Legislature(1999 - 2000)
02/21/2000 03:12 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 273-OIL SPILL RESPONSE; NONTANK VESSELS & RR CHAIRMAN HALFORD announced SB 273 to be up for consideration. SENATOR PEARCE, sponsor, said we are too often brought together as a legislature to react to events beyond its control and often times beyond the control of the individuals who have been a part of the events. That is what brings SB 273 before them today. SENATOR PEARCE said that Alaska has the best oil spill prevention and response program for crude oil, heavy crude carrying vessels, and the pipeline because it provides 20 percent of the oil produced in the United States. However, most of the oil spills occurring in the waters of Alaska today come from carriers that are not required to prepare for spill response by state law. Since 1995, 93 spills from regulated vessels and facilities occurred; a total of 5,286 gallons of oil were spilled. During that same period, 945 separate spills from non-regulated carriers occurred; over a quarter of a million gallons of oil was spilled. SB 273 would expand the prevention and response program to include larger non-tank vessels and the Alaska Railroad Corporation (ARRC), which transports oil products in bulk. SENATOR PEARCE stated the bill does a few simple things. It requires non-tank vessels and ARRC to provide an oil discharge prevention and contingency plan to the Department of Environmental Conservation (DEC), as is presently required of the oil industry and the tanker vessels that carry crude oil. It requires proof of financial responsibility for those vessels that are operating in our waters and it requires that the vessels be subject to inspections by the State along with whatever Coast Guard inspections are required under federal law. This is because we have had 945 spills since 1995 that totaled over a quarter million gallons of product. While that may sound like a much smaller number than the 11 million gallons of crude spilled by the Exxon Valdez, the non-crude petroleum products are often more toxic than the heavy crude, which goes to the bottom and doesn't intermix with the water column. Also, these vessels frequently carry a larger volume than those carrying fuel-less cargo, like the barges. One of the newest cruise ships coming into Alaskan waters for the first time this year carries 18,000 barrels of fuel - over three quarters of a million gallons of fuel. The cruise ships, many of the cargo ships, and state ferries, may have double hulls or bottoms that protect the cargo, but the fuel tanks are in the area between the second hull and the first hull, so the actual fuel of these ships, as much as 18,000 barrels, sits right next to the hull - only one hull away from the rocks. Clearly, the entire 18,000 barrels would not be spilled because the ships have separated tanks and baffling but they do carry a very large amount of fuel. They are not currently required to have a response system or equipment in place to prevent or respond to spills. They are not required to have the ability to finance the clean up effort and damages resulting from a spill. We don't have in place the process by which we would require the individual owners of the ships to respond. She expressed concern that if we have an event, it would the same kind of situation that occurred in Dutch Harbor in 1997 when the Kiroshima spilled 39,000 gallons of heavy bunker oil. Everyone spent a lot of time pointing in different directions and no one went to clean up the spill in the early days. Granted, the weather was bad and the site was hard to get to, but that marine environment is important and it was an important time period. SENATOR PEARCE thought that any ships that ply our waters should be required to have response plans. The ARRC is included in this bill; it has had three derailments since 1992 and three spills in the last four months. The largest spill was 167,000 gallons. Two recent spills equaled approximately 125,000 gallons of jet fuel that spilled out of tanker cars coming to Anchorage from Fairbanks. The spill of 12,450 gallons was the actual diesel fuel that was in the locomotive. That may have been caused by human error and perhaps human negligence in that a valve was jerry-rigged open. In 1999, 28,000 railroad cars carried an average of 22,500 gallons of fuel per car, meaning that the railroad carried 630 million gallons of fuel up and down that corridor with no contingency plan. They have proof of financial responsibility, which is probably the state. They have not had clean up response in place and ready to go. Non-tank vessels and the railroad would be covered by submitting oil discharge prevention contingency plans to DEC consistent with current requirements of tankers and oil facilities. The contingency plan (C-plan) requires the prevention and response equipment, personnel, and resources needed to respond to an oil spill. It requires proof of financial responsibility based on the maximum oil carrying capacity of the individual vessels and it would require spill drills and inspections of the equipment. SENATOR PEARCE explained that SB 273 allows DEC to adopt alternative ways to achieve equivalent levels of spill prevention and response in place of some C-plan requirements. Alternative compliance would be determined through the negotiated rule making process, so that a working group of representatives from industry, agencies, and other parties to assist in development of the regulations