Legislature(2013 - 2014)SENATE FINANCE 532
02/26/2013 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB27 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 27 | TELECONFERENCED | |
| + | SB 26 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 27
"An Act establishing authority for the state to
evaluate and seek primacy for administering the
regulatory program for dredge and fill activities
allowed to individual states under federal law and
relating to the authority; and providing for an
effective date."
9:41:37 AM
LARRY HARTIG, COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL
CONSERVATION, introduced SB 27. He related that the
legislation authorized the Department of Environmental
Conservation (DEC) and DNR to evaluate and pursue primacy
for Section 404 of the Clean Water Act, Regulation of Dredge
and Fill Activities.
Commissioner Hartig defined the 404 Program of the Clean
Water Act and explained the legislation. He read from
prepared testimony, "Senate Finance Committee Testimony of
Alaska Department of Environmental Conservation" Senate
Bill 27 "404 Primacy", February 26, 2013 (Copy on file).
What is a 404 program?
Section 404 of the Clean Water Act requires that all
dredge and fill activities in surface waters (the
ocean, lakes, rivers, streams) and wetlands be
permitted. This permitting is done by the U.S. Army
Corps of Engineers under what is known as the "404
program." Per the Clean Water Act, EPA retains
oversight over the Corps' 404 program.
Wetlands provide valuable functions that include
habitat for plants and animals, wildlife corridors,
improvements to water quality, and flood and storm
attenuation. Wetlands in Alaska range from North Slope
tundra to forested wetlands in the mountains of
Southeast. With over 174 million acres of wetlands
(65% of all wetlands in the nation), Alaska's stake in
administering the 404 program is unlike that of
any other state.
Examples of activities requiring 404 permits include
filling in wetlands for any purpose such as roads, or
residential or commercial building pads; and
construction of breakwaters, dams, and levees. The 404
permitting process itself involves an evaluation of
the dredge and/or fill activity to identify the "least
environmentally damaging practicable alternative"
(LEDPA) for a project. An
authorization for a dredge or fill activity must be
accompanied by what is known as 404(b)(1) findings on
potential short-term or long-term effects of a
proposed discharge of dredged or fill material on the
physical, chemical, and biological components of the
aquatic environment. This also includes an evaluation
of cumulative impacts.
The goal of 404 permitting is to avoid or minimize
impacts to aquatic resources, including wetlands.
Where impacts are unavoidable, actions are taken or
required to mitigate those impacts. The Clean Water
Act intends for states to implement (to assume primacy
for) the 404 program with
the Corps of Engineers and the Environmental
Protection Agency (EPA) acting in an oversight role.
States seeking primacy for the 404 program require
EPA's approval.
SB 27 gives the authority to DEC and DNR to evaluate
the costs and benefits of a state run program; begin
the application development process and to seek
approval to implement the program if it makes sense to
do so.
Commissioner Hartig emphasized that the legislation was a
multi-step process to evaluate the costs and benefits of
assuming primacy. The legislature would ultimately make the
decision to move forward with primacy based on the costs
and recommendations by the department.
9:47:13 AM
Commissioner Hartig continued with the testimony.
How do states assume the 404 program, and what can
states gain authority over?
The Clean Water Act spells out the requirements for a
state's application for 404 primacy. These include a
formal request by the governor; a description of the
program as the state will run it; the state Attorney
General's declaration that the state program is
consistent with the federal program; memoranda of
agreement with EPA and the Corps; a description of
staffing and funding; and copies of all applicable
state statutes, regulations, and administrative
procedures. EPA will not approve a program that is
less stringent than the federal program.
Commissioner Hartig informed the committee that in 2012 the
state gained total primacy over Section 402 of the Clean
Water Act, Wastewater Permitting Program, National
Pollutant Discharge Elimination System (NPDS). Primacy was
implemented over a five year period with Environmental
Protection Agency (EPA) oversight. The department gained
experience with the primacy application through the 402
primacy process. The agency mandated that the state develop
an equivalent to the federal program. He explained that
during the 402 process DEC had to seek legislative approval
several times for new authorities or statute changes in
order to comply with EPA requirements. The legislation was
the first step in the primacy process. He assured the
committee that the legislature remained the "gatekeepers"
to seeking primacy.
