Legislature(1999 - 2000)
01/31/2000 09:07 AM Senate FIN
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* first hearing in first committee of referral
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SENATE FINANCE COMMITTEE LOG NOTES 01/31/00 GENERAL SUBJECT(S): Review of Departments Accomplishments for FY'99 and FY'00 Department of Natural Resources Department of Environmental Conservation The following overview was taken in log note format. Tapes and handouts will be on file with the Senate Finance Committee through the 21st Legislative Session, contact 465-4935. After the 21st Legislative session they will be available through the Legislative Library at 465-3808. Time Meeting Convened: 9:07 a.m. Tape(s): SFC-00 # 16, Side A & B PRESENT: Senator Parnell Senator Adams Senator Wilken Senator Phillips Senator Leman NOT PRESENT: Senator Torgerson Senator Donley Senator P. Kelly Senator Green ALSO PRESENT: JOHN T. SHIVELY, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES KURT FREDRIKSSON, ACTING DEPUTY COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL CONSERVATION MICHELE BROWN, COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL CONSERVATION LOG SPEAKER DISCUSSION 20 JOHN T. SHIVELY, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES Stated that the Department's mission is to "develop, conserve, enhance and make available natural resources for present and future Alaskans." As a result of budget cuts last session, the Department experienced major reorganizations. The Division of Land and Water was combined with Division of Mining. He then summarized the fluctuation in the Department's workforce depending on the time of year. Over the years, there has been a reduction in the Department's staffing, but not in the workload. He then explained the Department's priorities. Referred to the last page of a handout entitled, "Department Mission, Department Goals and Strategies for FY2001." More specifically, Item One, under the heading, "Status of FY2000, Performance Measures," regarding the offer of 7 million acres of state land, for oil and gas leasing in 2 area-wide leases, the Commissioner stated that the Department would not meet this goal. The Commissioner has delayed the two North Slope lease sales until the BP/ARCO merger either goes through or dies. He did not feel it would be in the state's best interest to hold lease sales when it is uncertain who will be active in this area. The Department hopes to be back on track toward the end of this calendar year. Noted that the Department did complete the shallow gas regulations and they have issued their best interest finding for exploration leasing in the Copper Center area. Added that the construction of NorthStar and Alpine is ongoing, while Arco just received permits to conduct exploration wells in National Petroleum Reserve Alaska (NPRA.) He then referred to item two on the list, which was to complete geophysical/geological mineral inventory surveys of 1,000 square miles of Alaska lands. The Department actually completed surveys of 1,200 miles. The private sector mineral exploration has increased from about 1.5 million acres in 1993 to 2.9 million acres last year. Next, item three, to administer and facilitate the issuance of 15,000 mining claim permits. The Department presently administers 55,000 claims and leaseholds. The expansion has grown at a phenomenal rate. Last year the Department experienced an increase in the rental rates on mining claims. He explained how related, built-in rental rates worked. The Department took in over $2 million in lease and rental fees. Item four, to maintain and operate 121 state park units. This number should actually be 120 since the Department gave one of these to the General Health Land Trust. These parks had about 3.8 million visits last year. Added that the usage for state parks is comprised mainly of Alaskans. 137 COMMISSIONER SHIVELY Item five; maintain the state's land database through the notation of 10,000 state resource transactions affecting 12,000 townships and to make this information available to the public. The Department processed over 14,000 transactions last year. This record system is not quite up to standard, but this system should be unified across the Department soon. In regards to Y2K issues, the Department began upgrading six years ago so this process was pretty painless. The Department has a new indexing system and the Anchorage staff has moved to the Frontier Building, which necessitated reconfiguring the necessary computer systems. Item six, generate $1.4 million from the sale of forest products and offer approximately 60 million board feet of timber. The Department is way below this goal, with a total of $330,000 generated instead. In FY99 the Department offered 40 million board feet, "which is what we thought, we still think we'll issue about 60 million board feet of sales. This year we have 25 value-added sales, but the value of this timber has fallen." The Department is on target in terms of the volume but the volume has not been