02/13/2023 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB33 | |
| Presentation(s): Overview of the Department of Environmental Conservation | |
| Presentation(s): Overview of the 404 Primacy Feasibility Study | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 33 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
February 13, 2023
3:30 p.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Cathy Giessel, Co-Chair
Senator Bill Wielechowski, Vice Chair
Senator Scott Kawasaki
Senator James Kaufman
Senator Forrest Dunbar
Senator Matt Claman
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 33
"An Act relating to the renewable energy grant fund and
recommendation program; and providing for an effective date."
- HEARD & HELD
PRESENTATION(S): OVERVIEW OF THE DEPARTMENT OF ENVIRONMENTAL
CONSERVATION
- HEARD
PRESENTATION(S): OVERVIEW OF THE 404 PRIMACY FEASIBILITY STUDY
- HEARD
PREVIOUS COMMITTEE ACTION
BILL: SB 33
SHORT TITLE: RENEWABLE ENERGY GRANT FUND
SPONSOR(s): SENATOR(s) KAUFMAN
01/18/23 (S) PREFILE RELEASED 1/13/23
01/18/23 (S) READ THE FIRST TIME - REFERRALS
01/18/23 (S) RES, FIN
02/13/23 (S) RES AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
EMMA TORKELSON, Staff
Senator James Kaufman
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis for SB 33
on behalf of the sponsor.
CURTIS THAYER, Executive Director
Alaska Energy Authority
Anchorage, Alaska
POSITION STATEMENT: Provided invited testimony in support of SB
33.
CONNER ERICKSON, Planning Manager
Renewable Energy Fund (REF) program
Alaska Energy Authority
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on SB
33.
JASON BRUNE, Commissioner
Department of Environmental Conservation (DEC)
Juneau, Alaska
POSITION STATEMENT: Presented overviews of the Department of
Environmental Conservation and the 404 Primacy Feasibility
Study.
MEG KOHLER, Director
Division of Administrative Services
Department of Environmental Conservation (DEC)
Anchorage, Alaska
POSITION STATEMENT: Participated in the overviews of the
Department of Environmental Conservation and the 404 Primacy
Feasibility Study.
JULIE PACK, Assistant Attorney General
Environmental Section
Civil Division
Department of Law
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the overview of
the 404 Primacy Feasibility Study.
SHANNON MILLER, Program Manager
Division of Water
Department of Environmental Conservation (DEC)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the overview of
the 404 Primacy Program.
ACTION NARRATIVE
3:30:07 PM
CO-CHAIR CLICK BISHOP called the Senate Resources Standing
Committee meeting to order at 3:30 p.m. Present at the call to
order were Senators Kaufman, Dunbar, Claman, Wielechowski, Co-
Chair Giessel, and Co-Chair Bishop. Senator Kawasaki arrived
soon thereafter.
SB 33-RENEWABLE ENERGY GRANT FUND
3:31:02 PM
CO-CHAIR BISHOP announced the consideration of SENATE BILL NO.
33 "An Act relating to the renewable energy grant fund and
recommendation program; and providing for an effective date."
3:31:29 PM
SENATOR JAMES KAUFMAN, District F, speaking as sponsor of SB 33,
introduced the legislation speaking to the following sponsor
statement:
SB 33 extends the sunset date of the Renewable Energy
Grant Fund and Recommendation Program to June 30,
2033.
The Renewable Energy Fund (REF) program was originally
established in 2008 with the passage of House Bill 152
and later received a ten-year extension in 2012, in
both cases receiving unanimous vote in the
legislature. The REF is managed by the Alaska Energy
Authority in coordination with a nine member Renewable
Energy Fund Advisory Committee.
Since its inception, the Renewable Energy Fund has
distributed over $300 million dollars in grant funds
for qualifying and competitively selected renewable
energy projects across the state. These REF grants
have been supplemented by both federal and local
funding to the tune of hundreds of millions of
dollars. These combined funds help to stabilize and
reduce energy costs for consumers by supporting
renewable energy projects in both rural and urban
communities across Alaska.
As technology has improved and the available renewable
energy sources have expanded, so too has the number of
proposed projects. In Round 14, 39 applications from
around the state were submitted and 27 were
recommended to receive funding. Thirty-one
applications were submitted for Round 15, which closed
in December 2022. As energy prices climb, it is
important to take advantage of all alternative sources
of energy and heat, especially in our most vulnerable
communities. The Renewable Energy Grant Fund is an
important tool which supports Alaskan communities meet
their energy needs.
