Legislature(2001 - 2002)

04/15/2002 09:29 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     CS FOR SENATE BILL NO. 326(RES)                                                                                            
     "An Act relating to evaluating state assumption of the                                                                     
     wastewater discharge program under the federal Clean Water                                                                 
     Act; and providing for an effective date."                                                                                 
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
ZACH WARWICK, Staff to  Senator Gene Therriault, explained that this                                                            
bill  directs  the  Department  of  Environmental   Conservation  to                                                            
evaluate the  benefits and consequences  that would result  from the                                                            
State  assuming   primacy  for  the  National  Pollutant   Discharge                                                            
Elimination  System   (NPDES)  currently  managed   by  the  federal                                                            
Environmental  Protection Agency (EPA)  Seattle, Washington  office.                                                            
He explained  that the  federal Clean  Water Act,  enacted in  1972,                                                            
contains  provisions  allowing   states,  rather  than  the  federal                                                            
government,  to administer the NPDES  permitting program,  and noted                                                            
that 44 states  currently do so. He continued that  other states are                                                            
considering this option  because it would allow each state to tailor                                                            
regulations  to their specific  environmental  issues and  determine                                                            
permit  issuance   timelines.  He   stated  that,  in  addition   to                                                            
evaluating the  administration of the program, the  Department would                                                            
determine associated costs and identify funding sources.                                                                        
Senator   Austerman,   noting   that   this   legislation   involves                                                            
environmental  issues, asked what "potential problems"  might result                                                            
by this change.                                                                                                                 
Mr. Warwick  commented that some people  support continuing  federal                                                            
management   of  the  NPDES  program,   arguing  that  the   federal                                                            
government  does a  better job  than the  State  could; however,  he                                                            
could not provide specific concerns.                                                                                            
Senator Austerman  asked whether the  intent of this legislation  is                                                            
to conduct  an evaluation of the benefits  and consequences  of this                                                            
proposal to present to  the Legislature or whether enactment of this                                                            
legislation  would be  the actual  evaluation. He  pointed out  that                                                            
Section  2 of  the  bill identifies  the  statutory  and  regulatory                                                            
changes, permitting  procedures, and associated costs  that would be                                                            
incurred by this transfer.                                                                                                      
Mr. Warwick responded that  the evaluation process involves a series                                                            
of steps, including  regulatory and statutory changes  that would be                                                            
considered  in making  a determination  that the  transfer would  be                                                            
beneficial to the State.                                                                                                        
Senator Austerman  requested further information of  the Department.                                                            
TOM  CHAPPLE,   Director,  Division   of  Air  and  Water   Quality,                                                            
Department    of   Environmental    Conservation    testified    via                                                            
teleconference  from  Anchorage to  respond to  Senator Austerman's                                                             
question about "how in-depth"  the Departments' evaluation would be.                                                            
He disclosed  that this issue has  been discussed for approximately                                                             
fifteen  years, and  the question  is whether  "it would  be in  the                                                            
State's  best  interest to  take  on this  permitting  program."  He                                                            
stated that  without an in-depth analysis,  the determination  would                                                            
not be  possible; therefore,  he continued,  the inclusion  of draft                                                            
regulations,  permitting   procedures  and  proposed  corresponding                                                             
statutes  is  required  to  thoroughly  evaluate  the  benefits  and                                                            
consequences of the transfer.                                                                                                   
Mr.  Chapple surmised  that  if it  becomes  obvious,  early in  the                                                            
process, that the transfer  would not be beneficial to the State; it                                                            
would be  likely that  the effort  would be  curtailed; however,  he                                                            
reiterated,  the  complexity  of the  issue  requires  the State  to                                                            
evaluate regulation  and statute changes to determine  what would be                                                            
required to thoroughly answer the question.                                                                                     
Senator Ward,  referring to information  provided on page  25 of the                                                            
May  15,  1998  Easton  Environmental  Consulting   Engineering  and                                                            
Sciences  report   titled  "The  State  Role  in  NPDES   Wastewater                                                            
