Legislature(2013 - 2014)SENATE FINANCE 532
02/26/2013 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB27 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 27 | TELECONFERENCED | |
| + | SB 26 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
February 26, 2013
9:10 a.m.
9:10:37 AM
CALL TO ORDER
Co-Chair Meyer called the Senate Finance Committee meeting
to order at 9:10 a.m.
MEMBERS PRESENT
Senator Pete Kelly, Co-Chair
Senator Kevin Meyer, Co-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
Senator Anna Fairclough, Vice-Chair
ALSO PRESENT
Daniel Sullivan, Commissioner, Department of Natural
Resources; Larry Hartig, Commissioner, Department of
Environmental Conservation.
PRESENT VIA TELECONFERENCE
Joseph Sebastian, Kupreanof, Self.
SUMMARY
SB 26 LAND DISPOSALS/EXCHANGES; WATER RIGHTS
SB 26 was SCHEDULED but not HEARD.
SB 27 REGULATION OF DREDGE AND FILL ACTIVITIES
SB 27 was HEARD and HELD in committee for further
consideration.
Co-Chair Meyer clarified that Commissioner Sullivan
presented a general overview on permitting in the state
that related to both bills.
9:13:00 AM
DANIEL SULLIVAN, COMMISSIONER, DEPARTMENT OF NATURAL
RESOURCES, stated that SB 27 was part of an important
multi-year effort from the Parnell administration on
permitting reform and modernization that had "strong
bipartisan support" from the legislature. In addition to SB
26 and SB 27, the governor introduced SB 59 - Oil & Gas
Exploration/Development Areas that also dealt with
permitting issues. He explained that his presentation
titled "Statewide Permitting Reform" (copy on file under SB
26) placed the permitting reform and modernization efforts
by the Parnell administration in a broader perspective of
the three bills, how they fit together, and in the context
of trends throughout the country.
9:14:24 AM
Commissioner Sullivan discussed Slide 2:
"Importance of Permitting Reform for Alaska's
Competitiveness."
Permitting reform has bipartisan, national and local
recognition and support.
•Permitting reform is a bipartisan effort as
policymakers realize the economic benefits of allowing
large-scale development projects to proceed in a
responsible, timely manner
•States as politically diverse as California,
Massachusetts, Indiana, and Kansas are fully engaged
in modernizing their permitting processes
•The Federal government also recognizes the issues and
has undertaken initiatives to reduce costs, simplify
the system, and eliminate redundancy and inconsistency
•Last year (February 2012), The Economist ran a cover
story called "Over-regulated America" in which it
concluded that "America needs a smarter approach to
regulation" that will "mitigate a real danger: that
regulation may crush the life out of America's
economy"
•In Newsweek (June 2011), President Bill Clinton
lamented that it can take three years or more to
permit major economic development projects. One of his
top recommendations to put Americans back to work was
to speed up the regulatory approval process and grant
state waivers on environmental rules to hasten start
times on construction projects
Commissioner Sullivan pointed out that the administration's
permitting reform was part of a national, bipartisan trend.
After the economic downturn many states primary focus
became permitting reform and modernization.
Commissioner Sullivan turned to Slide 3:
"Importance of Permitting Reform for Alaska's
Competitiveness."
Permitting reform is a national issue affecting U.S.
competitiveness.
•Potential investors sometimes express reluctance to
pursue projects in the U.S. and Alaska because of the
ever-present risk of permitting delays and litigation
•In 2012, the investment firm Behre Dolbear Group,
which undertakes an annual global survey of mineral
sector investment, ranked the United States last (tied
with Papua New Guinea) out of 25 countries in the
category of "permitting delays"
o "Permitting delays are the most significant
risk to mining projects in the United States"
o States are negatively impacted by federal rules
that they are bound to enforce resulting in a
7- to 10-year waiting period before mine
development can begin
o Australia is one of the countries with the
fewest permitting delays
•Contrast Alcan Highway construction
Commissioner Sullivan stressed that the issue was
critically important to the administration, demonstrated by
the introduction of three permitting bills this session.
Commissioner Sullivan referenced Slide 4:
"Importance of Permitting Reform for Alaska's
Competitiveness."