there because of the market. Offered that the BP/Arco merger has taken up a substantial amount of the Commissioner and other staff's time. This is the type of thing where missions and measures do not apply. He then went into detail about the Department's move to the Atwood building. Continued that all the right-of-ways for pipelines are issued through the joint pipeline office. Three major right-of-ways were issued last year and the Commissioner listed these specifically. The Department sold just under 2,000 acres of land. The Department reforested 2300 acres of land. There were 328 wildfire occurrences last year, comprising 134 million acres. The revenues for the Mental Health Trust increased from $3 to $5 million. Summarized a bankruptcy situation with the Illinois Creek Mine for the committee. 230 CO-CHAIR PARNELL Stated the Department's mission from SB169 was to develop, conserve, and enhance and make available natural resources for present and future Alaskans. He noted that this mission was not carried through to the Department's detail book. Specifically omitted the statement, "and make available natural resources." He asked the Commissioner to respond to this. 238 COMMISSIONER SHIVELY Responded that this was an inadvertent omission. The mission, which the Department and the Governor crafted as a result of two subcommittees, was newly established, but the Commissioner thought that everyone would be in agreement about regardless. 244 CO-CHAIR PARNELL Stated that the Legislature passed SB 169 and the Governor signed it. He had hoped that missions could be established and stays consistent over a four-year period of time. He felt as though all the Departments should put forward what their legal mission is under the statute, into their working document. 254 SENATOR WILKEN Referred to page nine of the Commissioner's handout, under "Parcels and acres of State Land sold," regarding the 109 parcels at $1.5 million. He wondered how many acres did these numbers reflect. 261 COMMISSIONER SHIVELY Responded 1,900 acres. This is assuming that the figures, under accomplishments, relate to this. The Department sometimes gets mixed up between fiscal and calendar years. Noted that he would get this figure to the Senator. 265 SENATOR WILKEN Asked if there was a related table depicting where these parcels were located. He wished to get an idea of what land was selling and what was not. 267 COMMISSIONER SHIVELY Noted that the Department publishes a booklet outlining the locations of these parcels. 272 CO-CHAIR PARNELL Referred to the statement on this same page, listed under "Current Status," In October 1999 we sold 109 parcels for roughly - $1.5 million. He asked if this was true for the one-month time period, or asked if this was cumulative. 275 COMMISSIONER SHIVELY Responded that this was a one-time transaction and then explained the related particulars. 282 CO-CHAIR PARNELL Asked if the Commissioner had any idea of how many acres were sold during the calendar year 1999 or during the fiscal year. 283 COMMISSIONER SHIVELY Understood that the fiscal year was at about 1,900 acres. He stated that he would confirm this number as well. 284 SENATOR WILKEN Asked if this same breakdown of acreage could be found on the web. 288 COMMISSIONER SHIVELY Believed that this information was on the web. 290 SENATOR WILKEN Asked the Commissioner to talk about Municipal Entitlements. He asked if municipalities were picking up on these or were they stagnant. 293 COMMISSIONER SHIVELY Responded that these were not necessarily stagnant. Often the Department and the municipalities have differences of opinions about different things, slowing the work dramatically. He gave specific details as to these differences. 309 SENATOR ADAMS Asked who came first within the Department, regarding Municipal Entitlements, either Mental Health Trust or the University of Alaska. 314 COMMISSIONER SHIVELY The Mental Health Trust presently gets the "first shot." The Mental Health is still in the process of deciding. He understood that the University's procedures in the future would depend on how the legislation is passed. Certain Municipal Entitlements would be second after Mental Health. Gave specific details of how this would specifically work. 327 SENATOR LEMAN Stated that many people believe the Legislature is not cutting the budget. Noted that the reductions outlined by the Commission were real. Appreciated the Department's willingness to work under the circumstances. Added that he was interested in hearing the Department's new mission statement. 340 COMMISSIONER SHIVELY Stated that the Department's mission statement was to, "Provide for the utilization, development and conservation of all natural resources for the maximum benefit of the present and future Alaskans." For FY99 the Department transferred 11,000 acres of land to municipal government and this same was estimated for the present fiscal year. 349 CO-CHAIR PARNELL Referred to the FY2000 lease sales, and the fact that lease sales were put on hold because of the Arco/BP merger. He asked the Commission to give more detail about the basis of this decision. 