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

Vol. 23, No.15 Week of April 15, 2018

Committee moves HB 322, increases fines

House Finance amends spill bill originating in House Resources; fines DEC can charge for spills increased to account for inflation

Kristen Nelson

Petroleum News

House Finance has moved House Bill 322, the House Resources bill increasing oil spill fines to keep up with inflation. The 6-4 committee vote, April 7, was largely on party lines. The bill is now in House Rules and goes next to the House floor and, upon House passage, to the Senate.

There is no companion bill in the Senate, so the measure will start from scratch in that body.

The goal of the bill, crafted by House Resources, is fundamentally an update in spill fees and penalties which can be charged by the Department of Environmental Conservation, House Resources co-Chair Andy Josephson, D-Anchorage, told House Finance in March 29 and April 7 hearings.

He said the bill also adds administrative penalties since it is very expensive and time consuming for the department to deal with small penalties through the legal system. It is easier, Josephson said, if administrative penalties are available - and in other areas, such as food safety and public drinking water - the department can issue administrative penalties. He said the federal Environmental Protection Agency requires that administrative penalties be available in areas where the state has taken primacy.

Kristin Ryan, director of DECís Division of Spill Prevention and Response, said numbers in the bill were basically adjusting penalties to account for inflation since the penalties were imposed.

That was true of some changes, but in other cases the amount was simply doubled, where accounting for inflation would have made the increase about four times.

House Finance amendments

Amendments in House Finance by Rep. Dan Ortiz, a non-affiliated member from Ketchikan, raised amounts for civil penalties for non-crude oil spills of more than 18,000 gallons into aquatic environments and onto public land from an existing $10 per gallon to $40 per gallon in an anadromous environment. The House Resources bill had proposed $20.

For spills into an estuary, $2.50 is in place, the bill proposed $5 and the Ortiz amendment $10.

The current fine is $1 (in open ocean), the House Resources version proposed $2; the amendment increased that to $4.

The Ortiz amendment increases the fines in line with inflation since those penalties were established in 1977.

Penalty increases proposed in the bill for crude oil spills of more than 18,000 gallons remained as proposed, from $8 per gallon for spills less than or equal to 420,000 gallons to $16 per gallon; and for spills greater than 420,000 gallons from $12.50 to $25 per gallon. Those penalties were set in 1989 and have not been raised; the increases are in line with inflation.

In a separate amendment, also by Ortiz, the minimum civil penalty for illegal discharges of oil and crude oil of less than 18,000 gallons was raised from no less than $500 and no more than $100,000, to no less than $2,000 and no more than $400,000; the House Resources version of the bill had set those amounts at $1,000 and $200,000. The penalties were established in 1976 and had not been raised; the 2018 equivalent amounts are more than $2,000 and $400,000.

Unchanged from the House Resources version was an increase in the penalty for each day after the violation from $5,000 to $25,000, greater than the adjustment for inflation.

The bill also increases the amounts for civil penalties for discharges from cruise ships, which have not been raised since enacted by voter initiative in 2006.

A requirement in the House Resources bill that penalties be adjusted annually based on the consumer price index was changed in an amendment offered by House Finance co-Chair Paul Seaton, R-Homer, to every three years. Seaton also offered an amendment which inserted a definition of produced water into the bill, and another amendment which required that oil spill response plans be submitted to the department electronically.

All the amendments offered in House Finance were adopted.

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