Legislature(2005 - 2006)CAPITOL 124

03/14/2005 01:00 PM House RESOURCES

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Moved CSHB 75(RES) Out of Committee
Moved Out of Committee
Heard & Held
Bills Previously Heard/Scheduled
HB 153-POLLUTION DISCHARGE & WASTE TRMT/DISPOSAL                                                                              
CO-CHAIR RAMRAS announced that the  final order of business would                                                               
be  HOUSE BILL  NO. 153  "An Act  relating to  regulation of  the                                                               
discharge of pollutants under the National Pollutant Discharge                                                                  
Elimination System; and providing for an effective date."                                                                       
KURT    FREDRIKSSON,   Commissioner,    Alaska   Department    of                                                               
Environmental Conservation (DEC), provided the committee with                                                                   
the following testimony [original punctuation provided]:                                                                        
     Mr. Chairman,  members of the  Committee, I  am pleased                                                                    
     to  testify  today  in  support   of  House  Bill  153,                                                                    
     National   Pollutant   Discharge   Elimination   System                                                                    
     (NPDES)  Assumption. My  testimony  will  focus on  why                                                                    
     Governor  Murkowski and  I believe  passage  of HB  153                                                                    
     will strengthen the ability of  Alaskans to protect the                                                                    
     State's  water resources  and build  a strong  economy.                                                                    
     With  me   today  is  Dan   Easton,  Director   of  the                                                                    
     Department's Division of Water  to provide you with the                                                                    
     details of how this bill was developed.                                                                                    
     Since the  creation of the Department  of Environmental                                                                    
     Conservation  (DEC)  in  1971,  our  duties  have  been                                                                    
     clearly and  succinctly spelled out by  the legislature                                                                    
     to adopt  and enforce  regulations which  set standards                                                                    
     for  the prevention  and abatement  of all  water, land                                                                    
     and   air   pollution.   DEC   fulfills   these   State                                                                    
     obligations consistent with  national pollution control                                                                    
     programs  authorized  under  the Clean  Air  and  Clean                                                                    
     Water Acts.  These federal and  state laws  establish a                                                                    
     two-tiered  approach  consisting  of  national  uniform                                                                    
     environmental  quality  goals   and  pollution  control                                                                    
     strategies    tailored   to    each   state's    unique                                                                    
     DEC currently exercises all  the authorities granted by                                                                    
     the Alaska  legislature as  well as  the United  States                                                                    
     Congress to  protect Alaska's air quality  and drinking                                                                    
     water. The same is not  true for protecting the quality                                                                    
     of  Alaska's surface  water. The  federal Environmental                                                                    
     Protection  Agency  (EPA)  is  the water  authority  in                                                                    
     Alaska.  Alaska, like  four other  states, has  allowed                                                                    
     wastewater-permitting   authority    to   remain   with                                                                    
     the federal government.                                                                                                    
     EPA makes  the wastewater  permitting rules  in Alaska.                                                                    
     EPA  decides  what's  important  and  what's  not.  EPA                                                                    
     decides the permit review  timeframes. EPA decides what                                                                    
     goes  into  the permits  and  who  gets inspected.  EPA                                                                    
     decides how  Alaska's water  quality standards  will be                                                                    
     applied  to  specific   discharges. EPA  sets  Alaska's                                                                    
     water quality priorities.                                                                                                  
     As you know, Governor  Murkowski is committed to permit                                                                    
     streamlining  that eliminates  duplicative, unnecessary                                                                    
     procedures  which invite  litigation and  add time  and                                                                    
     cost…  without   additional  environmental  protection.                                                                    
     Governor Murkowski is committed  to permit streamlining                                                                    
     that  aligns  our  regulatory  requirements  with  real                                                                    
     Alaska  conditions and  focuses  on the  real risks  to                                                                    
     Alaska's water quality.                                                                                                    
     1:59:29 PM                                                                                                               
     DEC has  made significant progress in  streamlining its                                                                    
     permit  programs,  but  when  it  comes  to  wastewater                                                                    
     permitting, we cannot fix what we don't control.                                                                           
     Alaska has  never pursued  the opportunity  provided by                                                                    
     the federal  Clean Water Act  to shape the  NPDES water                                                                    
     pollution  control  permit   program  to  fit  Alaska's                                                                    
     unique  circumstances. HB   153  would  allow   DEC  to                                                                    
     develop  a   comprehensive  water   quality  protection                                                                    
