HJR 17- WATER & WASTE WATER REGULATION  8:09:51 AM CHAIR MUNOZ announced that the first order of business would be HOUSE JOINT RESOLUTION NO. 17, Urging the United States Congress to pass legislation concerning regulation of drinking water and wastewater treatment by the United States Environmental Protection Agency. CHAIR MUNOZ explained that HJR 17 is the result of work the committee performed earlier in the year after hearing about the changes the Environmental Protection Agency (EPA) is requiring such that some communities in Alaska would have to have more sophisticated water treatment systems, which are very expensive. Some years ago there was an exemption for 27 communities in Alaska that allowed those communities to use secondary treatment of their water. However, that exemption is in flux now and is of great concern for these communities. 8:11:02 AM PAUL LABOLLE, Staff, Representative Neal Foster, Alaska State Legislature, explained that the communities with the exemption have a 301(h) waiver. The EPA decided that it would not exempt one particular community from that waiver and has hinted that other communities may follow. At the same time, the EPA is not allowing that community to apply for the waiver because the deadline for that waiver expired some years ago. He explained that it's a situation in which the deadline for the waiver has expired, the community didn't apply for the waiver because they had an exemption, and the EPA changed its policy and is no longer recognizing the exemption. Mr. Labolle pointed out that the aforementioned language isn't included in HJR 17 per the request of the community, which is already under the U.S. Department of Justice (DOJ) enforcement. He noted that he has a couple of proposed technical amendments to offer for the committee's consideration. 8:13:09 AM MR. LABOLLE informed the committee that the facility program manager for Village Safe Water had provided an updated amount for the amount of declining federal funds. Therefore, he suggested the committee on page 2, line 16, delete "$49,000,000" and insert "$42,500,000". He then suggested the committee on page 2, line 18, change the "October 1, 2011" language to "the proposed fiscal year 2012". In response to Representative Saddler, confirmed that the reference is to the federal fiscal year. 8:14:56 AM REPRESENTATIVE AUSTERMAN moved the amendments proposed by Mr. Labolle, labeled Amendment 1, as follows: Page 2, line 16; Delete "$49,000,000" Insert "$42,500,000" Page 2, line 18; Delete "October 1, 2011," Insert "the proposed fiscal year 2012" There being no objection, Amendment 2 was adopted. 8:15:57 AM REPRESENTATIVE GARDNER moved that the committee adopt Conceptual Amendment 2, as follows: Page 2, line 31, following "emergency"; Insert "or to make the regulations less burdensome for communities." There being no objection, Amendment 2 was adopted. 8:16:45 AM REPRESENTATIVE GARDNER related her understanding that one of the problems with the EPA is that it isn't allowed to include costs as part of its argument for or against something. The EPA's focus is on the impact to the environment without regard to the cost to the community or the state. If that's the case, she questioned whether language should be added asking the U.S. Congress to allow the EPA to consider the fiscal impact when making its decisions. MR. LABOLLE directed attention to the language on page 1, line 14, which references Executive Order 13563 that addresses the issue. He explained that it's not that the EPA can't consider costs rather it's more of a situation in which the EPA acknowledges that the cost may be a problem for the communities, but not that the cost isn't EPA's problem. 8:18:23 AM SHIRLEY MARQUARDT, Mayor, City of Unalaska, thanked the committee for bringing forward HJR 17. As was pointed out earlier, this is a problem for Unalaska. However, all the signs point to it becoming an Alaska problem in the near future. She emphasized that it's an incredibly expensive mandate from EPA and only a limited amount of time to comply has been provided. With regard to the language on page 2, line 14, which says "will limit the ability of small communities to address other priorities", Mayor Marquardt opined that it will limit "most" communities. Referring to page 1, line 16, she then opined that EO 13563 isn't being followed in the case of the City of Unalaska. The aforementioned, that is "to be told by an agency in D.C. that you're not spending your money correctly in your community and you need to stop doing projects that you prefer and start doing just what they've said," is very frustrating, she related. Mayor Marquardt expressed hope that HJR 17 would be forward from the committee. 