355 COMMISSIONER SHIVELY Offered that when the Department got close on some pending lease sales in light of the merger, the Department decided the lease sale did not make sense. It became unclear whether BP would be the only major operator on the slope or whether there would be a divestiture and if so, which company or companies might get the divestiture. If a divestiture does take place, then this company would have more of an incentive to bid. The Department thought that if BP eventually controls everything on the slope, competitors would not bid because of this fact. He then went into greater detail about on-shore and offshore pending lease sales. 376 SENATOR ADAMS Stated the Legislature set up a committee to research privatization. As part of this effort the Legislature looked to privatize some state parks. He asked if this effort would work. 379 COMMISSIONER SHIVELY Noted that the Task Force on Privatization did not make a recommendation on state parks, which surprised him. This was one area where the state has privatized and it actually worked in some cases, although not others. He gave highlights of this process. 398 CO-CHAIR PARNELL Asked if any compliance inspections on the North Slope activities had been reduced in the current fiscal year. Specifically asked about the Department's June 22, 1999 Impact Statement, the budget they were given for FY00 under the Division of Oil and Gas. 400 COMMISSIONER SHIVELY Responded that he would get the answer to this inquiry. 402 CO-CHAIR PARNELL Called an, at ease at 9:25 a.m. Reconvened at 9:30 a.m. 405 SENATOR WILKEN Asked about the IRS ruling regarding the Gas Line Authority being tax exempt and the significance of this in light of a possible gas line. 409 COMMISSIONER SHIVELY Responded that he was not aware that the IRS had ruled, but stated that this was not a big surprise to him. Because this is a government authority, they can be tax exempt. The Commissioner thought that the gas situation presently is pretty interesting, with three possible proposals being considered to get this gas off the slope. He went into the details of each of these options. 439 CO-CHAIR PARNELL Called an, at ease at 9:40 a.m. Reconvened at 9:45 a.m. 444 KURT FREDRIKSSON, ACTING DEPUTY COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL CONSERVATION Read the "Department of Environmental Conservation Performance Measures" into the record. Let me begin this overview by saying that we are proud of what the Department of Environmental Conservation has accomplished with the resources you have given us and think the results we have achieved are worth talking about. I'll address the mission, a few examples of the department's accomplishments this last year, and some specific performance measures and statistical results. The mission of the Department of Environmental Conservation as approved by the legislature last year in SB 169 is: Develop, coordinate, and administer policies, programs and planning related to public health and the environment of the state. In more recent meetings with our subcommittees we have agreed on a more succinct statement for the department which is: To protect public health and the environment. With the funds appropriated by the legislature, all of the people in our department, in some capacity, work for clean air, clean water, clean land, safe food, safe handling of oil and chemicals, safe public facilities and businesses, and pollution prevention. Our staff is dedicated to a partnership with the people and industries of Alaska and the tools we use to promote the mission of public health and a healthy environment have changed in recent years. In the not too distant past, feedback from the public was not good. There was too much emphasis on investigation, legislation, regulation and litigation. Today, we don't rule out those tools, but we try first to anticipate, collaborate, negotiate, educate and communicate. Enforcement of clean air and water rules will always be necessary, because some people refuse to follow those rules. But at the Department of Environmental Conservation, we begin with the assumption that the people and industries that operate in our state have both the corporate conscience and the technical ability to work with us on constructive solutions to basic environmental management issues. In general, the Department of Environmental Conservation's work fits into two basic categories: Doing it Right and Healthy Safe Communities. For doing it right, we strive to deliver services that strengthen the overall economy and create and maintain good jobs for Alaskans by prudent and sustainable management of our air and water quality. There are several examples of the return on the investment in Doing it Right at the Department of Environmental Conservation. The following examples are just a few representative cases. The first is to get contaminated property cleaned up and available for economic re- use. An excellent example of a