Number 460 MS. ADAIR pointed out this Division was funded primarily through the Oil and Hazardous Substance Response Fund (the 470 Fund), created by HB 470 in 1986. The 470 Fund received no monies until the Exxon Valdez oil spill, and at that time the legislature passed a nickel per barrel conservation surcharge on all Alaska North Slope crude which went directly into the 470 Fund. She explained that the statute was specific and the only time the 470 Fund could be used without specific legislative appropriation was in the event of an eminent and substantial threat to the environment from a release of oil or hazardous substance. Sometimes this would be preventative and sometimes after the fact. Part of the Underground Storage Tank Program was not eligible for funding out of the 470 Fund. MS. ADAIR stated an annual report by the DEC on the 470 Fund was due to be out soon. She explained other agencies also received monies from the 470 Fund such as the Division of Emergency Services within the Department of Military and Veterans Affairs, the Department of Fish and Game and the Department of Natural Resources. The State Emergency Response Commission (SERC) also received money out of the 470 Fund. She pointed out the SERC had its roots in federal law and even though it was established during the same time as the Exxon Valdez spill, it was created in response to the Union Carbide chemical release. MS. ADAIR pointed out in Alaska statutes, oil was sometimes defined as a hazardous substance. She felt Title 46 which directed the DEC's activities needed to be cleaned up. She offered to answer any questions regarding the 470 Fund. Number 530 MR. TREADWELL offered to brief the committee on the annual report of the 470 Fund. CHAIRMAN WILLIAMS noted for the record that Representative Hudson and Carney joined the committee at 8:40 a.m. Number 540 MR. MENGE, DIRECTOR, DIVISION OF ENVIRONMENTAL QUALITY, explained that the programs in this Division had to do with air, land, and water, including solid waste management, air quality, etc., and these programs effected everyone's lives. He said some of these programs typified the partnership with federal programs and Congress desired that local governments administer the programs to the maximum extent feasible. The concept known as "primacy" was offered by the federal government, and the state had primacy in the air arena at present. In accepting primacy, the state accepted all the federal mandates, however, it also afforded some opportunity for local control. MR. MENGE pointed out federal laws in many cases were written for other states and would not take into consideration Alaska situations. He felt his Division often acted as a go-between to moderate some of the inflexible positions the EPA might take in order to protect the Alaska environment to the maximum extent possible. He said other issues within the Division were drinking water, industrial waste water, including municipalities, and industrial discharge where the EPA issued permits and had primacy. He explained the program of domestic waste water was in the process of being privatized. A manual was being created, training through the University and certification through DEC should help complete that process, he added. Number 610 MR. MENGE said another water issue was non-point source pollution. He explained a point source as anything that came out of a pipe and anything else that dealt with water, such as rain falling on a parking lot or a stream in a backyard. Forest practices was the major area where non- point source pollution was a consideration. Storm water was also a non-point source water pollution issue. He felt after the reauthorization of the Clean Water Act and since the issues of non-point sources which included agriculture, irrigation, forestry and storm water run-off had not been addressed in the last 20 years, that federal legislation would be seen in this area in 1993. MR. MENGE said another non-point source program was the water quality standards program. The federal government, through the Clean Water Act, set up requirements for each state regarding water quality standards giving the state flexibility relating to those standards. He said this was a complicated issue and offered any information needed when the issue came before the legislature. In regard to solid and hazardous waste areas, the EPA and the DEC had formed a long-term partnership and historically, the EPA retained primacy in this area. Five years ago, at the direction of the legislature, the DEC moved forward to obtain primacy of that program. However, because of the budget restraints, more responsibility had been left with the EPA. He felt this issue would also come before the legislature during the 18th Legislative Session. MR. MENGE stated the State's Resource Conservation Recovery Act Program was designed to permit and inspect facilities to ensure their compliance with state and federal laws. He explained that at the beginning of the year, the DEC and the EPA negotiated which activities would be performed by each organization. After a spill, the DEC's Division of Spill Prevention and Response would have jurisdiction. He said solid waste management, primarily municipal solid waste, was in his Division's jurisdiction, and also included large volume waste associated with mining and oil and gas activities. Major new federal laws were being passed and the state was in the process of adopting regulations in order to retain primacy in this area. Number 675 MR. MENGE explained the EPA had offered significant incentives to allow the State to approach the resolution of problems in permafrost and remote areas that lacked transportation. He pointed out the entire law regarding solid waste was written for areas that had roads, and in Alaska, a road was not always a part of the picture. He said the organic chemical laboratory was used when a substance analysis was needed immediately, as well as certified private labs around the state. In order to certify private labs, the laboratory must be able to not only do the testing needed, but also judge the quality of the work in private labs. MR. MENGE said work was being done to form partnerships with the University system, the Department of Health and Human Services, and the Forest Service, for better utilization of the laboratory facility and equipment, which could help offset the cost of maintaining the facility. Tape 93-4, Side B Number 000 MR. MENGE said the state's coastal zone interactions came under the jurisdiction of the Division of Environmental Quality. The Division also was responsible for the quality of community agreements as referred to by Mead Treadwell. He hoped the agreements were being used as tools so communities and the DEC could work together more successfully. He said the pollution prevention aspect was being integrated into the everyday permitting process. Number 074 MS. ADAIR pointed out the DEC was very important to the economic development of the state because a permitting requirement would be needed for such businesses as seafood processors, restaurants, bars, and