Legislature(1995 - 1996)

03/22/1995 03:50 PM Senate RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                   SENATE RESOURCES COMMITTEE                                  
                         March 22, 1995                                        
                           3:50 p.m.                                           
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Senator Loren Leman, Chairman                                                 
 Senator Drue Pearce, Vice Chairman                                            
 Senator Steve Frank                                                           
 Senator Rick Halford                                                          
 Senator Robin Taylor                                                          
 Senator Georgianna Lincoln                                                    
 Senator Lyman Hoffman                                                         
                                                                               
  COMMITTEE MEMBERS ABSENT                                                     
                                                                               
 None                                                                          
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
 CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 128(RES) am                      
 "An Act relating to the disposal of wastes; giving the Alaska Oil             
 and Gas Conservation Commission authority to regulate disposal in             
 the annular space of an oil or gas well, or in the annular space of           
 a water well associated with exploration and production of oil or             
 gas, of drilling mud, cuttings, and nonhazardous drilling operation           
 wastes, and exempting that disposal from the requirement of a waste           
 disposal permit issued by the Department of Environmental                     
 Conservation; and establishing an exemption from the requirement of           
 obtaining a waste disposal permit from the Department of                      
 Environmental Conservation for certain activities that yield solid            
 and liquid waste material discharges and cooling water discharges."           
                                                                               
 CS FOR HOUSE BILL NO. 169(RES)                                                
 "An Act defining the scope of the responsibility of the Department            
 of Natural Resources for regulating the mineral resources of the              
 state."                                                                       
                                                                               
  PREVIOUS ACTION                                                              
                                                                               
 No previous Senate action.                                                    
                                                                               
  WITNESS REGISTER                                                             
                                                                               
 Jack Phelps                                                                   
 Legislative Aide                                                              
 Alaska State Capitol                                                          
 Juneau, Alaska  99801-1182                                                    
  POSITION STATEMENT:  Testified for sponsor of HB 128                         
                                                                               
  Dave Johnston                                                                
 Alaska Oil and Gas Conservation Commission                                    
 320  Mariner Dr.                                                              
 Anchorage, AK  99515                                                          
  POSITION STATEMENT:  Supports HB 128                                         
                                                                               
 Chris Phillips                                                                
 Alaska Oil and Gas Association                                                
 121 W. Fireweed Lane, Suite 207                                               
 Anchorage, AK  99503                                                          
  POSITION STATEMENT:  Testified on HB 128                                     
                                                                               
 Neil Mackinnon                                                                
 Alaska Minerals Commission                                                    
 1114 Glacier Ave.                                                             
 Juneau, Alaska 99801                                                          
  POSITION STATEMENT:  Supports HB 128 and CSHB 169(RES)                       
                                                                               
 Steve Borell                                                                  
 Alaska Miners' Association                                                    
 501 W. Northern Lights Blvd.                                                  
 Anchorage, AK  99503                                                          
  POSITION STATEMENT:  Supports HB 128                                         
                                                                               
 David Rogers                                                                  
 Council of Alaska Producers                                                   
 P.O. Box 33930                                                                
 Juneau, AK  99803                                                             
  POSITION STATEMENT:  Supports HB 128                                         
                                                                               
 Leonard Verrelli                                                              
 Division of Environmental Quality                                             
 Department of Environmental Conservation                                      
 410 Willoughby Ave., Suite 105                                                
 Juneau, Alaska  99801                                                         
  POSITION STATEMENT:  Testified on CSHB 169(RES)                              
                                                                               
 Jules Tileston, Director                                                      
 Division of Mining and Water Management                                       
 Department of Natural Resources                                               
 3601 C St., Ste. 800                                                          
 Anchorage, AK  99503-5935                                                     
  POSITION STATEMENT:    Testified on CSHB 169(RES)                            
                                                                               
 Glen Gray                                                                     
 Division of Governmental Coordination                                         
 Office of the Governor                                                        
 Box 110030                                                                    
 Juneau, AK  99811-0030                                                        
  POSITION STATEMENT:  Testified on CSHB 169(RES)                              
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
  TAPE 95-24, SIDE A                                                           
 Number 001                                                                    
                                                                               
  CHAIRMAN LEMAN  called the Senate Resources Committee meeting to             
 order at   3:50 p.m.  The first order of business was CSSSHB 128              
 (RES)am.                                                                      
 SRES - 3/22/95                                                                
            HB 128 WASTE DISPOSAL PERMIT EXEMPTION                            
                                                                              
