Legislature(2017 - 2018)SENATE FINANCE 532

03/08/2018 09:00 AM Senate FINANCE

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                 SENATE FINANCE COMMITTEE                                                                                       
                       March 8, 2018                                                                                            
                         9:01 a.m.                                                                                              
9:01:58 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair MacKinnon called the Senate Finance Committee                                                                          
meeting to order at 9:01 a.m.                                                                                                   
MEMBERS PRESENT                                                                                                               
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Click Bishop, Vice-Chair                                                                                                
Senator Peter Micciche                                                                                                          
Senator Donny Olson                                                                                                             
Senator Gary Stevens                                                                                                            
Senator Natasha von Imhof                                                                                                       
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Rachel  Hanke,  Staff,  Senator  Peter  Micciche;  Commander                                                                    
Graham  Lanz, United  States  Coast  Guard, Juneau;  Kristin                                                                    
Ryan, Director,  Division of Spill Prevention  and Response,                                                                    
Department of  Environmental Conservation,  Juneau; Fabienne                                                                    
Peter-Contesse, homeowner, Juneau.                                                                                              
SB 92     VESSELS: REGISTRATION/TITLES; DERELICTS                                                                               
          SB 92 was HEARD and HELD in committee for further                                                                     
SB 158    OIL/HAZARDOUS SUB.:CLEANUP/REIMBURSEMENT                                                                              
          SB 158 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
SENATE BILL NO. 92                                                                                                            
     "An  Act relating  to abandoned  and derelict  vessels;                                                                    
     relating to  the registration  of vessels;  relating to                                                                    
     certificates  of title  for  vessels;  relating to  the                                                                    
     duties  of the  Department of  Administration; relating                                                                    
     to the  duties of the Department  of Natural Resources;                                                                    
     establishing  the derelict  vessel prevention  program;                                                                    
     establishing  the  derelict vessel  prevention  program                                                                    
     fund; and providing for an effective date."                                                                                
9:03:02 AM                                                                                                                    
Co-Chair MacKinnon directed attention  to SB 92. she relayed                                                                    
that  the committee  had heard  the bill  on March  1, 2018;                                                                    
public hearing had been opened and closed.                                                                                      
Vice-Chair   Bishop  MOVED   to  ADOPT   proposed  committee                                                                    
substitute  for  SB  92,   Work  Draft  30-LS0481\U  (Bruce,                                                                    
RACHEL  HANKE, STAFF,  SENATOR PETER  MICCICHE, stated  that                                                                    
most  of  the  changes  to  the  bill  were  technical.  She                                                                    
discussed the  substantive changes detailed  on "Explanation                                                                    
of Changes Ver.O to Ver.U"(copy on file):                                                                                       
     16. Page  13, Lines 19,  20: Rewrites to  read "develop                                                                    
     and  maintain a  publicly available  database of  known                                                                    
     derelict  vessels in  the state."  This clarifies  that                                                                    
     this  database is  only for  existing derelict  vessels                                                                    
     and not for all vessels.                                                                                                   
     17. Page  13, Line 31:  Adds new subsection  (4), which                                                                    
     allows the  fund to be  used to pay  for administration                                                                    
     18.  Page 14,  Lines  11-28: Adds  new subsection  that                                                                    
     grants departments,  municipalities and  peace officers                                                                    
     to enforce the chapter.                                                                                                    
9:05:26 AM                                                                                                                    
Co-Chair MacKinnon  WITHDREW her  OBJECTION. There  being NO                                                                    
further OBJECTION, it was so ordered.                                                                                           
9:05:54 AM                                                                                                                    
Ms.  Hanke  gave a  high-level  overview  of the  bill.  She                                                                    
detailed  that  SB  92  rewrote AS  30.30,  which  had  been                                                                    
largely unchanged  since the 1970s.  She said that  the bill                                                                    
would  make procedures  for  dealing  with derelict  vessels                                                                    
through the state clear  for local governments, strengthened                                                                    
vessel  owners due  process  rights,  expanded current  boat                                                                    
