Legislature(1993 - 1994)
04/14/1993 08:30 AM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 14, 1993
8:30 a.m.
TAPE HFC 93-105, Side 1, #000 - end.
TAPE HFC 93-105, Side 2, #000 - 408.
CALL TO ORDER
Co-Chair Larson called the House Finance Committee to order
at 8:30 a.m.
PRESENT
Co-Chair Larson
Co-Chair MacLean
Vice-Chair Hanley Representative Martin
Representative Brown Representative Parnell
Representative Foster Representative Therriault
Representative Grussendorf
Representatives Navarre and Hoffman were absent from the
meeting.
ALSO PRESENT
Leann Ferry, Staff, Prince William sound Regional Citizens'
Advisory Council; Nancy Lethcoe, Alaskan Wilderness
Recreation and Tourism Association; Steve Torok, Alaska
Operations Office, Environmental Protection Agency; Tom
Chapple, Project Manager, Permitting Group, Air Component,
Department of Environmental Conservation; Eric Meyers,
Member, Air Quality Advisory Working Group; Russel Heath,
Executive Director, Alaska Environmental Lobby; Robert
Reges, Assistant Attorney General, Department of Law.
SUMMARY INFORMATION
HB 167 "An Act relating to air quality control and the
prevention, abatement, and control of air
pollution; relating to civil and criminal
penalties, damages, and other remedies for air
quality control violations; clarifying the
definition of `hazardous substance' to include
releases and threatened releases to the
atmosphere; amending the lien provisions relating
to the oil and hazardous substance release
response fund; relating to inspection and
enforcement powers of the Department of
Environmental Conservation; and providing for an
effective date."
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HOUSE BILL NO. 167
"An Act relating to air quality control and the
prevention, abatement, and control of air pollution;
relating to civil and criminal penalties, damages, and
other remedies for air quality control violations;
clarifying the definition of `hazardous substance' to
include releases and threatened releases to the
atmosphere; amending the lien provisions relating to
the oil and hazardous substance release response fund;
relating to inspection and enforcement powers of the
Department of Environmental Conservation; and providing
for an effective date."
Representative Hanley noted that the federal Clean Air Act
was passed in 1990. States must meet minimum requirements
of the Act by December 1993 or lose state highway funding
and control of the program. He asserted that the state can
run the program cheaper than the federal government.
Federal law requires that fees be assessed to pay for the
program. He gave a history of the legislative working
group.
TOM CHAPPLE, PROJECT MANAGER, PERMITTING GROUP, AIR QUALITY,
DEPARTMENT OF ENVIRONMENTAL CONSERVATION provided members
with an overview of the Clean Air Act (Attachment 1). He
discussed page 2, Attachment 1. He noted that the Clean Air
Act is the first major revision of air quality standards in
20 years. It creates a relatively uniform program across
the nation by placing the burden of compliance on the
states. The current state permitting program does not
incorporate all Environmental Protection Agency (EPA)
standards. Smaller industries will be regulated. The Clean
Air Act mandates that states form Small Business Assistance
Programs. Alaska is exempt from acid rain provisions. He
observed that there are 189 hazardous air pollutants.
Mr. Chapple discussed page 3, Attachment 1, "Who needs a
permit". He noted that the Department of Environmental
Conservation will have to issue permits to approximately 450
installations.
Mr. Chapple stressed that the reason permit issues will
increase from 170 to 450 is due to fuel burning equipment
that currently exist but was not previously covered. He
discussed page 4, Attachment 1. He noted that the greatest
increase in permits are for electric utilities. Rural and
small communities will be most affected.
Mr. Chapple reviewed page 5, Attachment 1. He stressed the
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need to:
* Retain state jurisdiction of the program;
* Revise the program to include all federal
requirements;
* To design the program to require accountability.
Mr. Chapple explained that the fee cost will be lower if the
applicant "puts together a good application" and if
compliance is readily achieved. There are provisions for
public participation.
Mr. Chapple emphasized that the program must be based on
knowledge and understanding of the requirements. He
stressed the need to further define the program through
regulations.
Co-Chair MacLean asked for an explanation of how the bill
goes further than federal law requires. Mr. Chapple
explained that the issuance of permits on offshore
activities are not mandated by federal law. He added that
the bill contains provisions to allow authority to regulate
air pollutants not regulated by federal law, in sections
.010 and .015.
Co-Chair MacLean asked which provisions are optional. Mr.
Chapple stated that general permits are optional. He added
that provisions authorizing the Department during emergency
to allow expansion of permits are optional.
Mr. Chapple clarified, in response to a question from Co-
Chair MacLean, that the bill meets minimum sanctions imposed
on violations.
