Legislature(1995 - 1996)

01/18/1996 03:05 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
               HOUSE RESOURCES STANDING COMMITTEE                              
                        January 18, 1996                                       
                           3:05 p.m.                                           
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Joe Green, Co-Chairman                                         
 Representative William K. "Bill" Williams, Co-Chairman                        
 Representative Scott Ogan, Vice Chairman                                      
 Representative Alan Austerman                                                 
 Representative Ramona Barnes                                                  
 Representative John Davies                                                    
 Representative Pete Kott                                                      
 Representative Don Long                                                       
 Representative Irene Nicholia                                                 
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 All members present                                                           
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 HOUSE BILL NO. 212                                                            
 "An Act relating to the management and sale of state timber and               
 relating to the administration of forest land and classification of           
 state land."                                                                  
                                                                               
      - PASSED CSHB 212(RES) OUT OF COMMITTEE                                  
                                                                               
 OVERVIEW:  State's Air Quality Plan Application                               
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  HB 212                                                              
 SHORT TITLE: TIMBER MANAGEMENT; STATE LAND                                   
 SPONSOR(S): STATE AFFAIRS                                                     
                                                                               
 JRN-DATE     JRN-PG            ACTION                                         
 03/01/95       530    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/01/95       530    (H)   STATE AFFAIRS, RESOURCES, FINANCE                 
 03/16/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 03/16/95              (H)   MINUTE(STA)                                       
 03/21/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 03/21/95              (H)   MINUTE(STA)                                       
 03/21/95              (H)   MINUTE(STA)                                       
 03/21/95              (H)   MINUTE(STA)                                       
 03/22/95       844    (H)   STA RPT 1DP 4NR 1AM                               
 03/22/95       845    (H)   DP: JAMES                                         
 03/22/95       845    (H)   NR: OGAN, PORTER, IVAN, GREEN                     
 03/22/95       845    (H)   AM: WILLIS                                        
 03/22/95       845    (H)   2 FISCAL NOTES (DEC, F&G)                         
 03/22/95       845    (H)   ZERO FISCAL NOTE (DNR)                            
 04/26/95              (H)   RES AT 08:00 AM CAPITOL 124                       
 04/26/95              (H)   MINUTE(RES)                                       
 04/26/95              (H)   MINUTE(RES)                                       
 09/19/95              (H)   RES AT 09:00 AM                                   
 12/05/95              (H)   RES AT 09:00 AM ANCHORAGE LIO                     
 01/17/96              (H)   RES AT 08:15 AM CAPITOL 124                       
 01/17/96              (H)   MINUTE(RES)                                       
 01/18/96              (H)   RES AT 03:00 PM CAPITOL 124                       
 01/18/96              (H)   MINUTE(RES)                                       
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 REPRESENTATIVE JEANNETTE JAMES                                                
 Alaska State Legislature                                                      
 State Capitol, Room 102                                                       
 Juneau, AK  99801                                                             
 Telephone:  (907) 465-3743                                                    
 POSITION STATEMENT:  Testified on HB 212                                      
                                                                               
 JOHN STONE, Chief                                                             
 Air Quality Maintenance                                                       
 Division of Air and Water Quality                                             
 Department of Environmental Conservation                                      
 410 Willoughby Avenue, Suite 105                                              
 Juneau, Alaska  99801-1795                                                    
 Telephone:  (907) 465-5103                                                    
 POSITION STATEMENT:  Provided information on air quality control              
                                                                               
 ROBERT REGES, Assistant Attorney General                                      
 Natural Resources Section                                                     
 Civil Division                                                                
 Department of Law                                                             
 P.O. Box 110300                                                               
 Sixth Floor Dimond Courthouse                                                 
 Juneau, AK 99811-0300                                                         
 Telephone:  (907) 465-3600                                                    
 POSITION STATEMENT:  Provided information on air quality control              
                                                                               
 JOHN KUTERBACH, Environmental Engineer                                        
 Division of Air and Water Quality                                             
 Department of Environmental Conservation                                      
 410 Willoughby Avenue, Suite 105                                              
 Juneau, Alaska  99801-1795                                                    
 Telephone:  (907) 465-5100                                                    
 POSITION STATEMENT:  Provided information on air quality control.             
                                                                               
 DAVID ROGERS, Attorney and Lobbyist                                           
 Council of Alaska Producers                                                   
 P.O. Box 33932                                                                
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 586-1107                                                    
 POSITION STATEMENT:  Provided information on air quality control.             
                                                                               
 SVEND A. BRANDT-ERICHSEN, Attorney                                            
 Heller Ehrman White and McAuliffe                                             
 6100 Columbia Center                                                          
 701 Fifth Avenue                                                              
 Seattle, Washington  98104-7098                                               
 Telephone:  (206) 447-0900                                                    
 POSITION STATEMENT:  Provided information on air quality control.             
                                                                               
 KATHRYN LAMAL                                                                 
 Golden Valley Electric                                                        
 P. O. Box 71249                                                               
 Fairbanks, AK  99707                                                          
 Telephone:  (907) 452-1151                                                    
 POSITION STATEMENT:  Testified on air quality control.                        
                                                                               
 CARL HARMON                                                                   
 Chugach Electric                                                              
 5601 Minnesota Avenue, Building G                                             
 P. O. 196300                                                                  
 Anchorage, AK  99519-6300                                                     
 Telephone:  (907) 762-4739                                                    
 POSITION STATEMENT:  Testified on air quality control.                        
                                                                               
 STEVE TOROK                                                                   
 Environmental Protection Agency                                               
 410 Willoughby Avenue, Suite 100                                              
 Juneau, AK  99801                                                             
 Telephone:  (907) 586-7619                                                    
 POSITION STATEMENT:  Answered questions on air quality control.               
                                                                               
 LEONARD D. VERRELLI, Director                                                 
 Division of Air & Water Quality                                               
 Department of Environmental Conservation                                      
 410 Willoughby Avenue, Suite 105                                              
 Juneau, AK  99801-1975                                                        
 Telephone:  (907) 5260                                                        
 POSITION STATEMENT:  Testified on air quality control.                        
                                                                               
 BILL WALKER                                                                   
 Division of Air & Water Quality                                               
 Department of Environmental Conservation                                      
 410 Willoughby Avenue, Suite 105                                              
 Juneau, AK  99801-1975                                                        
 Telephone:  (907) 465-5104                                                    
 POSITION STATEMENT:  Addressed an air quality issue.                          
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 96-3, SIDE A                                                             
 Number 000                                                                    
 CO-CHAIRMAN BILL WILLIAMS called the House Resources Committee                
 meeting to order at 3:05 p.m.  Members present at the call to order           
 were Representatives Green, Ogan, Austerman, Barnes, Davies, Kott,            
 Long and Williams.  Representative Nicholia was absent.                       
                                                                               
 HB 212 - TIMBER MANAGEMENT; STATE LAND                                    
                                                                               
 CO-CHAIRMAN WILLIAMS announced that the agenda was a continuation             
 of the Wednesday, January 17, 1996, meeting on HB 212.  He added              
 that  committee members had been requested to submit any                      
 amendments, in writing, so the committee could address them at this           
 meeting.                                                                      
                                                                               
 Number 120                                                                    
                                                                               
 REPRESENTATIVE JOHN DAVIES read his proposed amendment for CSHB
 212, version "M."  He referred to page 3, line 20, and said delete            
 the words "sales of 160 acres or less" and insert "sales under                
 500,000 board feet."                                                          
                                                                               
 Number 165                                                                    
                                                                               
 CO-CHAIRMAN JOE GREEN objected for the purposes of discussion.                
                                                                               
