Legislature(2013 - 2014)SENATE FINANCE 532
02/26/2013 09:00 AM Senate FINANCE
Audio | Topic |
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Start | |
SB27 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+ | SB 27 | TELECONFERENCED | |
+ | SB 26 | TELECONFERENCED | |
+ | TELECONFERENCED |
SENATE BILL NO. 27 "An Act establishing authority for the state to evaluate and seek primacy for administering the regulatory program for dredge and fill activities allowed to individual states under federal law and relating to the authority; and providing for an effective date." 9:41:37 AM LARRY HARTIG, COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL CONSERVATION, introduced SB 27. He related that the legislation authorized the Department of Environmental Conservation (DEC) and DNR to evaluate and pursue primacy for Section 404 of the Clean Water Act, Regulation of Dredge and Fill Activities. Commissioner Hartig defined the 404 Program of the Clean Water Act and explained the legislation. He read from prepared testimony, "Senate Finance Committee Testimony of Alaska Department of Environmental Conservation" Senate Bill 27 "404 Primacy", February 26, 2013 (Copy on file). What is a 404 program? Section 404 of the Clean Water Act requires that all dredge and fill activities in surface waters (the ocean, lakes, rivers, streams) and wetlands be permitted. This permitting is done by the U.S. Army Corps of Engineers under what is known as the "404 program." Per the Clean Water Act, EPA retains oversight over the Corps' 404 program. Wetlands provide valuable functions that include habitat for plants and animals, wildlife corridors, improvements to water quality, and flood and storm attenuation. Wetlands in Alaska range from North Slope tundra to forested wetlands in the mountains of Southeast. With over 174 million acres of wetlands (65% of all wetlands in the nation), Alaska's stake in administering the 404 program is unlike that of any other state. Examples of activities requiring 404 permits include filling in wetlands for any purpose such as roads, or residential or commercial building pads; and construction of breakwaters, dams, and levees. The 404 permitting process itself involves an evaluation of the dredge and/or fill activity to identify the "least environmentally damaging practicable alternative" (LEDPA) for a project. An authorization for a dredge or fill activity must be accompanied by what is known as 404(b)(1) findings on potential short-term or long-term effects of a proposed discharge of dredged or fill material on the physical, chemical, and biological components of the aquatic environment. This also includes an evaluation of cumulative impacts. The goal of 404 permitting is to avoid or minimize impacts to aquatic resources, including wetlands. Where impacts are unavoidable, actions are taken or required to mitigate those impacts. The Clean Water Act intends for states to implement (to assume primacy for) the 404 program with the Corps of Engineers and the Environmental Protection Agency (EPA) acting in an oversight role. States seeking primacy for the 404 program require EPA's approval. SB 27 gives the authority to DEC and DNR to evaluate the costs and benefits of a state run program; begin the application development process and to seek approval to implement the program if it makes sense to do so. Commissioner Hartig emphasized that the legislation was a multi-step process to evaluate the costs and benefits of assuming primacy. The legislature would ultimately make the decision to move forward with primacy based on the costs and recommendations by the department. 9:47:13 AM Commissioner Hartig continued with the testimony. How do states assume the 404 program, and what can states gain authority over? The Clean Water Act spells out the requirements for a state's application for 404 primacy. These include a formal request by the governor; a description of the program as the state will run it; the state Attorney General's declaration that the state program is consistent with the federal program; memoranda of agreement with EPA and the Corps; a description of staffing and funding; and copies of all applicable state statutes, regulations, and administrative procedures. EPA will not approve a program that is less stringent than the federal program. Commissioner Hartig informed the committee that in 2012 the state gained total primacy over Section 402 of the Clean Water Act, Wastewater Permitting Program, National Pollutant Discharge Elimination System (NPDS). Primacy was implemented over a five year period with Environmental Protection Agency (EPA) oversight. The department gained experience with the primacy application through the 402 primacy process. The agency mandated that the state develop an equivalent to the federal program. He explained that during the 402 process DEC had to seek legislative approval several times for new authorities or statute changes in order to comply with EPA requirements. The legislation was the first step in the primacy process. He assured the committee that the legislature remained the "gatekeepers" to seeking primacy. Commissioner Hartig continued with the prepared testimony. States may assume primacy for the permitting and compliance program for all waters and wetlands except tidally influenced waters and waters that are or could be used for interstate and foreign commerce and wetlands adjacent to those waters. The Corps will retain authority for permitting dredge and fill activities in these waters in Alaska even after Alaska formally assumes the 404 program. Two other states already have primacy for the program, New Jersey and Michigan, while other states are considering it. The Department of Environmental Conservation (DEC) currently plays a secondary role in the 404 program in Alaska, reviewing permit applications, in some cases applying Alaska-specific conditions, and "certifying" that the Corps' permits meet State water quality standards. While I have described the formal process for 404 assumption from the Corps, there is a second mechanism where states can administer Section 404 dredge and fill