Number 223 HB 436 - Strictness of Air Quality Regs. JOSEPH EASAW, AIDE, REPRESENTATIVE AL VEZEY, stated HB 436 is designed to preclude the Department of Environmental Conservation (DEC) from adopting by regulation, any ambient air quality or emission standard that is more stringent than the federal standards in the Clean Air Act. This bill will limit that authority to the legislature which can adopt by statute any standard deemed in the state's best interest. Number 235 REPRESENTATIVE FINKELSTEIN wondered how this bill will work if there is a new industry with a new pollutant being put out and there is a health hazard. He said there are areas presently where DEC has the authority to regulate that activity, something not addressed at the federal level. He asked if that authority is being taken away in HB 436. Number 249 MR. EASAW responded that authority is not being taken away. He said HB 436 limits the authority of DEC to not set forth any regulation which is more stringent than those of the federal regulations. The bill does allow DEC to set regulations where no federal regulations are addressed. REPRESENTATIVE FINKELSTEIN asked if subsections (b) (3) and Section 2 address that issue. MR. EASAW said that is correct. Number 265 CHAIRMAN WILLIAMS pointed out the legislature went through HB 167 last year and there was a lot of discussion and debate on the bill, with many compromises made to arrive at an agreement. He wondered how HB 436 will affect HB 167. MR. EASAW stated he does not dispute the time which DEC may have put into HB 167 and the compromises made. He said the intent of HB 436 does not negate any of the work done on HB 167. The bill simply says DEC cannot set forth regulation standards which are greater than the federal regulations. CHAIRMAN WILLIAMS clarified HB 436 will not affect anything in HB 167. MR. EASAW stated HB 436 does not necessarily impact the work of HB 167. Section 5 of HB 436 adds a definition of regulated air contaminant and does say any regulation adopted under AS 46.14.010(b)(2), meaning those regulations adopted which were greater than the federal standards could be affected. REPRESENTATIVE FINKELSTEIN asked what is the reason for HB 436. MR. EASAW responded there are two prominent reasons. First, there is a feeling that anything that is in the state's best interest which is beyond the guidelines of the federal regulations should be left to the legislature. Second, when guidelines are set forth which are greater than those of the federal regulations, years of permitting processing is required for certain industries and the economy is affected. Number 322 MICHAEL MENGE, DIRECTOR, DIVISION OF ENVIRONMENTAL QUALITY, DEC, stated HB 436 is not good for Alaska's business community or the state's citizens. DEC feels under appropriate conditions and circumstances it does make sense for DEC to proceed beyond where the federal government sets a standard. He noted the situations which develop in the state are principally in the area of ambient air standards, where DEC is looking at an air shed and the ability to step into that air shed and restrict emission values (indiscernible) than the federal government would authorize where it makes sense to do so. He agreed that could be accomplished through the legislative process but noted how slow that process can be. He pointed out, with the flexibility DEC currently has, DEC can accomplish this with one-on-one negotiations with the permittee or those seeking permits and do it fairly quickly. MR. MENGE stated another key component is the two year process it has taken to get to the current point. He said although HB 167 is just one component within a very large statutory package, it is a balanced equation. DEC worked for two years to strike a balance, which represents protection for the environment plus allows an environment in which business can also work. He stressed there was unanimous support across all the environmental and business communities for HB 167. Therefore, DEC does not feel it is a good time to step in and tinker with that equation especially since DEC is currently in the process of writing the regulations for the statute. REPRESENTATIVE JAMES noted the last sentence of the sponsor statement says, "This bill will limit that authority to the legislature which can adopt by statute any standard deemed in the state's best interest." She thought the Air Quality Act passed last year contained provisions making the rules more restrictive than the federal standards, which she does not believe HB 436 affects. She stated HB 436 affects the authority of the regulators to regulate past what is contained in HB 167 and/or other federal regulations not necessarily addressed in that bill. HB 436 takes the ability to make those determinations and puts it in the lap of the legislature, as opposed to the regulators. She asked why that is not a good idea. LEN VERRELLI, PROGRAM MANAGER, AIR QUALITY MANAGEMENT SECTION, DEC, responded there are two points to look at regarding the authority to regulate. One is a situation like Unicol which has an ammonia standard currently which they did not have before. The federal government does not have an ammonia standard. Therefore, through a four year intense process, a regulation was established, resulting in an agreement between the community and the industry to establish that standard. He said in the new statute, if DEC decides to do something like that again, it will