registration to  capture U.S. Coast Guard  documented vessel                                                                    
and barges, allowed for the  titling of vessels, and created                                                                    
a  Derelict  Vessel  Program Prevention  Fund.  The  revenue                                                                    
sources  for the  fund were  the  barge registration  funds,                                                                    
titles, federal receipts, donations,  vessel sales under the                                                                    
chapter,  and  civil  penalties.  The  fund  would  pay  for                                                                    
establishment  and  administration  of the  Derelict  Vessel                                                                    
Prevention  Program, education  and  community outreach,  an                                                                    
advisory  council, and  the Derelict  Vessel data  base. The                                                                    
fund may  pay for reimbursement  costs of vessel  removal on                                                                    
state    and    municipal    property,    development    and                                                                    
implementation  of programs  to incentivize  compliance with                                                                    
the chapter, subsidizing  Derelict Vessel Prevention Program                                                                    
projects, and fund administration.                                                                                              
9:07:19 AM                                                                                                                    
Senator Stevens understood that  the requirement for a title                                                                    
did  not  include a  requirement  for  small boats  such  as                                                                    
skiffs.  He  wondered whether  there  was  a size  threshold                                                                    
included in the legislation.                                                                                                    
Ms. Hanke stated  that all boats required  to register would                                                                    
be titled.                                                                                                                      
Senator  Stevens  asked  again  whether  the  bill  excluded                                                                    
vessels such as skiffs.                                                                                                         
Senator Micciche stated that all  motorized boats and barges                                                                    
would be  required to register  and have a title.  He stated                                                                    
that he was  working with the Department  of Motor Vehicles.                                                                    
He said that  the bill did not include  vessels like canoes.                                                                    
All motorized vessels were required to have a title.                                                                            
Senator  Stevens  asked whether  a  skiff  with an  outboard                                                                    
motor  (and moved  by a  trailer) would  be included  in the                                                                    
requirement. He asserted that the  danger of a skiff sinking                                                                    
and causing problems was not  equivalent to the danger cause                                                                    
by  a  fishing boat  or  barge.  He wondered  whether  there                                                                    
should be an exclusion for smaller vessels.                                                                                     
Senator Micciche thought the topic  was worthy of discussion                                                                    
and noted  that excluding  smaller vessels would  shrink the                                                                    
size  of the  fund. He  thought that  smaller vessels  could                                                                    
sometimes be  part of  the problem.  He reiterated  that the                                                                    
issue   was  worth   consideration   but   would  remove   a                                                                    
significant amount of the funding for the fund.                                                                                 
9:11:12 AM                                                                                                                    
Senator  Stevens wondered  what the  requirements under  the                                                                    
bill would be to register a Boston Whaler.                                                                                      
Senator Micciche  explained that the  bill would add  $2 per                                                                    
year  to the  registration fee,  as well  as a  one-time $20                                                                    
title  fee that  would  extend  for as  long  as the  person                                                                    
registering owned the boat.                                                                                                     
9:12:02 AM                                                                                                                    
Co-Chair Hoffman  asked whether the  cost would be  the same                                                                    
for an 18-foot skiff and a large yacht.                                                                                         
Senator Micciche replied in the affirmative.                                                                                    
Ms. Hanke stated  that all boat registration  would cost $30                                                                    
under the  bill; except  for barges,  which would  cost $75;                                                                    
titling of vessels would be $20 across the board.                                                                               
Co-Chair  Hoffman  thought  the  committee  should  consider                                                                    
different fees for different sizes  of vessels. He discussed                                                                    
different size thresholds. He thought  the bill should treat                                                                    
the registration of  various sizes of boats  in an equitable                                                                    
Senator Micciche agreed.  He added that the  current cost of                                                                    
$24 was applied to  all state registered vessels, regardless                                                                    
of size. This would remain  the same whether the bill passed                                                                    