8:20:49 AM MARK LYNCH, Manager, City of Cordova, echoed the comments of Mayor Marquardt. The City of Cordova has a similar situation to that of Unalaska. Although the City of Cordova doesn't face as large a fiscal situation as the City of Unalaska, it's still a significant cost for Cordova. Mr. Lynch related that the City of Cordova's primary concern is the cost. The City of Cordova faces a cost of at least $10 million for improvements to the city's water system, such that it would comply with the LT2 regulations. Additionally, the City of Cordova, as it has been told, will face a cost of $10 million for forthcoming upgrades to secondary treatment of its wastewater. The aforementioned will cause a total impact of $20 million for a community with 700 households, and therefore residents will face an increase in water and sewer bills] in the amount of another $200-$250 per month, which is very burdensome. Another concern of the City of Cordova is the LT2 rule regarding the elimination of cryptosporidium. The City of Cordova has been testing for cryptosporidium and has performed historical research, both of which provide no evidence that the City of Cordova has or ever has had any measurable level of cryptosporidium. Therefore, he questioned spending $10 million to fix a problem that the City of Cordova doesn't have. He noted his agreement with Mayor Marquardt that this issue will be one of the biggest financial impacts on the state in the near term. 8:23:24 AM REPRESENTATIVE SADDLER recalled that at the prior hearing on this topic, there was discussion of conversations between the City of Cordova and EPA to reach a settlement. He inquired as to the status of those negotiations. MR. LYNCH answered that the City of Cordova hasn't had any direct negotiations with EPA, rather the city has only had discussions with the Department of Environmental Conservation (DEC). To date, the negotiations with [EPA] have only discussed the timeframe for compliance. With regard to the cost of these upgrades, Mr. Lynch related that the agency [EPA] acknowledged to the City of Cordova that it was aware of the cost impact [of the upgrades], but has said it's not the agency's problem. Mr. Lynch acknowledged that EPA is enforcing a regulation and isn't concerned with the cost. However, the cost is a large part of the issue for the community. 8:24:54 AM REPRESENTATIVE GARDNER asked if the EPA within its mandate has orders to consider cost or is it doing all it can do. MR. LYNCH related his understanding that the EPA to date hasn't taken cost into account. He said he was glad to see that President Obama signed EO 13563, which specifies that EPA should take into account the cost and benefit. However, he said he hasn't had any discussions with DEC or EPA since the EO was signed, and thus he didn't know whether it would impact the City of Cordova's case. MR. LABOLLE, drawing from his reading of U.S.C. 33, related his understanding that although EPA has fairly broad latitude, it specifies it has to consult with the state in almost every section that discusses policy implementation as well as enforcement. In further response to Representative Saddler, Mr. Labolle surmised that EPA has the ability, but not the mandate to consider cost unless consider one considers EO 13563. 8:27:19 AM CHRIS HLADICK, Manager, City of Unalaska, testified in support of HJR 17. He reminded the committee that the City of Unalaska is in settlement negotiations with the U.S. Department of Justice (DOJ). If the City of Unalaska has to go to secondary treatment, it will spend on the order of $52 million in 2014. He explained that breaks down to $32 million for the secondary treatment and $10 million for the new LT2 plant similar to Cordova. The City of Unalaska will also have to build new landfill cells because secondary treatment will create sludge, which will reduce the life expectancy of the landfill cells by about 20 percent. The new landfill cells cost $9.5 million. He noted that the city has had discussions with EPA regarding the cost increases of 200 percent and EPA doesn't care. 8:29:17 AM REPRESENTATIVE DICK returned to the issue of cryptosporidium, and opined that millions of dollars are being spent for something that doesn't exist. He then questioned whether a "WHEREAS" clause could be inserted to address cryptosporidium since it doesn't exist in Alaska. MR. LABOLLE pointed out that the broad brush language on page 2, line 7, would cover cryptosporidium. REPRESENTATIVE DICK opined that the existing language in the resolution seems to relate a general complaint and doesn't have the shock the situation with cryptosporidium would have. He remarked that he didn't want to delay HJR 17, but he wasn't ready to offer specific language either. CHAIR MUNOZ suggested that Representative Dick work on conceptual language to offer in the House Resources Standing Committee, of which he is a member. 8:31:09 AM REPRESENTATIVE AUSTERMAN moved to report HJR 17, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHJR 17(CRA) was reported from the House Community and Regional Affairs Standing Committee. 8:31:37 AM The committee took an at-ease from 8:31 a.m. to 8:34 a.m.