SB 161-COASTAL MANAGEMENT PROGRAM  CHAIR OLSON announced the consideration of SB 161. The committee substitute, Version 25-LS0883\C, was before the committee. SKIP RYMAN, Manager, City and Bureau of Yakutat, said he served as Yakutat's planner and its coastal district coordinator. When Alaska decided to participate in the Coastal Management Program it chose to use a model of multiple separate districts. The state could have chosen a single statewide umbrella plan, but Alaska's diversity made that impossible. The Northwest Arctic is radically different from Southeast Alaska, for example. He recalled Governor Murkowski eliminating the DGC [Division of Governmental Coordination] and the Coastal Policy Council, and then centralizing habitat and permitting functions within the Department of Natural Resources (DNR). Those actions were portrayed as a streamlining effort in order to make permitting less complicated for developers. As the administration's efforts took shape, it became obvious that it was the individual coastal districts that were viewed as impediments to development, and the actual goal was the muting and the elimination of their voice in development issues. MR. RYMAN said HB 191 was an honest attempt to reduce bureaucracy and was never an attempt to eliminate participation by Alaskans in development issues. But that was the intent of many regulations that followed the bill. He said he attached a position letter on the draft environmental impact statement for approval of amendments to the Alaska Coastal Management Program. It is signed by him for the City and Borough of Yakutat and by Bert Adams for the Yakutat Tlingit Tribe. The letter expresses their position on the issue. SB 161 seeks to reestablish full participation of Alaskans in their affairs, and he extended Yakutat's support for SB 161, including the reestablishment of the Coastal Policy Council. 3:43:49 PM MARLENE CAMPBELL, Director, Government Relations, City and Borough of Sitka, said she has been the coastal management coordinator and has been around for the entire revision process. "I can only thank anyone who has had anything to do with the development of SB 161, and especially sponsor Senator Olson for the major step in the right direction." Sitka used to be extremely proud of its coastal program as a responsive supportive entity, working with developers while protecting the environment in the coastal zone. That relationship changed with the onset of HB 191, and it further changed with the forced revision of Sitka's coastal plan, which removed any effective policies related to subsistence or habitat "or most of the other areas within our coastal plan that had been so helpful to us … in developing workable compromises for taking care our local area." Sitka's coastal district is 4,710 square miles. MS. CAMPBELL thanked Senator Olson for sponsoring the bill. She strongly supports broadening public involvement in permitting; it is especially true with the Department of Environmental Conservation (DEC), which is now reviewing air, land, and water quality permits with absolutely no communications with the coastal districts or the public. Legislation requiring a public process for DEC permits will provide an "excellent ability for the communities to reconnect with the permit process." The subsistence component is important and is mentioned in Sitka's coastal plan, "but we have not been able to effectively promulgate any enforceable polices related to it." Reconnecting subsistence with the coastal plan is very important to all communities that feel strongly about subsistence uses. 3:47:19 PM CHAIR OLSON asked about future coastal development in Sitka. MS. CAMPBELL said there is ongoing development, but there is nothing large scale like a big mine in the immediate future. But any current development is outside the ability of Sitka's coastal managers to comment effectively, and it is outside the public's ability to be notified. "I'm no longer up to speed on what may be happening, and I think this legislation will go a long way to, at least, providing public notice of those kinds of situations." Sitka could use some development, she opined. CHAIR OLSON asked if the plan was approved. MS. CAMPBELL said it was approved in April. 3:48:30 PM MARV SMITH, Community Development Coordinator and Coastal Coordinator, Lake and Peninsula Bureau, Iliamna, said he supports SB 161 because it reestablishes the Coastal Policy Council and gives the district a say in consistency reviews. Presently, air, land, and water quality is not included, making it difficult to do consistency reviews properly. The local districts do not have the power to adopt meaningful enforceable policies. In comparing the old plan with the new one for his borough, it is significantly different. Local people should have input. There is development in the area that is detrimental to the communities, and "we want to have the local input." The plan under the previous administration did not consider all the ramifications. All 17 communities of the borough are on freshwater or saltwater. Fishing is an important livelihood, and the communities should have input on how the coastal zone can be developed. SB 161 heads in that direction. 