     program where all  program components, from legislative                                                                    
     budgeting and  oversight to fieldwork  and enforcement,                                                                    
     are  conducted here  in the  state, where  Alaskans can                                                                    
     shape  solutions to  fit Alaska's  challenges. Alaskans                                                                    
     are capable of protecting our water resources.                                                                             
     A  state  permit  program will  be  based  on  Alaska's                                                                    
     priorities--not  national  priorities  that  are  "one-                                                                    
     size-fits-all".  DEC's  permit   priorities,  level  of                                                                    
     effort  and performance  measures would  be subject  to                                                                    
     annual  review and  approval by  Alaskans through their                                                                    
     elected officials in the state Legislature.                                                                                
     A state  run program will place  permit decision makers                                                                    
     closer  to  the  Alaskan public  and  regulated  permit                                                                    
     holders.  No   longer  will  permits  be   written  and                                                                    
     enforced  by  federal  staff unfamiliar  with  Alaska's                                                                    
     unique environment.                                                                                                        
     The State  run permit program  won't be free.  When EPA                                                                    
     issues permits  in Alaska  the costs  are borne  by the                                                                    
     U.S.  taxpayer.  A  state  permit  program  will  shift                                                                    
     authority and responsibility to  the state, but it will                                                                    
     also shift some of the  costs to permit holders and the                                                                    
     Federal  programs  do  not   adapt  easily  to  Alaska.                                                                    
     National  goals  do  not always  address  our  greatest                                                                    
     needs.  Alaska's  elected   representatives  have  made                                                                    
     clear  our commitment  to environmental  protection and                                                                    
     our  responsibility to  develop our  resources for  the                                                                    
     wellbeing of  all Alaskans.  If we  are to  realize the                                                                    
     promise  of   resource  development,  we   must  accept                                                                    
     responsibility for  managing our water  resources. That                                                                    
     means assuming primacy for the NPDES program.                                                                              
     With   primacy   there   will   be   no   rollback   of                                                                    
     environmental protection;  anyone who  supports primacy                                                                    
     on that basis will be disappointed.                                                                                        
     NPDES primacy means:                                                                                                       
     · A  faster, more effective program  for protecting our                                                                    
     water resources.                                                                                                           
     ·  Alaskan  industries  and  communities  working  with                                                                    
     Alaskan   permitters  on   permits  that   reflect  our                                                                    
     priorities and  unique conditions  - permits  that make                                                                    
     sense for Alaska.                                                                                                          
     ·  Less   emphasis  on  cumbersome  process   and  more                                                                    
     emphasis on results.                                                                                                       
     · Less  emphasis on one-size-fits-all permits  and more                                                                    
     emphasis on specific risks to Alaska's environment.                                                                        
     ·   Permitting  accountability   -  accountability   to                                                                    
     Alaska's elected officials and the public.                                                                                 
     It  is time  for  Alaskans to  take responsibility  for                                                                    
     protecting Alaska's environment.  To do otherwise means                                                                    
     continuing   the  status   quo.  The   status  quo   is                                                                    
DAN   EASTON,  Director,   Division  of   Water,  Department   of                                                               
Environmental Conservation,  said HB 153  is the result  of years                                                               
of  effort.    He  said  DEC released  a  report  in  2004  which                                                               
recommended  that the  state  seek primacy  and  would need  $4.8                                                               
million and  43 employees to run  the program.  Last  year HB 546                                                               
was passed, which  directed the state to apply  for partial NPDES                                                               
primacy for the  timber sector and created  a full-time position.                                                               
EPA told  the state  that partial  primacy would  be problematic.                                                               
So DEC  executed a work-share  agreement that makes DEC  the lead                                                               
in  developing   the  next  general   permit  for   log  transfer                                                               
facilities,  but the  permit is  controlled by  EPA.   Mr. Easton                                                               
said an  advisory work group was  formed in 2004 with  the Alaska                                                               
Oil  and  Gas  Association,  Alaska  Forest  Association,  Alaska                                                               
Miners  Association, Associated  General  Contractors of  Alaska,                                                               
Pacific   Seafood  Processors   Association,  Alaska   Water  and                                                               
Wastewater  Management  Association,  and  Alaska  Native  Tribal                                                               