committee.  He   said  that  the  legislation   was  largely                                                                    
targeted  at  bigger vessels.  He  noted  that the  original                                                                    
version of the bill had  included a differential on cost and                                                                    
well  as an  insurance  requirement for  larger vessels.  He                                                                    
thought  that  the  $20  title fee  could  be  augmented  to                                                                    
recognize vessel size.                                                                                                          
Co-Chair   Hoffman  suggested   setting   policy  now   that                                                                    
recognized the issue.                                                                                                           
9:16:20 AM                                                                                                                    
Co-Chair MacKinnon recapped that  there were boats in Alaska                                                                    
waters  that were  abandoned and  afloat and  were sometimes                                                                    
harming the  environment and creating  a safety  hazard. She                                                                    
concluded that the intent of  the bill was to alleviate this                                                                    
Senator Micciche added that there  were thousands of vessels                                                                    
that were  derelict and abandoned, and  the problem affected                                                                    
the entire state. He detailed  that there were 3,100 vessels                                                                    
between 28  feet and 59  feet that  were more than  45 years                                                                    
old, which he  believed was a precursor  to future problems.                                                                    
He reiterated that  the bill was largely  targeted at larger                                                                    
vessels.  He argued  that knowing  who  owned vessels  would                                                                    
help to deal with derelict vessels before they sink.                                                                            
Co-Chair MacKinnon  noted that Senator Micciche  was open to                                                                    
suggestions.  She discussed  derelict cars  and trucks,  for                                                                    
which individuals  were held  accountable, and  thought that                                                                    
the issue was similar.                                                                                                          
9:20:01 AM                                                                                                                    
Senator Stevens  expressed concern  about the  definition of                                                                    
"derelict"  and  wondered what  criteria  would  be used  to                                                                    
determine whether a vessel was derelict.                                                                                        
Senator Micciche said that you  could tell that vessels were                                                                    
derelict  by looking  at  them. He  reiterated  that it  was                                                                    
important  that vessels  owners be  known in  order to  hold                                                                    
derelict vessel owners accountable.  He argued that the bill                                                                    
provided a  method for  dealing with  the problem  before it                                                                    
became expensive for the state.                                                                                                 
Co-Chair MacKinnon  stated that she wanted  the committee to                                                                    
provide a clear definition of derelict vessels.                                                                                 
9:24:08 AM                                                                                                                    
COMMANDER GRAHAM  LANZ, UNITED  STATES COAST  GUARD, JUNEAU,                                                                    
explained that  the Coast  Guard did  not have  a definition                                                                    
for derelict or abandoned vessels.  He stated that the Coast                                                                    
Guard regulated vessels on their intended service.                                                                              
Co-Chair  MacKinnon  used  the analogy  of  overdue  parking                                                                    
Senator  Micciche   thought  the  definition  of   the  term                                                                    
derelict was present in the bill.                                                                                               
Ms. Hanke  stated that  Section 22  on page  12 of  the bill                                                                    
provided  various  situations in  which  a  vessel would  be                                                                    
considered derelict.                                                                                                            
Vice-Chair  Bishop   asked  whether  the  Coast   Guard  had                                                                    
protocol   for  what   determined  whether   a  vessel   was                                                                    
seaworthy. Theoretically,  a derelict  vessel could  be made                                                                    
seaworthy again with enough work and a reinspection.                                                                            
Commander Lanz  answered in the  affirmative. He  added that                                                                    
the Coast  Guard would  not make the  decision on  whether a                                                                    
boat was no longer fixable, just  when it was no longer safe                                                                    
to get underway.                                                                                                                
9:27:26 AM                                                                                                                    
Co-Chair MacKinnon  directed Senator  Micciche to  work with                                                                    
Senator  Stevens on  language defining  derelict. She  asked                                                                    
Senator Stevens to provide feedback  on the language already                                                                    
found in Section 22.                                                                                                            