could be established. The vessel owner and/or the railroad would be required to demonstrate proof of financial ability to respond and clean up a major spill: $300 per barrel for persistent oil; $100 per barrel for non-persistent oil. Persistent oil is defined as heavy refined oil and fuel such as bunker, crude, and lube oil. Non-persistent are the lighter refined oils and fuels such as gasoline, diesel, kerosene, and jet fuel, which are more toxic to both the fisheries resources and the flora and fauna. The law would take effect September 1, 2000, and the proof of financial responsibility and the inspection requirement would kick in. The actual C-plan requirement would not kick in until June 1, 2001, to provide time to do the regulations and to give the entities the opportunity to get their responses in place. SENATOR PEARCE said she is pleased with the number of entities that agree they should have prevention and contingency plans in place, as well as a way to respond to a spill. The industries in question have indicated that this bill is not a surprise. She has reason to believe the small cruise ships want to voluntarily comply, although they don't come under the 300 gross ton requirement. The least receptive people who have contacted her office are the representatives of the large fishing vessels that maneuver in Alaska's most dangerous water during the worst times of the year. The experience with fishing vessels, like the Kiroshima, indicate to her that Alaska should have some sort of requirements in place that aren't there now. Number 1949 SENATOR GREEN asked if there has been some reluctance to further empower DEC and give it more oversight authority. SENATOR PEARCE admitted there are people in the State who don't like the DEC, but she doubted any of them would disagree that these groups should have contingency plans and the financial ability to respond. DEC has its Spill Prevention and Response (SPAR) group and while there have been a number of negotiations over the finalization of contingency plans for the large tankers, part of the problem was created by vagueness in the bill that passed in 1990. The bill required best available technology, which is an ever changing standard. She believes the system is working quite well at the moment and that DEC has developed a great deal of expertise during the last 10 years. She is comfortable with giving oversight responsibility to the SPAR folks. Someone has to have that authority and DEC has a lot of regulations and knowledge in that area. SENATOR GREEN asked, based on the initial newspaper article about the ability of various owners to respond, whether companies will have to have big pieces of equipment available onsite and whether companies will have to own duplicate pieces of equipment. SENATOR PEARCE said, taking the railroad for example, she would expect that some response equipment would be stored on every train to be used for an initial response. The trains travel north and south, so the same train is probably making daily trips. That would require two sets of equipment: one for the northbound train and one for the southbound. Spill response contractors are already in place throughout the state because of current law. Seapro is in Southeast Alaska. It is the consortium put in place by the Southeast vessels that come under the present law because of all the fuel barged to every community in Southeast Alaska. There is no reason the new entities couldn't become part of those consortiums. The same thing is true in Southwest Alaska; Cook Inlet has three consortiums. SENATOR PEARCE clarified that not every vessel will have to have its own set of equipment. However, she suspects that there is not enough equipment in Seward today to respond to an accident should a cruise ship go aground. She suspects there would have to be a build-up of one of the coops in that area. SENATOR TAYLOR said the unfortunate part is that those people who have equipment are under contract to respond to the people who have paid for that equipment. He stated, regarding the Kiroshima incident, that equipment wasn't very far away on a barge. He explained that Campbell Towing, located out of Wrangell, had a tug and barge in the area for other purposes. It was willing to move equipment to respond to the troubled vessel and start off- loading oil so it wouldn't go in the water. Unfortunately, the onsite DEC personnel did not have sufficient authority to allow the movement of the equipment out of the area it was designated to protect. Had anything occurred in the area where that equipment was supposed to be available, everyone would have been strictly liable under OPA '90. The incident occurred on a Saturday night. Eventually, Commissioner Brown was located to give the authorization to move the equipment so that it could be moved to pump the oil. Everyone involved was very cooperative and professional. He assumed that DEC has fixed that problem so that a person who can give the contractors the right to respond can be reached at all times. SENATOR TAYLOR said he has spent a lot of time working on contingency plans and he was shocked to find that every Navy and Coast Guard vessel that moves up and down the coast has to have, onboard, the spill response plan for each of the counties and communities along the Pacific Coast. That requires a large library of materials, most of which is outdated. In addition, they don't know who to contact. All of the spill response plans are different and they are not even