3:51:06 PM CHAIR OLSON asked if any recent developments have been affected by the past administration. MR. SMITH said there will be a big one in the future. CHAIR OLSON asked what difficulties the district will encounter. MR. SMITH said the bill will give the local governments some say-so in what development goes on in their coastal districts. His district is trying to use statewide standards when a coastal consistency review comes before it. The planning commission was presented with a project for review under those standards "and they simply said we need to go back to the old plan." 3:52:41 PM CHAIR OLSON asked if his coastal plan has been approved. MR. SMITH said they are waiting for it to be approved and hope it will be approved soon. SENATOR STEVENS said before HB 191 there was a council "in control of things." Now the department seems to be running things. Communities keep saying that there is no forum or role for the locals in policy development. Is there some middle ground? Is the best answer to go back to the previous policy council? Or is there "some middle way of including communities and still keeping the department involved?" Some testifiers say they don't want to change the day-to-day operations of the department, they just want more balance and to be at the table. 3:54:28 PM MR. SMITH said being at the table is very, very important. He said to go back is not the answer, but suggested molding what is present into something that will work for everybody. The current plan has been a lot of hard work. Maybe the present regulations need to be tweaked. He can't answer whether the state must have the council, but it was made up of locals who understood what happens and could convey that to the staff. That was a good working relationship. He is not 100 percent sure it will work. Having that local input to the DNR staff is a great asset. There was also a working group, which is also gone. The people at the local level can give critical input. 3:56:01 PM SENATOR STEVENS said he is struggling with it, and this committee may not be the place to go over the details of how a council would be created. He suggests passing it to the Resources Committee. It is an important issue and he has heard both sides. The department felt they had no control of the outcome, and the local districts had no place at the table. DAN EASTON, Deputy Commissioner, Department of Environmental Conservation (DEC), said he will focus on the "DEC carve-out" that will be removed by the bill and on single agency reviews. He has an incomplete understanding of SB 161. The DEC carve-out has two parts: "a definition that says that the DEC standards for air quality, water quality, and solid waste disposal, as well as spill prevention and response planning, are the sole enforceable policies of the ACMP for those purposes." The second part is when DEC issues a permit for an activity, it establishes that activity as consistent with those ACMP policies. So "when we issue a permit, that establishes consistency automatically with those policies." The effect is that project activities that require a permit from DEC are not subject to the ACMP process - they are carved out from the ACMP process. Current law reflects the thought that DEC has the duty to interpret the state environmental standards, "and that DEC would authorize only activities that comply with those standards." 4:00:31 PM MR. EASTON said, "Because the state environmental standards are the only enforceable ACMP policies for those purposes, DEC authorization is both necessary and sufficient to establish consistency with the ACMP standards." That carve-out is removed by SB 161. DEC's authorizations typically include air emissions, water discharge, and pesticide permits, and approvals for oil spill prevention and response/contingency plans. When DEC issues an authorization, those activities aren't subject to ACMP review but are subject to an administrative process of public notice and comment. The permitting decisions are subject to administrative and judicial appeals processes, "so it may not be an ACMP process, but it's not a closed process either." 4:01:42 PM MR. EASTON said when DEC is the only permitting authority for a project, it determines if it should go through an ACMP review, but only for activities that are not carved out. Any project could have parts that would be subject to an enforceable district policy, and it is up to DEC to make a decision with DCOM as to whether there are parts of the project that should be subject to local district review. "We have internal guidance that tells us how to operate this process." The first step is sending a letter to the coastal district, and it includes project information and asks the district to identify any enforceable policies that it has. If there are none, there is no ACMP review. If the district says there are enforceable policies, and if DEC agrees with that, DEC will subject the project to an ACMP review for the purposes of deciding whether or not these other parts of the project - those beyond DEC's permits - are consistent with coastal district policies. "Our actual experience with these single agency reviews is limited, largely because there have been so few approved, effective coastal management plans." Since the carve-out has been in effect, DEC has only sent out 11 project scope letters to districts to see if any enforceable policies applied. Of those, one ACMP review was conducted. As more district plans are approved, the number of project scope letters and single agency reviews that DEC will conduct will increase. 