Shift of spill response cost from oil industry to Alaskans divides lawmakers

JUNEAU -- Alaska legislators are moving to shift some costs for the state's spill prevention and response program from the oil industry to Alaskans, drawing opposition from both left and right.

The House of Representatives on Wednesday voted to add a "surcharge" of a penny a gallon to the cost of most refined fuels sold in Alaska, though aviation, government and some others are exempted.

But what's called a surcharge in House Bill 158 looks a lot like a tax to many legislators.

"Any way you cut it, it's a new tax," said Rep. Tammie Wilson, R-North Pole. Many legislators from communities where heating oil is heavily used opposed the bill.

The bill divided usual party and caucus lines in the House, and barely passed on a vote of 21-19, with tax opponents such as Wilson joining with Democrats such as Rep. David Guttenberg, D-Fairbanks, who thought the oil industry should pick up the cost of preparing for and responding to spills.

He too disputed the terminology.

"It's not a user fee, it is a tax," he said.

Opponents didn't dispute the need for the program, focusing their criticism on the funding method used for the Department of Environmental Conservation's Division of Spill Prevention and Response.

Rep. Cathy Munoz, R-Juneau, carried the bill on the floor Wednesday, saying the current funding method of 5 cents a barrel of oil produced is no longer adequate as production has declined.

And the $8 million it will raise is needed, she said, especially for spills with no known source, such as a February spill in Juneau's Auke Bay.

"Because we didn't know who the responsible party was, it was the SPAR Division (of the Department of Environmental Conservation) that was at the site immediately and cleaning up and working with the Coast Guard to prevent any additional degradation to the environment," she said.

Rep. Steve Thompson, R-Fairbanks, supported the bill, saying that such costs have to be covered by the state.

"I hear 'This is not my fault, why should I have to pay for it?'" Thompson said, but likened it to education, for which even citizens without children are expected to pay for schools.

Rep. Lance Pruitt, R-Anchorage, supported the bill and said the Legislature has been "negligent" in failing to address the issue before now, knowing the fund was running out of money, with the difference made up from the general fund.

"For nine years we've known this fiscal cliff was coming," he said.

Over the years, there have been repeated attempts to raise the per-barrel tax on the oil industry but all have been blocked by industry allies in the Legislature.

Munoz said the industry has paid the cost of the program for 30 years or more, and also pays for its own prevention and response efforts. Shifting the cost to the public would be fair, she said.

"There are legitimate arguments for fairly apportioning the cost of prevention and cleanup in our state," she said, noting that 1,500 of 2,000 spills were of refined products and not crude oil.

Rep. Les Gara, D-Anchorage, who opposed the bill, said part of the SPAR program cost is to evaluate and approve company spill prevention and response plans.

The new surcharge, at 1 cent, is small, said Rep. Dan Saddler, R-Anchorage, who supported the bill.

"I don't think this is going to break anybody's bank," he said.

A previous attempt to raise the per-barrel tax, in 2007, was stymied on the House floor by then-Rep. Kevin Meyer of Anchorage, an employee of oil producer ConocoPhillips. Meyer is now president of the Senate.

When oil prices soared in recent years, the percentage cost of the program diminished, but positions hardened with industry representatives such as the Alaska Oil and Gas Association opposing increasing the per-barrel tax on crude. AOGA does not oppose the current bills, it said.

This year, the bill calling for the penny-per-gallon tax on refined fuels was first sponsored in the Senate by Sen. Peter Micciche, R-Soldotna, who also works for ConocoPhillips.

Micciche's bill was scheduled for the Senate floor Wednesday but was delayed with the passage of Munoz' bill in the House. The House bill will likely be taken up by the Senate in the next few days, Micciche said.