SB 33 will extend the Renewable Energy Grant Fund for
a further 10 years, supporting energy independence in
more of Alaska's communities.
3:32:12 PM
SENATOR KAWASAKI joined the committee.
3:34:25 PM
SENATOR CLAMAN noted that Legislative Audit didn't review the
program this year.
CO-CHAIR BISHOP responded the audit would be presented in Senate
Finance.
3:34:57 PM
EMMA TORKELSON, Staff, Senator James Kaufman, Alaska State
Legislature, Juneau, Alaska, presented the sectional analysis
for SB 33 on behalf of the sponsor.
Sec 1. Amends Section 5, Ch. 31, SLA 2008, as
previously amended, to extend the repeal date of the
fund to June 30, 2033.
Sec 2. Makes the sunset extension retroactive to
June 30, 2023 if the bill takes effect after the Fund
sunsets on that date.
Sec 3. Establishes an immediate effective date under
AS 01.10.070(c).
CO-CHAIR BISHOP turned to invited testimony.
3:35:51 PM
CURTIS THAYER, Executive Director, Alaska Energy Authority,
Anchorage, Alaska, stated that the legislature has appropriated
more than $300 million since the inception of the Renewable
Energy Grand Fund in 2008. Ninety programs currently are in
development, 44 of which are new in the last four years.
Legislative funding for these new programs was $4.7 million and
$15 million. The previous estimate that the program has
displaced 30 million gallons of diesel is under review by an
independent economist and the new number will be shared with the
legislature when it's available. Of the $300 million in funding,
85 percent has gone to rural Alaska and 15 percent to the
Railbelt. Increasingly, the focus has shifted to wind and
secondarily to solar and hydro. He highlighted that power for
Prince of Wales is over 90 percent renewable. Importantly, the
feasibility stage determines whether a project is viable. After
that the project receives independent, state, or federal funding
that take it to the next level.
MR. THAYER reported that application round 15 attracted 33
applicants who were vying for $31 million. The next step is to
do an economic analysis and feasibility study of those projects
to narrow the field to fit with the available funds. He said
this program has been very successful and extending it another
10 years would be very beneficial. The bill that was considered
last year didn't make it through the process but it had no
opposition.
SENATOR KAWASAKI requested an explanation of the evaluation
process and stages to qualify an application that result in 85
percent of the REF funding going to rural areas and just 15
percent to the Railbelt.
3:39:33 PM
CONNER ERICKSON, Planning Manager, Renewable Energy Fund (REF)
program, Alaska Energy Authority, Anchorage, Alaska, stated that
there is a four-step evaluation process, the first of which is
an eligibility review of both the applicant and the project. The
second stage is a more thorough review of the economic,
financial, and technical feasibility of the project. The third
stage is to rank the applications based on the scoring that's
part of the state's due process, the matching funds that would
be contributed, and other criteria. The fourth stage is to
weight the projects to ensure the statutorily required balance
between each of the energy ratings. He noted that all the
projects were funded in the last two application rounds, but
that was really subject to the available funding.
3:41:25 PM
SENATOR KAWASAKI reiterated that it seemed that rural projects
score higher than those on the Railbelt. He asked if it was
because the stage three ranking gives more points to rural areas
because the cost of energy is so much higher compared to the
Railbelt, or something else.
MR. ERICKSON replied that it depends on who applies and it just
so happens that for the last two application rounds there were
many more applicants from rural areas than the Railbelt. He
acknowledged that a cost of energy score is attributed to each
application in stage three and more points are given to
applications with higher energy costs.
3:43:02 PM
CO-CHAIR GIESSEL highlighted that the bill packet provides the
statutory guidance for each stage of the process and it was
likely posted on BASIS as well.
CO-CHAIR BISHOP asked the sponsor if he had anything to add.
SENATOR KAUFMAN thanked the committee for hearing the bill and
for clarifying that the backup material included information
about the statutory process.
3:44:16 PM
CO-CHAIR BISHOP held SB 33 in committee.
3:44:20 PM
At ease
^PRESENTATION(S): OVERVIEW OF THE DEPARTMENT OF ENVIRONMENTAL
CONSERVATION
PRESENTATION(S): OVERVIEW OF THE DEPARTMENT OF ENVIRONMENTAL
CONSERVATION
3:44:59 PM
CO-CHAIR BISHOP reconvened the meeting and announced an overview
of the Department of Environmental Conservation (DEC).