permits. This is done by partnering with the Corps in the issuance and administration of what are known as State programmatic general permits, or State PGPs. These permits are general permits for dredge and fill actions that are similar in nature and have minimal individual or cumulative effects. The Department likely already has statutory authority to administer State PGPs, but the proposed legislation and fiscal note provide for the state to explore and pursue both this option and the formal primacy option. Multiple Alaska administrations over many years have considered primacy for the 404 program with the most serious consideration about 10 years ago. The decision at that time was to first pursue State primacy from EPA to implement the federal Clean Water Act (Section 402), National Pollutant Discharge Elimination System Program - the wastewater discharge permitting program. DEC has completed that process with EPA approval of the program in 2008 and the State's final step to have full authority in 2012, when we accepted responsibility for the final industrial sector's permits. With that recent experience, now is a good time for the Alaska to expand control over its waters, recognizing state priorities for prompt permitting for economic development while protecting water quality. The application process for 404 primacy will be similar, as will program development and implementation. The lessons learned from that experience will apply directly to 404 assumption. One lesson, however, is that we know that it will take time. There are multiple opportunities along the way for the public to weigh in on program development as well as opportunities for the legislature to have a say in whether the state proceeds with primacy - when we may seek additional statutory changes to ensure the program will be consistent with the federal program and when we seek the budget necessary to implement the program. 9:55:31 AM Why is assumption of the 404 program important? Almost half of Alaska is considered wetlands - 65 % of the nation's wetlands are in Alaska. With wetlands so omnipresent in Alaska, most major projects - and a very large number of minor projects, like housing pads - require 404 permitting. Yet the Corps is experiencing budget cuts and staff reductions. In a state like Alaska with a very narrow window for construction, such delays can and do result in project delays of a year or more. A state-run program that is accountable to Alaskans and the legislature will assure that it is the State that decides the level of resources to devote to a program that is so essential to the state's economy. The state will have control of its permitting priorities. Commissioner Hartig elaborated that the state had primacy over the Clean Air Act for several decades. Experience with the Clean Air Act and Section 402 primacy demonstrated that the state was more flexible with setting permitting priorities than the federal government. Commissioner Hartig continued with his testimony. Both DEC and DNR have placed significant emphasis in recent years on permit reform. From automated permit application to improved business processes, the State is well-poised to apply these streamlining improvements to the 404 program. These faster, streamlined practices place more emphasis on results - protection of wetlands and water resources - and less on cumbersome processes. With a state-run program, two agencies - DEC and DNR - that have a long history of successful interaction - will run the program, rather than the four currently involved: The Corps, EPA, DEC, and DNR. Two vs. four simply means less bureaucracy. ADF&G will, of course, retain its Title 16 permitting authorities and DEC and DNR will coordinate and consult with ADF&G as part of the 404 process. Other benefits of a State-administered program: projects. for the program. Alaska's priorities and unique conditions with Alaska specific program guidance. less apt to stall projects needlessly and indefinitely. courts instead of outside federal courts. regime. consultation processes with less formal, faster processes while still achieving the objectives of those programs. What does the legislation do? The legislation before you provides two parallel tracks: Study 404 primacy and prepare an application for the program, and begin capacity building from the start. First, it directs DEC and DNR to evaluate costs, benefits, and consequences of the state assuming primacy for the 404 program, providing resources to the departments to do so. At the same time as the agencies are performing this evaluation, State staff can partner with Corps staff in the issuance of state Programmatic General Permits and authorizations under these general permits, assist the Corps with priority permit issuance, and work alongside the Corps in implementing mitigation projects associated with permitted projects in a way that works for Alaska's unique situation. This capacity building provides tremendous benefit to the state agencies when the state does gain primacy for the program, providing trained staff and tested processes for running the actual program. Additionally, it provides benefits to Alaska's permit applicants who will gain from the state staffing addition: shorter turnaround times for 404 permits, while continuing to protect water quality. In addition, this legislation provides the authority for DNR and DEC to administer the program and provides the authority for DEC to apply to EPA for authorization for the state-run program, as well as providing both agencies the authority to issue regulations needed for the program. Because the state is still early in the process of fully understanding the ramifications of 404 assumption, this bill will likely not be the last 404 legislation that comes before you. As we research statutory requirements, it is likely that we will back with needed changes: Statutory change has been required of other states seeking authority for the program. In addition, DEC and DNR will be evaluating the resources necessary to implement and run a state 404 program. The estimates in the fiscal notes that accompany this bill are for the application