Jobs and the Environment are Undermined by Permitting
Delays and Overregulation
•While an overly burdensome regulatory system can
discourage investments and job creation, it can also
undermine, not enhance, environmental protection
•When companies forgo investing in places like Alaska
and the U.S.-places with very high environmental
standards-because of regulatory delays, it can result
in passing energy and mineral investment to nations
with substandard environmental regulations and little
capacity or desire to protect the environment
o Last year the Associated Press estimated that 5
to 20 million tons of oil leaked a year in
Russia. At even the lower end, that would be the
equivalent of a Deepwater Horizon blowout about
every two months
o Russia experienced approximately 18,000 oil
pipeline ruptures in 2010 - the figure in the
U.S. for the same year was 341
•The global environment would be much better off if
hydrocarbons and other natural resources were produced
in countries with the highest environmental standards
rather than some of the lowest
Commissioner Sullivan expounded that the administration's
goal was to maintain environmental standards and believed
that Alaska had some of the highest environmental standards
in the world. Establishing permitting efficiency created
certainty and was not about "cutting corners".
Commissioner Sullivan moved to Slide 5:
"Importance of Permitting Reform for Alaska's
Competitiveness."
Timely, predictable, and efficient permitting is
critical to other statewide strategies
Secure Alaska's Future: Strategic & Critical Minerals
I. Undertake a statewide assessment of Alaska's
strategic mineral potential-millions budgeted for this
project
II. Provide support for the development of known or
highly prospective strategic mineral occurrences
throughout Alaska through infrastructure partnerships
and incentives
III. Improve the structure and efficiency of
permitting processes in order to expedite mineral
development, including strategic minerals
IV. Deepen partnership and cooperation with the
federal government, local governments, Native
corporations, and other potential new entrants to
encourage domestic exploration, development, and
processing of REEs and other strategic minerals
V. Attract new investment and markets for Alaska's
abundant mineral resources
Secure Alaska's Future: Oil
I. Increase production by making Alaska more
competitive
II. Ensure the permitting process is structured and
efficient
III. Facilitate and incentivize the next phase of
North Slope development
IV. Promote Alaska's resources and positive investment
climate to world markets
Commissioner Sullivan reviewed Slide 6:
"Statewide Permitting Reform -Strategy-."
DNR has been working with a team from DEC, ADF&G, and
LAW to develop and advance strategies that aim to:
I. Improve agencies' internal permitting structure to
create a more efficient, timely, and certain process
II. Enhance coordination within different state
departments and with different entities and
stakeholders throughout the state
III. Seek input from the public about the permitting
process including input from municipalities, industry
and non-governmental organizations
IV. Improve coordination between the state and the
federal government-federal permitting issues have a
strong influence on state projects
V. Anticipate and plan for permitting the next phases
of resource development, e.g. the Shale Oil Task Force
Objective: Improve the State of Alaska's permitting
processes in order to advance the public interest by
ensuring projects are permitted in a timely,
predictable and efficient manner while safeguarding
the environment.
Commissioner Sullivan emphasized that the permitting bills
were essential for accomplishing the permitting reform
strategies.
9:20:26 AM
Commissioner Sullivan turned to Slide 7:
"Statewide Permitting Reform -Significant Progress
Made-."
•In FY12, the Legislature provided approximately $2.7
million in operating funds for the Division of Mining,
Land & Water to create efficiency, timeliness and
certainty in the permitting process
•We utilized capital funding from FY12 ($2.5M for the
Unified Permit Project and Document Management) to
focus on business management software and services
•In FY13, the Legislature approved the continuation of
FY12 operating funds as part of the ongoing base for
permitting and an additional $950.0 to cover increased
personnel costs and fill vacant positions focused on
permitting
o FY13 capital budget included $3.3M to continue
work on the Unified Permit Project, including the
continuation of IT strategies and Business
Process Management
•We reclassified and updated over 50 position
descriptions
•Since the beginning of FY12, the backlog has been
reduced by 38.2% (1,015 authorizations)
•We have conducted public meetings statewide for input
on state permitting processes
•We are evaluating internal processes to identify and
fix inefficiencies
Commissioner Sullivan spoke to Slide 8 titled, "Statewide
Permitting Reform -Significant Progress Made-." The slide
depicted a graph that portrayed the Department of Natural
Resources permitting backlog from FY 2006 through FY 2012.
He reported that the department was focused on reducing the
backlog. He noted that the backlog was reduced by
approximately 1000, from a high of 2,658 in FY 2011 to
1,643 by the end of 2012. The department's goal was to
eliminate the backlog within three years.
Commissioner Sullivan addressed Slide 9:
"Statewide Permitting Reform -Significant Progress
Made-."