Senator Micciche  thought the section suggested  that if the                                                                    
vessel  was  in immediate  danger  of  sinking, had  already                                                                    
sunk, or if  ownership could not be determined,  it would be                                                                    
considered derelict.                                                                                                            
Co-Chair MacKinnon  supported the bill. She  referenced page                                                                    
12, lines 8  and 9, which cited environmental  concerns as a                                                                    
factor for  defining derelict vessels. She  thought that the                                                                    
bill could be clearer in the issue.                                                                                             
9:29:43 AM                                                                                                                    
Senator   von  Imhof   recalled   previous  testimony   that                                                                    
referenced  derelict versus  abandoned  vessels. She  stated                                                                    
that there  were different consequences for  derelict vessel                                                                    
and abandoned vessels.                                                                                                          
Co-Chair  MacKinnon  supported  the   concept  of  a  tiered                                                                    
approach to fees as suggested  by Co-Chair Hoffman. She felt                                                                    
that lager vessels  were more likely to  cause public safety                                                                    
issues than smaller vessels.                                                                                                    
Senator Micciche  stated that  separating the  definition of                                                                    
derelict  from  abandoned  had no  function.  He  felt  that                                                                    
either way  the vessel would need  to be dealt with  and the                                                                    
legislation  would provide  additional  tools  to deal  with                                                                    
those vessels.  He admitted that  there was further  work to                                                                    
be done on the bill.                                                                                                            
SB  92  was   HEARD  and  HELD  in   committee  for  further                                                                    
SENATE BILL NO. 158                                                                                                           
     "An Act  relating to oil  and hazardous  substances and                                                                    
     waiver of cost recovery  for containment and cleanup of                                                                    
     certain  releases;  and   providing  for  an  effective                                                                    
9:33:39 AM                                                                                                                    
KRISTIN  RYAN, DIRECTOR,  DIVISION OF  SPILL PREVENTION  AND                                                                    
RESPONSE, DEPARTMENT OF  ENVIRONMENTAL CONSERVATION, JUNEAU,                                                                    
discussed  SB 158.  The bill  would offer  cost recovery  to                                                                    
homeowners  when they  had  a release  of  oil of  hazardous                                                                    
substance  from   equipment  used   for  space   heating  or                                                                    
electrical  power generation.  Current statutes  require the                                                                    
Department  of Environmental  Conservation to  seek complete                                                                    
cost  recovery for  cleaning up  spilled petroleum  or other                                                                    
hazardous  substances.   This  can  deter   homeowners  from                                                                    
reporting  or  cooperating  with the  department  when  they                                                                    
experience a  spill at their  home, such  as a spill  from a                                                                    
heating oil  tank. She added  that the language of  the bill                                                                    
had been crafted specifically for  small homeowners that due                                                                    
to lack of expertise were least able to deal with a spill.                                                                      
9:37:42 AM                                                                                                                    
Ms. Ryan discussed  the fiscal impact of the  bill. She said                                                                    
that costs  related to  spills ranged  from $200  to $4,000.                                                                    
She  believed that  guidance from  the  department was  cost                                                                    
effective.  She stated  that the  money currently  collected                                                                    
from cost  recover went into  the Prevention  Account, which                                                                    
was utilized  by the legislature  to provide  the division's                                                                    
annual  operating  costs.  She relayed  that  several  other                                                                    
sources  of  funds  that  went into  the  account  would  be                                                                    
adequate to cover  costs into the future. She  felt that the                                                                    
reduction  in revenue  was  worth the  value  that would  be                                                                    
gained   by  cleaning   up  the   environment  and   helping                                                                    
individuals through a stressful situation.                                                                                      
9:39:55 AM                                                                                                                    
Senator von Imhof  noted that she had heard the  bill in the                                                                    
Senate Resources Committee. She  recalled testimony that had                                                                    
clarified  the  reticence  of   homeowners  to  contact  the                                                                    
department  because  of  the  financial  repercussions.  She                                                                    