4:04:20 PM MR. EASTON said SB 161 "retains the part of the carve-out - the provision that the DEC environmental standards as established by statute and regulation are the sole enforceable policies of the ACMP for those purposes -- but the bill eliminates the second part of the carve-out, such that no longer would simply our authorization of an activity establish that activity as consistent with the ACMP program." That change will have unclear impacts. DEC would continue to develop permits and other authorizations, "but it would appear that the Coastal Policy Council would also be called on to determine whether permitted activities comply with state environmental standards." That potential transfer of authority concerns him. CHAIR OLSON asked how DEC will make sure there's not a subjective issue when it approves plans. "You had stated that in order for some of these plans to be consistent -- and this bill does away with that consistency -- isn't there a subjective element to that that is what got us to where we are today?" MR. EASTON said there are two parts to consistency. One is: "Is a project … consistent with the DEC standards?" CHAIR OLSON said that part is still in place with SB 161. MR. EASTON said DEC attorneys don't advise it that way. That is the question. "We actually read … that now this is no longer. While that standard remains, and there's a statement in statute to that effect, that the Coastal Policy Council, now, would … also have say as to whether an activity complies with the state air quality standards, for example. That's what worries us. At least it's a question we have." 4:07:01 PM LINDSAY WOLTER, Assistant Attorney General, Environmental Section, Department of Law, said page 11 refers to the DEC carve-out. DEC has statutes and regulations as their exclusive enforceable policy of the ACMP, but (d) on Page 11 refers to the extent that DEC doesn't cover certain projects, the coordinating agency shall review all project activities to ensure consistency with water and air. That is where the confusion is raised. "What does it mean to the extent that DEC doesn't cover the topic?" "We're not sure how it would be interpreted." CHAIR OLSON asked how subjective that is since there is not a clear interpretation. MS. WOLTER asked if the program has been subjective to date. CHAIR OLSON said if there is confusion in the interpretation of what Mr. Easton was alluding to, then that makes it a subjective issue. MS. WOLTER said she is not sure of the question, but it is not clear what (d) does in relation to (b). It seems that DEC's statutes and regulations are the exclusive enforceable policy for the ACMP, but then (d) opens up the scope of any review, saying that, to the extent that those statutes and regulations don't apply, then all project activities will be reviewed to be consistent with statewide standard enforceable policies, which are the local policies. She questioned what that means. 4:10:37 PM SENATOR WAGONER said it looked like Mr. Easton wanted to say "we're having conflicting or dueling groups, because you might make a decision, and then this group would have the authority to review that decision and take further action on your decision." MR. EASTON said that is correct. SENATOR WAGONER said that is counter productive to what the legislature tried to do when a bill was passed three years ago. MR. EASTON said it is not entirely clear at this point that that will be the effect. It is muddled, "and we worry that that would be the effect, but it's just not that clear." 4:11:49 PM SENATOR WAGONER said that is how he interpreted it. SENATOR THOMAS said he is confused about "section (d)". It appears "that either somebody has a lot of foresight and that they're looking forward to issues that may not necessarily be considered in those particular statutes that deal with predominantly the DEC, or that, for whatever reasons, they want to create confusion and allow it to get channeled back to the more local communities." "Is that not, at least, one interpretation that people were looking forward to things that may not necessarily have been covered, and that was the reason for putting this language in, that if it wasn't, that they still had the opportunity to participate in the process?" MR. EASTON asked what he was referring to. SENATOR THOMAS said he is talking about small (d) on lines 22 to 26 on Page 11. 