Health  Consortium.   The meetings  were open  to the  public, he                                                               
added.  The work group  proceedings and findings were reported in                                                               
January 2005.   Support for state primacy  varied between groups,                                                               
he said, and certain sectors saw  a benefit in state primacy, and                                                               
others  saw  less benefit  but  would  not  object to  the  state                                                               
pursuing primacy.                                                                                                               
2:06:15 PM                                                                                                                    
MR. EASTON said there is a  $1.5 million fiscal note with HB 153.                                                               
The department's budget  includes $3.3 million and  30 staff that                                                               
are already devoted  to NPDES activities.  He said  a total of 43                                                               
positions are  required for the  work, so  DEC would need  13 new                                                               
positions.  Costs  would be divided between  state general funds,                                                               
federal grant money, and permit fee receipts.                                                                                   
2:07:41 PM                                                                                                                    
REPRESENTATIVE SEATON  asked if those  30 employees only  work on                                                               
NPDES  permits,  and  if  the   state  will  actually  need  more                                                               
MR.  EASTON  answered that  DEC  staff  deal with  water  quality                                                               
standards,   issue  state   permits,  and   inspect  some   NPDES                                                               
facilities.  They won't change what they are doing, he said.                                                                    
2:09:52 PM                                                                                                                    
CO-CHAIR RAMRAS  said he had  problems contacting DEC  last week,                                                               
and he asked how much public input there has been on HB 153.                                                                    
MR.  FREDRIKSSON said,  "We  are  here today  after  a series  of                                                               
events  and at  least  two legislative  sessions.   There's  been                                                               
quite  a  bit of  input  in  development  of the  original  NPDES                                                               
assumption study  that was requested by  the legislature, there's                                                               
quite  a bit  of  public input  through  the legislative  process                                                               
during those  last two years, and  then there was quite  a bit of                                                               
involvement,  as Dan  mentioned, in  the six  meetings that  were                                                               
held  here last  fall."    But for  this  current proposal,  "the                                                               
public testimony here will be  the first testimony on this actual                                                               
HB 153."                                                                                                                        
CO-CHAIR  RAMRAS  said  he  hasn't  been here  in  the  last  two                                                               
sessions, "so  when you say that  SB 326 is the  culmination of a                                                               
great deal of public input, can you outline that for me?"                                                                       
MR. EASTON  said the process  started with  SB 326 asking  DEC to                                                               
estimate the cost and benefits of the state assuming primacy.                                                                   
CO-CHAIR  RAMRAS   asked  if  DEC   solicited  opinions   in  the                                                               
communities where people may be affected.                                                                                       
MR. EASTON  said DEC had the  work group but no  public hearings.                                                               
The meetings were open to the public, however.                                                                                  
MR. FREDRIKSSON added that most  communities are required to have                                                               
NPDES  permits as  part of  their wastewater  discharge, and  the                                                               
work    groups   included    large    and   small    municipality                                                               
representatives.   There  has  been a  wide  distribution of  the                                                               
information on  the SB 326  report, he said, and  information has                                                               
been available on DEC's web page.                                                                                               
CO-CHAIR RAMRAS asked if EPA will sign off on this.                                                                             
MR.  FREDRIKSSON said  this is  an application  process.   HB 153                                                               
will give DEC the legislative approval  to go forward.  There are                                                               
only four  other states  that have not  received primacy,  and he                                                               
assumes that DEC can design a program that EPA will approve.                                                                    
MR.  EASTON  said  the  bill  calls  for  an  application  to  be                                                               
submitted to  the EPA by June  2006, and he expects  it will take                                                               
the EPA one year to approve the application.                                                                                    
CO-CHAIR RAMRAS asked if the state will get any federal money.                                                                  
MR. EASTON said no.                                                                                                             
CO-CHAIR  RAMRAS  asked what  the  financial  advantages are  for                                                               
businesses and other Alaskans.                                                                                                  
MR.  EASTON said  it varies.   The  larger and  more complex  the                                                               
permits,  the  more  the  savings.   The  working  group  took  a                                                               
theoretical  mine the  size  of  the Pogo  mine,  and it  clearly                                                               
demonstrated that by shaving six  months off of a permit process,                                                               
the advantage can be millions of dollars.                                                                                       
2:17:23 PM                                                                                                                    