3:45:20 PM
JASON BRUNE, Commissioner, Department of Environmental
Conservation (DEC), Juneau, Alaska, began the overview of the
Department of Environmental Conservation (DEC) with the mission
statement:
Conserving, improving, and protecting Alaska's natural
resources and environment to enhance the health,
safety, and economic and social well-being of
Alaskans.
COMMISSIONER BRUNE reviewed the five values he instituted when
he became commissioner:
- We make Objective decisions, based on science and facts.
- We are Accountable for our actions and stand proudly behind
our work, as individuals and as an organization.
- We perform to the highest ethical standards, and produce
transparent and consistent regulatory actions to show our
Integrity.
- We support and encourage Collaboration across programs and
partners to meet challenges and further our collective
mission.
- We strive to provide excellent Customer Service both inside
and outside of the organization by being professional,
responsive, reliable, and respectful.
3:46:23 PM
COMMISSIONER BRUNE stated that the four main areas of
environmental protection and human health are: Air Quality,
Water Quality, Spill Prevention and Response, and Environmental
Health.
He stated that DEC is accountable to the legislature for funding
and direction. With that in mind, he established metrics to
facilitate reporting department activities to the legislature
when he became commissioner.
COMMISSIONER BRUNE reported the following from the chart on
slide 5:
- The department issued more than 11,000 permits, approvals,
certifications, and plan reviews in 2021 and about 10,000 were
processed in 2022. Inspections and site visits in 2021 numbered
just more than 2,000 and that increased to nearly 3,500 in 2022.
- There was less emphasis on virtual inspections in 2022 than
2021, but those inspections are still important because they can
save time and money.
- All documents and files continue to be scanned so the 75
percent of DEC employees who work remotely 2-3 days/week still
have access to their files.
- In an effort to turn around the annual turnover rate of 25-30
percent, he instituted additional training and development plans
for each employee. Training hours are tracked for each employee
and the department is averaging 50 hours per week of training
for all of DEC. In SPAR, nearly 2.5 weeks is devoted to training
every year. That has brought retention in that division to
record levels. The department-wide annual turnover rate has
dropped 14 percent, which is an accomplishment.
3:49:22 PM
SENATOR CLAMAN asked how many positions were in the department
when he started and how many of those were filled, compared to
the total positions today and number that are filed.
COMMISSIONER BRUNE answered that there were 470 positions when
he started and there are 516 positions today. Positions that are
vacant for more than six months are flagged for elimination.
CO-CHAIR BISHOP asked if he'd shared his training model with any
other commissioners.
COMMISSIONER BRUNE replied that the need for training, career
opportunities, and the opportunity for telework is discussed at
the cabinet level on a regular basis.
CO-CHAIR BISHOP asked if DEC had a voluntary inspection program,
similar to the voluntary inspections request that OSHA offers. A
"Yellow Card" is issued if something needs to be corrected, but
it's "no foul" and there's time to correct the problem. A
citation is only issued in a voluntary inspection if there is an
immediate threat to life and health.
COMMISSIONER BRUNE said he liked the reference to soccer. He
opined that compliance assistance and partnering with the
regulating community was imperative; the department jumps at the
opportunity to work collaboratively to get projects moving
forward.
SENATOR KAWASAKI referenced a document that shows a vacancy rate
of just over 6 percent and asked what the turnover is during any
particular year.
3:53:26 PM
COMMISSIONER BRUNE clarified that when he became commissioner
four years ago, the turnover rate was 25-30 percent. Today, the
turnover rate is 14 percent. That's different than the vacancy
rate, which is the percent of the year that a position is
unfilled. The 6 percent vacancy rate refers to the percentage of
time that all the 516 positions at DEC are unfilled. That's a
budgetary problem.
SENATOR KAWASAKI asked if DEC currently had enough experienced
to monitor the permits that are issued. He also asked about the
current backlog for inspections, site visits, and permit
approvals for both air and water quality.
COMMISSIONER BRUNE confirmed that the department had sufficient
experienced staff to monitor permits. To the question about
backlogs, he said that's not generally been an issue but he
would follow up with the exact data.
CO-CHAIR BISHOP asked him to forward the information to his
office for distribution.
3:56:40 PM 35
COMMISSIONER BRUNE advanced to slide 6 and reviewed DEC
leadership positions in the FY2024 operating budget. He provided
a brief description of each individual in the positions of
deputy commissioner, special assistant to the commissioner, and
the directors for the Division of Administration, the Division
of Environmental Health, the Division of Air Quality, the
Division of Spill Prevention and Response, and the Division of
Water. He also noted the assistant attorney general position
working within DEC.