come before the legislature, a committee is formed of the peers of that particular pollutant and a resolution is found. MR. VERRELLI stated the other point is what DEC does at a request of the permittee. He mentioned the Healy Clean Coal Project, as an example. He said the only reason that permit was able to be issued by DEC is that the source came to DEC, saying they wanted more stringent emission standards, enabling them to keep emissions lower and get the National Park Service to agree the project will not impact Denali National Park. He stressed HB 436 will require going through a more stringent permit process. Number 444 STAN STEPHENS, PRESIDENT, PRINCE WILLIAM SOUND REGIONAL CITIZENS' ADVISORY COUNCIL (RCAC), testified via teleconference and stated HB 436 will prohibit DEC from adopting or enforcing a regulation which establishes an ambient air quality or emission standard more stringent than federal standards. With the considerable time devoted by numerous Alaskans over the past two years on HB 167, RCAC was extremely surprised to see HB 436 proposed. RCAC was even more surprised to see HB 436 scheduled for a hearing. He stated the effort devoted to HB 167 was a multi-year endeavor by representatives of many diverse interests in the state. The result of this effort is Alaska's current air quality statutes, regulations and public policies. These results also represent a compromise among those different perspectives. He noted those who represented the public interest dedicated a significant amount of time and resources to develop the compromise. Those same people largely accepted the compromise, despite that industry clearly fared better than the public. Number 464 MR. STEPHENS stressed it is extremely disheartening after this process and good faith effort to see HB 436. In the past, DEC has not been overbearing in adopting regulations more stringent than federal law requires. For example, in the air pollution area, DEC has adopted only two additional ambient air quality standards which were for ammonia and reduced sulphur compos and both were for special industrial pollution problems in Alaska. DEC has adopted smoke capacity rules particularly important for vessel traffic in Juneau, Seward, and Valdez. DEC has a program to control ice fog, hardly a concern to the Environmental Protection Agency (EPA) or the rest of the country. DEC has adopted special rules applicable to the port of Anchorage allowing liquid loading racks and delivery tanks to come to the Government Hill neighborhood. Mr. Stephens said few will argue those regulations are necessary to protect public health and welfare and natural resources, even though they were not forced by federal law and are more stringent than federal law. Number 484 MR. STEPHENS stated it is also not clear that HB 436 will accomplish anything. Specifically, the state will give up considerable flexibility if this legislation passes. For example, the Golden Valley Electric Association recently agreed to alter air emissions to make room for the Healy Coal facility emissions (indiscernible) Denali Park. He said in the port of Valdez, the EPA is setting emission standards for organic vapor emissions due to tanker operations at Alyeska's Valdez Marine Terminal. Valdez is the largest single source of organic vapor emissions. Number 504 MR. STEPHENS stressed state involvement and flexibility is not in the best interest of the public or industry. RCAC strongly opposes HB 436. The ability to set air quality emission standards to protect the health of Alaskans is an important state's rights issue which should not be casually given away. Number 515 REPRESENTATIVE JAMES asked why the state should have regulations which are more stringent than federal standards. She added that she does not consider permitting the same as establishing regulations. MR. VERRELLI responded it is. When an emission standard is put in a permit, it becomes law for that particular permit and that particular source. Number 525 REPRESENTATIVE JAMES asked if that permit requirement and regulation is at the request of the permittee, will HB 436 disallow DEC from doing that. MR. VERRELLI replied yes. REPRESENTATIVE JAMES asked what the time frame is for establishing regulations relating to ambient air quality standards. MR. VERRELLI estimated it takes approximately one year to go through the entire process. REPRESENTATIVE JAMES wondered since HB 436 will still allow the legislature to make rules and regulations more strict than existing federal regulations, if it would be wise in instances where there should be more strict regulations for DEC to bring that situation to the legislature to make that decision. MR. MENGE stated timing is a very crucial issue. DEC oftentimes enters into an air permit situation where there is a fairly polarized community with a variety of industrial interests. DEC negotiates the numbers which all of the constituents can live with, by incorporating them into the permit and then running the permit through the permit approval process. That then becomes a part of the public record and public acceptance, thus affecting the overall permit. If DEC was to bring that process before the legislature, it will be more difficult to arrive at an agreement. He said the process tends to attract additional concerns and policy issues, so the narrow focus, in a specific geographic area, with a very narrow constituency, oftentimes provides an opportunity to