REPRESENTATIVE CRAWFORD  asked why timber-related  activities are                                                               
MR. EASTON  said HB 546 already  gave DEC primacy for  the timber                                                               
REPRESENTATIVE LEDOUX  noted that  approval happens in  2007, but                                                               
the fiscal note includes $900,000 in 2006.                                                                                      
2:19:26 PM                                                                                                                    
MR. EASTON  said the money  is to prepare the  application, write                                                               
regulations, and prepare the data systems for primacy.                                                                          
REPRESENTATIVE  LEDOUX asked  if any  boroughs or  municipalities                                                               
have an opinion on HB 153.                                                                                                      
MR. EASTON said he will encourage  them to let the committee know                                                               
how they feel.                                                                                                                  
2:20:41 PM                                                                                                                    
REPRESENTATIVE SEATON  asked what  difference there has  been for                                                               
the timber industry since HB 546.                                                                                               
MR. EASTON said that process has  barely started and it will be a                                                               
year  before the  draft  permit is  in  place.   It  will make  a                                                               
significant  difference, he  believed.   A log  transfer facility                                                               
today  has to  get three  separate permits  for depositing  bark,                                                               
storm water,  and sewage.   DEC  will bundle  the permits  in one                                                               
application, which will save time and duplication.                                                                              
REPRESENTATIVE LEDOUX  asked how  many EPA  staff are  working on                                                               
Alaska permits.                                                                                                                 
ROBERT  ROBICHAUD,  Manager,  Wastewater Permit  Unit,  Northwest                                                               
Region,  Environmental  Protection  Agency,  said  20  staff  are                                                               
assigned to  some facet  of the  NPDES program.   It is  not just                                                               
writing  permits,   he  said,  but   also  EPA   has  inspectors,                                                               
enforcement  and  compliance  staff,  attorneys,  and  laboratory                                                               
technicians.  Permit writing for  Alaska costs about $1.4 million                                                               
in direct costs without overhead.                                                                                               
2:24:09 PM                                                                                                                    
REPRESENTATIVE  LEDOUX noted  that EPA  has 20  staff and  Alaska                                                               
wants 13, which may create permitting delays.                                                                                   
MR. EASTON  said currently there  are a total  of 51 DEC  and EPA                                                               
NPDES staff, and because of  the efficiency of state primacy, DEC                                                               
envisions it will need a total 43 staff.                                                                                        
CO-CHAIR  RAMRAS asked  about hurting  the permitting  process if                                                               
positions are cut in tight budget years.                                                                                        
MR. FREDRIKSSON said  DEC has reduced its budget in  the past few                                                               
years, but  it has built  up staff  and resources for  DEC's core                                                               
permit programs.   This is the  forum, he said, for  the state to                                                               
determine its spending priorities.                                                                                              
CO-CHAIR  RAMRAS  said  Alaska  has  an  administration  that  is                                                               
friendly with  resource development.   "If in the future  we have                                                               
an  administration  that's  less  friendly  to  mineral  resource                                                               
development, don't we  run the risk of actually  necking down the                                                               
process by having the State of Alaska the only gate keeper?"                                                                    
MR. EASTON said there is no  question about that, and the risk is                                                               
that the program gets reduced to where EPA takes it back.                                                                       
MR.  FREDRIKSSON said  the public  is  another element.   If  the                                                               
public becomes complacent, the dynamics  change, he said.  But he                                                               
is fairly confident the public will keep a watchful eye.                                                                        
MR. EASTON said no state has ever relinquished primacy.                                                                         
REPRESENTATIVE SEATON said the public  has not been complacent on                                                               
water  quality  regulations.   DEC  proposed  to allow  pollution                                                               
mixing  zones  in  spawning  streams, and  the  public  has  been                                                               
universally opposed to  that and yet DEC has  not withdrawn those                                                               
proposals.   The finance subcommittee  finally said  'We disagree                                                               
with the way you are going  whether you call this streamlining or                                                               
whatever  in ignoring  the public  comment and  all the  comments                                                               
from the legislature.'   Representative Seaton said,  "So we have                                                               
a situation...when the  public is aware and  commenting, it seems                                                               
to be  ignored by  the agency.   So I  am concerned  about giving                                                               
primacy in this particular area  because this is exactly the area                                                               
where numerous legislators  have weighed in on this  and seems to                                                               
have been ignored."                                                                                                             