 JACK PHELPS, staff to Representative Williams, prime sponsor of HB
 128, gave the following testimony.  HB 128 was introduced as a                
 result of a recommendation from the Alaska Minerals Commission.               
 Recently the Department of Environmental Conservation (DEC) began             
 a general permitting process for incidental discharges associated             
 with mineral drilling and well drilling.  For years, those                    
 discharges were treated as minimal and inconsequential under AS               
 46.03.100.  That statute is extremely broad and states any                    
 discharge to any waters, surface or land, to the state, requires a            
 permit.   The mineral and well drilling industries feel the process           
 presents unnecessary compliance problems.  HB 128 exempts the                 
 industry from the permit process if the operation does not produce            
 a point source discharge into a surface water of the state and is             
 incidental to the general industry activity.  The first two                   
 sections of the bill deal with the transference of current dual               
 jurisdiction, eliminates DEC oversight, and places oversight                  
 authority with the Alaska Oil and Gas Conservation Commission                 
 (AOGCC).  Representative Williams worked with DEC on Section 3 to             
 satisfy DEC's concerns regarding specificity.  The Department of              
 Fish and Game (DF&G) was concerned about affects on habitat                   
 therefore direct surface water discharges were excluded from the              
 exemption.  He noted the Alaska Oil and Gas Association (AOGA) has            
 suggested an amendment to Section 3, to page 2, line 27 and page 3,           
 line 16.                                                                      
                                                                               
 SENATOR LEMAN announced there is a proposed amendment from DEC as             
 well, and that he planned to take testimony and hold action on the            
 amendments until Monday.  MR. PHELPS explained the DEC amendment              
 rearranges Section 3, but does not appear to make any changes.                
                                                                               
 SENATOR TAYLOR asked about the word "annular."   MR. PHELPS replied           
 it refers to the space between the casings in an oil well.                    
                                                                               
 Number 120                                                                    
                                                                               
 SENATOR LEMAN noted some of the mud produced from drilling is                 
 radioactive.  He asked if that material is included under hazardous           
 wastes (EPA 40 C.F.R., Part 261) or if it could be reinjected into            
 the annular space.  MR. PHELPS could not specifically answer, but             
 stated that is the precise reason for the transfer of authority to            
 AOGCC since they are familiar with those activities and are able to           
 make those determinations.  SENATOR LEMAN commented he was                    
 referring to the natural material that is produced.                           
 DAVE JOHNSTON, Chairman of the AOGCC, testified in support of HB
 128, especially in regard to the transfer provision.  The AOGCC               
 believes HB 128 will improve oversight by consolidating authority             
 for annular disposals and streamline permitting requirements.                 
 Currently two agencies have oversight authority, the AOGCC and the            
 DEC.  THE AOGCC has the expertise to evaluate proper casing, proper           
 submitting programs, proper injecting procedures, etc.  This is an            
 outgrowth of the Underground Injection Control Program (UIC)                  
 implemented by the AOGCC since 1986, and mandated by the federal              
 Safe Drinking Water Act.  The annular disposal program is very                
 similar.                                                                      
                                                                               
 The transfer of this authority was recommended by the Interstate              
 Oil and Gas Compact Commission when they conducted a peer review of           
 Alaska's exploration and production waste management program.                 
                                                                               
 Number 177                                                                    
                                                                               
 Regarding Senator Leman's question about radioactive materials, MR.           
 JOHNSTON replied naturally occurring radioactive material (NORM) is           
 a class 2 fluid, and is injected under a UIC program.  The EPA has            
 reviewed UIC procedures for disposal of class 2 fluids.                       
                                                                               
 Number 222                                                                    
                                                                               
 CHRIS PHILLIPS, Operations Engineering Manager for BP Exploration             
 in Alaska, testified as a representative of AOGA.  AOGA supports              
 the intent of Sections 1 and 2 of HB 128, transferring oversight              
 authority to AOGCC as the transfer of jurisdiction will promote               
 regulatory efficiency.  Regarding the exemptions contained in                 
 Section 3, subsection (f)(1)(B), he suggested the following                   
 clarifying amendment.                                                         
                                                                               
 Delete:                                                                      
 (f) Except as to discharges arising out of exploration and                   
 development drilling for oil and gas resources,                               
                                                                               