 REPRESENTATIVE DAVIES said his purpose in offering this amendment             
 is based on the different productivity rates in different forests             
 of the state.  He said in the Tanana Valley State Forest a sale of            
 160 acres is not a small sale, it is a large one.  He added that              
 currently, 80 percent of the timber sales in the Tanana Valley                
 would be less than 160 acres.  The productivity of the forest in              
 the Tanana Valley is different from the productivity in the Susitna           
 area.  Representative Davies said that if HB 212 were to use                  
 "500,000 board feet" instead of "160 acres" it would reduce the               
 amount of acreage sold in the Tanana Valley State Forest to                   
 approximately 50 acres.  He said the impact in the Susitna area,              
 because the productivity factor is about 3,000 board feet per acre,           
 the acreage would increase to about 166 acres.  He concluded that             
 the value of having a number that has to do with the quantity of              
 board feet as opposed to acres is that it will accommodate the                
 different productivity of forests around the state.  In the Tanana            
 Valley State Forest, a sale of 160 acres would be tantamount to               
 getting rid of the whole Five Year Schedule; 80 percent of the                
 sales would not be required to be on the schedule.                            
                                                                               
 Number 348                                                                    
                                                                               
 REPRESENTATIVE JEANETTE JAMES objected to the proposed amendment to           
 HB 212.  She said the wording of "160 acres" is a management tool             
 that is effective because when a sale of 160 acres is announced the           
 public can conceptualize that amount which they can not do with               
 500,000 board feet.  She said the Department of Natural Resources             
 (DNR) gave testimony stating that they will put all sales, even               
 those under 160 acres on the five year schedule, even though they             
 are not required to do so.                                                    
                                                                               
 Number 451                                                                    
                                                                               
 REPRESENTATIVE DAVIES said that he does not believe that there was            
 a strong consensus as to the wording of HB 212.  He added that the            
 Board of Forestry is on record, with a unanimous recommendation               
 that if the committee leaves the wording of "160 acres" in HB 212,            
 the board requires that it be on the five year schedule at least              
 once.                                                                         
                                                                               
 Number 513                                                                    
                                                                               
 A roll call vote was taken on the proposed amendment to HB 212.               
 Representatives Davies and Long voted in favor of the amendment.              
 Representatives Williams, Green, Ogan, Barnes, Austerman and Kott             
 voted against the amendment.  Representative Nicholia was absent              
 for the vote.  The motion to adopt Representative Davies amendment            
 to HB 212 failed.                                                             
                                                                               
 Number 536                                                                    
                                                                               
 REPRESENTATIVE DAVIES offered an additional amendment to HB 212.              
 On page 4, line 13, delete the word "management".  The wording and            
 the purpose of the state forest would be, "the primary purpose in             
 the establishment of state forests is multiple use that provides              
 for production utilization and replenishment," et cetera.                     
 Representative Davies said his primary purpose in deleting the word           
 "management" is to eliminate the connotation that the primary                 
 purpose of the forest is bureaucracy, rather than multiple use.               
                                                                               
 Number 587                                                                    
                                                                               
 REPRESENTATIVE JAMES objected to the proposed amendment.                      
                                                                               
 Number 625                                                                    
                                                                               
 A roll call vote was taken on Representative Davies proposed                  
 amendment.  Representatives Davies and Long voted in favor of the             
 amendment.  Representatives Williams, Green, Ogan, Barnes,                    
 Austerman, and Kott voted against the amendment.  Representative              
 Nicholia was absent for the vote.  The motion to adopt the proposed           
 amendment to HB 212 failed.                                                   
                                                                               
 Number 638                                                                    
                                                                               
 REPRESENTATIVE DAVIES said he had one last proposed amendment to HB
 212.  On page 5, lines 20 to 24, delete Section 11 and renumber               
 accordingly.  He said Section 11 is redundant with the list that is           
 provided on page 2.                                                           
 Number 713                                                                    
                                                                               
 REPRESENTATIVE JAMES objected.  She said the classifications listed           
 on page 2 are in relationship to the forest management plan and               
 Section 11 restates the objective of wildlife management within the           
 Tanana Valley State Forest.                                                   
                                                                               
 REPRESENTATIVE NICHOLIA joined the committee meeting.                         
                                                                               
 A roll call vote was taken on the proposed amendment to HB 212.               
 Representatives Davies, Long and Nicholia voted in favor of the               
 amendment.  Representatives Kott, Austerman, Barnes, Ogan, Green,             
 Williams voted against the amendment.  The motion to adopt the                
 proposed amendment to HB 212 failed.                                          
                                                                               
 Number 778                                                                    
                                                                               
 CO-CHAIRMAN GREEN moved that committee substitute for HB 212,                 
 Resources version, 9LSO695-M, be moved from committee with                    
 individual recommendations and attached fiscal note.                          
                                                                               
 Number 796                                                                    
                                                                               
 REPRESENTATIVE IRENE NICHOLIA asked if the committee received any             
 fiscal notes for the new version from the Department of Fish and              
 Game (DFG) and the Department of Environmental Conservation (DEC).            
                                                                               
 CO-CHAIRMAN WILLIAMS said affected agencies can submit fiscal notes           
 to the House Finance Committee when it hears CSHB 212(RES).                   
                                                                               
 A roll call vote was taken.  Representatives Williams, Green, Ogan,           
 Barnes, Austerman, Kott and Nicholia voted in favor of moving the             
 bill from committee.  Representatives Davies and Long voted against           
 moving the bill.  The motion to pass committee substitute for HB
 212, Resources 9LSO695-M, out of the House Resources Committee                
 succeeded.  So HB 212(RES) moved from committee.                              
                                                                               
 Number 870                                                                    
                                                                               
 CO-CHAIRMAN GREEN announced that the second part of the committee             
 meeting would be a work session on Alaska's air quality program               
 with the Department of Environmental Conservation (DEC) providing             
 background information.  He said the DEC would explain the Clean              
 Air Act of 1990, also know as Title Five and then discuss HB 167,             
 passed by the 18th Legislature, which gives the DEC authority to              
 promulgate regulations to implement the clean air program.  The DEC           
 would also provide information on the development of regulations              
 which the Commissioner signed one month prior to this meeting and             
 the last part of the agenda would be to discuss any outstanding               
 issues or problems with the rates.  Co-chair Green provided some              
 information on how this meeting would be conducted and asked that             
 comments be focused on the regulations.                                       
                                                                               
 Number 1060                                                                   
                                                                               
 JOHN STONE, Chief, Air Quality Maintenance, Division of Air and               
 Water Quality, Department of Environmental Conservation, was first            
 to testify.  He said that his division is responsible for                     
 developing an air quality management program that regulates                   
 industrial sources of air pollution in the state of Alaska and                
 gives the state primacy for that program under the Clean Air Act.             
 The 1972 Alaska State Air Quality Control Plan is a series of                 
 regulations and guidance and allows Alaska primacy in granting                
 construction permits to large sources of air pollution.  In                   
 contrast, the National Pollutant Discharge Elimination System,                
 commonly referred to as wastewater permits, are given to large                
 industrial facilities in the state and are implemented by the                 
 Environmental Protection Agency (EPA).  The Air Quality Control               
 Plan also gives the state primacy for vehicle emission standards              
 program which is also administered by the DEC.                                
                                                                               