4:13:39 PM MR. EASTON said it is a bit complex. Section 16 is the new subsection (b). State environmental standards allow effects on resources, so the water quality standards allow some change in water quality. It depends on the circumstances, but it is not a no-change standard. It is the same with air and spills. Reading the new section (d), he wonders if it is a provision that says that for the types of changes that would be allowed by state standards, that the coastal policy council is then required by (d) to actually look and see if those changes are going to comply with ACMP standards and enforceable district policies. So it provides both a second level of review and it invites the districts to make standards that are more restrictive than state standards. It is a question and a concern. SENATOR THOMAS said, "It appears to me that you're incorporating, to the extent that, those particular statutes do not take into consideration some potential effect, that you just have this policy or this procedure that you go through." It appears to be incorporating existing statute -- not challenging it. Unless someone is trying to be creative, it does incorporate existing statute into it, and if something that was not anticipated pops up, there is this process to address it. 4:16:09 PM MR. EASTON said the reference to 46.03.0409, 14 and (d), is a reference to the state statutes that underpin the standard regulations. DEC develops standards in regulation pursuant to AS46.03, so it refers to state water and air quality standards. SENATOR THOMAS said that was his understanding, and "that's why I figured they were incorporated into the consideration already." That is why he is confused. MR. EASTON said, of the loss of the DEC carve-out in SB 161, "it is probably clear that we continue to develop permits and other authorizations, but it appears that the Coastal Policy Council would also be called on to determine whether permitted activities comply with state DEC environmental standards." That transfer of authority concerns him. Interpreting standards requires expertise and oversight by federal agencies. DEC has engineering and environmental professionals, so it is qualified as arbiters of state environmental standards. DEC strives to be consistent and predictable. Involving the council is one effect, and secondly the bill would require developing procedures to meld DEC permitting into the ACMP process. "I hear that discussed a lot, as if maybe that was the sole effect of the bill, and again, we wonder about that." Bringing the DEC permitting process under the ACMP process without subrogating DEC authority to the council seems possible, but it would require an amendment. 4:20:03 PM MR. EASTON said the bill eliminates 46.40.040 (b)(2), which establishes the standards for judging ACMP consistency for activities in the OCS [outer continental shelf] and activities outside of state jurisdiction. "By eliminating that direct statement of what the standards are to be used in the OCS, it creates a question of what standards are intended to be applied outside of state waters." The bill appears to do much more than "return activities authorized by DEC procedurally to the ACMP process." It raises questions as to the role of DEC and the Coastal Policy Council in the application of DEC statutes and regulations. It appears to invite ACMP standards that are different from DEC regulations and from one coastal area to another. The bill also removes the state environmental standards as a basis for determining coastal consistency in the OCS. He acknowledged that the coastal districts have been adversely impacted through changes in the ACMP process, and it needs to be addressed. There is opportunity to improve the procedural nexus between the ACMP process and the DEC process, "and we would welcome an opportunity with DNR to work on such improvements." 4:22:38 PM SENATOR STEVENS said that Mr. Easton has heard the same concerns he has heard from the local districts. They don't have a seat at the table and can't comment on projects. "You have said, very clearly, that this is something that we must address." "How do we bring the communities back into this process more, and I assume your position would be without giving them veto power over the department?" MR. EASTON said it is a good question, and he doesn't know. He defers to DNR as the lead in how to improve the program. His only interest is the DEC carve-out. "We are interested in making sure that the districts feel like they have a seat at the table, at the same time we're very interested in not subrogating our final authority for interpreting and applying state environmental standards." 4:24:48 PM CHAIR OLSON said it looks like there is a fear that DEC standards will come under the umbrella of ACMP standards, and he asked if there is a conflict between the two standards. MR. EASTON said there is no conflict now, because it is clear that DEC standards are the policies. There is concern that, in certain areas, the districts may want different standards, and that could create a patchwork of different standards. It might not be based on science or subjected to federal approval. It would not create a good regulatory regime. SENATOR WAGONER asked how many coastal districts there are and how many have submitted and approved plans. 