 Add to page 3, line 16:                                                      
 "otherwise required" after the word "permit."                                
                                                                               
 He explained the first amendment would remove any danger that the             
 language could be construed as creating a new permitting                      
 requirement; the second amendment would prevent expansion of the              
 scope of permitting requirements.                                             
                                                                               
 Number 274                                                                    
                                                                               
 SENATOR TAYLOR questioned the need for the legislation at this time           
 if it merely preserves the status quo in statute.                             
                                                                               
                                                                               
 MR. PHELPS responded that last spring and summer the DEC began a              
 public comment period on a new general permit, as the result of a             
 concern raised by a member of the general public.  That process               
 raised a great deal of reaction among industry members because they           
 saw no reason to create a new permitting process for activities               
 that had gone on for years without causing any problems.  HB 128              
 restores the status quo.                                                      
                                                                               
 Number 300                                                                    
                                                                               
 SENATOR FRANK asked if the public member's concern was aimed at               
 challenging DEC for not enforcing the law.  MR. PHELPS answered               
 affirmatively, and clarified that the current statute is so broad             
 that any discharge without a permit under AS 46.03.100 could                  
 probably be considered a violation.  Section 3 places in statute,             
 provisions that were assumed to have been there.                              
                                                                               
 SENATOR TAYLOR felt it is ludicrous that so much time has to be               
 wasted to pass a bill that has been unnecessary for the past 20               
 years.  He expressed concern about DEC's budget.                              
                                                                               
 Number 320                                                                    
                                                                               
 NEIL MACKINNON, representing the Alaska Minerals Commission (AMC),            
 stated HB 128 is one of the top recommendations of the AMC.  He               
 stated when he attempted to begin drilling on his property at                 
 Jualin, he was notified that he needed a drilling permit.  In                 
 researching AS 31.05.030, he found any discharge into the air, land           
 or water of the state, other than domestic wastewater, must be                
 permitted.  He noted that could be interpreted to mean businesses             
 discharging wastewater into municipal treatment plants would                  
 require permits.  After contacting DEC, he was told DEC received a            
 complaint from a member of the public about Echo Bay's drilling               
 operations, which prompted the enforcement of the statute.  MR.               
 MACKINNON felt the situation raises a serious equal protection                
 issue and enforcement of this statute is a deterrent to mineral               
 exploration.  He added no other state or country requires such                
 permits.                                                                      
                                                                               
 Number 398                                                                    
                                                                               
 STEVE BORELL, Executive Director of the Alaska Miners' Association            
 (AMA), testified in support of HB 128.  He agreed with Mr.                    
 Mackinnon's comments.  The AMA is primarily concerned with Section            
 3, regarding water well drilling and incidental construction.  He             
 believed DEC selectively applied the statute to the proposed permit           
 regulations.  He commented the bill will correct a technicality in            
 statute, to allow the status quo to continue.  Without the passage            
 of HB 128, burdensome requirements will be added to the permitting            
 process which will not provide any benefits.  He believes Governor            
 Knowles supports the measure.                                                 
                                                                               
 SENATOR TAYLOR asked how long Mr. Borell has lived in Alaska.  MR.            
 BORELL replied he has been in Alaska since 1986, but also lived in            
 Alaska in 1970-71.  SENATOR TAYLOR commented on the change of                 
 attitude toward mining and wildlife from 40 years ago.                        
                                                                               
 DAVID ROGERS, representing the Producer's Council, testified in               
 support of HB 128.  He reserved judgement on the proposed amendment           
 until he had time to review it.                                               
                                                                               
 SENATOR LEMAN announced HB 128 and the proposed amendments would be           
 held until Monday.                                                            
 Number 493                                                                    
 SRES - 3/22/95                                                                
        HB 169 DEPT. NAT RES. IS LEAD AGENCY FOR MINING                       
                                                                              
 The committee took up HB 169.  ROD MOURANT, legislative assistant             
 to Representative Kott, testified for the sponsor.  HB 169 defines            
 the Department of Natural Resources (DNR) as the lead agency for              
 permit processing and development of the mining industry.  DNR will           
 act as a coordinating and contact agency for mining companies to              
 obtain information on the status and requirements of their                    
 activities.  This measure was recommendation number five in the               
 Alaska Minerals Commission 1995 report.  The applicant would meet             
 with DNR and define the project; DNR would appoint a team leader              
 who defines the scope of the project and determine participating              
 agencies, who then appoint agency coordinators.  The applicant                
 would then meet with personnel to develop a work plan and time                
 frame.  This method will be less expensive for the applicant, but             
 should the applicant not meet the work plan requirements, the                 
 project would revert to the normal project process, and would no              
 longer be handled on an expedited basis.                                      
                                                                               