 MR. STONE said in 1990, the Clean Air Act was amended by adding new           
 requirements including the Title Five Operating Permits Program.              
 This program required Alaska to submit, to the EPA, a plan for                
 meeting federal requirements for this federal operating permit                
 program.  The DEC, several industries as well as environmental and            
 citizen groups worked to develop a language for the statutes that             
 give Alaska the authority to develop that program.  The intent of             
 the legislation was for the DEC to develop a program that complied            
 with the Clean Air Act in a manner that met federal requirements,             
 allowed efficient and cost effective processing of permits,                   
 required accountability from the DEC on matters relating to                   
 recovery of program costs, and insured the productivity of Alaska's           
 businesses while protecting the health and welfare of the state's             
 residents.  This legislature also intended for the DEC to implement           
 that bill in a manner that contained costs, minimized the number of           
 staff preforming air quality permit duties, fostered                          
 accountability, improved the efficiency of government and used it's           
 contracting authority, as appropriate, to undertake all alternative           
 methods of accomplishing duties under this act.  This statutory               
 legislation was passed in 1993.  Title Five Permit Program was                
 designed in compliance with air pollution laws of the federal                 
 government.  In Alaska it is estimated that 450 facilities will be            
 subject to the statutory legislation.                                         
                                                                               
 Number 1274                                                                   
                                                                               
 MR. STONE provided an overview of what the Department Environmental           
 Conservation has done to meet the intent of HB 167 and listed                 
 programs the DEC is in the process of developing.  The DEC has been           
 involved in developing regulations to obtain primacy of all                   
 important federal clean air programs.  The DEC reorganized, adding            
 the new Air Quality Maintenance Section.  This minimized the number           
 of staff preforming air quality duties and improved the efficiency            
 of how permits are processed which keeps costs low.  The DEC is               
 developing a small business assistance program to help smaller                
 facilities subject to these statutes.  General operating permits to           
 reduce the administrative burden on similar types of facilities               
 located throughout the state are being developed as well as                   
 streamlining the permitting of requirements related to oil                    
 exploration activities within the state.  Other programs being                
 developed include a certification program that will allow private             
 air pollution inspectors in the state to conduct air compliance               
 inspections therefore a substitute by those inspectors for the DEC            
 staff.  The Alaska Rural Electric Cooperative Association (ARECA)             
 and the department are working together to exempt small facilities            
 from permit requirements if their emissions are less than the                 
 emissions that trigger a permit requirement.  The DEC is also                 
 writing regulations that would simplify the application                       
 requirements, changing the EPA legalese into plain English so that            
 people can comply with those application requirements more easily.            
                                                                               
 Number 1361                                                                   
                                                                               
 MR. STONE said the DEC estimated the cost of a federal construction           
 permit program, based on proposed regulations that the EPA as put             
 forth, as $14 million would be funded by the federal budget and               
 user fees.  He said that it would cost the department $2.7 million,           
 the majority of which would be derived from user fees.                        
                                                                               
 Number 1440                                                                   
                                                                               
 MR. STONE gave an overview on the public process that the DEC uses            
 to develop regulations.  When the air bill was completed in the               
 summer of 1993, workshops were held to explain the new law and to             
 get public input on what type of public processes should be                   
 incorporated.  Using that information, a proposal was given and               
 approved by Commissioner Sandor which included the strawman                   
 regulation package distributed in December, 1993, with workshops              
 and video presentations to help clarify and get public input on the           
 most difficult aspects of that package.  On June 1, 1994,                     
 regulations were proposed with a 90-day public comment period                 
 combined with additional workshops.  After the 90-day period,                 
 Commissioner Sandor adopted regulations in the fall of 1994.  The             
 DEC continued to accept public recommendations through the winter             
 of 1995.  Throughout the past summer, the department held meetings            
 to address the industry stakeholder concerns.  In December,                   
 proposed regulations to address those concerns were submitted to              
 the EPA, who are in the process of reviewing the DEC's program and            
 determining if it meets the federal minimal requirements.                     
                                                                               
 Number 1558                                                                   
                                                                               
 REPRESENTATIVE RAMONA BARNES asked if the regulations were signed             
 into administrative code in December of 1994.                                 
 MR. STONE said yes they were.                                                 
                                                                               
 REPRESENTATIVE BARNES commented that the DEC is then going through            
 an amendment process because those regulations have been signed               
 into law.                                                                     
                                                                               
 MR. STONE said the DEC adopted the regulations and sent them to the           
 Department of Law (DOL) in the December of 1994.  He said the                 
 department has been involved in amending portions of those                    
 regulations.  He said provisions have been adopted in place of the            
 provisions that were in the December 5, 1994, adoption.                       
                                                                               
 Number 1600                                                                   
                                                                               
 REPRESENTATIVE BARNES asked Mr. Stone to supply those proposed                
 changes to the committee.                                                     
                                                                               
 MR. STONE stated that the regulations the DEC had adopted will not            
 become effective until the EPA approves the program.  He said he              
 would cover the parts of the regulations that received the most               
 comment.  The first was whether the DEC had exceeded federal                  
 requirements in order for the state to retain primacy in air                  
 quality regulations.  The second was whether or not the DEC provide           
 for all of the federal air pollution exemptions and the third was             
 what and how air pollution violations are excused.                            
                                                                               
 MR. STONE discussed the policy principals used by Commissioner                
 Sandor and Commissioner Burden for making decisions regarding the             
 regulations for the new program.  First, they wanted to develop               
 regulations that met the intent of the legislation.  Secondly, they           
 did not want to fundamentally alter the existing programs in the              
 state that provided for primacy of those programs.  Their concern             
 was to obtain primacy of the new programs adopted in the 1990 Clean           
 Air Act, namely Title Five.                                                   
                                                                               
 MR. STONE addressed the DEC analysis of the concern raised by the             
 Alaska Stakeholder Coalition (ASC).                                           
                                                                               
 Number 1750                                                                   
                                                                               
 REPRESENTATIVE BARNES asked for an explanation of the Alaska                  
 Stakeholder Coalition.                                                        
                                                                               
 MR. STONE said the Alaska Stakeholder Coalition was a group of                
 industry representatives that assembled for the purpose of                    
 providing uniform comment on these regulations.  One of the Alaska            
 Stakeholder Coalition remaining concerns is regarding excess                  
 emissions which are the air pollution violations that can be                  
 excused.  The industry feels that the DEC should provide                      
 affirmative defense for more types of violations.  Meanwhile the              
 EPA has informed the DEC that their adopted regulation provides an            
 affirmative defense for more "violations" than we are allowed to              
 provide if the state is to get primacy for this program.                      
                                                                               
 Number 1813                                                                   
                                                                               
 CO-CHAIRMAN GREEN asked if the DEC were to grant an affirmative               
 defense for more types of violations then the state might lose                
 primacy.                                                                      
                                                                               
 MR. STONE said that would be one of the reasons.  The second major            
 concern of the EPA is the ambient air quality impact requirements             
 which relate to those measures incorporated into Alaska's 1980                
 revision of the implementation plan giving control over granting              
 construction permits.  The contention is that Alaska is applying              
 that program in excess of what is allowed under federal law.  In              
 this new regulation package, the DEC did not endeavor to change               
 that 1982 prevention of significant deterioration (PSD) plan.  The            
 plan is a set of measures distributed in the compliance burden                
 among the large sources of pollution in the state.  In order to               
 revise that plan, compliance burdens would have to be redistributed           
 among those facilities or different facilities in order to obtain             
 primacy for that program.  He said the DEC would be willing to                
 undergo this process, but did not do it because of the undertakings           
 of the Title Five requirements and the lack of staff resources.               
                                                                               
 MR. STONE said that the Alaska Stakeholder Coalition believes the             
 federal government has exemptions not currently recognized by state           
 regulations.  The first has to do with insignificant pollution                
 sources which are the small pollution emitting activities within a            
 facility that do not have to be listed on the applications.  The              
 EPA has told the DEC that the proposed amendments will need to be             
 altered over time because it goes beyond what the federal law                 
 allows.  The DEC feels that as the application process continues,             
 they will get a feel for what pollution sources can or cannot be              
 exempted.                                                                     
                                                                               