good return on the state's investment in the Department of Environmental Conservation is our actions on the site of the former Sitka Pulp Mill. In April of last year we took the "closed" sign out of the window and gave the City and Borough of Sitka the opportunity to put a new industry in its place. EPA wanted to list this site on the superfund list. City officials feared that stigma would daunt any future development. We stepped in and assumed leadership over the cleanup. We finished it in half the time and at substantially less cost than it would have taken if EPA had supervised it. We also worked with Sitka and the Alaska Pulp Corporation to create an innovative agreement that enabled the community to take possession of the property without fear of liability, and clearly spelled out in advance monitoring and maintenance protections for the site so that new users would be able to plan for the site's re- use. A second investment example is issuing state air permits that make sense for Alaska, despite federal opposition. The Department of Environmental Conservation issues permits to control air pollution from diesel generators, which supply basically all of rural utility and industrial energy in Alaska. Mineral reserves at the Red Dog Mine outside Kotzebue have increased in recent years and it needed a power supply increase to support a higher rate of ore processing. The Department of Environmental Conservation granted Cominco a permit to install a new diesel generator to fill that need and required a pollution control technology that would substantially reduce emissions, but still be affordable. For EPA, that wasn't enough. EPA preferred another, far more expensive control technology, even though it would result in no measurable difference in air pollution at the Cominco property line. Over EPA's objections, and in fact, contrary to an EPA order directing us not to issue the permit, the Department of Environmental Conservation issued the permit. A similar battle was fought over Nome's utility where EPA tried to impose this same pet technology that would have increased Nome's utility rates by 25%. The third example is to tailor or seek a waiver of federal requirements that don't make sense in Alaska. It is a good investment to help Alaska's communities succeed where federal laws and regulations set some Alaska villages and cities up for failure. It is simply impossible - financially and sometimes literally - for Alaska's numerous small remote landfills to meet federal landfill standards. It was extremely expensive for municipal landfills to satisfy federal requirements. The Department of Environmental Conservation fought for and then completed a waiver on federal requirements for small landfills and put in place reasonable requirements for municipal landfills that save municipalities millions of dollars previously spent in unnecessary one size fits all federal requirements. The Department of Environmental Conservation's alternative plan to provide protections through more flexible means was finally approved by EPA. The fourth example is to make the permit process less labor intensive. The quicker people get permits, the more productive they'll be. The Department of Environmental Conservation developed a permit questionnaire on our web site, which allows many business owners to go through a series of questions and find out what, if any, permits are necessary for a job or a new operation. By answering questions on the possible effects on the environment and public health, like air emissions, wastewater needs, and food processing, the business can get a list of any permits, approvals, and licenses it may need from the Department of Environmental Conservation, and who to contact to get them. My last "doing it right" example is the Department of Environmental Conservation's effort to systematically assess possible cruise ship pollution in southeast Alaska. Cruise ships plying our waters don't fall right now within the state or federal permit systems. Yet, they are discharging wastewater at a rate that exceeds many of our small towns. The Department of Environmental Conservation convened over thirty cruise ship operators who operate in Alaska waters, as well as the EPA, the Coast Guard and the Southeast Conference to get to the bottom line on cruise ship waste dumping and air emissions in Southeast Alaska. Our goal is to develop a plan to assure Alaskans that the cruise ship industry will keep Alaska clean. We made it clear to the industry that we expect them to respect Alaska's values for doing it right. Already, the industry has committed that it will not dump in doughnut holes, (areas within the channel here that are outside state waters) and it will get prepared to respond to an oil spill. Work groups are being set up to assess the discharges, to monitor the industry, and to see that Alaska's resources are protected. The next general area of accomplishments I'd like to address is the state's investment in the Department of Environmental Conservation for human and community