Commissioner Hartig continued with the prepared testimony.
States may assume primacy for the permitting and
compliance program for all waters and wetlands except
tidally influenced waters and waters that are or could
be used for interstate and foreign commerce and
wetlands adjacent to those waters. The Corps will
retain authority for permitting dredge and fill
activities in these waters in Alaska even after Alaska
formally assumes the 404 program.
Two other states already have primacy for the program,
New Jersey and Michigan, while other states are
considering it. The Department of Environmental
Conservation (DEC) currently plays a secondary role in
the 404 program in Alaska, reviewing permit
applications, in some cases applying Alaska-specific
conditions, and "certifying" that the Corps' permits
meet State water quality standards.
While I have described the formal process for 404
assumption from the Corps, there is a second mechanism
where states can administer Section 404 dredge and
fill permits. This is done by partnering with the
Corps in the issuance and administration of what are
known as State programmatic general permits, or State
PGPs. These permits are general permits for dredge and
fill actions that are similar in nature and have
minimal individual or cumulative effects. The
Department likely already has statutory authority to
administer State PGPs, but the proposed legislation
and fiscal note provide for the state to explore and
pursue both this option and the formal primacy option.
Multiple Alaska administrations over many years have
considered primacy for the 404 program with the most
serious consideration about 10 years ago. The decision
at that time was to first pursue State primacy from
EPA to implement the federal Clean Water Act (Section
402), National Pollutant Discharge Elimination System
Program - the wastewater discharge permitting program.
DEC has completed that process with EPA approval of
the program in 2008 and the State's final step to have
full authority in 2012, when we accepted
responsibility for the final industrial sector's
permits.
With that recent experience, now is a good time for
the Alaska to expand control over its waters,
recognizing state priorities for prompt permitting for
economic development while protecting water quality.
The application process for 404 primacy will be
similar, as will program development and
implementation. The lessons learned from that
experience will apply directly to 404 assumption. One
lesson, however, is that we know that it will take
time. There are multiple opportunities along the way
for the public to weigh in on program development as
well as opportunities for the legislature to have a
say in whether the state proceeds with primacy - when
we may seek additional statutory changes to ensure the
program will be consistent with the federal program
and when we seek the budget necessary to implement the
program.
9:55:31 AM
Why is assumption of the 404 program important?
Almost half of Alaska is considered wetlands - 65 % of
the nation's wetlands are in Alaska. With wetlands so
omnipresent in Alaska, most major projects - and a
very large number of minor projects, like housing pads
- require 404 permitting. Yet the Corps is
experiencing budget cuts and staff reductions. In a
state like Alaska with a very narrow window for
construction, such delays can and do result in project
delays of a year or more. A state-run program that is
accountable to Alaskans and the legislature will
assure that it is the State that decides the level of
resources to devote to a program that is so essential
to the state's economy. The state will have control of
its permitting priorities.
Commissioner Hartig elaborated that the state had primacy
over the Clean Air Act for several decades. Experience with
the Clean Air Act and Section 402 primacy demonstrated that
the state was more flexible with setting permitting
priorities than the federal government.
Commissioner Hartig continued with his testimony.
Both DEC and DNR have placed significant emphasis in
recent years on permit reform. From automated permit
application to improved business processes, the State
is well-poised to apply these streamlining
improvements to the 404 program. These faster,
streamlined practices place more emphasis on results -
protection of wetlands and water resources - and less
on cumbersome processes.
With a state-run program, two agencies - DEC and DNR -
that have a long history of successful interaction -
will run the program, rather than the four currently
involved: The Corps, EPA, DEC, and DNR. Two vs. four
simply means less bureaucracy. ADF&G will, of course,
retain its Title 16 permitting authorities and DEC and
DNR will coordinate and consult with ADF&G as part of
the 404 process.