 Number 1975                                                                   
                                                                               
 MR. STONE said there is some concern over temporary source                    
 exemptions, especially regarding exemptions for oil exploration               
 activities, that may have been provided under the Clean Air Act.              
 The Clean Air Act gives some exemptions for modifications and                 
 pollution increases that are classified by the cause of the                   
 pollution.  In Alaska, exemptions are not given for the cause of              
 the pollution but rather by the amount of the pollution.  This type           
 of approach was deemed more flexible.  The EPA has informed the DEC           
 that they are not reviewing as much pollution increases as is                 
 expected and are not sure if the Alaska program is adequate to meet           
 the federal requirements.                                                     
                                                                               
 Number 2048                                                                   
                                                                               
 MR. STONE said the final Alaska Stakeholder Coalition concern has             
 to do with audit requirements such as how user fees are collected             
 and how the DEC is accountable.                                               
                                                                               
 Number 2078                                                                   
                                                                               
 REPRESENTATIVE BARNES asked if the user fees collected go into the            
 general fund.                                                                 
                                                                               
 MR. STONE said that the user fees have gone into the general fund,            
 but when the program is approved by the EPA, the user fees will go            
 into a clean air protection fund.                                             
                                                                               
 CO-CHAIRMAN GREEN remarked that this sounded like a dedicated fund.           
                                                                               
 ROBERT REGES, Assistant Attorney General, Natural Resources                   
 Section, Civil Division, Department of Law, answered that it was a            
 dedicated fund.  He added that it is exempt from the constitutional           
 consideration because the federal clean air act overrides it and              
 was approved by the legislature back in 1993.                                 
                                                                               
 MR. STONE said the Alaska Stakeholder Coalition requested                     
 streamlined administrative procedures for issuing construction                
 permits which was a recent request and that the DEC is not against            
 making those changes.  Finally, the last Alaska Stakeholder                   
 Coalition concern is with the DEC's ability to specify terms and              
 conditions in permits to ensure compliance with the state air                 
 quality statutes and regulations.  The statutes limit the                     
 establishment of those permit terms both in monitoring and how many           
 permit terms can be allowed without a regulation process.                     
                                                                               
 MR. STONE said that the DEC would work with the various parties to            
 achieve consensus and would work to adhere to the legislators                 
 intent in the statutes.                                                       
                                                                               
 Number 2247                                                                   
                                                                               
 REPRESENTATIVE DAVIES asked if the $2.7 million operating budget              
 for air quality programs was paid entirely out of user fees.  He              
 also asked how much the federal government program would expect the           
 regulated community to pay in user fee burden.                                
                                                                               
 MR. STONE said 80 percent of the DEC figure is user fees.  He said            
 the federal government figure would be $5.8 million for user fees.            
                                                                               
 REPRESENTATIVE DAVIES read from a section of the constitution that            
 dealt with dedicated funds under federal statutes.  He said that              
 Alaska is voluntarily entering into agreement with a dedicated fund           
 because the state is seeking primacy.                                         
                                                                               
 Number 2230                                                                   
                                                                               
 REPRESENTATIVE AUSTERMAN asked if interpretations of the federal              
 clean air laws have been challenged by the state of Alaska.                   
                                                                               
 Number 2236                                                                   
                                                                               
 MR. STONE said the state has had a long history of challenging the            
 EPA on interpretations on an ongoing basis.  He said the DEC has              
 created regulations based on Alaska's needs which the DEC felt met            
 the minimum requirements of the federal law.  He added that based             
 on what the EPA has told him today, the DEC will continue to                  
 challenge their interpretations.                                              
                                                                               
 Number 2265                                                                   
                                                                               
 REPRESENTATIVE AUSTERMAN asked how challenges are presented.                  
                                                                               
 MR. STONE said that in most cases the state needs to convince the             
 EPA of our position through on going discussion and contact.  Once            
 the EPA is convinced, flexibility is gained in the ability to                 
 implement the program.                                                        
                                                                               
 Number 2390                                                                   
                                                                               
 CO-CHAIRMAN GREEN asked about the cases where the DEC is exceeding            
 the federal requirements on applications.                                     
                                                                               
 MR. STONE said the problems with the EPA involve not requiring                
 enough information on operating permit applications.  He said the             
 only case where they would exceed the federal requirement would be            
 in regards to air pollution nuisance.  The state has an air                   
 pollution prohibited statute which directs the operator of a                  
 facility to ensure that they do not create an air pollution                   
 nuisance and does not allow for the federal excursion in cases of             
 emergency.                                                                    
                                                                               
 Number 2450                                                                   
                                                                               
 CO-CHAIRMAN GREEN asked if the EPA would allow an excursion for               
 that period because it is considered a nuisance.                              
                                                                               
 TAPE 96-3, SIDE B                                                             
 Number 000                                                                    
                                                                               
 MR. STONE said no, the affirmative defense is for unplanned events            
 and the federal requirements say that a state can provide an                  
 affirmative defense to something that exceeds a technology based              
 emission standard and is in effect only if an emergency occurs.               
                                                                               
 Number 068                                                                    
                                                                               
 CO-CHAIRMAN GREEN asked if this was an EPA requirement in all                 
 states.                                                                       
                                                                               
 MR. STONE said it is an EPA requirement of the Title Five permit              
 program.  He added that all states may have different standards in            
 regards to start-up and shut-down conditions within that standard.            
 Some federal standards have start-up and shut-down conditions.                
                                                                               
 CO-CHAIRMAN GREEN asked if Alaska's penalty for a start-up                    
 condition, that wasn't an emergency, would be a problem in this               
 state but might not be a problem in another state and wouldn't that           
 exceed the EPA minimum.                                                       
                                                                               
 Number 145                                                                    
                                                                               
 MR. STONE said in this state if someone exceeded the DEC standards            
 on start-up and shut-down the state could take enforcement action,            
 but wouldn't have to do so.  The DEC reviews those situations on a            
 case by case basis to see if it needs correction over time.                   
 Addressing Co-Chair Green's question, he said that the DEC would              
 have to review what other states were doing, he then went on to               
 review why the DEC had addressed this issue in this manner.                   
                                                                               
 Number 170                                                                    
                                                                               
 MR. STONE said that in the federal model it depends upon the                  
 emissions standard type, the affirmative defense that has come into           
 controversy, both with the Alaska Stakeholder Coalition and the               
 EPA, comes from Title Five of the Clean Air Act.  This specifically           
 relates to technology based emission standards.  Those standards              
 are not used to protect public health.  In the state implementation           
 plan developed in 1972, revised in 1982, there are health based               
 emission standards.  Therefore the federal Title Five affirmative             
 defense does not apply to those standards, and instead the DEC                
 normal enforcement discretion is used.  This discretion models the            
 EPA's discretion.  Each state has developed different emissions               
 standards which sometimes accommodate a start-up and shut-down                
 process.  The state of Alaska did not accommodate this process.               
                                                                               
 Number 198                                                                    
                                                                               
 CO-CHAIRMAN GREEN reiterated his question as to whether or not it             
 exceeded federal minimum requirements.                                        
                                                                               
 Number 201                                                                    
                                                                               
 JOHN KUTERBACH, Environmental Engineer, Division of Air and Water             
 Quality, Department of Environmental Conservation, explained the              
 air quality control plan that has been in place in the state since            
 1972.  He said if the DEC were to show the EPA that extra emissions           
 for the start-up and shut-down process won't cause an ambient air             
 quality problem in our state they would allow an exemption.  The              
 DEC is in the process of developing proof of this and will then               
 present revisions of Alaska regulations to incorporate these                  
 exemptions.                                                                   
 Number 228                                                                    
                                                                               
 REPRESENTATIVE AUSTERMAN asked if there were disparity concerns               
 between the federal requirements generalized across all states.               
                                                                               