health issues such as safe drinking water, better sanitation and spill response. Elsewhere in the country, many of these services are provided by local government, but in Alaska, the state retains most of the duties for assuring the Basics we take for granted in modern life. We believe that part of our mission is to keep Alaska a model for community health and inviting vacation destinations for visitors. Two examples are: First, providing clean water and sanitation facilities for all Alaskans. As of the end of the 1999 construction season, two thirds of rural Alaska households have access to a basic, but safe, level of drinking water and sewage system. That means from either a haul or piped water and sewer system. When all the projects started today are completed, the number of rural households with access to basic drinking water and sewer systems will be 84 percent. The state's investment in community infrastructure is protected and maintained through the Village Safe Water Remote Maintenance Worker program which provides training and on-site technical assistance to 71 communities. Since 1989 when the Remote Maintenance program was put in place, there have been no catastrophic system failures. Sanitation projects will pump almost 90 million dollars into the Alaska economy this fiscal year. It generated approximately 900 rural jobs this past construction season. Urban Alaska's economy also benefits greatly from these projects. On average, 70 cents on the rural sanitation dollar stays in Anchorage, Fairbanks and Juneau for materials and services. In other words, of the $62 million appropriated through Village Safe Water this year, approximately $43 million flowed into our urban economies. The second example is in minimizing the impacts of spills. The Department of Environmental Conservation has signed over 20 spill response agreements with local governments and municipalities to establish oil and hazardous substance spill response partnerships at the local level. Under the terms of the agreements, the Department of Environmental Conservation trains local responders, can activate local emergency response resources as needed to supplement the department's own response capability, and can reimburse costs incurred by the local government in actual response to spills. The combined response resources of local governments substantially enhance the state's overall spill response capability without increasing the size of state government. As I mentioned earlier, the department has been meeting with our finance subcommittee's to develop performance measures for the future. As a starting point we have turned to our current performance measures and results for the first ten months of calendar year 1999. For safe water, we can report on two measures. First, the measure was a decrease in the number of Boil Water Notices issued, the population affected and the duration. Tracking that measure indicated a result of a decrease from 1998: 29 notices affecting 3,439 people were issued in 1999 and 39 notices affecting 9,908 people were issued in 1998. The second measure is the percentage increase of Class A & B public water systems in compliance with health-based standards. The result showed 94% are in compliance, exceeding our goal of 91%. For safe food, we can report on three measures. The first was the percent decrease in violations that affect food safety and wholesomeness. The result indicated a decrease in violations at inspected food service facilities from 49% in 1997, to 46% in 1998, to 32% in 1999. Second, the measure is the number of pounds of food products detained or destroyed before reaching the consumer because of contamination or incorrect processing. The result showed, in 1999, approximately 60,000 pounds were detained and 29,000 pounds were destroyed. In 1998, 680,000 pounds were detained and over 234,000 pounds were destroyed. Third, the measure is the number of approved harvesting areas closed because of PSP levels. The result showed none were closed in 1999 and one was restricted in 1998. For safe public facilities, we report on three measures. First, the percent decrease of critical violations in inspected public facilities that affect the health or safety of the public. The result was a steady decrease from 77% in 1997 to 59% in 1998 to 24% in 1999. Second, the increase in percentage of landfills with permits or an alternative to a permit. The result was an increase of 6% from 1998. Third, the percent increase of landfills with an inspection score of 80 or higher. The result was 55% had a score of 80 or higher, a 1% increase from 1998. In the FY 2001 budget, we have also proposed several measures for discussion with our subcommittees. Those measures address public health through measuring progress in sanitation, controlling air emissions and food safety. The measures we propose are: Measure: Provide basic water and sewerage service to an average of 500 households in rural communities each year. Current Status: The average number of households provided with new water and