Other benefits of a State-administered program:
projects.
for the program.
Alaska's priorities and unique conditions with Alaska
specific program guidance.
less apt to stall projects needlessly and
indefinitely.
courts instead of outside federal courts.
regime.
consultation processes with less formal, faster
processes while still achieving the objectives of
those programs.
What does the legislation do?
The legislation before you provides two parallel
tracks: Study 404 primacy and prepare an application
for the program, and begin capacity building from the
start. First, it directs DEC and DNR to evaluate
costs, benefits, and consequences of the state
assuming primacy for the 404 program, providing
resources to the departments to do so. At the same
time as the agencies are performing this evaluation,
State staff can partner with Corps staff in the
issuance of state Programmatic General Permits and
authorizations under these general permits, assist the
Corps with priority permit issuance, and work
alongside the Corps in implementing mitigation
projects associated with permitted projects in a way
that works for Alaska's unique situation. This
capacity building provides tremendous benefit to the
state agencies when the state does gain primacy for
the program, providing trained staff and tested
processes for running the actual program.
Additionally, it
provides benefits to Alaska's permit applicants who
will gain from the state staffing addition: shorter
turnaround times for 404 permits, while continuing to
protect water quality.
In addition, this legislation provides the authority
for DNR and DEC to administer the program and provides
the authority for DEC to apply to EPA for
authorization for the state-run program, as well as
providing both agencies the authority to issue
regulations needed for the program.
Because the state is still early in the process of
fully understanding the ramifications of 404
assumption, this bill will likely not be the last 404
legislation that comes before you. As we research
statutory requirements, it is likely that we will back
with needed changes: Statutory change has been
required of other states seeking authority for the
program. In addition, DEC and DNR will be evaluating
the resources necessary to implement and run a state
404 program. The estimates in the fiscal notes that
accompany this bill are for the application process
and to begin the initial capacity building I've
mentioned. By the FY16 budget cycle, however, we
expect a decision point regarding whether to advance
the primacy effort. At that point, DEC and DNR will
have a much better understanding of the resources that
will be required for the full program. We expect that
additional resources, likely significant because it is
a significant program, will be required at that time.
Fiscal Impacts
There are three fiscal notes for SB 27. The dollar
amounts from the DNR and Law fiscal notes are includes
in the services line of the DEC fiscal note - DEC's
fiscal note represents the full funding request for
the early stages of evaluating and beginning
preparation for a potential primacy application; and
to increase the State's understanding of the program
through capacity development. The fiscal note does not
include the full costs to implement a State 404
program. (The concluding paragraphs of the
presentation are on file.)
Commissioner Hartig commented that SB 27 did not affect the
EPA's study of the Bristol Bay Watershed Assessment under
Section 404 of the Clean Water Act.
10:03:43 AM
Commissioner Sullivan pointed out that 404 permitting was
the major and most lengthy piece of the permitting process
for most of the large development projects in the state. He
related that DNR was declared a "cooperating agency" by the
federal government. The department coordinated information
between other state agencies with federal agencies during
the permitting process. He stated that DNR was frustrated
that despite its status as a cooperating agency, it did not
have a participatory role at the decision making level on
federal permitting decisions that affected the state. He
advised that primacy granted the state the ability to
affect the process and control its own destiny. He remarked
that recently a number of "vague" federal policy decisions
which affected the state were made with very little Alaskan
input. Assuming primacy ensured that the state's policies
would not be driven by "vague" federal regulation.
Senator Dunleavy questioned what the state was giving up to
the federal government and what it was gaining in assuming
primacy. Commissioner Hartig elucidated that when the state
took over permitting responsibility with the EPA while
assuming Section 402 Primacy, DEC discovered that the EPA
had a permitting backlog and unfinished regulatory agendas.
The EPA wanted the state to adopt and develop the
unfinished regulations. The state declined to proceed with
any unfinished regulations that were not legally mandated.
