SB 50 PUBLIC WATER SUPPLY VIOL: ADMIN PENALTIES  CHAIRMAN MACKIE brought SB 50 before the committee as the next order of business. TAPE 97-5, SIDE B Number 001 JANICE ADAIR , Director, Division of Environmental Health, Department of Environmental Conservation, explained Congress reauthorized the Safe Drinking Water Act (SDWA) in 1996 and added a new requirement for primacy of the drinking water program. Another change was requiring primacy for continued access to federal construction funds for drinking water systems. Ms. Adair pointed out that the state of Alaska has primacy for the drinking water program at this time as does all other states except for Wyoming. Primacy means that the state manages and enforces the terms of the SDWA in lieu of the federal government. It affords the state several benefits, including the ability to waive certain monitoring requirements for specific water systems. She related these waivers have saved almost $1.5 million in laboratory costs for systems that are located in the districts of committee members. Primacy also allows the department to work one-on-one with systems on solving their problems, and that helps ensure the delivery of safe water to the communities served. SB 50 will provide DEC the authority to establish a program for administrative penalties. It sets an amount of $1,000 per day per violation for systems that serve more than 10,000 people, and for all other systems, the penalty may not exceed $750 per day. On page 2, beginning with line 10 and ending on page 3, line 4, it outlines the factors the department thought were important to be considered when establishing an amount of a penalty. Ms. Adair pointed out that Section 7 of the bill delays the actual effective date of the penalty authority until the EPA tells the state it must have administrative penalty authority to retain primacy for the drinking water program. Number 035 CHAIRMAN MACKIE referred to the title of the bill and asked for an explanation of change to the Alaska Rules of Civil Procedure. MS. ADAIR explained that the administrative penalty for a violation is a federal mandate. The Civil Procedure Rule change is not a requirement of federal law, but where there is a water system that refuses to pay a penalty and it necessitates taking them to court in order to get them to do what needs to be done and to pay the penalty, then that change would allow the state to recover those attorney fees. Number 050 SENATOR HOFFMAN referred to subsection (d) on page 3, line 8, which provides a 30-day period in which a person can file an appeal after receiving an assessment notice on a penalty, and suggested it was too short a tim period and that it should be changed to 45 days. MS. ADAIR stated the department would not have a problem with his suggested change. SENATOR HOFFMAN then referred to page 3, line 19, which provides that the person who receives an administrative penalty can file a notice of appeal in the superior court. He pointed out that people in the smaller communities would have to fly in to file an appeal, and he questioned why that couldn't be done in a district court because there aren't that many superior courts in the state. BRECK TOSTEVIN , Assistant Attorney General, Department of Law, responded that traditionally administrative appeals from an agency action go to superior court and a superior court acts as an appellate court and reviews the agency action as opposed to the district court, so that's why those provisions were drafted that way. SENATOR HOFFMAN referred back to subsection (d) and said it provides that the department may extend the time periods in the subsection for good cause. He then asked if there was a definition of "good cause." MS. ADAIR answered that she did not know, but it would be something that the department would want to address the regulatory development process as they put the program together. Number 105 SENATOR WILKEN referred to the sectional analysis and asked if this issue only deals with Anchorage, Juneau, Fairbanks, one air force base and two army bases. MS. ADAIR said those six systems are the ones that serve more than 10,000 people so those would be the systems that would be subject to the $1,000 per day per violation penalty. For all other systems in the state with less 10,000 people are subject to a $750 per day per violation penalty. SENATOR WILKEN inquired when the last time there was an issue that required the filing of a lawsuit in a matter such as drinking water. MS. ADAIR thought it was in the very early 1990's, it was a system in Southeast Alaska, and it was a criminal issue. SENATOR WILKEN voiced his concern that as a society we need to talk about administrative penalties and, particularly, allowing DEC to impose them unilaterally. He said this is probably an excellent example of the heavy handed way that government controls what we do, both state and federal. He suggested there needs to be a better way to do this and not to just give carte blanche approval to DEC to sanction something as simple as providing good drinking water. CHAIRMAN MACKIE asked Ms. Adair what would happen if this legislation did not pass. MS. ADAIR replied that at some point in time, the EPA would begin the process to withdraw primacy for a drinking water program, and if primacy was withdrawn, the program would become an enforcement only program. She related that 85 percent of the state's drinking water program is funded by EPA, which amounts to approximately $1 million. The 1996 amendments to SDWA added construction funds for drinking water systems, and in FY 98 that is expected to be about $28 million to the state. Number 180 In a brief discussion on why the appeals have to go a superior court instead of a district court, it was concluded that it is a standard that is set out in the Administrative Procedures Act. SENATOR DONLEY suggested that could be amended if Senator Hoffman thought his constituents would be better served by access to district court. Number 215 SENATOR HOFFMAN stated he agrees with Senator Wilken's statement about the heavy hammer that this legislation is giving DEC, but because it is required in order for the state to comply with the changes in SDWA and to continue to receive funds, he suggested working on it to make sure that the department does not have so much discretion on the use of that heavy hammer. KEITH KELTON , Director, Division of Facility Construction & Operation, Department of Environmental Conservation, said what Congress is attempting to do with the changes in SDWA is respond to an unfunded mandate complaint. They are putting a carrot in this Safe Drinking Water Act reauthorization that says they will fund a low interest loan program with state participation. The initial funding, starting in FY 96, was $27 million and the state has to put in a match of $5 million, so the there will be a total of $32 million for low interest loans for solving community infrastructure problems. The stick they are throwing in is the administrative penalty, and if the state doesn't do the administrative penalty, it loses primacy and the funding that goes with it, he said. Number 365 SENATOR WILKEN commented that on the campaign trail he heard a lot of good things about what the Legislature had been doing in the rural areas in regard to sewer and water, and his comments, by no means, should be taken that he doesn't support that. He just wants to make sure that the process isn't slowed down by having someone or some group get out of control and forget where the power really lies, and that's why he speaks against the ability to just simply write an order that stops the process. MR. KELTON related that probably the primary recipients of these loan funds are the larger urban communities, but any municipal government can apply. For instance, Anchorage has received well over $30 million in the waste water program. The smaller communities normally rely on a grants program rather than the loan program. CHAIRMAN MACKIE requested that Senator Hoffman and Senator Wilken take a further look at this issue, both from an urban and rural perspective, and work with the people at DEC to see if some of these problems can be worked out before another hearing is scheduled on the legislation.