asked how much the fuel tax the division received.                                                                              
Ms.  Ryan  replied  that the  division  received  $.095  per                                                                    
Co-Chair MacKinnon clarified that  the question was how much                                                                    
was received in total on an annual basis.                                                                                       
Ms. Ryan  stated that  there were 2  sources of  monies that                                                                    
went to the  fund. One was the $.095 per  gallon for refined                                                                    
fuel, which she believed would  end up generating $6 million                                                                    
per  year; additionally,  there was  a $.04  per barrel  tax                                                                    
from  Trans-Alaska   Pipeline  System  (TAPS).   Because  of                                                                    
declining  production,  there  had  been a  decline  in  the                                                                    
revenue, which had prompted the refined fuel tax.                                                                               
9:41:54 AM                                                                                                                    
Vice-Chair  Bishop  asked  about  the  release  amount  that                                                                    
constituted a recordable spill.                                                                                                 
Ms.  Ryan stated  that the  amount varied  depending on  the                                                                    
receiving environment.  She stressed that all  spills should                                                                    
be  reported to  the division.  She said  that water  spills                                                                    
should  be  reported  immediately,  land  spills  were  less                                                                    
immediate  depending   on  size.  She  relayed   that  large                                                                    
companies on  the North Slope  provided a monthly  report of                                                                    
spills, rather than reporting each minor spill.                                                                                 
Co-Chair  MacKinnon  asked  Ms.  Ryan to  walk  through  the                                                                    
Sectional Analysis.                                                                                                             
Ms. Ryan addressed the Sectional Analysis (copy on file):                                                                       
     Section 1 (Page  1, lines 4 -8):  provides an exception                                                                    
     to existing mandatory cost recovery requirements.                                                                          
     Section 2 (Page 1, line  9   13): allows the Department                                                                    
     to adopt regulations to waive  cost recovery efforts in                                                                    
     situations defined by the proposed legislation.                                                                            
     Section  3 (e)  (Page 1,  line 14    Page  2 line  16):                                                                    
     Establishes  reasons  the  Department  may  waive  cost                                                                    
     recovery efforts. The Department  must find the release                                                                    
     was from a home or  building with four or fewer housing                                                                    
     units; the release was not  willful and was reported to                                                                    
     the   Department   immediately;  the   homeowner   took                                                                    
     immediate  measures to  stop and  contain the  release;                                                                    
     and the  homeowner granted access  to the  property and                                                                    
     is cooperative.                                                                                                            
     Section  4  (Page  2,  lines  17-22):  establishes  the                                                                    
     ability for the Department to adopt regulations.                                                                           
     Section 5 (Page 2, lines  23-26): makes sections 1-3 of                                                                    
     the legislation retroactive to January 2018.                                                                               
     Section 6 (Page  2, line 27): allows  the Department to                                                                    
     adopt regulations under section 4 immediately.                                                                             
9:44:06 AM                                                                                                                    
Senator Stevens asked for an  explanation of the term "small                                                                    
Ms.  Ryan  explained that  any  sized  home would  meet  the                                                                    
exemption requirement.                                                                                                          
Co-Chair  MacKinnon  referenced  Ms. Ryan's  comments  about                                                                    
unexpected exemptions. She requested further details.                                                                           
Ms.  Ryan stated  that the  most  significant exemption  was                                                                    
municipalities that  provided fuel for heat  generation. She                                                                    
recalled  that  the initial  fiscal  note  had assumed  $7.6                                                                    
million  would  be  generated,   which  had  dropped  to  $6                                                                    
million. She  said that the most  significant exemptions had                                                                    
been for municipalities and power generation in villages.                                                                       
Ms. Ryan  stated that  there was a  section in  statute that                                                                    
spoke to the exemptions.                                                                                                        
Co-Chair  MacKinnon  asked  whether   there  was  spills  in                                                                    
municipalities that the state was responsible for.                                                                              
Ms. Ryan  affirmed that there  wherever there was  fuel used                                                                    