MR.  FREDRIKSSON   said  both  the   executive  branch   and  the                                                               
legislative branch  operate through a  very public process.   "We                                                               
take public  input, we  consider that public  input, and  then we                                                               
take actions."                                                                                                                  
DICK COOSE, Ketchikan, said he  represents Concerned Alaskans for                                                               
Resource and  Environment, a non-profit  group to  promote access                                                               
to resources by  business.  He urges support of  HB 153, "this is                                                               
only  one  of  the  several  programs  under  which  the  federal                                                               
government  continues  to  treat  the  State  of  Alaska  like  a                                                               
territory, and the state needs to control its own future."                                                                      
2:32:35 PM                                                                                                                    
MR.  COOSE said  DEC uses  better science  and works  better with                                                               
people than  EPA--"EPA appears  to be  here to  say no  or simply                                                               
delay, and the business or the  activity goes away."  He said the                                                               
laws won't be  overlooked by the state.  He  added that Ketchikan                                                               
fish  processors have  EPA  permits to  handle  fish wastes,  and                                                               
those wastes  simply pile up  and do  not decompose.   No science                                                               
supported the  grinding of  fish that EPA  requires, and  it does                                                               
not work, he  said.  Resources are Alaska's wealth.   Funding for                                                               
DEC is a  pittance of the total  state budget, and DEC  is key to                                                               
managing resources and needs sufficient funding, he concluded.                                                                  
2:35:35 PM                                                                                                                    
DAVID STONE,  Vice President, Alaska Miners  Association, said he                                                               
supports HB 153.   The mining industry has  discussed primacy and                                                               
now is  convinced it  is in  Alaska's best  interest.   Mr. Stone                                                               
referenced an  article written in  the Alaska  Miners Association                                                               
monthly newsletter.   He said federal control has  the problem of                                                               
non-Alaska  factors  influencing  permit  decisions,  like  court                                                               
cases in  other parts of  the country.  Local  Alaska conditions,                                                               
needs,  and the  merits  of  a particular  permit  are not  EPA's                                                               
primary consideration, but  rather how the decision  on an Alaska                                                               
permit may affect some other part  of the country, he said.  This                                                               
approach by  EPA adds delays and  may add costs and  problems for                                                               
the permittee.   He said he understands that permit  fees will go                                                               
2:38:13 PM                                                                                                                    
RICH HEIG, General Manager, Greens  Creek Mining Company, said he                                                               
is the  past president  of the Council  of Alaska  Producers, and                                                               
the  council was  part  of DEC's  task force.    He supports  the                                                               
comments  of Commissioner  Fredriksson.   "We believe  Alaska can                                                               
manage Alaska's  waters more efficiently, more  timely," he said,                                                               
and DEC  is more  familiar with the  regulated community  and the                                                               
public,   and  primacy   can  be   done  in   an  environmentally                                                               
responsible manner.                                                                                                             
2:40:03 PM                                                                                                                    
REPRESENTATIVE SEATON asked  if there were public  members on the                                                               
work group.                                                                                                                     
MR. HEIG said he did not think so.                                                                                              
MR. EASTON said  the work group members were  all permittees, but                                                               
the meetings were open to the public.                                                                                           
2:40:56 PM                                                                                                                    
CO-CHAIR RAMRAS asked what other states did not have primacy.                                                                   
MR.  EASTON  said  Idaho,  New  Mexico,  Massachusetts,  and  New                                                               
REPRESENTATIVE ELKINS  asked if Ernesta Ballard  was the director                                                               
of Region 10.                                                                                                                   
MR.  FREDRIKSSON  said  that  Ms. Ballard  was  EPA's  region  10                                                               
administrator,  and she  was  the commissioner  of  DEC when  the                                                               
report was submitted to the legislature.                                                                                        
2:42:05 PM                                                                                                                    
EARL HUBBARD,  Vice President, Trident Seafoods,  said Trident is                                                               
involved  in all  aspects  of the  Alaska  fishing industry;  "We                                                               
catch, we  process, we market  all commercial  seafood products."                                                               
He said he is  happy to offer support for HB 153.   He noted that                                                               
all fisheries  depend on  water quality,  including the  image of                                                               
water  quality, and  any  environmental threat  is  a concern  to                                                               
Trident.  Water  quality is Alaskan's most valuable  asset so the                                                               