process and to begin the initial capacity building I've mentioned. By the FY16 budget cycle, however, we expect a decision point regarding whether to advance the primacy effort. At that point, DEC and DNR will have a much better understanding of the resources that will be required for the full program. We expect that additional resources, likely significant because it is a significant program, will be required at that time. Fiscal Impacts There are three fiscal notes for SB 27. The dollar amounts from the DNR and Law fiscal notes are includes in the services line of the DEC fiscal note - DEC's fiscal note represents the full funding request for the early stages of evaluating and beginning preparation for a potential primacy application; and to increase the State's understanding of the program through capacity development. The fiscal note does not include the full costs to implement a State 404 program. (The concluding paragraphs of the presentation are on file.) Commissioner Hartig commented that SB 27 did not affect the EPA's study of the Bristol Bay Watershed Assessment under Section 404 of the Clean Water Act. 10:03:43 AM Commissioner Sullivan pointed out that 404 permitting was the major and most lengthy piece of the permitting process for most of the large development projects in the state. He related that DNR was declared a "cooperating agency" by the federal government. The department coordinated information between other state agencies with federal agencies during the permitting process. He stated that DNR was frustrated that despite its status as a cooperating agency, it did not have a participatory role at the decision making level on federal permitting decisions that affected the state. He advised that primacy granted the state the ability to affect the process and control its own destiny. He remarked that recently a number of "vague" federal policy decisions which affected the state were made with very little Alaskan input. Assuming primacy ensured that the state's policies would not be driven by "vague" federal regulation. Senator Dunleavy questioned what the state was giving up to the federal government and what it was gaining in assuming primacy. Commissioner Hartig elucidated that when the state took over permitting responsibility with the EPA while assuming Section 402 Primacy, DEC discovered that the EPA had a permitting backlog and unfinished regulatory agendas. The EPA wanted the state to adopt and develop the unfinished regulations. The state declined to proceed with any unfinished regulations that were not legally mandated. He offered that if primacy meant that the state did all the work at the federal government's direction, then the state gave up a lot. He commented that primacy granted the state direct contact with the permittees and the public and the ability to respond more efficiently to their needs. He stated that what Alaska gave up and what it gained was up to the state. He believed that the state would gain decision making control over the federal government. Senator Dunleavy believed that the State's education system was essentially controlled by the federal government through funding and mandates. He wondered whether there was an actual gain for the state. Commissioner Hartig delineated that Alaska would not obtain funding from the federal government to run the program. The state had the opportunity to apply for federal grants for the evaluation and application process. The assumed 404 Primacy program would operate on state funds from permitting fees and state general funds. Without federal funding the federal government would lack the leverage to control or mandate the process. He concluded that federal agencies maintained a certain amount of oversight, but that the state gained a "fair amount" of discretion. 10:11:59 AM Senator Dunleavy warned that the state needed to proceed with caution. Even though federal funding was diminishing, federal mandates were still enforced. Co-Chair Meyer wondered whether the state would be getting enough benefit to offset $1.8 million costs to the state for assuming primacy. Co-Chair Kelly commended Commissioner Hartig for his informative presentation. He referred to the term "capacity" in the presentation and questioned whether it was a fiscal term. He wondered whether "capacity" related to other general permitting legislation. Commissioner Hartig relayed that the DEC fiscal note contained five positions for DEC and two for DNR. The positions would be dedicated to evaluating 404 Primacy. He explained that capacity was being built during the evaluation phase of the process. The department learned from the 402 program that it needed to start building capacity from the evaluation stage. If primacy was assumed experienced staff was imminently necessary to fulfill the responsibilities of the permitting process. He anticipated more positions would be necessary. He added that if primacy was likely DEC would submit a detailed proposal to the legislature including the costs to completely build the capacity to run the program. Co-Chair Kelly inquired whether statutory authority was necessary to proceed with primacy or if it could be achieved through the appropriation process. Commissioner Hartig believed that DEC possessed the authority to pursue primacy, but that DNR clearly did not. He indicated that primacy was a multi-agency effort and that DEC and DNR would share duties. Historically, DEC was the natural resource regulator and DNR's expertise was in land management and mitigation. He thought the arrangement would continue, but that the delineation of duties would evolve as capacity was built. 10:17:41 AM Senator Bishop shared that the Army Corps of Engineers required small mines to do over flights and photograph their properties for mitigation purposes. He believed that placed a financial strain on miners. He asked whether primacy allowed the state to advocate on its own behalf in similar instances. Commissioner Hartig responded that the legislation was intended to help small business as well as large. He was aware of the problem with placer miners obtaining permits. He reported that one problem was the remote locations of the mines and how the Army Corps of Engineers developed a process to make determinations and identify wetlands with a declining budget. The department was working with DNR and the corps to obtain state assistance to help the miners. 