Legislature(2001 - 2002)
04/15/2002 09:29 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 Committee. 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 process. 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 system. 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 necessary. 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 Conservation.