state  should take  the  lead role  in  protective programs,  "in                                                               
balance  with  EPA,  which  is   an  agency  that  is  not  going                                                               
anywhere,"  which  is  good,  he said.    Primacy  gives  greater                                                               
control  and state  assets  will be  best protected.    It is  an                                                               
integral opportunity which  lends due deference to  the state, he                                                               
said,  and timeliness,  efficiency, oversight,  and economy  will                                                               
improve.  EPA is spread thin with limited staff.                                                                                
2:48:43 PM                                                                                                                    
MR. HUBBARD  said DEC is  more able  than ever to  administer the                                                               
program  in an  effective way.   Mr.  Easton and  Mr. Fredriksson                                                               
make a good  leadership team.  He concluded that  primacy is good                                                               
for water quality and good for business.                                                                                        
2:49:51 PM                                                                                                                    
LOIS EPSTEIN, Senior Engineer, Cook Inlet Keeper, Anchorage,                                                                    
provided the following testimony to the committee [original                                                                     
punctuation provided]:                                                                                                          
     Good afternoon.  My name  is Lois Epstein  and I  am an                                                                    
     Alaska-licensed  engineer  with  Cook Inlet  Keeper  in                                                                    
     Anchorage.   Cook   Inlet   Keeper  is   a   nonprofit,                                                                    
     membership  organization  dedicated to  protecting  the                                                                    
     Cook Inlet watershed  and the life it  sustains. I have                                                                    
     worked on  safety and environmental issues for  over 20                                                                    
     years  for  two  private  consultants,  the  U.S.  EPA,                                                                    
     Environmental  Defense  in  Washington,  DC,  and  Cook                                                                    
     Inlet  Keeper. Additionally,  I have  served on several                                                                    
     multi-  stakeholder  federal advisory  committees,  and                                                                    
     currently serve  on an advisory committee  appointed by                                                                    
     U.S. DOT  Secretary Mineta that includes  former Alaska                                                                    
     House and Senate member  Drue Pearce. HB 153 accurately                                                                    
     reflects the  wish- list from  the industry  members of                                                                    
     the  Department  of  Environmental  Conservation  (DEC)                                                                    
     workgroup   studying   "National  Pollutant   Discharge                                                                    
     Elimination    System   (NPDES)    Primacy,"   commonly                                                                    
     understood  as  EPA  giving the  state  of  Alaska  the                                                                    
     authority to  issue wastewater discharge  permits under                                                                    
     the federal Clean Water Act.  Because Tribes and public                                                                    
     interest   organizations   were   excluded   from   the                                                                    
     workgroup, our concerns  were never seriously addressed                                                                    
     and  their  solutions  were not  included  in  HB  153.                                                                    
     Additionally, though  DEC may  not emphasize  this fact                                                                    
     to the  legislature, the workgroup  member representing                                                                    
     municipal  wastewater  treatment   plants  opposes  the                                                                    
     state's bid for  NPDES primacy. And, just  to be clear,                                                                    
     there has  been no  public input into  HB 153  to date.                                                                    
     With this  background -  and bearing  in mind  that EPA                                                                    
     might  have similar  concerns and  may not  approve the                                                                    
     state's application for  primacy unless the legislature                                                                    
     amends the bill and the  state amends the Fiscal Note -                                                                    
     Cook  Inlet  Keeper  offers the  following  substantive                                                                    
     issues  requiring amendments  and further  information-                                                                    
     gathering.  Our  primary  concerns  are:  1.  The  high                                                                    
     governmental  cost  of  the permitting  program,  which                                                                    
     only  will  grow  as   the  state's  industrial  growth                                                                    
     increases.  2.   Ensuring  a   high-quality  permitting                                                                    
     program to  protect Alaska's salmon and  other fish. 3.                                                                    
     Ensuring governmental accountability  to Tribes and the                                                                    
     High Cost of the Permitting Program                                                                                      
     According  to HB  153's  Fiscal  Note, the  legislature                                                                    
     will need  to appropriate,  at a minimum,  $1.5 million                                                                    
     each  year   to  DEC  to   support  the   bigger  state                                                                    
     government  required to  manage  this complex  program.                                                                    
     Because  workgroup  members  insisted  on  a  limit  to                                                                    
     permit fees of slightly more  than 15% of program costs                                                                    
     (compared  to   the  57%  of  program   costs  paid  by                                                                    
     permittees   in  Oregon   and   the   75-80%  paid   in                                                                    