2012 Statutory Changes - HB 361
•The Division of Mining, Land and Water identified
over 30 statutory changes that would help reduce
applicant costs, create efficiencies, reduce
redundancies, and reduce opportunities for legal
challenges
•During the 2012 Legislative session, the Governor
introduced HB 361, which included the highest priority
changes related to leasing and disposal programs that
would help reduce the permitting burden on the
applicant and free more time for staff to work on
processing applications
•The Legislature passed HB 361 and it has been signed
by the governor.
Commissioner Sullivan noted that HB 361 passed with
bipartisan support but was only one piece of the ongoing
reform effort.
Commissioner Sullivan identified Slide 10:
"Statewide Permitting Reform -2013 Legislature-"
2013 Statutory Changes - HB 77 & SB 26
•Building on the success of 2012, the Division of
Mining, Land and Water has identified additional
statutory changes that would help streamline
permitting requirements for the public to use and
enjoy Alaska's land and resources
•Governor Parnell has introduced HB 77, which would
reform and streamline procedures for obtaining,
issuing, and appealing permits, leases, best interest
findings, and other DNR authorizations
•It would allow DNR to establish a general permit for
an activity on state land unlikely to cause
significant and irreparable harm to the State
•It would prevent non-agency entities from being able
to apply directly for a reservation of water; this
does not affect holders of, or applicants for,
standard water rights, temporary water use permits or
water
Commissioner Sullivan examined Slide 11:
"Statewide Permitting Reform -2013 Legislature-"
2013 Statutory Changes - HB78 & SB27
•Section 404 of the Clean Water Act (CWA) requires a
permit from the Corps of Engineers for discharge of
dredged or fill material into waters of the U.S.
•Purpose is to provide the State authority to evaluate
and, potentially, assume primacy for permitting of
dredge and fill activities in waters and wetlands in
the State, as provided for in the CWA
•State primacy would still be subject to federal
oversight and must be as stringent as the current
federal program, but should help ensure funding and
staffing for the program, provide greater state
participation and control, enable the State to focus
resources where most needed, and better insulate the
program from national politics
Commissioner Sullivan voiced that primacy was a critical
element for permitting modernization. He stressed the
importance of the state to take "control over its own
destiny" in regards to projects. He appreciated the
legislature's support of permitting reform.
Senator Hoffman cited slide 8. He referenced the
legislature's previous efforts to help reduce the
permitting backlog through budget appropriations. He asked
whether additional appropriations would expedite the
process. Commissioner Sullivan cited slide 7. He explained
that the slide highlighted the substantial budget requests
the Department of Natural Resources (DNR) brought to the
legislature in FY 2012 and FY 2013 to address permitting
reform and the backlog. Starting in FY 2012 the department
filled vacant positions and embarked on the Unified Permit
Project and Document Management. He reported that the $2.7
million fundingfor the Division of Mining, Land & Water was
adequate. He appreciated the legislative support. He felt
that the "informal" goal of eliminating the permitting
backlog within three years was achievable with the
"significant" funding already received.
9:27:51 AM
Senator Hoffman referenced the 5th bullet point on slide 5,
"Attract new investment and markets for Alaska's abundant
mineral resources", and questioned what the prospects for
new investments were. Commissioner Sullivan responded that
DNR was very aggressively promoting the state's "greatest
natural resource basins in the world" both within and
outside the United States. He informed the committee that
over the last two years DNR hosted a strategic and critical
minerals summit in Fairbanks resulting in a tremendous sold
out response. He elaborated that the issue of permitting
reform played a role in promoting Alaska's natural
resources.
Senator Olson acknowledged DNR efforts. He questioned how
much additional revenue the streamlined permitting
processes brought to the state in the last year or two.
Commissioner Sullivan deemed that the department had
"enormous success" attracting companies to Alaska. He noted
a "quiet boom" in the minerals sector. He stated that "one
third of all exploration investment in the United States in
the past two years" occurred in Alaska. Oil and gas
companies were showing a lot of interest. He pointed out
that the largest LNG [liquid natural gas] consumer in the
world; Korea Gas travelled to Alaska as a direct result of
the administrations aggressive outreach efforts. He
remarked that the oil and gas industry, in search of
favorable or more competitive investment climates,
monitored the state's permitting and tax reform efforts. He
believed the strategy was "bearing fruit."
Senator Olson appreciated DNR's efforts to reach out to
investors and noted that "responsible development" fostered
the Alaskan lifestyle. He noted the streamlined permitting
efforts and expressed concern over keeping industry in the
"realm of responsibility" while developing natural
resources. He observed that the oil industry recently
demonstrated that it was not acting responsibly. He
exemplified the 2012 Shell [Royal Dutch Shell] accidents
with the drill ship Kulluk
[in Kiliuda Bay, Alaska] and noted a natural disaster was
narrowly avoided.
