Legislature(1995 - 1996)
03/22/1995 03:50 PM Senate RES
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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.
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