sewerage service for the last two years is 240. Measure: Reduce carbon monoxide pollution in Anchorage to meet health standards by the end of 2003. Current Status: Anchorage - 1997 and 1998 met health standard; 1999 one day above standard as of Oct 31 of this past year. Measure: Percentage decrease in critical violations at inspected food establishments. Current Status: Food service facilities (inspected through October, 1999) had 14% fewer critical violations than in 1998. As we continue down the path of developing Performance measures, tracking results and reporting to the legislature and the public, we will have to face the inherent difficulty in measuring the effectiveness of prevention. A significant portion of the Department of Environmental Conservation budget is dedicated to prevention efforts - those that prevent public health outbreaks and minimize contamination of our land, air and water. To date, the value of prevention has frequently been tied to surrogate output measures such as the number of technical assists, compliance efforts, inspections, educational programs or other counts. The value of prevention may best be measured by the costs avoided as a result of successful prevention. A human life, which is not lost due to food or water borne disease, an Exxon Valdez spill which does not happen, a superfund cleanup of a contaminated site which is not needed, or avoiding the cost of repair or replacement of a water or wastewater system after catastrophic failure could be measures of successful prevention. It is difficult to put a price tag on the level of confidence and comfort experienced by Alaskan citizens that the food we eat, the air we breathe, the water we drink and the land where we build our homes and raise our children, are safe. Quantifying that is a shared challenge we face. To help us along, the Department of Environmental Conservation convened stakeholder work groups to address how and whether the state should invest in a state wastewater discharge permitting program and in a food safety program. The water group had permitees from the hard rock and placer mining, seafood processors, oil and gas, and timer industries; representatives from municipal governments and coastal districts; the US Army Corps of Engineers; the Environmental Protection Agency; legislators who chair the Department of Environmental Conservation budget finance subcommittees; and representatives from environmental and public interest groups. The group's advisory report will soon be out soon and it includes ideas for efficiencies like expanding the use of general permits and permits by rule; the need to increase field presence and enforcement activities; improving access to data and other information related to permitting activities; and whether to pursue primacy of the NPDES program. The group is also looking at the level of resources necessary to deliver services; what tasks should be handled by full-time state employees; what tasks should be done by contractors; how general funds should be allocated; and how to pay for the rest: this includes the issue of fixed fees versus hourly or time and materials. The food safety work group had members from the Alaska Seafood Marketing Institute, the Alaska Visitors Association, the hotel industry, United Fisherman of Alaska, the seafood processing industry, Alaska Municipal League, Alaska Hospitality Alliance, Alaskan and Proud, Health and Social Services, Food and Drug Administration, University of Alaska, just to name a few Like the water group, the food group is looking at program efficiencies, such as replacing state-sponsored food safety training courses with putting a self- inspection form on the internet, and increasing the financial contribution from FDA for seafood processing inspections. We are hopeful that both of these groups will offer us good suggestions on missions and measures and funding. Thank you for the opportunity to provide this overview of the department's mission, accomplishments and performance measures. I'd be happy to answer any questions. 556 SENATOR ADAMS Commented about 84 percent water and sewer systems statewide and requested a list of villages that have this service. He also asked for justification of these numbers. He noted that the bush communities dispute these numbers. 552 DEPUTY COMMISSIONER FREDRIKSSON Noted that the Department views "those that are in place, as well as those that are in the pipeline." 551 SENATOR ADAMS Added that sewer and water as defined in the village is where there are toilets and running water in households, not a local spicket. 549 DEPUTY COMMISSIONER FREDRIKSSON Responded that the department's distinction of sewer and water will make this number clear. 547 SENATOR PHILLIPS Addressed a complaint, which his office received last week about tank flooding in Valdez. From what he has been able to gather, the Fire Marshall's office is also involved. The complaint from the public is that the Department of Environmental Conservation has waited 22 years until this situation has become critical. 