He wondered how DNR was finding a balance between
responsible development and industry mistakes. Commissioner
Sullivan reported that DNR emphasized Alaska's strong
record of developing resources and environmental protection
as part of the department's outreach. He voiced that the
state wasn't interested in investors who disregarded
environmental standards. Conversely, he cited the
Kensington Mine, where it took 10 to 20 years to permit, as
an argument for the streamlined processes. He thought that
the federal government's permitting process was flawed
[with regard to off shore drilling permitting]. The [Artic]
permitting effort took five years and did not result in any
successful exploration drilling. He voiced that the
department agreed with maintaining high environmental
standards. He thought that efficiencies, certainty, and
timelines in the permitting process and sustained
environmental standards were not mutually exclusive and
attracted more investment with companies who wanted to
uphold high standards.
9:35:45 AM
Senator Bishop expressed satisfaction with the reduced
permitting backlog. He inquired whether DNR had a
methodology or ranking of permit applications. Commissioner
Sullivan replied that DNR did prioritize applications, and
that the process was evolving. The department was
attempting to fix its internal permitting processes. He
exemplified DNR's prioritizing of Pt. Thomson permitting.
The department worked closely with multiple state agencies,
Army Corp of Engineers, and the North Slope Borough to
achieve a permit and avoid further delays in construction.
The department devoted a big portion of its resources in
the Pt. Thompson permitting effort. He stated that the
department wanted to create a balance between smaller
companies waiting for permits and the large developers in
line for permits. The ultimate goal was to make the whole
system more efficient for all applicants.
Senator Dunleavy questioned what the state was giving up to
the federal government with SB 27. Commissioner Sullivan
replied that the state stood to gain more control over
wetland permitting. He offered that wetland permitting
often took the longest amount of time. The state would
process wetland permits on its own schedule and end delays.
Co-Chair Meyer appreciated the department's hard work
addressing the permitting backlog. He mentioned his
interest in helping small business thrive in Alaska and not
rely on the major oil companies. He pointed out that the
high cost of doing business in Alaska due to location and
conditions coupled with its lengthy permitting process
proved challenging for small businesses. He offered that
most small companies could not wait years to develop a mine
or new oil field. He concluded that making the permitting
process easier in Alaska helped small businesses and
diversified Alaska's economy.
SENATE BILL NO. 27
"An Act establishing authority for the state to
evaluate and seek primacy for administering the
regulatory program for dredge and fill activities
allowed to individual states under federal law and
relating to the authority; and providing for an
effective date."
9:41:37 AM
LARRY HARTIG, COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL
CONSERVATION, introduced SB 27. He related that the
legislation authorized the Department of Environmental
Conservation (DEC) and DNR to evaluate and pursue primacy
for Section 404 of the Clean Water Act, Regulation of Dredge
and Fill Activities.
Commissioner Hartig defined the 404 Program of the Clean
Water Act and explained the legislation. He read from
prepared testimony, "Senate Finance Committee Testimony of
Alaska Department of Environmental Conservation" Senate
Bill 27 "404 Primacy", February 26, 2013 (Copy on file).
What is a 404 program?
Section 404 of the Clean Water Act requires that all
dredge and fill activities in surface waters (the
ocean, lakes, rivers, streams) and wetlands be
permitted. This permitting is done by the U.S. Army
Corps of Engineers under what is known as the "404
program." Per the Clean Water Act, EPA retains
oversight over the Corps' 404 program.
Wetlands provide valuable functions that include
habitat for plants and animals, wildlife corridors,
improvements to water quality, and flood and storm
attenuation. Wetlands in Alaska range from North Slope
tundra to forested wetlands in the mountains of
Southeast. With over 174 million acres of wetlands
(65% of all wetlands in the nation), Alaska's stake in
administering the 404 program is unlike that of
any other state.
Examples of activities requiring 404 permits include
filling in wetlands for any purpose such as roads, or
residential or commercial building pads; and
construction of breakwaters, dams, and levees. The 404
permitting process itself involves an evaluation of
the dredge and/or fill activity to identify the "least
environmentally damaging practicable alternative"
(LEDPA) for a project. An
authorization for a dredge or fill activity must be
accompanied by what is known as 404(b)(1) findings on
potential short-term or long-term effects of a
proposed discharge of dredged or fill material on the
physical, chemical, and biological components of the
aquatic environment. This also includes an evaluation
of cumulative impacts.