3:58:41 PM
MEG KOHLER, Administrative Services Director, Department of
Environmental Conservation (DEC), Anchorage, Alaska, advanced to
slide 7 and highlighted the following in the Division of
Environmental Health:
1) The division took on the national subtitle C RCRA hazardous
waste management. Positions have been filled and the division is
moving forward with the program.
2) Microreactor siting permit regulations for the Eielson area.
3) Raw milk and food security
4) IIJA funded projects to review drinking water plans and
recreational and commercial shellfish testing.
5) The environmental health laboratory is also enjoying forward
progress because of the additional federal funds.
CO-CHAIR BISHOP asked where the microreactor permit would be
sited.
MS. KOHLER replied it would be sited at Eielson [Air Force
Base].
CO-CHAIR BISHOP asked for the timeframe to execute the permit.
COMMISSIONER BRUNE answered that the Air Force said it wanted to
let the contract in July. DEC went through the project scoping
in December and January to ensure public concerns were heard,
and the regulation package will be released in the next month.
This will provide additional opportunity for public comment and
the hope is that those regulations for where the facility can be
sited will be completed by July. He noted that this same process
will be followed for other projects designed to replace diesel
in rural Alaska.
4:01:11 PM
SENATOR DUNBAR said based on an earlier presentation, it seemed
as though it would be quite a while before microreactors would
be commercially available. There may be a project at Eielson,
but that is very different than the small rural communities that
would benefit from replacing diesel. He then asked for
additional information about the environmental health
laboratory.
COMMISSIONER BRUNE responded that a bill that passed last year
instructed DEC to put forward a siting regulatory package. He
noted he had a meeting with tribal interests and Alaska Native
corporations to ensure they were aware of the siting. The
process should be very transparent and the regulations can be
amended going forward. To the question about the lab, he said
it's a great facility that does testing for human health,
including shellfish, milk, and drinking water. He offered to
give a tour anytime.
4:03:32 PM
SENATOR CLAMAN how many positions were authorized for the
subtitle C RCRA program.
COMMISSIONER BRUNE replied the legislature approved six
positions last year.
SENATOR CLAMAN asked what the funding source was for the
subtitle C RCRA program, and the breakdown if federal funds were
involved.
COMMISSIONER BRUNE said the assumption process for RCRA was 100
percent general fund. Once the state receives primacy for that
program, the federal government will provide about $600,000 for
the state oversite.
SENATOR CLAMAN asked if that was $600,000 annually, and if so,
how much of the program that pays for.
COMMISSIONER BRUNE replied it is an annual payment and those
federal receipts will pay for 50-60 percent of the program.
SENATOR CLAMAN asked what the timeline was to get the subtitle C
RCRA program approved.
COMMISSIONER BRUNE explained that it was a two-year process to
implement. DEC currently was developing the application and
would submit it next January for the Environmental Protection
Agency (EPA) approval. DEC anticipates it will be overseeing the
program July 1, 2024.
SENATOR CLAMAN offered his understanding that DEC would finish
the application process within the next six months and EPA would
have about six months to approve or not approve the application.
COMMISSIONER BRUNE clarified that the approval or disapproval
would come 17 months from now.
SENATOR CLAMAN asked if it would be 2025 before DEC was running
the program.
4:05:49 PM
COMMISSIONER BRUNE clarified that it would be FY2025, but the
department anticipates the program will be up and running July
1, 2024.
SENATOR KAWASAKI asked for an explanation of the timeline to get
the permits in place for the microreactor at Eielson.
COMMISSIONER BRUNE said it was frustrating to learn that the Air
Force intends to let that contract in July. He said he argued
that it wasn't possible to push regulations through without
meaningful public dialog, and that was why he mandated a scoping
process. About 100 comments came if from the public and those
are being used to develop the regulatory package, which should
be released in several weeks. The comment period will be either
60 or 90 days, although only 30 days is required. DEC has to
respond to the comments and get the package to the Lieutenant
Governor for approval. The process has to be completed within a
year of starting, but the hope is to complete it sometime in
July.
SENATOR KAWASAKI asked if that means that DEC won't release the
permit until sometime after July.
4:08:23 PM
COMMISSIONER BRUNE clarified that the regulations need to be in
place before the entity can apply and follow the process. He
noted that the local governmental jurisdiction also has to sign
off on the project.
SENATOR KAWASAKI asked for confirmation that he was not
anticipating a backlog in the review and permitting of large
IIJA-funded projects.