 MR. MOURANT explained the committee substitute addresses department           
 concerns that the legislation implied that DNR would take over                
 statutory requirements of other departments.  That was not the                
 intent of the sponsor, therefore the language, "and, in its                   
 capacity as lead agency, shall coordinate all regulatory matters              
 concerning mineral resource exploration, development mining and               
 associated activities," on lines 6-8, page 1, was added.                      
                                                                               
 LEN VERELLI, Director of the Air and Water Quality Management                 
 Sections at the DEC, stated the language added to the committee               
 substitute is satisfactory to DEC.                                            
                                                                               
 NEIL MACKINNON stated CSHB 169 (RES) is one of the AMC's                      
 recommendations.  He commented as a small mine operator, he would             
 prefer to go to one agency for information, and to have one person            
 accountable for that information.                                             
                                                                               
 Number 523                                                                    
                                                                               
 JULES TILESTON, Director of Mining and Water Management, DNR, gave            
 the following testimony.  The administration has not yet taken a              
 position on CSHB 169(RES), but he believes the amendments will                
 resolve the administration's concerns.   The Alaska Minerals Policy           
 Commission reviewed the Fort Knox project in Fairbanks and                    
 determined the effectiveness of the project was due to the fact               
 that DNR assigned a senior staff member, familiar with the                    
 permitting process and agencies, to coordinate the process.  DNR              
 has expertise in mining, water management, and reclamation,                   
 statewide; the Division of Governmental Coordination (DGS) provides           
 technical expertise on mining related issues; the Division of Lands           
 deals with tidelands; and the Plants Materials Center contains the            
 state's reclamation experts.  The word "coordinate" will not mean             
 that DNR will take on the permitting or regulatory authorities of             
 other entities; nor can it arbitrarily or capriciously direct                 
 another entity to do something against its laws or regulations.               
 The term does imply that evaluations, decisions, and processes be             
 uniformly applied to mining operations throughout Alaska.  He noted           
 AS 27.19.010(d) is another way of solving the problem; it prevents            
 DNR's ability to usurp or modify other agencies' authorities and              
 responsibilities.                                                             
                                                                               
 Number 570                                                                    
                                                                               
 SENATOR TAYLOR asked how the bill could be redrafted to usurp the             
 authority of the other departments.  MR. TILESTON remarked he has             
 worked on the permit process of major projects in the state for 25            
 years and believes it is critical to provide strong leadership and            
 a consistent approach to the permitting process.                              
                                                                               
 TAPE 95-24, SIDE B                                                            
                                                                               
 SENATOR TAYLOR commented he believes when the competing entities              
 are forced to sit with, and justify, their capricious activities to           
 their colleagues, they have to acknowledge the rules and                      
 regulations of the other entities involved.                                   
                                                                               
 Number 570                                                                    
                                                                               
 SENATOR LINCOLN asked what the DGC's function is.                             
                                                                               
 GLEN GRAY, project analyst with the DGC, stated DGC plays a similar           
 coordinating role with coastal zone projects as DNR would under               
 CSHB 169 (RES) with mining projects.  If two or more state permits,           
 or one federal permit, are required for coastal zone projects, DGC            
 coordinates those reviews.                                                    
                                                                               
 Number 557                                                                    
                                                                               
 SENATOR PEARCE asked what "hammer" DGC has when an agency is being            
 obstructive.  MR. GRAY replied final deference is given to the                
 specific agency that has responsibility for that resource.  If an             
 agreement is not reached, the DGC makes its best guess and writes             
 a consistency determination which can be appealed by the agencies.            
                                                                               
 SENATOR PEARCE commented the Shepard's Point road project that was            
 mandated by Judge Holland in an agreement between the federal                 
 government, the state, and the Alyeska plaintiffs, is not                     
 progressing.  She stated permits are not forthcoming; part of the             
 problem is the U.S. Corps of Engineers, but the DF&G is unwilling             
 to issue permits because they feel the project is unnecessary.  She           
 questioned the need for DGC if they cannot fulfill the requirements           
 of a court ordered project.  MR. GRAY responded he was not familiar           
 with that project.                                                            
                                                                               