Discharge Permitting  in Alaska, Options  for Improvement"  [copy on                                                            
file],  asked  which industries  have  been  granted administrative                                                             
NPDES extensions by the EPA.                                                                                                    
Mr. Chapple  commented that  the Easton Report  is not available  at                                                            
the teleconferencing site.                                                                                                      
JOHN SUND,  Vice  President, Norquest  Seafoods,  testified from  an                                                            
offnet  site  and spoke  in  favor  of  the bill.  He  informed  the                                                            
Committee that  his seafood processing  company holds NPDES  permits                                                            
for  each  of  its  processing  plants  in  Ketchikan,  Petersburg,                                                             
Cordova,  and Chignon  as  well as  for  two floating  vessels  that                                                            
process crab,  herring, and salmon. He stated that  this legislation                                                            
would streamline  the process explaining that currently  the DEC and                                                            
the EPA  jointly administer  the program, and  the permit holder  is                                                            
required  to  file  joint, duplicate  reports  to  each  entity.  He                                                            
furthered that whenever  a discharge issue arises, the permit holder                                                            
is required to contact both the DEC and the EPA.                                                                                
Mr. Sund asserted that  this legislation does not alter the terms or                                                            
conditions  of the permit; however,  a single program administrator                                                             
would allow  for a more  uniform interpretation  and enforcement  of                                                            
the standards.  He  informed the  Committee that  at meetings  where                                                            
representatives  of the seafood industry, the EPA,  and the DEC have                                                            
met  to discuss  and resolve  discrepancies  regarding  the  current                                                            
permit,  it  has   been  noted  that  some  of  the  EPA   personnel                                                            
administering  the program  have never  been to  Alaska and "do  not                                                            
know much about the State or the seafood industry."                                                                             
Mr. Sund  informed the Committee  that although  the quality  of the                                                            
water in mixing  zones locations as well as the sizes  of the mixing                                                            
zones are federal  issues; the allowable  quantity of seafood  waste                                                            
deposits  on the ocean  floor is  a State issue.  He continued  that                                                            
when a situation  involves both jurisdictions, the  permit applicant                                                            
gets "caught in the middle".  He expressed that this situation would                                                            
be  avoided if  a single  entity  were  responsible  for the  entire                                                            
Mr.  Sund  summarized  that  this  legislation   would  provide  the                                                            
opportunity to explore  whether this transfer would be beneficial to                                                            
both  the State  and  the affected  industries,  and  stressed  that                                                            
inclusion of the  statutory and regulatory details  are paramount in                                                            
the determination.  He noted  that the question  of how the  program                                                            
would  be funded  is a  significant issue,  and  he qualified  that,                                                            
currently; the federal government funds its operation.                                                                          
BILL JEFFERS, Manager,  Environmental Services, Fairbanks Goldmining                                                            
Inc, and Vice-President,  Council of Alaska Producers, testified via                                                            
teleconference  from Fairbanks in favor of the bill.  He voiced that                                                            
Mr.  Chapple's  testimony  fairly  represents  Alaskan  industries'                                                             
discussions  and concerns  regarding steps  that should be  taken to                                                            
address  the issue,  and  that  Mr. Sund  adequately  expressed  the                                                            
concerns and problems  that have been encountered  under the current                                                            
CHARLIE BODDY, Vice-President  Governmental Relations, Usibelli Coal                                                            
Mines, testified  via teleconference from Fairbanks  in favor of the                                                            
bill as he stated that  this legislation would provide the State the                                                            
ability to determine  whether this transfer would  be in the State's                                                            
and  the  industry's  best  interest.  He  stated  that  the  mining                                                            
community,  which is "dynamic"  rather than  "static" in its  mining                                                            
endeavors,  factors water  discharge  permit applications  into  its                                                            
timelines, and he attested  that the continuous permitting delays of                                                            
"the  ever-changing"   EPA   office  staff   in  Seattle  has   been                                                            
detrimental to operations.                                                                                                      
Senator Austerman asked if the EPA charges a permit fee.                                                                        
Mr. Boddy  responded  that while  there is  no fee  for the  federal                                                            
NPDES permit, the State charges a certification fee.                                                                            
Co-Chair Kelly asked whether this legislation is time critical.                                                                 
Mr. Boddy responded that it is not.                                                                                             