COMMISSIONER BRUNE responded that 32 communities in Alaska were
unserved and still using honey buckets. It's a priority for DEC,
the governor, and the congressional delegation and DEC used IIJA
funds to add positions to help meet the timelines. He noted that
many of the IIJA funded projects will impact wetlands so it
would be helpful for the state to assume 404 primacy. He said
it's unlikely that those 32 communities will be upgraded
immediately because the state doesn't have the capacity to do
the upgrades all at once. The EPA has said the state will have
10-15 years to do this, but the goal is to get those communities
off honey buckets as soon as possible.
4:10:40 PM
MS. KOHLER spoke to the following highlights from the Division
of Air quality:
1) Fairbanks [State Implementation Plan] SIP support &
implementation
2) Regulatory monitoring network
3) Rural monitoring network
4) Modelling support
5) Ongoing permitting, compliance, and public support
for clean air
6) IRA funding details forthcoming
4:11:35 PM
MS. KOHLER briefly mentioned the following highlights from the
Division of Spill Prevention & Response:
Spill Prevention & Response
1) Spill reporting made easier
2) 18 AAC 75 Article 4
3) Prevention Preparedness and Response Realignment
4) Response at ~150 PFAS contaminated sites
5) ANCSA litigation
6) Cost Recovery
7) PFAS Regulatory Package
COMMISSIONER BRUNE said he was pleased to report that the
department has been authorized to move forward with the
regulatory package to set PFAS limits in the state. This work
will begin in the next several months.
4:13:09 PM
SENATOR DUNBAR said he grew up in Cordova and addressing PFAS
contamination was a passion of his. He noted that a fund that
was established to pay the cost to recover PFAS throughout the
state wasn't sufficient to run the expanded number of recovery
programs. He recalled that $0.009 was collected on every gallon
and $0.04/barrel at Alyeska. He asked if that was correct and if
the division supports the proposal to increase the $0.009
surcharge to $0.015.
COMMISSIONER BRUNE stated that originally SPAR was funded with
$0.04 for every barrel of oil produced in the state and an
additional $0.01 for the response account. That's $0.05. The
SPAR allocation stops once the response account reaches $50
million. Right now the balance is in the $30 million range. To
the second question, he said the administration absolutely
supports diversification of funding and increasing the refined
fuel surcharge from $0.0095 to $0.015. He noted that he was also
pleased to have received some general fund dollars for SPAR.
4:17:26 PM
SENATOR KAWASAKI mentioned the potential for lawsuits in the
interest of statehood defense and asked if there was any
discussion about the federal SIP.
COMMISSIONER BRUNE said yes; the department was watching that
closely. Once the public comment period is finished, the EPA
will consider those comments, and the SIP will be finalized
later this year. At that point it will be ripe for potential
litigation. He also noted the potential for litigation regarding
the EPA's responsibility for certifying wood stoves.
SENATOR CLAMAN recapped his understanding that the money is
collected from different entities.
COMMISSIONER BRUNE clarified that $0.05 cents is collected on
every barrel of oil produced from Cook Inlet and the North
Slope. Of that, $0.04 goes to the prevention account and $0.01
goes to the response fund. The refined fuel surcharge is
$0.095/gallon and that goes toward funding SPAR.
SENATOR CLAMAN asked if he supported increasing the $0.095 to
$0.015 cents.
COMMISSIONER BRUNE answered yes.
SENATOR CLAMAN asked whether the $0.05/barrel charge would
remain the same.
COMMISSIONER BRUNE said that's correct.
4:20:03 PM
MS. KOHLER jumped to slide 12 and highlighted that Legislative
Finance calculations show that DEC's general fund budget per
resident worker is just 38 cents a day to protect human health
and the environment.
She displayed the chart on slide 13 that illustrates that DEC's
budget is less than one percent of the state's total operating
undesignated general fund (UFG). She also noted the FY2023 and
FY2024 IIJA funding the department will receive.
CO-CHAIR BISHOP thanked the presenters.
^PRESENTATION(S): OVERVIEW OF THE 404 PRIMACY FEASIBILITY STUDY
PRESENTATION(S): OVERVIEW OF THE 404 PRIMACY FEASIBILITY STUDY
4:21:10 PM
CO-CHAIR BISHOP announced the consideration of an overview of
the 404 Primacy Feasibility Study.
4:21:40 PM
JASON BRUNE, Commissioner, Department of Environmental
Conservation (DEC), Juneau, Alaska, stated that he, Shannon
Miller and Julie Pack were eager to talk about the Clean Water
Act, Section 404 Dredge and Fill Feasibility Study that the
legislature funded last year with $1 million.