538 MICHELE BROWN, COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL CONSERVATION The Department of Environmental Conservation does not have authority over sludge as long as it is contained in a tank. The Department does have authority over how it is transported and handled. She agreed that this sludge situation was problematic, since now it has caused the fire suppression system to be inoperative. In conjunction with the Joint Pipeline Office officials and the Fire Marshall, the Department has been in discussions to help facilitate rectifying this problem, including the draft of a procedural order for Alyeska to ensure that the fire suppression system is fixed. 532 SENATOR PHILLIPS Wondered if the Department has ever asked for this authority and if not, why not. 530 COMMISSIONER BROWN Responded that they had not, because this situation is considered a fire hazard. As long as the sludge is in the tanks, it does not pose a risk to anyone's health or to the environment, except for when this situation could cause a fire and in this instance, the jurisdiction fell to the local Fire Marshall. The Department does not intend to seek this authority. 525 SENATOR WILKEN Noted, that as a member of the Capital Budget Subcommittee, he found it difficult to look at the village safe water project to get a sense of what has happened in the past, or what would happen in the future, especially in regards to following: the start date of a project, the sources of different funding for specific projects, the amount of monies expended, etceteras. Asked for something more like a balance sheet accounting for each project. He also mentioned those federal projects that did not show up on their state project list. Asked for a "moving history" type document that would be more inclusive. 511 SENATOR LEMAN Asked if the Department's total budget increased in FY2000 over FY1991. 507 COMMISSIONER BROWN Yes, the Department's budget increased from all funding sources. 506 SENATOR LEMAN Stated that many people do not know this and feel as though the Legislature has decimated the Department of Environmental Conservation's budget. This was not Senator Leman's intent. When the Legislature looked at ways to streamline the Department, they suggested some revisions to the Department of Environmental Conservation's travel budget. "You came back and said, `well we're looking at the various programs that others perhaps could do,' and so you took some reductions in Water Quality." He noted that the budget for Water Quality was $2 million, plus the $1.7 million [indiscernible] Point Source Pollution Grant. He was not real clear what the Department has done with the other $4.2 million dollars when the number of permit writers within the Department has been reduced to four. He asked for an explanation. 492 COMMISSIONER BROWN Noted that the Department's budget has grown, but the sources of funding will become increasingly more restrictive. The general fund of the Department has been cut significantly, leaving them with 75 percent of restrictive funding for their entire budget. This limits their ability to choose their own priorities. Because of the general fund cuts, rather than become a self-fulfilling prophecy of not doing a good job with the general fund programs, it is far better to have the discussion of what programs should be discontinued, rather than cut off "fingers and toes" of programs. The Department has developed criteria on which to decide what programs are less of a priority to the state. In establishing priorities, the water permit side of the Department has less priority than all of the water programs. Noted that the reason the Department did not "take it in travel," is because they have only about $800,000 in general fund travel. This is not their overall travel budget, but the bulk of their funding being federal funds or oil spill response fund dollars, these monies are dedicated for these purposes. This unallocated cut would have been about a third of the general fund travel. The Department of Environmental Conservation is a field agency. It is necessary for them to be in the field, in order to do their job. Added that on the water side of the house, there are three basic functions. The first is creating water quality standards, which they are obligated to do under federal law. These are allowed to be drafted, as Alaskan specific and she explained the advantages of this designation. The second and larger part of the water program is called non- point source water pollution. This is the greatest source of water pollution in the state. The industrial discharges, although they have to be monitored, have improved considerably and these are not the largest source of pollution. The largest source is non-point source pollution. There are 58 water bodies in the state, which are impaired. Over 50 percent of these are impaired by non-point sources. The Department made the decision that it was very important that they stay involved with this avenue. The large part of the money, which the Department