     Washington), the  increased costs will come  from other                                                                    
     state   initiatives   such   as   education   or   road                                                                    
     maintenance. Should industrial  growth occur in Alaska,                                                                    
     the  legislature  will  need  to  increase  the  annual                                                                    
     appropriation   beyond  $1.5   million  to   cover  the                                                                    
     approximately 85%  of the program not  funded by permit                                                                    
     fees. If  the growth occurs among  businesses with less                                                                    
     than 20  employees, annual appropriation needs  will be                                                                    
     even  higher given  cost recovery  constraints for  the                                                                    
     program,   i.e.,  governmental   travel  will   not  be                                                                    
     recovered  from small  businesses. In  the future,  DEC                                                                    
     will not get  any more federal funding  for the program                                                                    
     than  currently since  the state  receives the  maximum                                                                    
     amount allowed  for administering  its Clean  Water Act                                                                    
     programs.  While   federal  funding  is   projected  to                                                                    
     continue  at  the  current level,  the  federal  budget                                                                    
     process  in  future  years may  decrease  this  amount,                                                                    
     resulting  in additional  costs  to the  state. If  the                                                                    
     legislature  fails to  fund the  program adequately  in                                                                    
     the future, it is likely  that permit issuance would be                                                                    
     slowed  and permit  errors may  occur.  Since there  is                                                                    
     virtually  no  chance  that  EPA  will  take  back  the                                                                    
     permitting  program  once  it  has been  given  to  the                                                                    
     state,  permittees  will  suffer  due  to  insufficient                                                                    
     general fund  resources. The workgroup's  report states                                                                    
     that permit fees "are expected  to increase by a factor                                                                    
     of 1.8…a substantial increase,"  including increases to                                                                    
     municipal  permit  fees.  Thus,  both  state  and local                                                                    
     costs  will  increase  significantly should  the  state                                                                    
     obtain NPDES primacy.                                                                                                      
     Keeping Fish Healthy                                                                                                     
     Fiscal  Note cost  estimates arguably  are low  because                                                                    
     proposed  DEC  staffing   levels  are  insufficient  to                                                                    
     implement  the program  adequately. If  the program  is                                                                    
     not   carried  out   with   sufficient  technical   and                                                                    
     enforcement staff, water quality  and fish habitat will                                                                    
     decline. Currently, a total  of 51 full-time equivalent                                                                    
     (FTE)  employees  from  EPA   and  DEC  carry  out  the                                                                    
     permitting  program. DEC  estimates reduce  this number                                                                    
     to 43 FTE, an overall  reduction of 16% that includes a                                                                    
     38%  reduction  in  program  development  staff  (e.g.,                                                                    
     water  quality standards  staff),  a  28% reduction  in                                                                    
     permitting  staff, and  a 16%  reduction in  compliance                                                                    
     and enforcement  staff. Though DEC  may state  that its                                                                    
     proposed staff  numbers are in-line with  that of other                                                                    
     states, its  own information shows  that to  be untrue.                                                                    
     For example, the state of  Alaska expects to spend only                                                                    
     52% of  the resources that Washington  state spends per                                                                    
     permit. Since DEC has  produced essentially no evidence                                                                    
     to date on  how it can maintain  an adequate permitting                                                                    
     program with  severe staff reductions, we  request that                                                                    
     the    legislature    obtain    additional,    detailed                                                                    
     information from  DEC on the  adequacy of  its staffing                                                                    
     estimates  - especially  for technical  and enforcement                                                                    
     staff  -  and  the  likelihood  of  EPA  approving  the                                                                    
     permitting program  with serious staff reductions  in a                                                                    
     state with numerous, large industrial operations.                                                                          
     2:55:14 PM                                                                                                               
     Additionally,  Cook Inlet  Keeper and  industry members                                                                    
     of  the workgroup  share a  concern  about the  limited                                                                    
     technical  expertise  at  DEC  and the  likely  use  of                                                                    
     consultants to  develop permits. Problems with  the use                                                                    
     of consultants include  potential conflicts of interest                                                                    
     and  the lack  of  longterm DEC  staff experience  with                                                                    
     particular  industries, which  can result  in technical                                                                    