COMMISSIONER BRUNE began the presentation with a review of DEC's
existing primacy programs.
- The state assumed primacy of the Clean Air Act in the 1970s.
- Soon thereafter the state assumed primacy over the Safe
Drinking Water Act.
- In the mid-2000s, the legislature directed DEC to assume
primacy of the National Pollution Discharge Elimination System
(NPDES) program under Section 402 of the Clean Water Act. The
transition took four years and the program was up and running
in 2012.
- Last year the legislature provided funding for six positions
so DEC could assume oversight of the Resource Conservation and
Recovery Act by July 1, 2024. This is handling hazardous
waste.
- The state is now working to assume primacy over Section 404 of
the Clean Water Act to regulate the discharge of dredge and
fill material.
4:25:02 PM
COMMISSIONER BRUNE advanced to slide 3 to discuss the history of
the state's efforts to assume primacy over the regulation of
dredge and fill activities.
- In 2013, the legislature passed Senate Bill 27, mandating that
DEC take reasonable steps to assume primacy of the Section 404
program. The bill passed both bodies with bipartisan support.
COMMISSIONER BRUNE deferred to Julie Pack with the Department of
Law to talk about the legal components of assuming Section 404
primacy.
4:26:05 PM
SENATOR CLAMAN asked if he was saying that after the legislation
passed in 2013, the department did not take reasonable steps to
assume primacy. Rather, the department did an investigation and
decided not to proceed.
COMMISSIONER BRUNE clarified that the department was taking
reasonable steps, but oil prices fell and the program was not
funded. It was just last year that the legislature provided $1
million to commence the feasibility study.
SENATOR CLAMAN asked if DEC did any studies or if any reports
were prepared in the 2013 era, similar to the report the
committee has today.
COMMISSIONER BRUNE yes and that was submitted last year as part
of the record last year. He offered to provide a copy again this
year.
SENATOR CLAMAN said he'd appreciate that.
4:27:41 PM
SENATOR WIELECHOWSKI commented that the fiscal situation hadn't
really changed since 2013 because money was still a problem and
the budget was still not balanced.
COMMISSIONER BRUNE said the legislature holds the purse but he
believes that this is an investment that is well worth making.
In the long run, he said it's an opportunity to diversify the
funding. The regulated community supports partially funding this
through user fees and there's a ground-swell of support among
states to get the federal government to provide some support to
states that assume Section 404 primacy. He acknowledged the
current budgetary issues and expressed hope that this two year
effort would result in a program that is funded by the federal
government, users, and some general fund.
SENATOR WIELECHOWSKI offered his perspective that the
fundamental concern had always been the money. He noted that the
federal government has more staff to run the program than DEC is
proposing, and the states that have assumed primacy - Florida,
New Jersey, and Michigan, have more staff to run their programs
and nowhere near the acreage in wetlands that Alaska has. For
example, Michigan has 6.5 million acres of wetlands and 82 staff
in 10 offices to run the program; New Jersey has 915,000 acres
in wetlands and 176 staff; and Florida has 10 million acres in
wetlands and just increased the program staff from 170 to 212
and the current budget request if for an additional 33 staff.
SENATOR WIELECHOWSKI stated that despite overwhelming support in
the legislature to assume Section 404 primacy, it's never
penciled out. Furthermore, even if the state were to assume
primacy, it would still be subject to federal regulations.
4:31:24 PM
COMMISSIONER BRUNE countered that while there are 175 million
acres of wetland in Alaska, just 0.1 percent has been developed.
Furthermore, those other states need more staff because they
have more economic activity associated with the development on
wetlands. In Florida, for example, the ongoing building boom is
largely on wetlands. The number of positions DEC has proposed is
based on the activities those staff will do, not the wetland
acreage. He also posited that any economic activity beyond
what's anticipated will lead to more royalties and taxes and
will pay for itself. He further posited that not only does
industry want the state to assume primacy, but the environmental
community also wants this because of the compensatory mitigation
to the watershed. He described this as a win-win.
4:32:55 PM
SENATOR WIELECHOWSKI asked if he would be willing to insert a
provision in the budget that requires the program to be cost
neutral to the general fund.
COMMISSIONER BRUNE answered no but he had committed on record to
work with the regulated community to ensure it has skin in the
game. He recounted the process to take the application to EPA
and the Corps of Engineers and then have the discussion with the
regulated community. It has to be fair for all the entities that
benefit from the state assuming Section 404 primacy.