 Number 518                                                                    
                                                                               
 SENATOR LINCOLN asked if the coordinating functions of DGC and DNR            
 will overlap if CSHB 169(RES) passes.  MR. GRAY answered the bill             
 would require that DGC, when it coordinates such a review, would              
 involve DNR.  DNR would act as the lead agency; DGC would                     
 coordinate the review.                                                        
 SENATOR LINCOLN asked for clarification of the agency roles.  MR.             
 GRAY explained DGC would still provide the permitting coordination;           
 and would work closely with the lead agency regarding DNR's                   
 concerns.                                                                     
                                                                               
 Number 518                                                                    
                                                                               
 SENATOR LINCOLN questioned Mr. Gray's opinion of CSHB 169(RES).               
 MR. GRAY felt the word "coordinate" created confusion.  To his                
 understanding, this bill would not affect the authority of any                
 other agency, therefore it would not create a problem for DGC                 
 because DGC would still coordinate reviews within the coastal zone.           
 The bill would ensure that DGC work with DNR in the permitting                
 process.                                                                      
                                                                               
 SENATOR LINCOLN requested the committee provide a letter of intent            
 to clarify that CSHB 169(RES) was not designed to permit DNR to               
 function for other departments.                                               
                                                                               
 SENATOR TAYLOR stated the legislation implies DNR will be the lead            
 agency, therefore they need to lead other agencies.  SENATOR                  
 LINCOLN did not feel CSHB 169(RES) clarifies the situation                    
 described by Senator Taylor.  She stated the testimony differed.              
                                                                               
 SENATOR HOFFMAN asked for Mr. Mourant's understanding of the                  
 delineation of functions under CSHB 169(RES).  MR. MOURANT                    
 explained the word "coordinate" means just that; there is no change           
 of authority intended by the measure.  The regulatory and statutory           
 authorities of DEC, DF&G, DGS, and DNR will remain in those                   
 agencies as specified in regulation and statute.  The only purpose            
 of CSHB 169(RES) is to provide a single contact point for mining              
 applicants to get advice, coordinate, and find out the status of              
 their projects.  It is a method of expediting a bureaucratic                  
 process.                                                                      
                                                                               
 Number 488                                                                    
                                                                               
 SENATOR HOFFMAN questioned DF&G's comments on the fiscal note.  MR.           
 MOURANT replied the fiscal note was not provided to the sponsor,              
 therefore he was unable to comment.                                           
                                                                               
 Number 458                                                                    
                                                                               
 SENATOR TAYLOR remarked in both British Columbia and Alberta, the             
 government decides whether the project will occur, and directs its            
 agencies to provide solutions to any problems.  In Alaska, the                
 agencies are asked to bring all problems to the table to shut the             
 project down.  He felt Alaska to be approaching the problem in a              
 backward manner.  He added if CSHB 169(RES) creates a "one stop               
 shopping" system for mining applicants, that system will not be               
 expeditious if every agency creates blocks to the process.  He                
 noted it has taken longer to obtain the initial permits on the AJ             
 mine than it took to win World War II.                                        
                                                                               
 Number 443                                                                    
                                                                               
 MR. MOURANT indicated there are many matters regulated by DF&G that           
 are of no interest to the mining community.  DF&G would coordinate            
 its regulatory authority with DNR on only those matters affected by           
 the application.                                                              
                                                                               
 SENATOR LINCOLN asked if there would be committee objection to                
 DEC's recommended language that further states that Section 1 does            
 not alter or diminish the authority of another state agency under             
 its laws and regulations.                                                     
                                                                               
 SENATOR LEMAN did not believe the language to be necessary.                   
                                                                               
 MR. MOURANT explained HB 169 was initially amended because of that            
 concern, and that language was developed in coordination with the             
 affected agencies, who now seem to feel further clarification is              
 necessary.                                                                    
                                                                               
 SENATOR LEMAN announced CSHB 169(RES) would be held until Monday.             
 He also announced the next Senate Resources Committee meeting would           
 be held on Friday; SB 69 and SJR 20 are scheduled.  The                       
 subcommittee on SB 130 will meet on Thursday at 1:00 p.m. in the              
 Beltz Room.  He adjourned the meeting at 4:50 p.m.                            
                                                                               

Document Name Date/Time Subjects