LEANN FERRY, STAFF, PRINCE WILLIAM SOUND REGIONAL CITIZEN'S
ADVISORY COUNCIL (RCAC) spoke on behalf of the RCAC Terminal
Operations and Environmental Monitoring Committee (TOEM).
She stated that the TOEM Committee is responsible for
monitoring chronic pollution emitted from the Alyeska Marine
Terminal and the environmental effects of pollution. She
asserted that the Alyeska Terminal emits more volatile
organic compounds into the air than any other facility in
North America. These emissions include air toxins like
benzene and hexane.
Ms. Ferry stressed that it is unclear if the bill would
allow the Department of Environmental Conservation to
regulate air toxins and volatile organic compounds emissions
from tank vessels such as the oil tankers at the Valdez
Terminal. She added that it is unclear whether emissions
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from vessels could be attributed to the Alyeska facility and
regulated under the bill.
Ms. Ferry maintained that the bill would preclude the state
from enacting air pollution rules more strict than the
minimum required under the federal Clean Air Act, unless the
state meets an "unusually" high standard of scientifically
demonstrated need. She noted that the process of
scientifically demonstrating a health risk can be
protracted. She observed that it is difficult to
conclusively demonstrate a health or environmental hazard.
She noted that technology-based standards are the norm in
many other states and that much of the federal Clean Air Act
amendments are devoted to technology-based emission
standards. Technology-based standards require polluters to
control emissions over certain threshold amounts if such
controls are feasible and economically reasonable. She
asserted that the bill would tie the Department of
Environmental Conservation's hands in adopting standards
stricter than federal standards.
Ms. Ferry reminded the Committee that the Alyeska Marine
Terminal is the third-largest source of benzene air
pollution in the United States. She noted that there are no
federal standards regulating benzene emissions.
Ms. Ferry maintained that the legislation shifts the burden
of proof to the victims of pollution. She alleged that the
legislation would preclude local entities from enacting
clean air regulations.
Ms. Ferry expressed concern that the recommendations of the
Alaska Air Quality Advisory Committee were not considered.
She concluded that: "In light of the Legislature's current
action to slash the Department of Environmental
Conservation's budget, it's questionable whether the
Department would have the funding or staff to administer new
clean air regulations in any case."
NANCY LETHCOE, PRESIDENT OF THE ALASKA WILDERNESS RECREATION
AND TOURISM ASSOCIATION spoke in opposition to HB 167. She
stated that the Alaska Wilderness Recreation and Tourism
Association promotes the recognition and use of Alaska's
recreation and tourism resources.
Ms. Lethcoe stressed that the Alaska Wilderness Guides
Association is concerned about air pollution. She noted
that tour and lodge operators at Denali National Park and
Fairbanks based tour guides and out fitters are concerned
about the proposed Healy Power Plant. She asserted that the
business climate will be enhanced by regulations which
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provide for maximum use of our resources and the creation of
more jobs.
Ms. Lethcoe alleged that the bill tries to minimize the cost
to polluters rather than looking to ways to use the permit
structure to encourage reductions in pollution and increased
business activity in all sectors of the economy.
Ms. Lethcoe maintained that the effects of polluters on
small, non-polluting businesses was not considered. She
requested that the bill be amended to encourage polluters to
reduce their pollution. She noted that a recently MIT
study, published in The Nature Conservancy of Alaska
Newsletter, Spring, 1993, "Environmentalism and Economic
Policy," found that, "States with stronger environmental
policies consistently outperformed the weaker environmental
states on all matters." According to project leader Stephen
Meyer, "If stringent environmental policies have negative
economic effects, they are so marginal and transient that
they are completely lost in the noise of much more powerful
domestic and international economic influences."
Ms. Lethcoe asserted that the bill makes it difficult and
virtually impossible for small non-polluting businesses to
participate in the public process. She stressed that public
participation is made difficult by section .285 on page 20.
She requested that the word "may" at line 19 be changed to
"shall."
Ms. Lethcoe observed that section .200 on page 12 makes it
difficult to appeal decisions. She emphasized that
"private" and "substantive" have not been defined in
environmental law. She requested that this section be
changed to guarantee that other businesses and business
organizations which could be adversely affected by a permit
be allowed to appeal.
Ms. Lethcoe recommended the following changes:
* Sec. 015. p. 3. delete the section or cover costs
through emission fees;
* Sec. .240 on page 15, amend item 1 to shift costs
to emission fees. In this way, those who pollute
the most would pay the most. It also encourages
companies to reduce their pollution, which would
reduce conflict with their business neighbors.