4:34:19 PM
SENATOR CLAMAN articulated his concern that only three states
had moved forward to assume Section 404 primacy, which was just
the opposite for Section 402 primacy to oversee the regulation
of wastewater discharge under the Clean Water Act. Only three
states and the District of Columbia declined to move forward. He
counted 23 states that had looked at the issue and decided not
to move forward, primarily for cost and complexity reasons. He
agreed with Senator Wielechowski that it was a black hole of
expense. He emphasized, "I just want to say that I'm very
skeptical when you see that many states declining to go forward
and there's zero federal funding to support this if we take it
over."
COMMISSIONER BRUNE countered that the states that declined to
move forward likely had already developed all their wetlands. He
pointed to California that had developed more than 90 percent of
its wetlands. It wouldn't benefit that state to assume primacy,
but Alaska has 175 million acres of wetlands. He maintained that
nobody has more interest in deciding what areas to protect, to
develop, and to mitigate any impacts than the state itself.
4:37:12 PM
SENATOR CLAMAN said he was more interested in Wyoming, Montana,
Minnesota, North Dakota, Kentucky, and other states that have
resource development and undeveloped wetlands. Those states have
chosen not to move forward and assume Section 404 primacy.
COMMISSIONER BRUNE responded that the issue is doing what's
right for the wetlands and trying to partner with the
development community to ensure that projects go forward while
protecting the value of the wetlands in perpetuity.
4:38:19 PM
SENATOR KAWASAKI added to Senator Wielechowski's comments by
pointing out 1) that the state has a $500 million structural
deficit in FY2024 and 2) that in 2013 there was $19 billion in
the statutory budget reserve and the constitutional budget
reserve and the legislature still declined to pursue primacy. He
also questioned whether DEC could actually fill the new
positions given the recruitment and retention problems executive
branch agencies are facing. He also voiced concern that the
permits are done properly, timely for industry, and with
protections in place.
COMMISSIONER BRUNE opined that DEC was a role model among the
state agencies for retaining and promoting employees. The
turnover rate was cut in half in last four years.
4:40:32 PM
SENATOR DUNBAR asked 1) why the state didn't wait until the
program was federally funded and 2) why Florida was able to
assume primacy in just two years when it took New Jersey and
Michigan seven or more years.
4:41:50 PM
COMMISSIONER BRUNE argued that 1) the two year timeframe was
achievable because the EPA and Corps of Engineers just went
through the process with Florida and it was fresh on their
minds; 2) the state had an excellent relationship with the Corps
and EPA; and 3) Congress designed these programs to be assumed
by states and provided funding. DEC received $49,000 from the
EPA to do wetlands delineation.
SENATOR DUNBAR asked why the state didn't wait until the federal
government funded the program.
COMMISSIONER BRUNE offered his belief that it was a good
investment of state dollars to move forward now and to
concurrently work to get the federal government to fund the
program. He pointed out that even if there was federal funding,
it would not be available until after the application was
approved.
4:45:08 PM
JULIE PACK, Assistant Attorney General, Environmental Section,
Civil Division, Department of Law, Anchorage, Alaska, stated
that before she goes through Section 404 of the Clean Water Act
from a legal perspective, she wanted to articulate the
Department of Law's position on how EPA's 404 veto power
intersects with the 404 assumption program if a state were to
assume the program. That position is that the EPA's statutory
404(c) power will not be affected by state assumption of the 404
program.
4:45:48 PM
SENATOR CLAMAN asked if she was saying that if the state assumes
404 permitting authority, EPA will still have veto authority
over any decision the state makes as to its portion of the 404
program.
MS. PACK replied that just three states have assumed the program
and EPA has only finalized this power 14 times as of the most
recent determination. Because there are so few instances of the
404 assumption context and veto context, no court has opined on
the specific question of how they intersect. It is a technical,
legal grey area, but Section 404(j) provides for a
federalization process. In that process, when the EPA receives a
copy of a permit application, it has the opportunity to raise
objections that the state must resolve. If the state doesn't
resolve the objections, EPA can federalize the permit and return
it to the Corps. Once the permit is back on the federal track,
EPA's 404(c) power applies the way it did for Bristol Bay.
4:48:03 PM
SENATOR CLAMAN asked if she said there were 14 instances of a
state permit being federalized in one of those three states.
MS. PACK clarified that the 13 instances she mentioned were
EPA's previous exercise of its 404(c) power. None of those 13
vetoes were over state permits issued by a state-assumed
program. She said she was trying to illustrate that there was a
lot of daylight between the two concepts.