Mr. Jeffers concurred.                                                                                                          
Senator Leman  voiced that, in his  professional perspective,  State                                                            
management of the NPDES  permit process would be preferred; however,                                                            
he questioned why the evaluation  process would take approximately a                                                            
year and  a half to complete  and require  the hiring of  additional                                                            
staff. He opined  that the study could be conducted  in less time at                                                            
a lower cost.                                                                                                                   
Senator Ward  re-visited his question  concerning which category  of                                                            
industries   received  EPA  administrative   permit  extensions   as                                                            
specified  in the  Easton Report.  He stated  that this information                                                             
would be helpful  in developing program  receipt funding  mechanisms                                                            
similar to those developed  by other states to fund up to 96 percent                                                            
of program administration  costs. He additionally  asked for further                                                            
information about the permit extension process.                                                                                 
Mr. Chapple explained that  NPDES permits are issued for five years,                                                            
and due to limited resources,  it has been common for the EPA office                                                            
in Seattle  to administratively  extend seafood  and mining  permits                                                            
another five years.  He exampled that the Municipality  of Anchorage                                                            
sewage  treatment plant  permit  was administratively  extended  for                                                            
more than  ten years.  He informed  the Committee  that a few  years                                                            
ago, Congress notified  the EPA that too many permitting delays were                                                            
occurring,  and that  the Seattle  Region  10 office  was among  the                                                            
offices with the  most delays. He communicated that  the Seattle EPA                                                            
office is now current on the majority of its permits.                                                                           
Senator Ward  asked the testifier  which industry holds the  bulk of                                                            
the NPDES permits.                                                                                                              
Mr.  Chapple responded  that  NPDES permits  are  applicable to  any                                                            
discharge affecting surface  water. He stated that EPA characterizes                                                            
these discharges  as "minor source"  or "major source." He  exampled                                                            
that  major  source  discharges  include  such things  as  a  sewage                                                            
treatment  plant  for medium  to  large  communities  and  regulated                                                            
industries  such as seafood processing  plants, mining, and  oil and                                                            
gas  activities.  He  continued   that  all  of  the  oil  platforms                                                            
operating in Cook Inlet  are permitted under a general permit issued                                                            
by the EPA whereas the  North Slope activities have both general and                                                            
individual permits.                                                                                                             
Senator Ward asked how  much revenue the NPDES permits fees generate                                                            
toward  the cost  of  administering  the  program. He  informed  the                                                            
Committee  that  a pulp  mill  in  the State  is  currently  charged                                                            
$80,000 for its permit.                                                                                                         
Senator Leman  voiced the understanding that the fees  would need to                                                            
be increased to support the program.                                                                                            
Mr.  Chapple  stated  that  program  funding  is one  of  the  major                                                            
components in  the determination of whether the State  should solely                                                            
administer the  NPDES program. He shared that program  receipts or a                                                            
combination of  program receipts and state general  funds or federal                                                            
funds are used to fund other states' programs.                                                                                  
Co-Chair  Kelly reiterated  that while no  fee is currently  charged                                                            
for the  federal NPDES  Permit,  the State charges  a certification                                                             
fee. He continued that  were the process to transfer entirely to the                                                            
State, DEC would  assess a fee for the issuance of  the permit, and,                                                            
he  surmised,  the  certification   procedure  would  no  longer  be                                                            
Mr. Chapple  confirmed that  only one fee  would be assessed  if the                                                            
State were  the sole  manager of  the NPDES  permitting process.  He                                                            
stated  that  the   fee  levels  would  be  determined   during  the                                                            
evaluation process as funding options are reviewed.                                                                             
Senator  Austerman  stated   that  page  54  of  the  Easton  Report                                                            
specifies  that the  NPDES permitting  process could  require  up to                                                            
twenty-three, full-time  EPA employees, and he asked whether the DEC                                                            
would  need to  staff at  approximately  this level,  as this  would                                                            