He offered that if primacy meant that the state did all the
work at the federal government's direction, then the state
gave up a lot. He commented that primacy granted the state
direct contact with the permittees and the public and the
ability to respond more efficiently to their needs. He
stated that what Alaska gave up and what it gained was up
to the state. He believed that the state would gain
decision making control over the federal government.
Senator Dunleavy believed that the State's education system
was essentially controlled by the federal government
through funding and mandates. He wondered whether there was
an actual gain for the state. Commissioner Hartig
delineated that Alaska would not obtain funding from the
federal government to run the program. The state had the
opportunity to apply for federal grants for the evaluation
and application process. The assumed 404 Primacy program
would operate on state funds from permitting fees and state
general funds. Without federal funding the federal
government would lack the leverage to control or mandate
the process. He concluded that federal agencies maintained
a certain amount of oversight, but that the state gained a
"fair amount" of discretion.
10:11:59 AM
Senator Dunleavy warned that the state needed to proceed
with caution. Even though federal funding was diminishing,
federal mandates were still enforced.
Co-Chair Meyer wondered whether the state would be getting
enough benefit to offset $1.8 million costs to the state
for assuming primacy.
Co-Chair Kelly commended Commissioner Hartig for his
informative presentation. He referred to the term
"capacity" in the presentation and questioned whether it
was a fiscal term. He wondered whether "capacity" related
to other general permitting legislation. Commissioner
Hartig relayed that the DEC fiscal note contained five
positions for DEC and two for DNR. The positions would be
dedicated to evaluating 404 Primacy. He explained that
capacity was being built during the evaluation phase of the
process. The department learned from the 402 program that
it needed to start building capacity from the evaluation
stage. If primacy was assumed experienced staff was
imminently necessary to fulfill the responsibilities of the
permitting process. He anticipated more positions would be
necessary. He added that if primacy was likely DEC would
submit a detailed proposal to the legislature including the
costs to completely build the capacity to run the program.
Co-Chair Kelly inquired whether statutory authority was
necessary to proceed with primacy or if it could be
achieved through the appropriation process. Commissioner
Hartig believed that DEC possessed the authority to pursue
primacy, but that DNR clearly did not. He indicated that
primacy was a multi-agency effort and that DEC and DNR
would share duties. Historically, DEC was the natural
resource regulator and DNR's expertise was in land
management and mitigation. He thought the arrangement would
continue, but that the delineation of duties would evolve
as capacity was built.
10:17:41 AM
Senator Bishop shared that the Army Corps of Engineers
required small mines to do over flights and photograph
their properties for mitigation purposes. He believed that
placed a financial strain on miners. He asked whether
primacy allowed the state to advocate on its own behalf in
similar instances. Commissioner Hartig responded that the
legislation was intended to help small business as well as
large. He was aware of the problem with placer miners
obtaining permits. He reported that one problem was the
remote locations of the mines and how the Army Corps of
Engineers developed a process to make determinations and
identify wetlands with a declining budget. The department
was working with DNR and the corps to obtain state
assistance to help the miners.
10:19:54 AM
Commissioner Sullivan added that primacy would allow
consideration of local insight and issues into the
mitigation process.
Senator Hoffman supported Section 402 Primacy. He
communicated that Section 404 Primacy entailed taking on 65
percent of the nation's wetlands. The state's program must
be as stringent as the federal governments. The state did
not know the total costs of taking over the program. He
related that Alaska had some of the highest tidal
fluctuations in the world. He recalled that Alaska would
not control tidal influence wetlands with Section 404
primacy. He called for the clear delineation of Alaska's
responsibilities in such cases. He pointed out that there
were many unanswered questions in seeking 404 primacy. He
wondered what the exact benefits and actual financial costs
of primacy were. He cautioned that careful evaluation of
the costs and benefits of primacy was paramount.
Commissioner Hartig replied that he strongly agreed. The
state was currently not in the position to answer the
unanswered questions. The legislation provided an
opportunity to proceed methodically. He reminded the
committee that in 2016 a detailed analysis would be
provided to the legislature. He felt that industry and the
public would also weigh in on whether it was advantageous
for the state to assume primacy by evaluating the state's
performance in permitting and regulatory oversight.