10:19:54 AM Commissioner Sullivan added that primacy would allow consideration of local insight and issues into the mitigation process. Senator Hoffman supported Section 402 Primacy. He communicated that Section 404 Primacy entailed taking on 65 percent of the nation's wetlands. The state's program must be as stringent as the federal governments. The state did not know the total costs of taking over the program. He related that Alaska had some of the highest tidal fluctuations in the world. He recalled that Alaska would not control tidal influence wetlands with Section 404 primacy. He called for the clear delineation of Alaska's responsibilities in such cases. He pointed out that there were many unanswered questions in seeking 404 primacy. He wondered what the exact benefits and actual financial costs of primacy were. He cautioned that careful evaluation of the costs and benefits of primacy was paramount. Commissioner Hartig replied that he strongly agreed. The state was currently not in the position to answer the unanswered questions. The legislation provided an opportunity to proceed methodically. He reminded the committee that in 2016 a detailed analysis would be provided to the legislature. He felt that industry and the public would also weigh in on whether it was advantageous for the state to assume primacy by evaluating the state's performance in permitting and regulatory oversight. 10:25:06 AM Senator Hoffman remarked that state assumed primacy required that the state "pay the tab" for the program and significantly expand its bureaucracy while the federal government maintained ultimate oversight. Co-Chair Meyer judged that the state was not anxious to assume the costs of the program but expediting the permitting process offered benefits. He relayed that the state received federal funding for dredging the Port of Anchorage and other ports. He asked whether the legislation impacted the dredging funding for the port. Commissioner Hartig thought that the 404 program was outside of the scope of dredging harbors and the Army Corps of Engineers would continue to provide the service. He opined that primacy allowed a maturing state to control its destiny on key programs that impacted the state. Commissioner Sullivan agreed with Senator Hoffman regarding federal oversight and the budgetary impact. He reiterated that primacy established state control over decision making on very important projects. 10:30:08 AM Co-Chair Meyer OPENED public TESTIMONY JOSEPH SEBASTIAN, KUPREANOF, SELF (via teleconference), testified against SB 27. He shared concerns over the total and cumulative costs of assuming primacy for many years, expanding state bureaucracy, and the need for more personnel with specialized expertise. He opined that assuming primacy was a "duplication of efforts" that the federal government currently provided. He did not feel that the benefits of primacy would yield benefits that were commensurate with the costs and "burden" to the state. 10:32:22 AM Co-Chair Meyer CLOSED public TESTIMONY Co-Chair Meyer requested a written response from DEC regarding any potential impact from SB 27 on the Port of Anchorage dredging. Co-Chair Meyer asked for clarification on the fiscal note. Commissioner Hartig explained the DEC fiscal note. The total amount of $1,434,700 was appropriated for five positions in FY 14; the out years increased to $1,854,300 in FY15 with 3 additional positions and future years at $1.828.800 through 2019. He restated that in FY 2016 the total costs to assume primacy would be known. He pointed out that the DEC fiscal note contained appropriations for DNR and the Department of Law (DOL) in the services category for $870,000 which included two positions for DNR. He added that two additional DNR positions would be necessary in FY 15. Co-Chair Meyer asked what would happen to the positions if the program was not approved. Commissioner Hartig replied that the department might need to retain some of the additional resources for the permitting program. The majority of the additional positions would not be retained resulting in budget reductions. He envisioned that the process would develop incrementally. Senator Hoffman asked how much the federal government currently spent on administering the program in Alaska. Commissioner Hartig responded that he obtained partial information regarding the full program. He voiced that the state would not assume the full program because of geographic limitations. Navigable rivers, tidal influence, and adjacent wetlands were not included. He ascertained that the state would assume 20 to 50 percent of the permitting. He did not know what level of expertise was necessary. He offered the information from the Army Corps of Engineers. The district maintained 49 employees with a budget of $7.9 million annually. The amount of administrative support was unknown. The corps was headquartered in Anchorage with field offices in Fairbanks, Juneau, Kenai, and Sitka. Approximately 1,500 to 1,800 permit applications were processed each year and 85 percent were Section 404 applications. Senator Hoffman queried how many federal positions would be lost under state assumed primacy. Commissioner Hartig replied that he did not know. Senator Hoffman asked whether 25 additional employees were necessary for the state to accomplish the program. Commissioner Hartig thought that was a ballpark estimate. 10:40:44 AM Co-Chair Meyer referenced the DEC fiscal note and relayed that some costs were anticipated to be offset by program receipts. He requested clarification. Commissioner Hartig replied that permitting fees were associated with the program and provided a "mechanism" to recover a portion of the state's costs. Co-Chair Meyer commented that he shared the committee members concerns with the fiscal note. SB 27 was HEARD and HELD in committee for further consideration. 10:44:21 AM