The goal of 404 permitting is to avoid or minimize
impacts to aquatic resources, including wetlands.
Where impacts are unavoidable, actions are taken or
required to mitigate those impacts. The Clean Water
Act intends for states to implement (to assume primacy
for) the 404 program with
the Corps of Engineers and the Environmental
Protection Agency (EPA) acting in an oversight role.
States seeking primacy for the 404 program require
EPA's approval.
SB 27 gives the authority to DEC and DNR to evaluate
the costs and benefits of a state run program; begin
the application development process and to seek
approval to implement the program if it makes sense to
do so.
Commissioner Hartig emphasized that the legislation was a
multi-step process to evaluate the costs and benefits of
assuming primacy. The legislature would ultimately make the
decision to move forward with primacy based on the costs
and recommendations by the department.
9:47:13 AM
Commissioner Hartig continued with the testimony.
How do states assume the 404 program, and what can
states gain authority over?
The Clean Water Act spells out the requirements for a
state's application for 404 primacy. These include a
formal request by the governor; a description of the
program as the state will run it; the state Attorney
General's declaration that the state program is
consistent with the federal program; memoranda of
agreement with EPA and the Corps; a description of
staffing and funding; and copies of all applicable
state statutes, regulations, and administrative
procedures. EPA will not approve a program that is
less stringent than the federal program.
Commissioner Hartig informed the committee that in 2012 the
state gained total primacy over Section 402 of the Clean
Water Act, Wastewater Permitting Program, National
Pollutant Discharge Elimination System (NPDS). Primacy was
implemented over a five year period with Environmental
Protection Agency (EPA) oversight. The department gained
experience with the primacy application through the 402
primacy process. The agency mandated that the state develop
an equivalent to the federal program. He explained that
during the 402 process DEC had to seek legislative approval
several times for new authorities or statute changes in
order to comply with EPA requirements. The legislation was
the first step in the primacy process. He assured the
committee that the legislature remained the "gatekeepers"
to seeking primacy.
Commissioner Hartig continued with the prepared testimony.
States may assume primacy for the permitting and
compliance program for all waters and wetlands except
tidally influenced waters and waters that are or could
be used for interstate and foreign commerce and
wetlands adjacent to those waters. The Corps will
retain authority for permitting dredge and fill
activities in these waters in Alaska even after Alaska
formally assumes the 404 program.
Two other states already have primacy for the program,
New Jersey and Michigan, while other states are
considering it. The Department of Environmental
Conservation (DEC) currently plays a secondary role in
the 404 program in Alaska, reviewing permit
applications, in some cases applying Alaska-specific
conditions, and "certifying" that the Corps' permits
meet State water quality standards.
While I have described the formal process for 404
assumption from the Corps, there is a second mechanism
where states can administer Section 404 dredge and
fill permits. This is done by partnering with the
Corps in the issuance and administration of what are
known as State programmatic general permits, or State
PGPs. These permits are general permits for dredge and
fill actions that are similar in nature and have
minimal individual or cumulative effects. The
Department likely already has statutory authority to
administer State PGPs, but the proposed legislation
and fiscal note provide for the state to explore and
pursue both this option and the formal primacy option.
Multiple Alaska administrations over many years have
considered primacy for the 404 program with the most
serious consideration about 10 years ago. The decision
at that time was to first pursue State primacy from
EPA to implement the federal Clean Water Act (Section
402), National Pollutant Discharge Elimination System
Program - the wastewater discharge permitting program.
DEC has completed that process with EPA approval of
the program in 2008 and the State's final step to have
full authority in 2012, when we accepted
responsibility for the final industrial sector's
permits.
With that recent experience, now is a good time for
the Alaska to expand control over its waters,
recognizing state priorities for prompt permitting for
economic development while protecting water quality.
The application process for 404 primacy will be
similar, as will program development and
implementation. The lessons learned from that
experience will apply directly to 404 assumption. One
lesson, however, is that we know that it will take
time. There are multiple opportunities along the way
for the public to weigh in on program development as
well as opportunities for the legislature to have a
say in whether the state proceeds with primacy - when
we may seek additional statutory changes to ensure the
program will be consistent with the federal program
and when we seek the budget necessary to implement the
program.
9:55:31 AM
Why is assumption of the 404 program important?