10:25:06 AM
Senator Hoffman remarked that state assumed primacy
required that the state "pay the tab" for the program and
significantly expand its bureaucracy while the federal
government maintained ultimate oversight.
Co-Chair Meyer judged that the state was not anxious to
assume the costs of the program but expediting the
permitting process offered benefits. He relayed that the
state received federal funding for dredging the Port of
Anchorage and other ports. He asked whether the legislation
impacted the dredging funding for the port. Commissioner
Hartig thought that the 404 program was outside of the
scope of dredging harbors and the Army Corps of Engineers
would continue to provide the service. He opined that
primacy allowed a maturing state to control its destiny on
key programs that impacted the state.
Commissioner Sullivan agreed with Senator Hoffman regarding
federal oversight and the budgetary impact. He reiterated
that primacy established state control over decision making
on very important projects.
10:30:08 AM
Co-Chair Meyer OPENED public TESTIMONY
JOSEPH SEBASTIAN, KUPREANOF, SELF (via teleconference),
testified against SB 27. He shared concerns over the total
and cumulative costs of assuming primacy for many years,
expanding state bureaucracy, and the need for more
personnel with specialized expertise. He opined that
assuming primacy was a "duplication of efforts" that the
federal government currently provided. He did not feel that
the benefits of primacy would yield benefits that were
commensurate with the costs and "burden" to the state.
10:32:22 AM
Co-Chair Meyer CLOSED public TESTIMONY
Co-Chair Meyer requested a written response from DEC
regarding any potential impact from SB 27 on the Port of
Anchorage dredging.
Co-Chair Meyer asked for clarification on the fiscal note.
Commissioner Hartig explained the DEC fiscal note. The
total amount of $1,434,700 was appropriated for five
positions in FY 14; the out years increased to $1,854,300
in FY15 with 3 additional positions and future years at
$1.828.800 through 2019. He restated that in FY 2016 the
total costs to assume primacy would be known. He pointed
out that the DEC fiscal note contained appropriations for
DNR and the Department of Law (DOL) in the services
category for $870,000 which included two positions for DNR.
He added that two additional DNR positions would be
necessary in FY 15.
Co-Chair Meyer asked what would happen to the positions if
the program was not approved. Commissioner Hartig replied
that the department might need to retain some of the
additional resources for the permitting program. The
majority of the additional positions would not be retained
resulting in budget reductions. He envisioned that the
process would develop incrementally.
Senator Hoffman asked how much the federal government
currently spent on administering the program in Alaska.
Commissioner Hartig responded that he obtained partial
information regarding the full program. He voiced that the
state would not assume the full program because of
geographic limitations. Navigable rivers, tidal influence,
and adjacent wetlands were not included. He ascertained
that the state would assume 20 to 50 percent of the
permitting. He did not know what level of expertise was
necessary. He offered the information from the Army Corps
of Engineers. The district maintained 49 employees with a
budget of $7.9 million annually. The amount of
administrative support was unknown. The corps was
headquartered in Anchorage with field offices in Fairbanks,
Juneau, Kenai, and Sitka. Approximately 1,500 to 1,800
permit applications were processed each year and 85 percent
were Section 404 applications.
Senator Hoffman queried how many federal positions would be
lost under state assumed primacy. Commissioner Hartig
replied that he did not know. Senator Hoffman asked whether
25 additional employees were necessary for the state to
accomplish the program. Commissioner Hartig thought that
was a ballpark estimate.
10:40:44 AM
Co-Chair Meyer referenced the DEC fiscal note and relayed
that some costs were anticipated to be offset by program
receipts. He requested clarification. Commissioner Hartig
replied that permitting fees were associated with the
program and provided a "mechanism" to recover a portion of
the state's costs.
Co-Chair Meyer commented that he shared the committee
members concerns with the fiscal note.
SB 27 was HEARD and HELD in committee for further
consideration.
10:44:21 AM