Ms. Lethcoe observed that small businesses in local
communities have the best chance of protecting their natural
resources through local ordinances. However, the fee
structure established on page 24 under (d) places an undue
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financial burden on local communities. Studies envisioned
in section .010 could cost millions of dollars. Local
communities would have to wait perhaps a year or more to
recover these costs from the state. She asserted that they
should be allowed to bill the polluter directly. She
maintained that without the power to bill polluters directly
and recover their costs in a more timely manner, local
governments and hence local business communities are
effectively deprived of their right to set regulations.
Ms. Lethcoe expressed support for section 010 on page 2, but
requested that the words "in written findings" be inserted
after the word "demonstrate" one line 26.
ERIC MEYERS, ALASKA AIR QUALITY ADVISORY COMMITTEE noted
that the Advisory Committee was created by the Department of
Environmental Conservation to build consensus. The working
group consisted of members of industry, with the exception
of the timber industry which chose not to be involved, and
environmental concerns. He noted that the deliberation of
the working group was difficult but that they achieved
unanimous support. He expressed his disappointment that the
hard work of the group has been set aside by the
legislature. He expressed concern with section .010. He
gave examples of difficulties which could occur due to
inclusion of provisions in section .010. He did not feel
that regulation of volatile organic compounds at the Valdez
terminal has been adequately addressed.
(Tape Change, HFC 93-105, Side 2)
RUSSEL HEATH, EXECUTIVE DIRECTOR, ALASKA ENVIRONMENTAL LOBBY
stressed that Alaska's environmental community was asked to
join the Advisory Committee in an effort to develop
legislation which would bring Alaska into conformity with
the 1990 amendments to the Federal Clean Air Act. He noted
that the legislation proposed by the Committee gained the
support of the Alaska Environmental Lobby. He alleged that
legislation proposed by the Advisory Committee was set aside
in favor of legislation drafted in response to timber
industry concerns. He stated that the Alaska Environmental
Lobby opposes HB 167.
Mr. Heath maintained that HB 167 fails to protect the
quality of Alaska's air; restricts the public's right to
influence public policy and restricts the rights of local
governments to control the quality of the air in their own
communities and neighborhoods.
Mr. Heath stressed that the fee structure subverts the key
intent of the Clean Air Act, to reduce emissions. He felt
that the size of the fee should be tied directly to the
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amount emitted in order to provide a powerful incentive to
the polluter to reduce its emissions. He noted that the fee
structure in HB 167 ties the bulk of the fees to the per
hour cost to the Department of Environmental Conservation to
process the permit application. He asserted that, "the
incentive to the polluter then becomes to submit a letter
perfect, permit application. Because the faster the
Department of Environmental Conservation can process the
application, the cheaper it becomes for the polluter." He
alleged that, "this fee structure disembowels the entire
act; rendering it an expensive exercise in paper shuffling."
Mr. Heath noted that the fee structure is self supporting.
He maintained that the fee burden has been transferred to
small emitters.
Mr. Heath referred to the general permit process. He noted
that the general permit was developed to reduce a portion of
the burden. A general permit is a blanket permit which
applies to all emitters of a similar type. An individual
emitter need not go through the entire expensive permitting
process. At the time that a general permit is developed,
public review is solicited state wide. He observed that the
public is not allowed to comment when a specific business in
a specific neighborhood is granted a general permit.
He stressed that judicial standing is narrowed beyond
current Alaskan statute in HB 167. Standing is the legal
criteria which an aggrieved party must satisfy before being
legally eligible to obtain judicial review of a permit. He
asserted that standing was narrowed in order to protect the
polluting industry from lawsuits challenging their permits.
He reiterated that the legislation is closing the public
process. He emphasized that businesses formed after the
initial public process would not be allowed an opportunity
to challenge a permit.
Mr. Heath observed that duration is fixed at five years. He
noted that this is a substantial departure from current
administration policy. Currently, if a business is an
historical violator, its permit is written for a shorter
period of time so that the public has a chance to comment
more frequently on its impact on the safety of the
community. A shorter permit period also provides the state
the chance to incorporate the best permit stipulations
possible to assist a business in coming into compliance with
its permit.
Mr. Heath favored the permit duration developed by the
Department of Environmental Conservation's Advisory
Committee. It allows businesses without compliance problems
to receive the maximum permit term of five years. Repeat
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and gross violators who cannot follow state laws are given
permits with shorter duration. As soon as a violating
business achieves compliance, it is given the same privilege
of a five year permit as complying businesses have. He
maintained that varying the permit's duration, provides an
excellent incentive for compliance.