SENATOR CLAMAN asked if the EPA had taken any action to
disapprove a state permit in any of the three states that have
assumed 404 authority.
MS. PACK answered yes; EPA federalized one Florida permit and in
Michigan or New Jersey it used the federalization power under
404(j) to return a permit to the Corps.
SENATOR CLAMAN asked if that was what was referred to as a veto.
MS. PACK replied those are two separate concepts. The 404(c) is
commonly referred to as the veto power and the 404(j) was
similar but it applies specifically to state permits.
4:50:27 PM
SENATOR CLAMAN asked where 404(c) comes into play if a permit is
federalized under 404(j).
MS. PACK replied that 404(c) has not come into play in any of
the three state-assumed programs.
4:51:05 PM
SENATOR WIELECHOWSKI offered his understanding that 404(c) was
the provision under which EPA effectively vetoed the Pebble Mine
project.
MS. PACK answered yes.
SENATOR WIELECHOWSKI asked if she was aware that the
administration was contemplating a lawsuit to challenge that
authority.
MS. PACK answered yes.
SENATOR WIELECHOWSKI asked whether the administration had made a
decision to move forward with the lawsuit.
MS. PACK replied that the administration issued a press release
that the Department of Law was discussing and preparing to bring
a lawsuit.
SENATOR WIELECHOWSKI asked if she agreed that it seemed odd that
she was touting EPA's veto power when DOL was preparing a
lawsuit to overturn that authority.
MS. PACK said she'd agree if that were the extent of the story,
but there's more. EPA used the language under 404(c) to do what
it did on the Pebble Mine but had never done before in any of
the previous 13 vetoes. The Department of Law is challenging the
veto independent of what is at play here.
4:52:31 PM
SENATOR DUNBAR asked her to speak to the Florida case and
whether the state had filed a lawsuit about the federalization.
MS. PACK explained that the federalization was specifically
related to a dispute about how waters of the US (WOTUS) applied.
The Trump administration issued the MWPR rule, which was a
different definition of WOTUS than the Biden administration is
implementing. That rule was vacated in August, 2021 and the
permit was federalized. Nobody sued Florida.
SENATOR DUNBAR said it sounds as though the state of Florida did
not sue the federal government.
MS. PACK said that's correct.
SENATOR DUNBAR asked what kind of project led to the
federalization.
MS. PACK said she would follow up with a written response.
4:54:29 PM
CO-CHAIR BISHOP asked, if the program is approved, would the
state be required to undergo an annual EPA audit to keep the
primacy program.
SHANNON MILLER, Program Manager, Division of Water, Department
of Environmental Conservation (DEC), Anchorage, Alaska, said it
depends. The department has conversations with EPA on a regular
basis and makes adjustments as needed, so it doesn't have an
annual review of the water programs that other primacy programs
may have. She said she anticipates this model will continue and
corrections will be made as they come up.
4:55:03 PM
MEG KOHLER, Administrative Services Director, Department of
Environmental Conservation (DEC), Anchorage, Alaska, added that
the statutes require the state to submit a report to EPA on an
annual basis.
COMMISSIONER BRUNE conveyed that all the state's other primacy
programs have the state review framework (SRF) process whereby
EPA issues a report card every five years. He reminded the
committee that EPA notified him three years ago that DEC wasn't
doing enough inspections for the 404 program. He asked the
legislature for additional positions to do those additional
inspections. He said that's an example of the level of
collaboration DEC has with EPA to protect human health and the
environment. That will continue.
4:56:58 PM
CO-CHAIR BISHOP asked if the state owned the entire 175 million
acres of wetlands.
COMMISSIONER BRUNE replied it's a mix of ANCSA lands, state
lands, and federal lands all over the state.
CO-CHAIR BISHOP asked what percentage of state land is wetlands.
COMMISSIONER BRUNE said he'd follow up with the information.
CO-CHAIR BISHOP mentioned carbon sequestration and earlier
efforts to establish a compensatory mitigation program within
DNR. He then asked if the 404 program would allow other states
to buy into some of the state's wetlands.
COMMISSIONER BRUNE said he wasn't aware that carbon tied into
the 404 assumption program.
CO-CHAIR BISHOP said he mentioned mitigation to stimulate
thinking about other revenue streams to supplant the use of
general funds. He mentioned the $800 million cost for wetlands
mitigation offset on the AKL&G project to highlight the need to
look for ways to improve project economics.
5:01:04 PM
There being no further business to come before the committee,
Co-Chair Bishop adjourned the Senate Resources Standing
Committee meeting at 5:01 p.m.