 Number 295                                                                    
                                                                               
 MR. STONE said that the EPA just monitors the DEC to make sure that           
 it meets the fundamental purpose of the Clean Air Act.  Each state            
 can tailor a mix of control strategies and regulations.                       
                                                                               
 Number 320                                                                    
                                                                               
 REPRESENTATIVE SCOTT OGAN said he heard of companies that cannot              
 start-up and shut-down facilities without being in violation of               
 regulations and asked Mr. Stone to respond to this.                           
                                                                               
 MR. STONE said that the DEC has set up a guide on how to request              
 changes to those standards so that companies can comply.                      
                                                                               
 CO-CHAIRMAN GREEN asked if any of the new regulations require any             
 additional permitting to an existing facility.                                
                                                                               
 Number 370                                                                    
                                                                               
 MR. STONE said all existing facilities will have to submit an                 
 application in order to get an operating permit that meets the new            
 operating permit program requirements.                                        
                                                                               
 Number 397                                                                    
                                                                               
 CO-CHAIRMAN GREEN received confirmation that the new operating                
 permits would be required nationwide.  He then asked if the DEC               
 will follow the same guidelines as the EPA with regards to allowing           
 existing facilities to make certain changes without requiring                 
 construction permits.                                                         
                                                                               
 Number 435                                                                    
                                                                               
 MR. STONE said that facilities can make changes and would only need           
 a construction permit if the change they made pushed them past a              
 designated emission level.  This system was kept because it was               
 felt it allowed for more flexibility and was simpler to use, but              
 this system has been questioned by the EPA.  The federal provisions           
 differ in that they allow for exemptions depending on the type or             
 cause of pollution increase.                                                  
                                                                               
 Number 535                                                                    
                                                                               
 DAVID ROGERS, Attorney and Lobbyist, Council of Alaska Producers,             
 representing the Alaska Stakeholder Coalition (ASC), was next to              
 testify.  He said the ASC is an ad hoc group that industry                    
 representatives formed a year ago to develop and communicate a                
 unified industrial position on issues of general concern.  He                 
 stated that other members of this group, besides the Council of               
 Alaska Producers, are the Alaska Oil and Gas Association, the                 
 Pacific Seafood Processors Association, Chugach Electric, Homer               
 Electric Association, Alyeska Pipeline Service Company, UNOCAL,               
 Anchorage Municipal Light and Power, Golden Valley, and ARECA.  He            
 said that Alaska Stakeholder Coalition still has concerns in four             
 general categories which include regulations that exceed minimum              
 federal requirements, regulations that are unrealistic, industry              
 proposals that take advantage of opportunity for streamlining the             
 permitting process, and industry proposals for increased                      
 accountability.                                                               
                                                                               
 Number 745                                                                    
                                                                               
 SVEND A. BRANDT-ERICHSEN, Attorney, Heller Ehrman White and                   
 McAuliffe, representing Chugach Electric was next to testify.  He             
 said that the industries feel that although the DEC has done a good           
 job there are some areas that they are not presently addressing               
 that they should.                                                             
                                                                               
 Number 788                                                                    
                                                                               
 CO-CHAIRMAN GREEN requested and received confirmation that these              
 concerns deal with those falling under the DEC's control.                     
                                                                               
 Number 835                                                                    
                                                                               
 REPRESENTATIVE BARNES asked if these are regulations that the DEC             
 is trying to amend.                                                           
                                                                               
 MR. BRANDT-ERICHSEN answered the issues currently of concern are              
 those raised in response to the development of the December, 1994             
 regulations.  Comments were made that winter and were not addressed           
 when those regulations finally came out of the Department of Labor            
 and were adopted in May of 1995.  These issues have been addressed            
 and are currently under the EPA's review.                                     
                                                                               
 MR. BRANDT-ERICHSEN said the Congress, through the EPA, required              
 the development of operating permit programs by the states, Alaska            
 already had a combined construction and operating permit program.             
 A new or existing facility went through the same permit process               
 with a renewal time of five years.  With the federal mandate, the             
 DEC had to split their program into two parts.  One part being a              
 construction permit program for new facilities or changes to                  
 existing facilities that are issues only once.  The second part is            
 an operating permit program which is renewed every five years and             
 is supposed to incorporate existing requirements that come out of             
 air law.                                                                      
                                                                               
 Number 934                                                                    
 MR. BRANDT-ERICHSEN said this change in federal law has caused the            
 DEC to change the existing operating permit system.  Currently, the           
 facility that gets an operating permit is now obligated to self               
 monitor and report their compliance.  In exchange for this,                   
 industry is supposed to get a clear understanding of what rules               
 apply.  Alaska's divergence from the EPA model eliminates the EPA's           
 guidance.  One of the new requirements is a national ambient air              
 quality standard, which is the surrounding air quality.  The EPA              
 has stated that this standard is evaluated when it is new or                  
 modified and should not be a new permit limit in the operating                
 permit program which the DEC has done.  Facilities are required to            
 determine what effect they have on surrounding air quality and                
 proposed permit terms and conditions are based on those findings.             
 Mr Brandt-Erichsen said these terms should be in the construction             
 permits.                                                                      
                                                                               
 Number 1110                                                                   
                                                                               
 CO-CHAIRMAN GREEN inquired why an ongoing industry operation should           
 have to redo their operating permits.                                         
                                                                               
 Number 1136                                                                   
                                                                               
 MR. BRANDT-ERICHSEN said that any time that you try to figure out             
 the impact of a facility on the surrounding air; you must, at                 
 first, try to use a model.  These models tend to be conservative              
 and overestimate the impact.  Usually, other methods of accurately            
 predicting the air quality levels are needed but they are more                
 expensive.                                                                    
                                                                               
 Number 1180                                                                   
                                                                               
 CO-CHAIRMAN GREEN asked if this cost was borne by the state or the            
 applicant.                                                                    
                                                                               
 Number 1239                                                                   
                                                                               
 MR. BRANDT-ERICHSEN said a large change to an existing facility is            
 proposed, the applicant is responsible for gathering that                     
 information.  The DEC's requirement that all facilities undergo the           
 ambient air standard is because a number of facilities were                   
 permitted that did not have this type of review.  The DEC is now              
 trying to get facilities to go back and do these reviews that                 
 should have been done all along.                                              
                                                                               
 MR. BRANDT-ERICHSEN said the second issue is the broad language               
 that the DEC has included allowing conditions it feels are                    
 necessary to implement the statute or the air regulations.  The DEC           
 said that this is specifically designed for unusual situations such           
 as odor problems, but the language does not specify these                     
 circumstances.                                                                
                                                                               
 Number 1326                                                                   
                                                                               
 MR. BRANDT-ERICHSEN said there is one other area in which the DEC             
 has exceeded the EPA's requirements and this is with non-road                 
 engines such as exploratory drilling rigs, floating fish processing           
 units and, in some cases, power generation.  The DEC is treating              
 these as temporary stationary sources rather than mobile sources              
 which means they need to get operating permits.  The EPA has                  
 developed protocol in which they would be regarded as mobile                  
 sources.                                                                      
                                                                               
 Number 1432                                                                   
                                                                               
 CO-CHAIRMAN WILLIAMS asked what are suggested changes to these                
 issues.                                                                       
                                                                               
 MR. BRANDT-ERICHSEN said the regulations could be narrowly drawn.             
 He felt that this provision does not belong in an operating permit.           
                                                                               
 Number 1471                                                                   
                                                                               
 MR. ROGERS said there are some specific additional requirements               
 that do belong in the program, but that they should be identified.            
                                                                               
 Number 1485                                                                   
                                                                               
 CO-CHAIRMAN WILLIAMS asked whether the Resources Committee could              
 drop or suggest new language.                                                 
                                                                               