Mr. Heath asserted that provisions in the legislation make
it effectively impossible for state or local governments to
require standards more stringent than those required by the
federal Clean Air Act. He observed that requirements for
peer review of studies demonstrating that local conditions
vary from those on which the federal standards were based,
are so complex and so expensive that it would render a
municipality powerless to address local needs and concerns.
STEVE TOROK, CHIEF, STATE OPERATIONS, ENVIRONMENTAL
PROTECTION AGENCY expressed concern with section 46.14.560.
He stressed that the section raises enforcement concerns.
He stated that the section could render the state's
implementation plan unacceptable.
Mr. Torok reiterated EPA's concerns regarding the funding
level of the Department of Environmental Conservation. He
noted that the Senate has reduced program receipt authority
by $700.0 thousand dollars. He emphasized that the
Department of Environmental Conservation must demonstrate
the fiscal capability to implement the program. He stated
that the legislation generally meets the minimum federal
requirements.
Representative Brown asked the implication of subsection (e)
page 3, line 6. She interpreted the language to require
that anything generally applicable must be in regulation
prior to inclusion in a permit. She noted the difficulty of
setting in regulations all requirements prior to
implementation of the program. Mr. Torok noted that an
implementation plan must be submitted to EPA.
Representative Martin noted that legislation needs to be
passed this session.
Representative Brown noted that EPA expressed concern with
the legislation in a memorandum dated 2/18/93 (Attachment
2). She noted their concerns with section 46.14.540 on page
29. She asked their concern. Mr. Torok replied that
federal law does not take into account the possibility of a
natural disaster. Congress envisioned that EPA would have
discretion to operate under a natural disaster. He noted
that the Commissioner of Department of Environmental
Conservation could waive requirements under the provision of
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46.14.540. He stated that the state could submit its plan
minus the provision.
Representative Brown noted that EPA questioned language on
page 12, line 22, regarding permit review.
ROBERT REGES, ASSISTANT ATTORNEY GENERAL clarified that the
issue has been resolved.
Representative Brown provided members with a memorandum from
Terri Lauterbach, Legislative Counsel (Attachment 3). Ms.
Lauterbach believes CSHB 167 (JUD) does not comply with
federal law. Mr. Reges disagreed with Ms. Lauterbach's
assessment of CSHB 167 (JUD). He stated that the legal
position is not definitive. He discussed applicable law.
He
conceded that the language contained in sec 46.14.200
narrows standing.
Representative Brown stressed that to request an
adjudicatory hearing an individual would have to be a "owner
and operator, a person who participated in the public
comment process or a person who has a private, substantive,
legally protected interest under state law". She
interpreted the language to be modified by "adversely
affected by the permit action". Mr. Reges agreed. He noted
that the interpretation is furthered narrowed by the
language, "private, (and) substantive". He stated that, as
currently written, "an individual who did not participate in
the public comment process, and is neither the owner or the
operator, would have to show that his interest was private,
substantive and that it was legally protective and may
adversely be affected."
Representative Brown asked the definition of "private
interest". Mr. Reges replied, that in his opinion,
"private" would be juxtaposed against associational
interests. He added that an organization may be required to
bring the action in the nave of one of its members.
Standing would have to be demonstrated through an
individual.
Representative Brown asked if it would require that the
individual live next door to the source or could they be a
citizen of the community. Mr. Reges stressed that standing
is a concept created by courts. He stated that the basic
premise is that a legally redressable interest be
ascertained. A "personal stack in the outcome" is often
used by the courts. He emphasized that the State of Alaska
Supreme Court has generally taken the broader
interpretation.
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Representative Brown referred to page 3, subsection (e).
She asked what would be required in regards to the initial
issuance of permits by the Department of Environmental
Conservation. Mr. Reges stated that "when incorporated into
a permit," would signify that standards which are generally
applicable must be adopted by regulation. He maintained
that at least one permit could be issued with the standard
in it prior to adoption in regulation. He suggested that
"when incorporated into a permit" be changed to "when
incorporated into one or more permits". The Department
would be required to adopt into regulations when it is
evident that a standard has a broader application to be in
subsequent permits.
Representative Brown agreed that Mr. Reges' interpretation
represents the intent of how the legislation would work.
She expressed concern that the language seems to say that
standards must be in regulation prior to issuance of
permits, if it is generally applicable. She asserted that
it would be impossible to address every permit condition in
regulation prior to issuances of permits. Representative
Brown and Mr. Reges continue to discuss language regarding
conditions of permit issuance. Previous remarks were
reiterated.
ADJOURNMENT
The meeting adjourned at 9:59 a.m.
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