indexed the same way. He said he understands Senator Pearce's concerns and supports the effort to provide a meaningful response when a spill occurs, but he believes there should be some practical way of making sense of it all when the oil hits the water. He said he was present when Seapro was formed and it was created only because there was no way that individual companies could afford to respond. They collectively brought their money and equipment together. It took years to get DEC to approve the level of equipment, where it would be based, and how it would all work. He said he does not want to see an overlay that creates another 18 member committee in each community to solve a problem. SENATOR TAYLOR said he is still waiting for DEC to show him how it spent the two cents per barrel. He would like to know what equipment it purchased and how much booming material is available in Southeast. He also asked about the three cents per barrel that went to DEC all of this time. SENATOR PEARCE said the two cents per barrel was not to buy anything; it goes into the $50 million contingency fund account. The three cents per barrel was supposed to do several things. She knows that DEC has purchased equipment around the state. One of the reasons we don't have the same requirements in Alaska as other states have is that Alaska did its first. Second, there was a move made by California, Washington, and Oregon to create an interstate compact with Alaska to decide what spill responses would be up and down the entire West Coast. The Alaska Legislature chose not join the compact, which she thought was a good choice, because Alaska's requirements are not as onerous as California's. On the other hand, she believes the ships that are coming to Alaska should be prepared for an accident. SENATOR PEARCE said the experience in Dutch Harbor was the first of that kind in that area and everyone learns from each and every incident. There were those same sorts of questions in Prince William Sound, but after DEC has gone through all of the table- top exercises over the years most of Senator Taylor's concerns have been resolved. SENATOR PEARCE said she believes that one non-profit spill response organization writes all of the plans in the state of Washington. Every vessel that sails into Washington's waters gets a bill for $160 every time it enters. Because so many ships come into those waters, the fee is only $160 per transit. She thought that in Southeast, for instance, as more entities have to join, the cost of that equipment will be spread out and, over the long term, it will be better for everybody economically. She noted she understands the frustrations in the past but she has found that people in Southeast Alaska are glad there is a spill response capability that wasn't here in 1989. SENATOR TAYLOR said he would help her any way he could. Number 1000 CHAIRMAN HALFORD asked who exempted public vessels. SENATOR PEARCE said public vessels that are commercial are not exempted so the ferries are not exempted, but she didn't know of any other state vessels that fit. She noted that federal vessels are exempt. CHAIRMAN HALFORD asked about the biggest of the ADF&G boats. SENATOR PEARCE replied that they are not 300 gross tons. CHAIRMAN HALFORD asked what 300 gross tons equal in terms of size. He noted the tonnage is fairly large, but the gallon capacity is fairly low; it looks like a vessel has to be 300 gross tons or more and carry 6,000 gallons. SENATOR PEARCE explained that those numbers were chosen because that is what is in all the other states on the West Coast. She did not want to bring in an entirely new group of vessels. There is some question about whether gross tonnage should be the measure; perhaps it should be displacement. The 300 gross tonnage picks up the largest of the processing ships, but it does not bring in any vessels that have limited entry permits. That was a threshold that DEC was trying to get above. CHAIRMAN HALFORD asked if a 150 foot Bering Sea crab boat weighs less than 300 tons. MR. PAT CARTER, aide to Senator Pearce, said that generally speaking, a 150 foot vessel would fall under this but the gross tonnage is based on cargo capacity and, depending on how the ship is constructed, the tonnage can be calculated differently. TAPE 00-04, SIDE A Number 001 MR. CARTER explained that the intent was to exclude barges that don't transport fuel - barges that transport containers, for example. He noted a vessel could weigh 300 gross tons as a barge, that is carrying fuel for dredging equipment or a crane onboard. CHAIRMAN HALFORD noted that most tenders in the fisheries may be barges but they carry a lot more than 6,000 gallons of fuel. MR. CARTER added that some of the tenders, especially those that work the salmon fleet, will fall under that because they are fuel barges that sell fuel to the fishermen. Part of their commerce is generated by transporting fuel for cargo, so they are already under the law now (as a tanker barge). SENATOR TAYLOR asked what amount of equipment the railroad carries now. MS. WENDY LINDSKOOG, Alaska Railroad Corporation, said the ARRC is currently revising its emergency response plan to meet contingency plan requirements that currently do not apply to it. ARRC believes, that as a state-owned entity, it should meet or beat the standards the state requires of similar carriers. ARRC believes that legislation to place this type of planning in statute and regulation is prudent and will ensure consistency in response