receives for this program comes from the federal government. It is up to the State of Alaska though to monitor these situations because the federal government does not have jurisdiction to do so. The federal government has said that they will take these millions of dollars allotted to Alaska and give these dollars to other states. Stated that the final area of the water program is the permit program. The Department does not have primacy of this program. EPA issues the primary permits. The Department of Environmental Conservation certifies them, as complying with state water quality standards, and provides the site-specific flexibility, such as mixing zones. In terms of the Department's core mission, which is protecting health and the environment, EPA would do this by issuing the permits. This is why the Department felt as though this was a lesser priority. 447 SENATOR LEMAN Asked of those impaired water bodies, how many of these non-point source situations are man-made. 440 DEPUTY COMMISSIONER FREDRIKSSON Responded that in terms of the impaired water bodies, those are all human-caused pollutant sources, all 58. 439 COMMISSIONER BROWN Noted that the Department went through a couple of intense negotiation years with the EPA to limit these pollution designations to human causes. The EPA wanted the Department to list hundreds more that were impaired for natural reasons. The two entities went through lengthy battles to limit this in those situations where the Department could make a difference. 432 SENATOR LEMAN Stated that three years ago the Legislature passed an environmental self-audit bill, with the cooperation of the Department. He wished to know what the status of this was in terms of being used by Alaskans, and he also wondered what the Department was doing to encourage people to know about it and use it. He thought it could dovetail to help deliver services that strengthen the overall economy and create and maintain good jobs by prudent and sustainable management of air, water and natural resources. In his opinion, to do this right, it is necessary to ensure that people look at their own operations. He used cruise ship pollution as an example. He asked what the Department had been doing to encourage people to do what is right. 422 COMMISSIONER BROWN Responded that there were two or three individuals that have used these, not extensively. The Department is not doing anything to promote the use of this law specifically, but the Department does make a point of compliance assistance before they do any kind of enforcement actions. The Department has programs that are geared toward auditing facilities with a company, without taking enforcement actions as long as problems are corrected. The spirit of these laws are used daily. 412 SENATOR LEMAN Asked for a status of combining the Contaminated Sites and Storage Tank programs since last year. 408 DEPUTY COMMISSIONER FREDRIKSSON Noted that this program also changed from a Grant to a loan-funding source. Eight employee positions were cut in the Storage Tank Program. The Department has been working to put regulations in effect for the new loan program. They have also put out regulations for privatizing the on- going monitoring and inspection of tanks. The Department is looking to merge the cleanup programs for each of these divisions together as well. 392 CO-CHAIR PARNELL Asked about the Department's impact statements and read the following based on this current year budget: "The Department of Environmental Conservation will no longer conduct voluntary, quality control inspections at seafood processors for institutional food programs managed by the U.S. Department of Commerce." He wondered how this was conducted previously, since it appears that the Department of Environmental Conservation is still inspecting these facilities, but not for this particular program. He asked if this was the case and if so, what was the Department inspecting them for now. 385 COMMISSIONER BROWN Responded that this was correct and added that when these cuts took place in this program, the Department looked to see who else could do this function. It was decided that the federal government could inspect meat and poultry. The Department of Environmental Conservation then turned this program over to them. Then the Department took the remaining facilities that they inspect and ranked them by the risk they presented, so that the Department could maintain their presence in the high risk programs and less so, in the low risk. The program, which Co-Chair Parnell referred to, certifies seafood for commerce, but it is not necessarily a health-based inspection thus not posing such a high risk. If the Department is at the facility or in the vicinity, they will continue to inspect these as they are able, but these facilities will not be routinely scheduled. The Department of Commerce may pick these up. 376 CO-CHAIR PARNELL Adjourned the meeting at 10:20 a.m. SENATE FINANCE COMMITTEE LOG NOTES01/31/00 Page 1
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