increase the cost of managing the program.                                                                                      
Senator  Austerman  voiced  the understanding  that  the  evaluation                                                            
would identify  available  federal funding  in addition to  industry                                                            
permit fees  that would support the  program; however, he  expressed                                                            
concern  regarding  the level  of  the fees  the industry  might  be                                                            
required to pay.                                                                                                                
Senator Leman  voiced that "some efficiency  should be realized"  by                                                            
the State assuming  primacy of the  process because of "the  reduced                                                            
interaction  with  the  EPA"  and  the  benefit   of  absorbing  the                                                            
certification process within  the permitting process. He opined that                                                            
having  Alaskans administer  the  program would  produce  additional                                                            
benefits,  and he asserted  that the "major  goal" of this  endeavor                                                            
should be to realize "substantial efficiencies."                                                                                
AT EASE 10:01 AM / 10:03 AM                                                                                                     
Senator  Austerman  agreed   that  the State's   assumption  of  the                                                            
permitting process  should result in more efficiencies  and that the                                                            
Easton Report  indicates that the State's management  of the program                                                            
would result in a more  accessible and predictable process; however,                                                            
he voiced,  the report  additionally specifies  that, "the  industry                                                            
shall be  requested to contribute  financially"  by way of  a permit                                                            
fee.  He stated  that historically,  the  amounts  levied for  State                                                            
permit fees have  increased dramatically, and he continued  to voice                                                            
concern about the costs incurred to the industry.                                                                               
Senator  Austerman opined  that if the  Department of Environmental                                                             
Conservation  desires this  process  to be entirely  assumed by  the                                                            
State, they would  produce a favorable report, and  he expressed the                                                            
hope that the State's $315,000  investment in generating this report                                                            
would provide  the necessary information to evaluate  this endeavor.                                                            
Senator Olson  characterized his professional  experiences  with the                                                            
Department of Environmental  Conservation as positive encounters. He                                                            
stated  that  the  current  permitting   process  is  cumbersome  to                                                            
applicants, who are often  working within critical timelines, for it                                                            
requires them  to jointly coordinate  the permit and any  subsequent                                                            
events with  the State and the EPA.  He voiced that it can  be "very                                                            
aggravating" to not have  any one entity take responsibility, and he                                                            
asserted  that the State  should endeavor  to make  this process  as                                                            
efficient as possible.                                                                                                          
Amendment  #1: This  amendment  changes the  effective  date of  the                                                            
legislation to January 1, 2003.                                                                                                 
Co-Chair Kelly moved to adopt Amendment #1.                                                                                     
There being no objection, Amendment #1 was adopted.                                                                             
AT EASE 10:10 AM /10:11 AM                                                                                                      
Co-Chair  Kelly recommended  that  the Department  of Environmental                                                             
Conservation  FY 03 fiscal note amount  be reduced by half  to align                                                            
with the legislation's new effective date.                                                                                      
The Committee concurred and the fiscal note was revised.                                                                        
Senator Leman  stated, "I move to report the Finance  version of the                                                            
bill with individual  recommendations  and the accompanying  revised                                                            
fiscal note."                                                                                                                   
Senator  Ward  objected  and  stated that  his  concerns  about  the                                                            
effects  of  this  legislation  prevent   him  from  supporting  the                                                            
expenditure of $100,000 in general funds to conduct the study.                                                                  
A roll call was taken on the motion.                                                                                            
IN  FAVOR:  Senator  Austerman,  Senator  Olson,   Senator  Hoffman,                                                            
Senator Wilken, Senator Leman, Co-Chair Kelly                                                                                   
OPPOSED: Senator Ward                                                                                                           
ABSENT: Senator Green, Co-Chair Donley                                                                                          
The motion PASSED (6-1-2)                                                                                                       
CS SB 326 (FIN)  was REPORTED from Committee with  a $109,100 fiscal                                                            
note, dated  April 16,  2002, from the  Department of Environmental                                                             

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