 Number 1539                                                                   
                                                                               
 MR. BRANDT-ERICHSEN said that the statutes should note that the DEC           
 will specify the operating permit program requirements.                       
                                                                               
 Number 1570                                                                   
                                                                               
 MR. ROGERS said that the enabling legislation dealt with that issue           
 to some extent.  The provision is current law 010E, it discusses              
 the development of regulations in any situation where emission                
 standard limitation monitoring reporting requirements and                     
 compliance verification requirements are incorporated into more               
 than one permit.  We do not want an ad hoc decision if these things           
 affect more than one permit.                                                  
                                                                               
 REPRESENTATIVE OGAN asked for clarification of what industry is               
 looking for in the regulatory process.                                        
                                                                               
 Number 1692                                                                   
                                                                               
 MR. BRANDT-ERICHSEN talked about an existing facility applying for            
 an operating permit.  When a facility gets its operating permit and           
 there is something in it that they did not have to do before; that            
 means changes in the facility that were not anticipated.  He said             
 the impact of the facility on air quality is supposed to be                   
 evaluated when it is built or when it is modified.  If there are              
 particular problems with a facility that are discovered over time,            
 there are mechanisms in the Clear Air Act to deal with that.                  
 Particularly, if there are ambient air quality problems in an area,           
 there are major portions of the Clean Air Act that address                    
 specifically how that is supposed to be dealt with.  The state is             
 supposed to do a planning process to evaluate what the source of              
 the problems are in an area and deal with it on an area-wide basis            
 rather than individual existing facilities.                                   
                                                                               
 Number 1735                                                                   
                                                                               
 REPRESENTATIVE DON LONG asked if the presentation by Mr. Stone was            
 premature before we addressed ASC's problem.                                  
                                                                               
 MR. ROGERS answered that the representative was getting a different           
 view of these issues.                                                         
                                                                               
 Number 1830                                                                   
                                                                               
 MR. BRANDT-ERICHSEN stated his company has been working with the              
 Department of Environmental Conversation for 3 1/2 years on this              
 issue.  He said a number of the issues between them are well                  
 defined and there does not appear to be much middle ground.  While            
 the department portrayed a situation where they are penned between            
 the EPA and Alaska industry on the vast majority of the issues that           
 we really care about, that is not the case.  The department has               
 indicated their lack of willingness, given several opportunities to           
 change the regulations, to address the issues that we are raising.            
 He said there are some key issues, the two that he as identified,             
 that he doesn't feel that the department has any intention of                 
 correcting without some direction from his company.                           
                                                                               
 MR. ROGERS interjected the situation is at an impasse.                        
                                                                               
 CO-CHAIRMAN GREEN wanted more clarification from Mr. Brandt-                  
 Erichsen regarding the areas of differences with the DEC.                     
                                                                               
 Number 1958                                                                   
                                                                               
 MR. BRANDT-ERICHSEN said a good example is how modifications of               
 facilities are handled.  In the last set of regulations adopted in            
 December, the department adopted a different approach.  It was not            
 something that his company asked for although it would be favorable           
 for some companies if approved.  If the department were to adopt              
 the changes to the definition of modification that was suggested,             
 it would really simplify construction permitting for a number of              
 facilities.  The changes that were asked for include allowing us to           
 switch fuels at a facility without having to get a construction               
 permit; allowing us to change hours of operation due to changes in            
 conditions without any changes in capital structure or changes in             
 shifts or a change in throughput without having to get a                      
 construction permit.                                                          
                                                                               
 Number 2062                                                                   
                                                                               
 REPRESENTATIVE DAVIES asked clarification of the assertion that the           
 DEC was asked to make these exemptions and would not.                         
                                                                               
 MR. BRANDT-ERICHSEN replied that this issue was not responded to in           
 the most recent set of comments.  He said in October, his company             
 filed comments raising this issue.  The department prepared an                
 extensive response to comments, but this particular issue was not             
 addressed in that response.  In prior discussions and informal                
 settings, some in the DEC have said that it is inconsistent with              
 the definition of modification contained in statute.                          
                                                                               
 Number 2157                                                                   
                                                                               
 REPRESENTATIVE DAVIES asked if it was in October, 1995.                       
                                                                               
 MR. BRANDT-ERICHSEN answered that was the most recent time this               
 issue was raised.  It was also raised it February, 1995.  He noted            
 he is sure this issue was discussed before then.                              
                                                                               
 Number 2192                                                                   
                                                                               
 REPRESENTATIVE DAVIES asked Mr. Brandt-Erichsen to provide the                
 committee with a written detailed list of the issues, a issue                 
 background briefing paper on what the issues are that he                      
 specifically enumerated with the DEC.  REPRESENTATIVE DAVIES said             
 he just wanted to understand what the issues are.                             
                                                                               
 Number 2270                                                                   
                                                                               
 MR. BRANDT-ERICHSEN said he would provide a summary of comments on            
 the last set of regulations from the October filing.                          
                                                                               
 Number 2323                                                                   
                                                                               
 REPRESENTATIVE LONG queried about construction permits and asked,             
 without the exemption put in by the state are we not exceeding the            
 federal EPA standards?                                                        
                                                                               
 MR. BRANDT-ERICHSEN said the EPA does not have a construction                 
 permit program that applies to the type of sources that are being             
 talked about.  He said the problem is the EPA does not administer             
 this program, it is delegated to the states, it is a state program.           
 States are given a lot of latitude as to how they draw up their               
 construction permit program.  In this area, the EPA would not                 
 require a new permit for a facility, for example, that switched               
 fuels unless its fuel type was specifically specified in a permit.            
 CO-CHAIRMAN GREEN asked further clarification of the areas of                 
 difference between the stakeholder's and the DEC where the EPA                
 said, states we do not have limits, you establish them?                       
                                                                               
 MR. BRANDT-ERICHSEN responded that states have the authority to set           
 a different definition of modification .....end tape.                         
                                                                               
 TAPE 96-4, SIDE A                                                             
 Number 000                                                                    
                                                                               
 MR. BRANDT-ERICHSEN addressed violations and explained two types of           
 exceedencies.  Unexpected malfunctions and types of problems that             
 result in elevated emission levels may violate a standard.  The               
 current rules do deal with malfunctions or other unplanned events             
 that cause an exceedence.  He said a number of states do allow                
 unavoidable excess emissions that occur during start-up and shut-             
 down to be excused and the EPA has found that acceptable.  He said            
 he is talking about things that good air quality management                   
 practices can not correct.                                                    
                                                                               
 Number 286                                                                    
                                                                               
 REPRESENTATIVE DAVIES asked Mr. Brandt-Erichsen if he agreed with             
 the DEC's assertion that it is basically an EPA requirement that we           
 have to make this demonstration.                                              
                                                                               
 MR. BRANDT-ERICHSEN replied in order to have this change federally            
 recognized, we would have to get it incorporated into the State               
 Implementation Plan.  To get it into the State Implementation Plan,           
 we have to satisfy the EPA that it is not going to hurt our ability           
 to meet ambient air quality standards.  There would have to be a              
 demonstration.  The question is, who is going to be the advocate              
 for this?  Is the department going to put this on the companies               
 that care about this to do the whole thing, or is it going to be an           
 advocate for the process?  He said, until we get it into the state            
 program, we are not going to get anywhere in getting it into the              
 federal program.                                                              
                                                                               
 Number 339                                                                    
                                                                               
 REPRESENTATIVE DAVIES referred to the "advocate," and asked if this           
 implied also the question about who is going to pay for this.                 
                                                                               