there would be  spills. She said that the first  goal was to                                                                    
have the responsible party address the problem.                                                                                 
9:47:08 AM                                                                                                                    
Co-Chair MacKinnon OPENED public testimony.                                                                                     
9:47:28 AM                                                                                                                    
FABIENNE  PETER-CONTESSE,  HOMEOWNER, JUNEAU,  testified  in                                                                    
support  of  the  bill.  She   recounted  that  she  had  an                                                                    
underground  fuel  spill at  her  home  and had  immediately                                                                    
called   Department  of   Environmental  Conservation.   She                                                                    
detailed her  process working with  the department.  She had                                                                    
spent  many tens  of thousands  of dollars  to mitigate  the                                                                    
problem.  She lamented  that homeowner's  insurance did  not                                                                    
cover  her spill.  She expressed  appreciation for  the ease                                                                    
with which the  department's staff had worked  with her. She                                                                    
revealed that  overtime she began  to receive bills  for the                                                                    
day to  day operations  of the division.  She felt  that the                                                                    
billing of the  public put a barrier between  the public and                                                                    
the department. She shared that  she had recently received a                                                                    
letter and expected  that she would receive a  bill for them                                                                    
having written the letter. She  expressed concern for people                                                                    
who would be  financially burdened for clean  up efforts, on                                                                    
top of the stress of  dealing with the spill. She encouraged                                                                    
full support of the legislation.                                                                                                
9:51:52 AM                                                                                                                    
Vice-Chair  Bishop  appreciated  the testimony.  He  related                                                                    
that he had heard similar stories from constituents.                                                                            
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
Vice-Chair  Bishop   discussed  FN  1  from   Department  of                                                                    
Environmental  Conservation, OMB  component number  3094. He                                                                    
believed  that the  division had  effectively explained  the                                                                    
Senator Micciche  supported the  bill. He asked  whether DEC                                                                    
had increased its  outreach to the public  about the program                                                                    
and spill prevention measures.                                                                                                  
Ms. Ryan stated  that the division had spent quite  a bit of                                                                    
time  at  home  building association  meetings  and  various                                                                    
fairs  that highlighted  home  products.  She discussed  the                                                                    
concept of increasing prevention  and noted that most spills                                                                    
were occurring where  fuel was stored in  large volumes. She                                                                    
said  that  the division  only  regulated  tanks of  420,000                                                                    
gallons or larger and had  not role in prevention regualtion                                                                    
below  that  threshold.  She   stated  that  regulation  was                                                                    
recently  drafted  that  would   require  tanks  below  that                                                                    
threshold,  down to  13,000 gallons,  to  register with  the                                                                    
division. She  believed that building  relationships through                                                                    
providing  technical assistance  would improve  the dialogue                                                                    
surrounding the maintenance of tanks.                                                                                           
9:56:18 AM                                                                                                                    
Ms.  Ryan shared  that  the goal  was  setting standards  in                                                                    
regulation  but thought  this would  be  difficult to  apply                                                                    
universally throughout the state  because of varied resource                                                                    
availability in different areas of the state.                                                                                   
SB  158  was  HEARD  and   HELD  in  committee  for  further                                                                    
9:58:08 AM                                                                                                                    
Co-Chair  MacKinnon informed  that  amendments  to the  bill                                                                    
were due by 5:00 p.m. on the following Friday.                                                                                  
9:58:53 AM                                                                                                                    
The meeting was adjourned at 9:58 a.m.                                                                                          

Document Name Date/Time Subjects
SB158 Sectional Analysis.pdf SFIN 3/8/2018 9:00:00 AM
SB 158
SB158 Supporting Document-DEC Fact Sheet.pdf SFIN 3/8/2018 9:00:00 AM
SB 158
SB158 Transmittal Letter.pdf SFIN 3/8/2018 9:00:00 AM
SB 158
SB 92 J. Murgas SFIN written testimony.pdf SFIN 3/8/2018 9:00:00 AM
SB 92
SB 92 Explanation of Changes Ver. O to Ver. U.pdf SFIN 3/8/2018 9:00:00 AM
SB 92
SB 92 FAQ Sheet.pdf SFIN 3/8/2018 9:00:00 AM
SB 92
SB 92 Work Draft Version U.pdf SFIN 3/8/2018 9:00:00 AM
SB 92
SB 92 Support Doc - Northern Economics 2015 Survey Summary.pdf SFIN 3/8/2018 9:00:00 AM
SB 92