Almost half of Alaska is considered wetlands - 65 % of
the nation's wetlands are in Alaska. With wetlands so
omnipresent in Alaska, most major projects - and a
very large number of minor projects, like housing pads
- require 404 permitting. Yet the Corps is
experiencing budget cuts and staff reductions. In a
state like Alaska with a very narrow window for
construction, such delays can and do result in project
delays of a year or more. A state-run program that is
accountable to Alaskans and the legislature will
assure that it is the State that decides the level of
resources to devote to a program that is so essential
to the state's economy. The state will have control of
its permitting priorities.
Commissioner Hartig elaborated that the state had primacy
over the Clean Air Act for several decades. Experience with
the Clean Air Act and Section 402 primacy demonstrated that
the state was more flexible with setting permitting
priorities than the federal government.
Commissioner Hartig continued with his testimony.
Both DEC and DNR have placed significant emphasis in
recent years on permit reform. From automated permit
application to improved business processes, the State
is well-poised to apply these streamlining
improvements to the 404 program. These faster,
streamlined practices place more emphasis on results -
protection of wetlands and water resources - and less
on cumbersome processes.
With a state-run program, two agencies - DEC and DNR -
that have a long history of successful interaction -
will run the program, rather than the four currently
involved: The Corps, EPA, DEC, and DNR. Two vs. four
simply means less bureaucracy. ADF&G will, of course,
retain its Title 16 permitting authorities and DEC and
DNR will coordinate and consult with ADF&G as part of
the 404 process.
Other benefits of a State-administered program:
projects.
for the program.
Alaska's priorities and unique conditions with Alaska
specific program guidance.
less apt to stall projects needlessly and
indefinitely.
courts instead of outside federal courts.
regime.
consultation processes with less formal, faster
processes while still achieving the objectives of
those programs.
What does the legislation do?
The legislation before you provides two parallel
tracks: Study 404 primacy and prepare an application
for the program, and begin capacity building from the
start. First, it directs DEC and DNR to evaluate
costs, benefits, and consequences of the state
assuming primacy for the 404 program, providing
resources to the departments to do so. At the same
time as the agencies are performing this evaluation,
State staff can partner with Corps staff in the
issuance of state Programmatic General Permits and
authorizations under these general permits, assist the
Corps with priority permit issuance, and work
alongside the Corps in implementing mitigation
projects associated with permitted projects in a way
that works for Alaska's unique situation. This
capacity building provides tremendous benefit to the
state agencies when the state does gain primacy for
the program, providing trained staff and tested
processes for running the actual program.
Additionally, it
provides benefits to Alaska's permit applicants who
will gain from the state staffing addition: shorter
turnaround times for 404 permits, while continuing to
protect water quality.
In addition, this legislation provides the authority
for DNR and DEC to administer the program and provides
the authority for DEC to apply to EPA for
authorization for the state-run program, as well as
providing both agencies the authority to issue
regulations needed for the program.
Because the state is still early in the process of
fully understanding the ramifications of 404
assumption, this bill will likely not be the last 404
legislation that comes before you. As we research
statutory requirements, it is likely that we will back
with needed changes: Statutory change has been
required of other states seeking authority for the
program. In addition, DEC and DNR will be evaluating
the resources necessary to implement and run a state
404 program. The estimates in the fiscal notes that
accompany this bill are for the application process
and to begin the initial capacity building I've
mentioned. By the FY16 budget cycle, however, we
expect a decision point regarding whether to advance
the primacy effort. At that point, DEC and DNR will
have a much better understanding of the resources that
will be required for the full program. We expect that
additional resources, likely significant because it is
a significant program, will be required at that time.
Fiscal Impacts
There are three fiscal notes for SB 27. The dollar
amounts from the DNR and Law fiscal notes are includes
in the services line of the DEC fiscal note - DEC's
fiscal note represents the full funding request for
the early stages of evaluating and beginning
preparation for a potential primacy application; and
to increase the State's understanding of the program
through capacity development. The fiscal note does not
include the full costs to implement a State 404
program. (The concluding paragraphs of the
presentation are on file.)
Commissioner Hartig commented that SB 27 did not affect the
EPA's study of the Bristol Bay Watershed Assessment under
Section 404 of the Clean Water Act.