 MR. BRANDT-ERICHSEN said it is part of carrying out the                       
 department's duties as well in managing the State Implementation              
 Plan to amend it as necessary, to manage that plan.  That has not             
 been the issue on the table.                                                  
                                                                               
 Number 524                                                                    
                                                                               
 MR. BRANDT-ERICHSEN said the industry is very concerned about                 
 having an operating permit program go into effect where industry              
 will be documenting compliance status, reporting compliance status,           
 certifying compliance status and be subject to citizen suit or                
 state action based on that certification without having this issue            
 addressed.                                                                    
                                                                               
 MR. BRANDT-ERICHSEN discussed the streamline construction permit              
 process that takes minor sources and gives them an expedited review           
 process.  If we are going to do additional work on this area, it              
 ought to be considered.  It will benefit a number of facilities in            
 the state, it would make things easier for a number of facilities             
 and should be given some consideration.                                       
                                                                               
 Number 596                                                                    
                                                                               
 MR. BRANDT-ERICHSEN talked about accountability, audits both                  
 performance and financial.  There has been a suggestion from                  
 industry that because of the amount of fees that will be collected            
 under this program that the way they are spent should be watched              
 closely.  The department has not been very open to the idea of a              
 productivity audit, they indicate they feel it will not be a good             
 use of resources.  We think it is something that will be needed, we           
 are going to have to take a look at how well this program is                  
 operating.  It is going to require a substantial "chunk of change"            
 from a lot of companies and they are concerned that their money not           
 be wasted.                                                                    
                                                                               
 Number 684                                                                    
                                                                               
 CO-CHAIRMAN GREEN wanted clarification that the agency was                    
 likewise, not in favor of this.                                               
                                                                               
 MR. BRANDT-ERICHSEN said the department's response to comments on             
 this issue did include a one or two page response which indicated             
 the DEC felt it inappropriate for them to initiate.                           
                                                                               
 Number 769                                                                    
                                                                               
 MR. ROGERS said other stakeholders were available on the                      
 teleconference line.                                                          
                                                                               
 Number 798                                                                    
                                                                               
 KATHRYN LAMAL, Golden Valley Electric, testified that the Coal                
 Burners of the Interior had worked with the DEC on the excess                 
 emissions.  The department is charging all the coal power plants              
 for their work on this issue.  She said her comments were in                  
 response to Representative Davies question about who was paying for           
 the work on the start-up, shut-down provision.                                
                                                                               
 Number 853                                                                    
                                                                               
 REPRESENTATIVE DAVIES followed up on the audit issue, he asked if             
 there are specific things that Mr. Brandt-Erichsen is concerned               
 about or is this a general performance audit.  He questioned what             
 the sore spots are.                                                           
                                                                               
 MR. ROGERS said, "bang for the buck," is the overall concern.                 
                                                                               
 Number 893                                                                    
                                                                               
 CARL HARMON, Chugach Electric, said we talk about industry here               
 paying the bill.  It is not just industry, it is the consumer.                
 Every dollar we talk about comes out of the consumer's pocket.                
                                                                               
                                                                               
 Number 950                                                                    
                                                                               
 STEVE TOROK, Environmental Protection Agency, came forward at the             
 request of Co-Chairman Green.  He said the EPA is willing to work             
 with the DEC in addressing the issues as the EPA reviews the DEC's            
 submittal and, hopefully, a submittal to the federal register for             
 an action on the state's proposal.                                            
                                                                               
 Number 1000                                                                   
                                                                               
 CO-CHAIRMAN GREEN asked Mr. Torok if the department was right or              
 are the operators are right.                                                  
                                                                               
 MR. TOROK said it is difficult to answer in a generality because              
 the issues are very specific.  As we are approaching the completion           
 of the review of the state's submittal, there a number of areas               
 where we do have problems with that submittal.  We commend the                
 state and the DEC for putting together a program they think is in             
 the best interest of all Alaskans.  Unfortunately, in some areas,             
 they push the envelope a little too far in terms of what the EPA              
 can approve.  We will provide those comments to the state in those            
 areas.  Some of those areas are serious enough that will probably             
 require some modification in the regulations.  While we can still             
 proceed ahead with a public Federal Register action on the state              
 submittal, we will need from the department a commitment that they            
 feel they can get these deficiencies corrected prior to the time we           
 are ready to take a final Federal Register action.                            
                                                                               
 MR. TOROK said among other issues, it was most prudent to give                
 interim approval to a portion of the state's program now, with                
 every indication that these issues can be worked out later in the             
 program without having to delay the federal approval.  He said the            
 EPA will work with the state and the stakeholders to find the                 
 middle ground.  He said it was interesting to hear that the state             
 has not taken full advantage of the flexibility that the federal              
 law allows while, at the same time, there areas where the state has           
 pushed the envelope a little too far in that flexibility and the              
 EPA is going to have to push back to reach a middle ground.                   
                                                                               
 Number 1180                                                                   
                                                                               
 CO-CHAIRMAN GREEN asked the department to respond to the                      
 stakeholder's testimony.  The chairman said he planned to dismiss             
 this hearing and take the issue up again after the committee has              
 received forthcoming information and the lists.                               
                                                                               
 Number 1215                                                                   
                                                                               
 MR. STONE said he wanted to make it clear that the department did             
 not establish any new air pollution control standards during this             
 regulation process.  All of the existing standards that were in               
 effect since 1972 and 1980, formed the basis of the new program.              
 He said, what has changed is the new operating permit program                 
 requires a lot more information about compliance status.  So, both            
 the DEC and the people that submit applications have to provide               
 much more scrutiny of what the compliance status of the facility is           
 with those existing air pollution control requirements.  He felt              
 that is where some of the differences in agreement are coming from.           
 The DEC laid out a couple of processes in this last adoption to               
 help address that:  (1) We laid out a guide on how to change the              
 air pollution control requirements so that industry can comply with           
 them.  Obviously, Commissioner Burden was concerned that he did not           
 want to be in the position of providing all of these new standards            
 for facilities that may not be doing much at all to control                   
 pollution.  The DEC recognizes that it needs to strive for a                  
 balance there.  The important thing being that we still make sure             
 that that new standard will provide clean air surrounding the                 
 facility or air that does not exceed the federal air standards.               
                                                                               
 CO-CHAIRMAN GREEN clarified that most of that was on new facilities           
 but the one the issue raised is with existing facilities and new              
 permitting.                                                                   
                                                                               
 MR. STONE replied that is an existing facility requirement.  He               
 said most of the facilities that have that problem are existing               
 facilities, facilities that have been in Alaska for a long time.              
                                                                               
 CO-CHAIRMAN GREEN stated that there is a difference in opinion.               
 The department's view and the stakeholder's view.  There still is             
 a difference of opinion whether that is necessary.                            
                                                                               
 Number 1348                                                                   
                                                                               
 REPRESENTATIVE DAVIES said as he understood the stakeholder's                 
 argument, they are saying there were some requirements that were              
 originally required in the construction permit having to do with              
 ambient air quality that are now appearing in the operating permit.           
 He asked Mr. Stone if he agreed with his statement.                           
                                                                               
 Number 1364                                                                   
                                                                               
 MR. STONE replied that the stakeholders were addressing the ambient           
 air quality standards.  Those are the standards that the EPA has              
 established that the state of Alaska has to meet everywhere in the            
 state.  It is assumed, that if the air quality concentration of               
 those contaminants is below the standard, then the air will be                
 healthy.  If it is above that standard, then it is unhealthy.  In             
 the state of Alaska, the program that was developed in 1972 and               
 carried forward imposed the compliance burden on big sources of air           
 pollution.  Basically, what we said is you have to comply with the            
 ambient air quality standards surrounding your facility.  There are           
 240 big facilities in the state of Alaska.  Now, when the operating           
 permit program comes into effect they have to show us how they are            
 going to comply with ambient air quality standards.  That is a                
 requirement of the Operating Permit Program.  This is difficult in            
 some cases.  Mr. Stone said he and Commissioner Burden created a              
 document to help people get through that process.                             
                                                                               