hotels, or industrial businesses. She assured members that the DEC was striving to process permits in a timely fashion and the conditions regarding the permit were reasonable. Lastly, she said the Division of Information and Administrative Services provided financial services, reviewed grant applications, provided public information, personnel, supply and data processing. Number 117 MS. ADAIR stated the DEC expected a variety of activities in Washington, D.C., this year that would impact the DEC. One of the most important issues might be a national seafood inspection program. She pointed out the DEC's Division of Environmental Health seafood inspection program was considered a model for the United States and had been used as the basis for past federal bills, and could be used again in 1993 as a model. Other issues that would affect Alaska were the Clean Water Act and the Resource Conservation and Recovery Act which were up for reauthorization in 1993. MS. ADAIR pointed out that both the governor's office in Washington, D.C., and a contract lobbyist working for the EPA helped keep the DEC informed on pending issues in Washington. She said the DEC staff in some cases traveled to Washington, D.C., in order to bring information about Alaska's unusual circumstances such as the lack of roads in rural Alaska. Number 160 MR. TREADWELL informed the committee that the DEC's Commissioner, John Sandor, served as one of three state trustees on the Exxon Settlement Trust Council. He said that many issues, including Kachemak Bay, were being considered by these trustees and probably would be brought before the legislature. Secondly, he said radiation threats affecting Alaska was an issue being worked on with the Department of Energy. He also felt the committee would want a briefing on a study requested by the governor on radiation threats affecting Alaskans. Thirdly, MR. TREADWELL pointed out wetlands were Alaska's most important issue under the Clean Water Act. Much of the state was wetlands and the federal government was the local zoning authority. He stated that the DEC was drafting a state wetlands control program that would enable the state to receive a statewide general permit from the Corps of Engineers for a better wetlands management scheme. The fourth issue he wanted the committee to be aware of was international issues. He said the state was affected in the Arctic by what was put into the air and water by neighbors across the sea. MR. TREADWELL added the Department of State had asked Alaska to act as an observer and a participant in meetings of the Arctic Environmental Protection Strategy. Also, the state was involved in several programs with the Northern Forum, an association of fourteen regional governments in the north, to exchange environmental and clean-up information. REPRESENTATIVE GREEN asked if a list of the funding of HB 470 would be available to the legislature. MS. ADAIR said the report by the DEC was due to the legislature on the fifteenth or twentieth day of the session, and the transmittal letter and report would be on time. Number 036 REPRESENTATIVE DAVIES asked if the Clean Air Act bill was considered a consensus bill by the DEC. MS. ADAIR replied in the affirmative. She pointed out a briefing had been held in the governor's conference room and all members of the interim committee that worked on the proposed legislation had voiced their support and intent to work to ensure passage of the Clean Air Act bill. She said certain amendments added to the bill could cause some groups to withdraw their support. Number 047 REPRESENTATIVE DAVIES asked for the approximate percentage of total support from federal dollars versus state dollars for the DEC's operation. TRACI CRAMER, BUDGET ANALYST FOR THE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, OFFICE OF MANAGEMENT AND BUDGET, was unsure of the percentage, but disclosed the general fund portion of the operating budget was $21 million. MS. ADAIR disclosed the total operating budget to be approximately $45 million. MR. TREADWELL explained that on a program by program basis the DEC received money for drinking water programs and air programs which, after the air bill, would be self liquidating, and have more federal mandates on solid hazardous waste with less funding. He indicated the DEC received federal funding in other areas as well. REPRESENTATIVE DAVIES inquired into the percentage of program budgets that would be funded under user fees and was concerned that if the user fee was too high, compliance might be a problem. Number 118 MS. ADAIR said the DEC's goal was to privatize domestic septic system approvals. For one year the DEC had been working toward this goal, she added, and explained that the DEC began septic system inspections as a favor to the lending industry. She noted this was a very time consuming program which, in other states, was a local responsibility. She said the DEC was working with Alaska Housing and hoped to charge the $250 fee only when a private engineer was not used in such inspections. Number 150 REPRESENTATIVE JEANNETTE JAMES asked whether the EPA office would be located in Anchorage or Juneau. MS. ADAIR disclosed the EPA office would be located in Anchorage, according to the Presidential directive. Number 160 REPRESENTATIVE PAT CARNEY asked why the DEC was spending state money for domestic septic system inspections without legislative regulations requiring the DEC to perform that function. MS. ADAIR said historically the DEC had performed domestic septic system inspections. She noted lending institutions wanted insurance by the health authority that the septic system was in working order and in compliance with local regulations. Because the Constitution said the legislature should provide for the public health, the DEC had been made the health authority for the state, and unless a local government passed an ordinance to take that responsibility upon themselves, the DEC held responsibility for this inspection. When the DEC stopped doing these inspections in years past, banks stopped making loans and the DEC was forced to begin the process again, she advised. Number 204 MR. TREADWELL pointed out although the DEC felt inspections were needed for septic tanks, it was not mandated under the DEC's regulations and, therefore, could be privatized. CHAIRMAN WILLIAMS asked how the DEC would like to handle questions from the legislature. MS. ADAIR preferred questions come to her office from the legislature, which she could then direct to the appropriate Division. Number 244 REPRESENTATIVE HUDSON asked the Committee to filter questions through the House Resources Committee staff so all members receive the information. ANNOUNCEMENTS CHAIRMAN WILLIAMS announced that at 8:00 a.m. on Friday, January 22, 1993, there would be an overview hearing by the Department of Fish and Game. He announced further that the House Special Committee on Fisheries had been invited to that meeting. ADJOURNMENT There being no further business to come before the committee, Chairman Williams adjourned the meeting at 9:50 a.m.