10:03:43 AM
Commissioner Sullivan pointed out that 404 permitting was
the major and most lengthy piece of the permitting process
for most of the large development projects in the state. He
related that DNR was declared a "cooperating agency" by the
federal government. The department coordinated information
between other state agencies with federal agencies during
the permitting process. He stated that DNR was frustrated
that despite its status as a cooperating agency, it did not
have a participatory role at the decision making level on
federal permitting decisions that affected the state. He
advised that primacy granted the state the ability to
affect the process and control its own destiny. He remarked
that recently a number of "vague" federal policy decisions
which affected the state were made with very little Alaskan
input. Assuming primacy ensured that the state's policies
would not be driven by "vague" federal regulation.
Senator Dunleavy questioned what the state was giving up to
the federal government and what it was gaining in assuming
primacy. Commissioner Hartig elucidated that when the state
took over permitting responsibility with the EPA while
assuming Section 402 Primacy, DEC discovered that the EPA
had a permitting backlog and unfinished regulatory agendas.
The EPA wanted the state to adopt and develop the
unfinished regulations. The state declined to proceed with
any unfinished regulations that were not legally mandated.
He offered that if primacy meant that the state did all the
work at the federal government's direction, then the state
gave up a lot. He commented that primacy granted the state
direct contact with the permittees and the public and the
ability to respond more efficiently to their needs. He
stated that what Alaska gave up and what it gained was up
to the state. He believed that the state would gain
decision making control over the federal government.
Senator Dunleavy believed that the State's education system
was essentially controlled by the federal government
through funding and mandates. He wondered whether there was
an actual gain for the state. Commissioner Hartig
delineated that Alaska would not obtain funding from the
federal government to run the program. The state had the
opportunity to apply for federal grants for the evaluation
and application process. The assumed 404 Primacy program
would operate on state funds from permitting fees and state
general funds. Without federal funding the federal
government would lack the leverage to control or mandate
the process. He concluded that federal agencies maintained
a certain amount of oversight, but that the state gained a
"fair amount" of discretion.
10:11:59 AM
Senator Dunleavy warned that the state needed to proceed
with caution. Even though federal funding was diminishing,
federal mandates were still enforced.
Co-Chair Meyer wondered whether the state would be getting
enough benefit to offset $1.8 million costs to the state
for assuming primacy.
Co-Chair Kelly commended Commissioner Hartig for his
informative presentation. He referred to the term
"capacity" in the presentation and questioned whether it
was a fiscal term. He wondered whether "capacity" related
to other general permitting legislation. Commissioner
Hartig relayed that the DEC fiscal note contained five
positions for DEC and two for DNR. The positions would be
dedicated to evaluating 404 Primacy. He explained that
capacity was being built during the evaluation phase of the
process. The department learned from the 402 program that
it needed to start building capacity from the evaluation
stage. If primacy was assumed experienced staff was
imminently necessary to fulfill the responsibilities of the
permitting process. He anticipated more positions would be
necessary. He added that if primacy was likely DEC would
submit a detailed proposal to the legislature including the
costs to completely build the capacity to run the program.
Co-Chair Kelly inquired whether statutory authority was
necessary to proceed with primacy or if it could be
achieved through the appropriation process. Commissioner
Hartig believed that DEC possessed the authority to pursue
primacy, but that DNR clearly did not. He indicated that
primacy was a multi-agency effort and that DEC and DNR
would share duties. Historically, DEC was the natural
resource regulator and DNR's expertise was in land
management and mitigation. He thought the arrangement would
continue, but that the delineation of duties would evolve
as capacity was built.
10:17:41 AM
Senator Bishop shared that the Army Corps of Engineers
required small mines to do over flights and photograph
their properties for mitigation purposes. He believed that
placed a financial strain on miners. He asked whether
primacy allowed the state to advocate on its own behalf in
similar instances. Commissioner Hartig responded that the
legislation was intended to help small business as well as
large. He was aware of the problem with placer miners
obtaining permits. He reported that one problem was the
remote locations of the mines and how the Army Corps of
Engineers developed a process to make determinations and
identify wetlands with a declining budget. The department
was working with DNR and the corps to obtain state
assistance to help the miners.
10:19:54 AM
Commissioner Sullivan added that primacy would allow
consideration of local insight and issues into the
mitigation process.
Senator Hoffman supported Section 402 Primacy. He
communicated that Section 404 Primacy entailed taking on 65
percent of the nation's wetlands. The state's program must
be as stringent as the federal governments. The state did
not know the total costs of taking over the program. He
related that Alaska had some of the highest tidal
fluctuations in the world. He recalled that Alaska would
not control tidal influence wetlands with Section 404
primacy. He called for the clear delineation of Alaska's
responsibilities in such cases. He pointed out that there
were many unanswered questions in seeking 404 primacy. He
wondered what the exact benefits and actual financial costs
of primacy were. He cautioned that careful evaluation of
the costs and benefits of primacy was paramount.