 Number 1442                                                                   
                                                                               
 REPRESENTATIVE DAVIES asked Mr. Stone to specifically address the             
 construction permit versus the operating permit.                              
                                                                               
 Number 1474                                                                   
                                                                               
 MR. STONE said the state of Alaska, up until these regulations take           
 effect, had a permit program that not only was a construction                 
 permit, it was also a operating permit; a combined permit system.             
 The purpose of that permit program since 1972 was to make sure that           
 facilities complied with the stack emission standards and the                 
 ambient air quality standards.  So, that is what was used over time           
 for that vehicle.  That provides for primacy of our program. In the           
 air bill that was passed in 1993, that was broken up into two                 
 programs.  One was a construction permit program that would be for            
 new industrial expansion in an area, or increased industrial                  
 expansion to an existing facility and that would require a review             
 of that facility before the permit construct was given along with             
 an opportunity for public comment.                                            
                                                                               
 Number 1504                                                                   
                                                                               
 CO-CHAIRMAN GREEN asked Mr. Stone if the situation is an attitude             
 difference more than a factual difference.  He said he remembered             
 asking several times if the DEC felt it was exceeding federal                 
 requirements.  CO-CHAIRMAN GREEN stated that the stakeholders said            
 yes, and he felt from Mr. Torok that there are some cases, and two-           
 thirds of the testimony that maybe you are exceeding requirements.            
                                                                               
 Number 1574                                                                   
                                                                               
 MR. STONE said a lot of it has to do with interpreting regulations            
 and his responsibility is to make sure the department's program is            
 approved by the federal administrator.  MR. STONE agreed that what            
 he does for purposes of having a program approved by the federal              
 administrator is at odds with what people asking him to do.                   
                                                                               
 Number 1626                                                                   
                                                                               
 MR. STONE said with respect to adjusting the start-up, shut-down              
 standards for the coal burners, the EPA was present at one meeting            
 to make sure that everyone understood what the DEC has to do to               
 meet the EPA's concerns.  He said the DEC's priority system has               
 been to issue construction permits for industrial expansion in the            
 state which is priority number one.  Priority two is to work with             
 facilities on their compliance problems.  There is not much staff             
 left to help other people beyond that.                                        
                                                                               
 Number 1664                                                                   
                                                                               
 CO-CHAIRMAN GREEN asked if there any merit to the state wanting to            
 have conditions, restriction, requirements in excess of what is               
 absolutely required by the EPA.                                               
                                                                               
 Number 1691                                                                   
                                                                               
 MR. STONE said there are situations in which the federal minimum              
 requirements do not provide certain protections from air pollution            
 to the public.  He said the department has a threshold for                    
 incinerators that is greater than, for permit requirements, what a            
 lot of people would like.  The department's incinerator permit                
 threshold was established for federal primacy only.  It does not              
 provide any additional health protection to the public.  He gave              
 other examples such as odor control plans for facilities burning              
 old sewage sludge and cancer causing pollutants such as chloroform            
 from pulp mills.                                                              
                                                                               
 Number 1770                                                                   
                                                                               
 LEONARD D.VERRELLI, Director, Division of Air and Water, Department           
 of Environmental Conservation, said we are talking around whether             
 the department can or can not be more strict than the federal                 
 government.  He said that was part of the statutory development.              
 There were instances where the DEC started regulations different              
 that the federal government such as the ammonia standards for                 
 UNOCAL.  He said, we have had that ability since 1972, we go beyond           
 the feds anytime we wanted to, it was there for our taking.  We did           
 not abuse that authority, we did it when the public came in and               
 asked us to do that. In the statute, there is a provision that says           
 if the state wants to go beyond the federal government, or beyond             
 the statutes, there is a board of peers who reviews the need for              
 that regulation.  For the onerous things, the DEC has a provision             
 in statute to take care of that, what we are dealing with in the              
 discussion here is very minute things that we have always had the             
 ability to do to protect the ambient air.  What we are leaving out            
 of the discussion today is the public.  We have heard from the                
 state side and the EPA side, we have not heard from the public who            
 also has input in this.  Therein lies the problem.  The EPA has               
 given us 26 pages of input.  The most important thing that we have            
 to face today, we want primacy, you folks told us you want primacy.           
 That is the first thing we have to do.                                        
                                                                               
 Number 1893                                                                   
                                                                               
 C0-CHAIRMAN GREEN said the areas you feel you need to have more               
 stringent requirements are in the remote areas where there are big            
 facilities; and maybe in the metropolitan areas, you have not                 
 restricted enough.                                                            
                                                                               
 Number 1920                                                                   
                                                                               
 CO-CHAIRMAN WILLIAMS asked if the public had the opportunity to               
 comment on the EPA's comments.                                                
                                                                               
 MR. VERRELLI said EPA's comments had just been received and are 26            
 pages long.  He said the DEC hopes the committee and others will              
 evaluate the department's submission.  It is in the negotiation               
 phase.  When we decide certain things have to go to regulation to             
 be fixed, it will go out for public comment.                                  
                                                                               
 Number 1920                                                                   
                                                                               
 MR. VERRELLI stated the committee meeting went beyond what the                
 public has had opportunity to comment on.                                     
                                                                               
 CO-CHAIRMAN WILLIAMS clarified that the public has already had the            
 opportunity to comment on it.                                                 
                                                                               
 Number 1982                                                                   
                                                                               
 REPRESENTATIVE DAVIES referred to the argument from the                       
 stakeholders regarding start-up and shut-down, and said the DEC               
 does not disagree with trying to seek that exemption but it is                
 going to take some time to do it.  The stakeholder's concern was,             
 without that exemption in place, putting in the new requirements              
 that forced industry to report these violations, they are exposing            
 themselves to some potential losses.                                          
                                                                               
 Number 2027                                                                   
                                                                               
 MR. STONE said the new program provides that you can incorporate              
 compliance schedules within the permit.  So, you can accommodate              
 situations where somebody may not be complying at the time you                
 issue the permit.  The permit life is five years.  Once the permit            
 is issued, the owner and operator is shielded from any intervention           
 by third parties or the state.                                                
                                                                               
 Number 2074                                                                   
 REPRESENTATIVE DAVIES asked if the compliance schedule specifically           
 provides an exemption for start-up and shut-down conditions.                  
                                                                               
 MR. STONE said it could possibly.  There is flexibility there.                
                                                                               
 Number 2088                                                                   
                                                                               
 REPRESENTATIVE OGAN said he hoped the department could come up with           
 something more than a five year compliance schedule type permit.              
                                                                               
 Number 2122                                                                   
                                                                               
 BILL WALKER, Division of Air and Water, Department of Environmental           
 Conservation, commented for the record that the start-up, shut-down           
 provision, (indisc.--repeated paper tearing, shuffling) we proposed           
 it in the strawman version, we proposed it in the formal proposal             
 and we received comment from the EPA that the DEC can not do this             
 without the demonstration.  The DEC decided, at that time, that we            
 had a choice of either going with a case-by-case EPA approval for             
 every permit, which was not going to work for industry, or go with            
 what we have talked about developing for the future and which                 
 Representative Ogan has asked us to do.                                       
                                                                               
 Number 2165                                                                   
                                                                               
 CO-CHAIRMAN GREEN announced the committee schedule for January 19,            
 1996 was HB 341, tax appeal process.                                          
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 There being no further business to come before the House Resources            
 Committee, Chairman Green adjourned the meeting at 5:21 p.m.                  
                                                                               

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