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Refined fuel surcharge passes House 21-19
Kristen Nelson Petroleum News
A noisy floor fight in the Alaska House preceded the April 8 passage, by a 21-19 vote, of a bill to provide funding for the Department of Environmental Conservation’s Division of Spill Prevention and Response through a 1 cent per gallon surcharge on refined fuels. SPAR has been funded by monies from a 5 cent per barrel surcharge on oil produced, 4 cents of which goes to the prevention account, but that source of funding is no longer adequate due to reduced oil production.
Efforts in the past to increase the surcharge on crude oil production have not been successful, with the industry arguing that the majority of the spills to which the state responds are refined oil, not crude oil, spills.
Rep. Cathy Munoz, R-Juneau, sponsor of House Bill 158, said a shortfall in SPAR funding has been identified in the budget subcommittee for DEC, which she chairs, for three years. She said she had introduced legislation in the past to raise the 5 cent per barrel surcharge on crude oil, but those efforts failed.
Fuel oil issue Rep. Tammie Wilson, R-North Pole, introduced an amendment to add “fuel used to heat private or commercial buildings or facilities” to the exceptions in the bill, an amendment which failed by an 18-22 margin.
Wilson argued that fuel oil costs are already high in the Interior and in rural Alaska, but said it isn’t just about the money. She said spills were not her fault, and said DEC was taking the easy way out and needed to go after those who are responsible for the spills.
Rep. Scott Kawasaki, D-Fairbanks, introduced an amendment to add a 3 cent surcharge to the existing 5 cent surcharge on crude oil, arguing that crude oil spills are among the most expensive spills to clean up and therefore the crude oil industry should pay. That amendment was defeated 13-27.
Majority of spills In discussing the bill, Munoz said 1,500 of some 2,000 spills last year of varying sizes were due to refined products, not crude oil. Many activities are not regulated, she said, and in some cases the responsible party is unknown, but SPAR is still there. She noted that an existing system would be used for remitting the new surcharge, so no new positions would be required, and called HB 158 a viable, fair and long-term funding source for SPAR.
Rep. Bryce Edgmon, D-Dillingham, said the bill represents an era when individual Alaskans and communities are going to be asked to pay more for services formerly provided by the state or federal government. He said he knew it was a “very difficult choice” for some members, but called it a fair compromise.
Wilson, Kawasaki and Rep. David Guttenberg, D-Fairbanks, all spoke against the bill, with Guttenberg saying while there needed to be a spill response and cleanup fund, this was the wrong way to fund it.
Rep. Paul Seaton, R-Homer, spoke in favor, responding to charges that items from a SPAR audit needed to be addressed. Seaton, also on the DEC Finance subcommittee, said there was an old audit, and members have worked diligently with the department to make sure some of the duties SPAR previously had were removed. Cost causer should be cost payer had been argued, and Seaton said the bill does that because users of the most refined fuel pay the most.
Rep. Lance Pruitt, R-Anchorage, said the bill shows the reality the state is currently living in and said it also shows that the Legislature has been negligent in addressing a problem they’ve seen coming. Response and prevention are the policy of the state, he said, and because it’s a policy of the state the Legislature needs to support it.
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