planning and prevention over time. ARRC is especially encouraged by provisions in this and other legislation that will allow the railroad to craft regulatory standards with state regulators to fit the railroad's unique operational situation rather than simply impose a one-size fits all response planning standard. ARRC will work actively with the legislature, DEC, other state agencies, and the public to produce effective regulations and response plans. She concluded saying ARRC supports the legislation. SENATOR TAYLOR asked what equipment is on the train now. MR. ERNIE PIPER, Alaska Railroad Corporation, replied that every locomotive has a three-man train crew and some spill response equipment. It's really designed to respond to the most likely scenario that three people could deal with, which might be a small hole in the fuel tank of the locomotive, a leak from a belly cap on a tanker or some kind of valve damage. They don't carry equipment to do a major response. SENATOR TAYLOR asked what equipment they carry. MR. PIPER replied that pumps and other types of equipment used for larger responses are staged at strategic locations along the route. For example, some equipment is cached at the Hurricane section just above Gold Creek and Canyon. Equipment is also cached in Fairbanks and Anchorage. SENATOR TAYLOR asked what kind of crew is available to respond. MR. PIPER said the practical way for most carriers to deal with a spill is to have independent contractors, which is what the Railroad has. SENATOR TAYLOR asked if ARRC's independent contractors were ready, capable, and able to respond to the last couple of spills. He heard a lot of criticism about the ability of the railroad to respond to the spills. MR. PIPER answered that ARRC has good contractors. The same contractors are used by Alyeska Pipeline and others. The real problem in each of the spills was that the locations were particularly remote. In addition, the Gold Creek spill happened during the middle of a storm that had Southcentral Alaska shut down. He tells people that response is never clean and it doesn't work very well; prevention is the key. He assured them that there were ways to improve the response time and capability and ARRC will do that. SB 273 will help. SENATOR TAYLOR asked how the bill will help when nothing prevented ARRC from going in that direction before the bill was filed. He asked what ARRC's real plans are for the future, how the bill will affect its overall economics, and whether SB 273 will work from a practical standpoint. MR. PIPER answered that contingency planning in Alaska statute and regulation actively involves two parts of the equation that aren't normally involved - both the public and the regulatory agencies. When everyone has a clear picture of what the likely scenarios are, what dedicated equipment is available, and what the response strategies are going to be in particular areas, it makes things go a lot more smoothly. This bill is one of the ways to actively involve more people to see what could be done to do a response. It keeps the communications strong among all the parties involved. MR. BOB DOLL, Department of Transportation and Public Facilities (DOTPF), stated support for SB 273. He pointed out that the Marine Highway already has a written agreement with the DEC to operate its vessels in support of an oil spill clean-up effort and its ships have additional capabilities on board. His principal purpose for testifying today is to point out DOTPF's fiscal note, which indicates a source to pay the costs of DOTPF's participation. That is one of DOTPF's main concerns. SENATOR TAYLOR said his concern is that DOTPF has announced a transition to a high speed fleet in Southeast, which will travel in excess of 32 knots. He assumes that when one of those vessels hits a rock, it will spray oil all over the place. MR. DOLL replied that DOTPF doesn't expect that to happen. The ferry system has a 37-year record of operating at 16 knots in some very difficult waters and through challenging channels. DOTPF expects to apply the same safety standards to the high- speed fleet. SENATOR TAYLOR said that traveling at half that speed, 18 knots, the Taku ran directly into an island in the middle of the bay at Prince Rupert on a clear night. Other vessels were run on to rocks in Sergius Narrows and the bottoms were ripped out. Those vessels do carry a significant amount of fuel. He said, "In fact, we always were very happy that we had the oil tank on the bottom of the vessel because when we ripped a hole in the bottom of the boat, all we lost was fuel, we didn't lose a vessel." Senator Taylor stated he wants to make certain that in going through this process, the bill will not add one more layer of cost and inefficiency to a system that certainly isn't operating to the level of service he would like to see it. MR. DOLL responded that DOTPF's costs are indicated in the fiscal note. He noted that, "Anytime we talk about additional costs for the Marine Highway operation we need to be cautious about that and certainly I will continue to sound that note at every opportunity." He did not believe this bill will affect the marine highway service level. DOTPF already has contingency plans in place. It does expect additional costs associated with SB 273 and would like to target those expenses as much as possible. CHAIRMAN HALFORD noted that Senator Taylor volunteered to work on this issue and he would look for two more volunteers to work with the sponsor.