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Providing coverage of Alaska and northern Canada's oil and gas industry
February 2018

Vol. 23, No.7 Week of February 18, 2018

Questions raised over oil spill bill

Trucking industry official tells House Resources that proposed contingency plan requirement would duplicate federal plan law

Alan Bailey

Petroleum News

A proposed state statute requiring trucking operations for the carriage of crude oil in Alaska to maintain approved oil spill contingency plans is unnecessary, because the U.S. Department of Transportation already requires spill contingency plans for trucks carrying various forms of oil, including crude oil, Aves Thompson, executive director of the Alaska Trucking Association, told the House Resources Committee on Feb. 9. The committee was hearing industry testimony on House Bill 322, a bill designed to increase fines for oil spills in Alaska. Although primarily targeting the levels of fines, the bill also includes a section mandating oil tanker truck contingency plans.

The code of federal regulation “already prescribes contingency plans for the transport of oil,” Thompson said. The Trucking Association wants the mandate for state contingency plans to be removed from the bill.

Oil spill penalties were set in the 1970s and 1980s but have not been altered since. House Resources has introduced HB 322, using recommendations from the Alaska Department of Environmental Conservation. DEC is concerned that the fines have not kept pace with inflation and may no longer be sufficiently high to act as an effective deterrent against spilling oil.

The section that would require contingency plans for trucking operations reflects DEC’s concerns about the possibility of a highway oil spill, given that there are now two companies trucking crude oil on the Kenai Peninsula. A tanker truck accident could impact salmon bearing creeks and rivers on the peninsula.

Avoiding duplication

Much discussion during the Feb. 9 committee meeting revolved around the question of whether the federally mandated contingency plans would adequately address DEC’s concerns and thus avoid duplication of effort. It appears that the content of the federally required plans are similar to what DEC wants. However, there are some procedural differences between what DEC envisages and what the federal government mandates

DEC is looking to adopt the same procedure that it uses for other oil spill contingency plans: The trucking company would need to file its plans with DEC for approval and would not be allowed to transport oil without an approved plan. There would also be requirements for drills and exercises to test the plans.

The federal government, on the other hand, does not require the contingency plans to be pre-approved. The federal regulations require a trucking company to prepare plans and post the plans in its principle place of business and at truck dispatch points. Plans must specify actions such as training and the conducting of unannounced drills. The plans are then subject to random audits, with the potential for fines if the plans do not meet the regulatory requirements.

State review requirements?

Thompson pointed out that the U.S. DOT’s Federal Motor Carrier Safety Administration has an office in Alaska, with enforcement personnel who perform compliance reviews, including the checking of trucking company contingency plans.

Kristin Ryan, director of DEC’s Division of Spill Prevention and Response, said that DEC is excited to know that there is a contingency plan regulatory requirement similar to what the state is seeking. She said that the department would be happy to help with the conducting of spill response drills and exercises, and that DEC could add value in the review of the plans.

Thompson responded that his organization’s membership had not authorized him to comment on the possibility of state involvement in review of the federal contingency plans. He did not see any particular problem with sending copies of the plans to DEC. But his concern would be with any resulting state review and approval process adding another layer of complexity to the procedures.

Thompson also emphasized the careful screening of truck drivers and the level of training that the drivers must go through before being allowed to drive oil-carrying trucks. In addition, one of the two carriers trucking oil on the Kenai Peninsula has been doing this for 30 or 40 years.

“They have done it safely. They have done it conscientiously. And to my knowledge there haven’t been any significant spills,” Thompson said.

Industry perspective

Kara Moriarty, president and CEO of the Alaska Oil and Gas Association, provided an oil industry perspective on the proposed increases to oil spill penalties.

“We actually welcome this opportunity to share with you and the public … the industry’s commitment to safety, and our diligence to prevent and prepare for the unfortunate incident of a spill,” Moriarty said.

Moriarty argued that, given the declining incidence of oil spills in the state and the large investment that the industry already makes in mandated oil spill prevention and contingency measures, increases in the oil spill penalties are unnecessary. For example, oil companies pay fees for membership in oil spill cooperatives that maintain equipment and expertise for responding to oil spills. Alyeska Pipeline Service Co., the operator of the trans-Alaska pipeline and the Valdez Marine Terminal, spends more that $800 million annually on oil spill prevention and response readiness, in addition to the company’s spending on drills and exercises along the pipeline, Moriarty said.

And crude oil spills have only constituted just under 2 percent of total spills over the last couple of years, she said.

Moriarty also questioned a proposal to include produced water when calculating oil spill volumes for assessing spill penalties. The spillage of produced water has also been trending downwards, she said.

Given the downward trend in spills, given the money that the industry already spends on spill prevention and contingency, given that the industry normally refunds DEC for the full cost of a spill response, and given that the industry already funds most of the Division of Spill Prevention and Response’s operating budget, what is the purpose of this bill, Moriarty asked.

“We do not need fines and penalties to encourage us to be diligent,” she said. The high cost of a response and cleanup is already a strong deterrent from incurring a spill, she added.

Bill modified

Subsequent to the Feb. 9 meeting and before passing the bill out of committee, House Resources modified the bill, replacing the section of the bill requiring contingency plans for truck operations involving the carriage of crude oil with a revised section requiring any commercial motor vehicle transporting crude oil on a highway or road maintained by the state to submit to DEC the oil spill response plan required under federal law.






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