4:27:26 PM RANDY BATES, Director, Division of Coastal and Ocean Management (DCOM), DNR, said there are 28 participating districts. There is a federal granting agency (OCRM) that has approval authority over any program changes Alaska makes. There are 16 coastal district plans in effect and approved. Four were sent to OCRM, and he just received notice that those program changes have been approved. It also approved the transfer of authority to the new DCOM. Now those four plans will be filed with the Lieutenant Governor and go into effect 30 days after his signature. SENATOR WAGONER asked if eight have not been submitted or if they are being updated. MR. BATES said Aleutians East, Bristol Bay, and Juneau have completed their plans and are pending submission to OCRM. The districts have to clean up those plans and get them in final form. They have DNR approval. Bering Straits, North Slope Borough, and Northwest Arctic Borough have chosen to mediate the decision of the DNR commissioner. The other two, Cordova and Ceñaliulriit, are going to be submitted. 4:30:43 PM CHAIR OLSON asked how long those will take. MR. BATES said for the five that are not mediating, "the timeframe is largely their doing." As soon as DNR gets a clean version - incorporating the commissioner's recommendations -- DNR will submit it to the federal agency. That takes two to three weeks, and OCRM has a 28-day review process that can be extended. So that is two to three months after getting a clean plan from Aleutians East, Bristol Bay, Juneau, Ceñaliulriit, and Cordova. SENATOR KOOKESH moved the committee substitute for SB 161, version 25-LS0883\C, Bullock, from committee with individual recommendations and attached fiscal note(s). SENATOR WAGONER objected. A roll call vote was taken. Senators Kookesh, Stevens, Thomas, and Olson voted in favor and Senator Wagoner voted against. Therefore, CSSB 161(CRA) passed from committee on a vote of 4:1. 4:35:01 PM SENATOR STEVENS said he would like to hear about a middle ground because every community expressed frustration at not being at the table. He asked DNR to present that to the next committee. SENATOR KOOKESH said that "middle ground" will need to be supported by the communities. The department has had a lot of time to work on this and the communities are still unsatisfied. CHAIR OLSON said he has not heard a single district happy with it, and if there was middle ground it should have been put in place a long time ago. SENATOR STEVENS said he agrees. He has heard enormous frustration. In the sponsor statement, Chair Olson said not to go back to the way things were. It needs discussion. 4:36:43 PM SENATOR WAGONER said, "I understand some of the reasons. If you take authority for permitting in certain areas away from local areas, I understand why they are upset, and that is one of the reasons they are upset." At the same time, one of the reasons it was done was because people were having trouble getting permits. He opposes SB 161 even if it may be a large improvement, "but until the districts do what they said they would do and get their plans through, reviewed, and approved and accepted - and we got all 28 of them that have done that - then if we need to make some modifications, that's the time to make modifications." He said some people haven't even complied with the law yet, and keep getting extensions "for years and years and years." He gets upset that these people delay and delay and delay. His borough is one of them. But there comes a time when "you do the work that you say you will do, and then … if there are problems … we'll work them out." He said the committee is talking about passing a new bill when people haven't complied with the bill that's in place. 4:38:34 PM CHAIR OLSON said the ability to comply with the old one is almost impossible. Part of it was the problem that DNR had hiring people and redoing letterheads. "We need to go ahead and do something in a timely manner so we have some way to regulate what's going on out there." Yesterday there was a big sale in the Chukchi area, and people are upset because they didn't have any influence. It is federal lands, and that is the reason for the bill. Over the last six years, "attempt after attempt by people that I have been in close contact with, have been frustrated." There is a letter from one of the directors that said he won't talk about regulation review until June 2009. "I find that not just upsetting, I find that unreasonable." He said he offered the bill to get some movement. 4:39:50 PM SENATOR WAGONER said it is also frustrating to sit here and have the people say they can't comply. "I can come up with 1,000 different reasons why I can't do something, and sometimes it's a lot easier to do that than do the work that's requested of me and then look at it and see if it works or doesn't work and then go from there." CHAIR OLSON said that is valid.