resolve a problem before it begins to grow out of proportion. He felt it is a question of timing. Number 585 REPRESENTATIVE JAMES clarified that when someone applies for a permit where state and federal laws apply, because the public wants something even bigger, DEC, in issuing the permit, should be able to do what the public asks. She asked where does the public's right come into play in getting something which is more than what state and federal laws require. MR. MENGE responded if the permittee is within the air increment of a region, the public is entitled to that. He said the public interest is represented through the permit process. He noted the Healy project is a good example. There is one emitting source well within permit limitations and a second emitting source is coming in there. The affected community was unprepared and unwilling to accept an increase above the ambience standard. The public had a vested interest and became fairly vocal through the permit process. The permittee recognized a difficult situation, so it made sense for the permittee to request a lower standard, which had to be done in conjunction with the existing source. Therefore, there were three groups along with the state, together determining what the appropriate limitations for all the permits should be, which allowed both to proceed forward while still allowing the public to accept the decisions made since they were a part of the process. REPRESENTATIVE JAMES stated it appears the legislative process is being circumvented. MR. MENGE responded the public does not have a voice beyond the existing air limitations standards. The public's voice comes into play when a permit is being written and the permittee is requesting to pull back. Once the permit is reviewed and sent out for public comment, the public has an opportunity to comment. He said if the standard is to be strictly adhered to and the law does not allow going beyond a certain limitation, then the permittee is not going to be able to submit their permit because there will not be room for the permittee within that air shed. The permittee will have to stand back and wait until the older industrial entity goes away or a process is developed allowing them to fit into the remaining air increment. MR. VERRELLI stated all regulations proposed by the department and the permits go to a legislative committee, so that interest does come to the legislature. There is a committee that reviews these permits and regulations while DEC is developing them. MEAD TREADWELL, DEPUTY COMMISSIONER, DEC, stated the legislature has given the department authority to protect public health. The legislature has not looked at that authority in terms of what the federal government has determined what public health is. Rather, the legislature says DEC has the capability to look at Alaska's needs, to protect Alaskans. Therefore, there is a state's rights issue as well. He said DEC was also given strong binders last year in the compromise reached through HB 167. The compromise requires if DEC does something different than the federal requirements, DEC must commission a peer review panel and go through an extensive risk assessment process which is somewhat expensive. He felt there already is a strong bind on DEC if the department decides to move forward and do something the federal government is not doing. MR. TREADWELL said many times, DEC can see down the road and determine the federal government is going some place which DEC does not want to go. If DEC has a regulatory process in place, the federal government is likely to defer to DEC's process in some cases, rather than adopt their own. He pointed out that is what is happening in relation to Valdez. The federal government is setting air standards for organic contaminants for marine terminals around the country-- terminals one hundredth the size of the Valdez terminal. He added the technology the federal government is requiring is one Alyeska may not be able to meet. DEC can meet the needs of Alaskans by having a standard in place ahead of the federal government, which is stronger than what the federal government has presently. He felt in the end, DEC will be deferred to and a different, more flexible standard than the federal standard will be put in place. He said industry is working with DEC on this issue. TAPE 94-44, SIDE B Number 000 MR. TREADWELL stated DEC has been told if they do not have certain things adopted in the National Toxic (indiscernible), they will have to defer to a tougher federal standard. Therefore, DEC went ahead and adopted some things. At the time DEC adopted them, they would have been illegal had HB 436 been applied to the water. He stressed the flexibility has been very helpful. REPRESENTATIVE JAMES asked if the situation in Valdez should have been dealt with by the legislature this year. MR. TREADWELL said that process is one where scientists were paid hundreds of thousands of dollars by each side, doing extensive studies making a very difficult determination of scientific health risk. If the process was tied to a legislative session, the 120 day rule and delayed for another year, there may have been further losses of state flexibility versus the federal government. He felt the legislature probably does not want to get into that level of detail. He pointed out that the legislature has passed laws authorizing a public process to go forward to review health risks and he added that public