Legislature(1999 - 2000)

02/21/2000 03:12 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
         SB 273-OIL SPILL RESPONSE; NONTANK VESSELS & RR                                                                    
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                                                              
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                                                              
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.                                                                                                                    

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