     deficiencies  and costly  staff inefficiencies.  Though                                                                    
     conflicts of interest were  discussed in the workgroup,                                                                    
     Section  4(h)(4) needs  to be  amended to  specifically                                                                    
     prevent  conflicts  of  interest for  DEC  consultants.                                                                    
     Cook  Inlet  Keeper  also is  concerned  that  required                                                                    
     federal   reviews,   such   as  with   expert   federal                                                                    
     biologists   on  essential   fish   habitat,  will   be                                                                    
     eliminated  by   the  state  assuming   NPDES  primacy.                                                                    
     Governmental Accountability                                                                                              
     NPDES  primacy  will eliminate  federal  government-to-                                                                    
     government  consultations   with  Tribes   and  various                                                                    
     analyses  that  the  public currently  participates  in                                                                    
     which  are required  by federal  statutes  to ensure  a                                                                    
     healthy  environment.  Tribal  government-to-government                                                                    
     consultations  have  numerous  benefits  which  can  be                                                                    
     better described  by tribal members  than by me,  and I                                                                    
     urge the  legislature to include Tribes  in its primacy                                                                    
     deliberations  (unlike  the  DEC  workgroup).  Sections                                                                    
     4(h)(2)  and   4(h)(3)  of   HB  153   enable  industry                                                                    
     permittees  to review  draft and  final permits  before                                                                    
     public issuance,  giving industry  permittees excessive                                                                    
     and  unfair influence  over permits.  EPA may  disallow                                                                    
     such  unbalanced treatment.  The  legislature needs  to                                                                    
     remove   these  sections   from   the  bill.   Finally,                                                                    
     legislators  need to  amend  Section  1(b)(2) so  DEC's                                                                    
     NPDES workgroup is  representative of all stakeholders.                                                                    
     This  section  currently  extends the  mandate  of  the                                                                    
     undemocratic   and  unrepresentative   workgroup  which                                                                    
     crafted this  bill's contents. Thank you  very much for                                                                    
     your attention  to these concerns.  NPDES primacy  is a                                                                    
     major undertaking  for DEC, with serious  fiscal, fish,                                                                    
     and  governmental   accountability  implications.  Cook                                                                    
     Inlet Keeper  urges the legislature not  to make costly                                                                    
     programmatic changes that are  of questionable value to                                                                    
     permittees  and troubling  for Tribes  and the  public.                                                                    
     This is  a case  where an important  engineering saying                                                                    
     applies - if it works, don't fix it.                                                                                       
2:57:20 PM                                                                                                                    
REPRESENTATIVE  SEATON  asked Ms.  Epstein  if  she requested  to                                                               
become a member of the workgroup.                                                                                               
MS. EPSTEIN said yes.                                                                                                           
2:58:39 PM                                                                                                                    
OWEN GRAHAM, Executive Director,  Alaska Forest Association, said                                                               
he was  on the  working group and  he supports HB  153.   He said                                                               
there  shouldn't be  a concern  about the  makeup of  the working                                                               
group  because   there  were  people  from   the  communities  in                                                               
attendance who could speak up  whenever they wanted.  The purpose                                                               
of  the group  was  to find  out what  the  permittees needed  to                                                               
streamline the process.                                                                                                         
REPRESENTATIVE   SEATON   asked   about  Mr.   Graham's   written                                                               
testimony, which  says state  primacy will  allow a  faster, less                                                               
formal process.  What do you see as faster?                                                                                     
MR. GRAHAM said he  is not the expert, and it  would be better to                                                               
ask Mr. Easton.                                                                                                                 
3:00:48 PM                                                                                                                    
MR. EASTON said EPA permitting  has formal consultation processes                                                               
that  apply to  it  as  a federal  agency  consulting with  other                                                               
agencies.     With  state  primacy,  those   formal  consultation                                                               
processes  with the  National Marine  Fisheries  Service and  the                                                               
United  States  Fish and  Wildlife  Service  don't apply  to  the                                                               
state.   What applies instead,  he said,  "is a condition  of EPA                                                               
approval, typically,  that the state  will consult with,  but the                                                               
process is less formal, it's shorter, it's less prescribed."                                                                    
3:01:53 PM                                                                                                                    
[HB 153 was held over]                                                                                                          

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