Commissioner Hartig replied that he strongly agreed. The
state was currently not in the position to answer the
unanswered questions. The legislation provided an
opportunity to proceed methodically. He reminded the
committee that in 2016 a detailed analysis would be
provided to the legislature. He felt that industry and the
public would also weigh in on whether it was advantageous
for the state to assume primacy by evaluating the state's
performance in permitting and regulatory oversight.
10:25:06 AM
Senator Hoffman remarked that state assumed primacy
required that the state "pay the tab" for the program and
significantly expand its bureaucracy while the federal
government maintained ultimate oversight.
Co-Chair Meyer judged that the state was not anxious to
assume the costs of the program but expediting the
permitting process offered benefits. He relayed that the
state received federal funding for dredging the Port of
Anchorage and other ports. He asked whether the legislation
impacted the dredging funding for the port. Commissioner
Hartig thought that the 404 program was outside of the
scope of dredging harbors and the Army Corps of Engineers
would continue to provide the service. He opined that
primacy allowed a maturing state to control its destiny on
key programs that impacted the state.
Commissioner Sullivan agreed with Senator Hoffman regarding
federal oversight and the budgetary impact. He reiterated
that primacy established state control over decision making
on very important projects.
10:30:08 AM
Co-Chair Meyer OPENED public TESTIMONY
JOSEPH SEBASTIAN, KUPREANOF, SELF (via teleconference),
testified against SB 27. He shared concerns over the total
and cumulative costs of assuming primacy for many years,
expanding state bureaucracy, and the need for more
personnel with specialized expertise. He opined that
assuming primacy was a "duplication of efforts" that the
federal government currently provided. He did not feel that
the benefits of primacy would yield benefits that were
commensurate with the costs and "burden" to the state.
10:32:22 AM
Co-Chair Meyer CLOSED public TESTIMONY
Co-Chair Meyer requested a written response from DEC
regarding any potential impact from SB 27 on the Port of
Anchorage dredging.
Co-Chair Meyer asked for clarification on the fiscal note.
Commissioner Hartig explained the DEC fiscal note. The
total amount of $1,434,700 was appropriated for five
positions in FY 14; the out years increased to $1,854,300
in FY15 with 3 additional positions and future years at
$1.828.800 through 2019. He restated that in FY 2016 the
total costs to assume primacy would be known. He pointed
out that the DEC fiscal note contained appropriations for
DNR and the Department of Law (DOL) in the services
category for $870,000 which included two positions for DNR.
He added that two additional DNR positions would be
necessary in FY 15.
Co-Chair Meyer asked what would happen to the positions if
the program was not approved. Commissioner Hartig replied
that the department might need to retain some of the
additional resources for the permitting program. The
majority of the additional positions would not be retained
resulting in budget reductions. He envisioned that the
process would develop incrementally.
Senator Hoffman asked how much the federal government
currently spent on administering the program in Alaska.
Commissioner Hartig responded that he obtained partial
information regarding the full program. He voiced that the
state would not assume the full program because of
geographic limitations. Navigable rivers, tidal influence,
and adjacent wetlands were not included. He ascertained
that the state would assume 20 to 50 percent of the
permitting. He did not know what level of expertise was
necessary. He offered the information from the Army Corps
of Engineers. The district maintained 49 employees with a
budget of $7.9 million annually. The amount of
administrative support was unknown. The corps was
headquartered in Anchorage with field offices in Fairbanks,
Juneau, Kenai, and Sitka. Approximately 1,500 to 1,800
permit applications were processed each year and 85 percent
were Section 404 applications.
Senator Hoffman queried how many federal positions would be
lost under state assumed primacy. Commissioner Hartig
replied that he did not know. Senator Hoffman asked whether
25 additional employees were necessary for the state to
accomplish the program. Commissioner Hartig thought that
was a ballpark estimate.
10:40:44 AM
Co-Chair Meyer referenced the DEC fiscal note and relayed
that some costs were anticipated to be offset by program
receipts. He requested clarification. Commissioner Hartig
replied that permitting fees were associated with the
program and provided a "mechanism" to recover a portion of
the state's costs.
Co-Chair Meyer commented that he shared the committee
members concerns with the fiscal note.
SB 27 was HEARD and HELD in committee for further
consideration.
10:44:21 AM
ADJOURNMENT
The meeting was adjourned at 10:44 a.m.