process works very well. He said the legislature has authority to tell DEC to get out of that business in Valdez and make a determination. He felt to do it with a law which says the legislature always wants to be doing that will be very difficult. He gave examples. He stressed DEC has not abused the flexibility. DEC asked the sponsor of HB 436 if there were any particular examples where DEC may have made mistakes and the sponsor could not give any examples. Number 055 REPRESENTATIVE GREEN clarified the Lieutenant Governor signed the air quality bill last week. MR. VERRELLI stated it was the state implementation plan, which is not the Title 5 process coming from HB 167. REPRESENTATIVE GREEN asked if that plan would be affected if HB 436 became law. MR. VERRELLI said the one thing which falls under the transportation control regulation package is the nonattainment areas of Anchorage and Fairbanks. If there is construction in that area, HB 436 will affect the plan because DEC will have to set limits lower than federal standards since it is a nonattainment area for carbon monoxide. REPRESENTATIVE GREEN clarified there are three pollutants very closely watched in nonattainment areas and asked what the risk is. MR. VERRELLI responded there have been seasonal changes in Anchorage and a haze has built up over the Seward Highway. He said that haze is (indiscernible) chemical smog. The smog usually occurs twice a year and gives an indication that the state is on the threshold because DEC does not control hydrocarbons, which is part of the ozone package. REPRESENTATIVE GREEN wondered if the state is working under the agreement from last year, would the state be more or less likely to not come under federal regulation with HB 436. MR. VERRELLI said that is a difficult question to answer because of the different considerations. He stated as an overall policy, the federal government likes to see a state taking the initiative to protect its citizens and is always supportive because sometimes federal laws are lagging. He noted the wood stove standards are a good example. Number 110 REPRESENTATIVE GREEN asked if HB 436 will have any adverse impact on getting available federal funding. MR. TREADWELL responded the Clean and Mitigate Air Quality funds are federal highway funds which have to be committed to mitigation of air quality problems. When DOT spends that money, they have to spend it in conjunction with a plan to improve air quality. DEC is in a bureaucratic never-never land currently with oxyfuels. The law says oxyfuels should be used yet they are not being used. DEC may have to defend that decision in court. MR. TREADWELL said just because DEC cannot be as stringent as the federal government does not mean DEC has to be as stupid as the federal government. Many times the federal government gives DEC dumb things to do. DEC oftentimes goes to the federal government and asks them to let the department manage for the desired result, rather than managing the way the federal government tells them to. He continued to discuss the issue. He cannot say the state will be limited from using federal funds. DEC has thought about using those funds in conjunction with local governments. However, asking DEC to work on a standard more stringent than the federal government will require a long and unnecessary delay for DEC if the HB 436 process is used. Number 159 RICK LAUBER, REPRESENTATIVE, PACIFIC SEAFOOD PROCESSORS ASSOCIATION (PSPA), stated PSPA has not taken a position on HB 436. He said PSPA participated, as an industry, on the task force which worked on HB 167. He pointed out that all major industries were invited to participate on that task force and most of them did. Out of that work came HB 167 which passed largely intact. He said the concept in HB 436 was discussed extensively by the committee but the majority of the committee felt this type of legislation was not needed. The task force felt there were times when there should be more strict regulations. Number 200 MR. LAUBER noted the task force realized that before DEC could impose more stringent regulations, there would be a review by industry, public, etc. HB 167 resulted from many compromises. He cautioned committee members that before they make any significant adjustments, they have the same type of process and review which was used to put HB 167 together. Number 221 CHAIRMAN WILLIAMS asked the sponsor if he had been asked by industry to sponsor HB 436. REPRESENTATIVE VEZEY stated the impetus of the bill came from a recommendation from the Governor's Task Force on Regulatory Reform. He said the general statement that state regulations should not exceed federal standards is very generic and broad based. He explained given the time restraints, this was the only area he had time to address because the subject matter of the clean air bill was still fresh in people's minds. He said there was no push by any individual nor was there any specific problem which instigated HB 436, but rather a general concern of many people in very broad terms. CHAIRMAN WILLIAMS stated since the House Resources Committee is the last committee to hear HB 436, it will be held for further consideration. ANNOUNCEMENTS CHAIRMAN WILLIAMS announced the committee will meet on Wednesday, March 30 at 8:15 a.m. to hear HB 515. ADJOURNMENT There being no further business to come before the House Resources Committee, Chairman Williams adjourned the meeting at 11:00 a.m.