covered the inspection of the nontank vessels. MR. DIETRICK explained: I think ... you'll see in the note here that the primary workload is going to be processing and review; this person is not the person that's trained to go onboard. That would be done with existing staff. We're not adding anybody to do that. CHAIR BARNES noted the request is $58,477 for a new position. MR. DIETRICK agreed. CHAIR BARNES indicated she does not believe that the House Finance Standing Committee is going to fund that position. She believes that if [this current committee] took one of the fiscal notes and gave them $143.7 thousand, which would cover contractual and travel, they would be in good shape, because it is more than they originally asked for and less than they asked for in this one. MR. DIETRICK repeated his explanation that the $132,000 was to cover the costs of the task force to do the work [now mandated by the resolution]. DEC expects to contract for a facilitator and specialist, as needed, to deal with any issues. The amount in addition to that is to fund the position to process the financial responsibilities. CHAIR BARNES pointed out that they are getting $125,400 for the facilitator. MR. DIETRICK added that it also covers travel expenses for the task force. Number 1990 REPRESENTATIVE PHILLIPS addressed Mr. Dietrick: The department [DEC] has been working on this issue for quite some time this winter, and I know that you've had a lot of meetings with a lot of different people. What has been the cost to the department? We didn't give you extra money during the session to work on this issue. What was the amount of money that you identified as working on this issue in the last couple of months without an additional person? Number 2007 MR. DIETRICK said DEC has not tallied the additional cost, but the work has taken up a considerable portion of his time. DEC also has been responding to requests for information, and has talked to whomever is going to be affected, such as the Marine Highway System or people from out of state. But the bulk of it has been for his time, working back and forth between the DEC office and the capitol. Number 2027 SENATOR PEARCE noted that adding the additional ships - even just [verifying] financial responsibility - is not an insubstantial amount of work, "certainly in the first round of making sure that we have all the proper paperwork, all the proper certification." She continued: I would suggest that rather than just zeroing out the person - and I would note that it [the money] comes from the 470 fund, as opposed to the general fund - I would make it a one-year position so that they can get through the task force and the initial certification of all the ships' financial responsibility. Make it a temporary person, and then when you come back with the legislation next year, look and see whether the work load that will be attached to the contingency plans is sufficient to need additional staff on an ongoing basis. CHAIR BARNES replied: ... While I have tremendous respect for you and for your opinion, I have yet to ever see a person come onboard as a temporary that didn't become an instant, full-time, for-God-and-[for]ever person. ... It seems to me that we could give you the $210,000 on this fiscal note and make sure that there is absolutely no money for SCR 1. Is that agreeable? CHAIR BARNES, hearing no response, said she would entertain a motion to move the bill from committee. Number 2141 REPRESENTATIVE JOULE made a motion to move from committee SB 273, Version Z [1-LS1464\Z, Chenoweth, 4/25/00], as amended, with a title change and the House concurrent resolution, and with individual recommendations and the accompanying fiscal note to HCS CSSB 273(WTR) in the amount of $210,000, knowing that it will be the only fiscal note and that there is a zero fiscal note for the task force. Number 2151 REPRESENTATIVE MASEK objected. She explained that she will support this bill but objects to the way it has been handled. Number 2200 CHAIR BARNES said she thinks the sponsor "did a very fine thing" when she came forward with a proposed CS, which ensured that there would be a piece of legislation that everyone could live with. REPRESENTATIVE JOULE remarked that he had voted for the amendment [Amendment 1] "with the anticipation that if I am back in this body that I hope to see this legislation very early, and I would encourage very strongly that those involved in this process will move this whole issue forward so that we can deal with this and get it out of here early in session." Number 2232 CHAIR BARNES asked whether there was further debate and whether the objection was maintained. There being no objection, HCS CSSB 273(WTR) was moved out of the House Special Committee on World Trade and State/Federal Relations.