SENATE BILL NO. 271 "An Act authorizing the commissioner of transportation and public facilities to participate in certain federal highway programs and relating to that authorization; relating to powers of the attorney general to waive immunity from suit in federal court related to those programs; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. JOHN MACKINNON, Deputy Commissioner of Highways & Public Facilities, Department of Transportation and Public Facilities explained that a National Environmental Policy Act (NEPA) delegation six-year pilot program was included in the federal highway Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), when it was reauthorized by Congress in the summer of 2005. He read a segment of a handout titled "NEPA Delegation Pilot Fact Sheet" [copy on file] as follows. SAFETEA-LU includes a NEPA delegation pilot program for five states - Alaska, California, Oklahoma, Ohio, and Texas. Under the program, the five states are eligible to apply for delegation of the Secretary of Transportation's (Secretary) NEPA responsibilities for one or more highway projects within the state. The state may also apply for delegation of some or all of the Secretary's review and consultation responsibilities under other Federal environmental laws. The scope of delegation will be determined through application to the Secretary and execution of a Memorandum of Understanding (MOU). Time Frame: · Duration of the pilot program is six years from enactment of SAFETEA-LU. Unless extended by statute, the pilot terminates on August 10, 2011. · The Secretary is required to promulgate regulations to establish delegation application requirements. Rulemaking is required to be complete within 270 days of the Act. Rulemaking is behind schedule. · The State may not submit its application until * Rulemaking is complete and * The State must advertise the application and solicit public comment. · After its application is accepted, the State and Secretary will enter into an MOU. Once the MOU is executed, delegation may proceed. Mr. MacKinnon pointed out that this program would transfer "the decision making process on what level of environmental documentation is required out of the hands of the federal Highway Administration and puts in the hands of the State Department of Transportation". The State would have "more control of the process and the rate at which these environmental reviews proceed". This program would not reduce environmental protections or environmental reviews, as the State must continue to follow federal Environmental Protection Act guidelines. The benefit would be that the State could control "the pace at which" the process proceeds. Mr. MacKinnon qualified that the program would be limited to highway projects administered by the Federal Highway Administration (FHWA). Furthermore, the program would be limited "to environmental decision making" and would exclude engineering issues. Airport aviation projects and other federal projects occurring in the State would be unaffected. Senator Bunde ascertained therefore that, even though the State might have more control, it could strengthen but not reduce restrictions, as it must "abide by federal standards". Mr. MacKinnon affirmed that the State would be required to abide by federal regulations and could not establish its own environmental policy. Senator Bunde questioned, therefore, the benefit the program would provide to the State. To that point, were the State to participate in this program and a lawsuit regarding its actions presented "as there often is", the State would be required to defend its action. Mr. MacKinnon affirmed. Senator Bunde suggested therefore that the fiscal notes accompanying the bill must "be adjusted" to address that issue. In conclusion, he asked what "advantages" the State's participation in this program would provide, since the State would be required to follow the same rules. Co-Chair Green understood one benefit to be that the State would be "in more of a position" to improve project timeframes rather than being dependent on federal decision timeframes. Mr. MacKinnon affirmed. The State has no control over the timing of the federal decision making process. "It would not be unusual for work to sit on a desk for a significant period of time." "There is a greater chance" that documents "sitting on one of our desks" could be processed faster. Mr. MacKinnon mentioned that the bill would also pertain to "the level of documentation required. The majority of the environmental documentation" consists of "categorical exclusions" (Cat-Ex's), which are the simplest form of documentation. The NEPA process is required for projects such as road repavings or the construction of an overpass. Under this program, the State would assume responsibility for Cat-Ex documentation. When the federal government is involved, "they make the decision on what level of documentation is required". At times, the federal government required projects that had historically been subject to Cat-Ex documentation to be subject to an environmental assessment or the more extensive environmental impact statement. Were the State to assume "the NEPA delegation, those decisions would be made at the State level and not at the federal level". Mr. MacKinnon affirmed that with the assumption of this responsibility, the State would be required to defend its decisions in Court. Language that "waived the State's immunity from suit in federal court" is specified in Section 1 page 1 lines 9 and 10 of the bill. Since "NEPA is procedural law", a basis for a Court case "would be that the Department for one reason or another did not follow the correct procedure." The Court's decision could require the Department to go back and redo something, "following the procedure correctly". Historically in such FHWA cases, the judgments as well as the defense costs have been small. Nevertheless, some of the federal cases have been lengthy and expensive. Mr. MacKinnon stated that, were the State to assume the responsibilities of the program, the expectation would be that the cost of defending such a case would be considered "an eligible" individual project cost, rather than a general fund expense. 9:43:25 AM Senator Bunde voiced concern as to whether what the State would "be gaining is worth the price." Co-Chair Wilken deemed "this is just a little tiny piece" of the answer to peoples' question as to "why government grows". Referring to the Analysis section of the Department of Transportation and Public Facilities fiscal note #1, he voiced disbelief that the work required by the State for assuming the responsibilities of this program "would require 160 hours a week". This would be something he would be unable to explain to constituents. Were this program enacted, he predicted that in five years, "we're going to sit here and just think the world's coming to an end because this program's going to go away". Continuing, he asked whether the State would be able to conduct the program using $647,000 in Capital Improvement Project (CIP) receipts and only hire two people. 9:44:54 AM Mr. MacKinnon responded that the Department based its staffing determinations on the number of people currently administering the federal program and on the Department's own internal review of the program. "It's not a simple thing to assume." Co-Chair Wilken announced that the question needed to be asked even though the response provided no relief. Senator Bunde understood therefore that the project would require four or five new positions. Senator Stedman, observing that the expenses associated with the project and the new staffing positions would be approximately $650,000 per year, remarked that "we're certainly not paying these people by the road mile built," as the State has historically conducted a tremendous amount of planning, but has built few new roads. He voiced concern regarding the sovereignty of the State as well as the hiring of people "without any parameters on production". He was disinterested in compiling office hours without accompanying road construction. Therefore, even though "the intent is good", he was hesitant to expand planning activities. The cost of planning per road mile built "is alarming". Mr. MacKinnon advised that the goal of the Department was not to assume NEPA responsibilities "and proceed at the same pace. The status quo isn't good enough for us." The Department, like the Legislature and the public, is also frustrated with the time that is required to develop a project. NEPA is one of the factors affecting the time it takes to develop a project. The money the Department has spent on developing certain Environmental Impact Studies (EIS) or Environmental Impact Assessments (EIA) would "astound" the Committee. In addition to the time spent on developing a project, $8,000,000 to $15,000,000 is typically spent on developing a major project's EIS. One factor that increases the amount of time and money spent on an EIS is the amount of time spent "dealing with the various resource agencies when they say we need this information, we need that information, and we need this information in order to do a complete environmental assessment". The State is not currently in a position to say, "we don't think you need that information. The information that's there on this particular issue is adequate, it's more than adequate". Currently "the federal government makes those decisions because they have the NEPA assumption". Mr. MacKinnon stressed that the State is willing to assume the risk of making those decisions. "We're a lot less adverse to risk than the federal government is in these issues. The likelihood of a serious mistake in carrying out one of these documents because you didn't gather sufficient information is, the judge would say, well you need to go back and count the caribou there one more time. We're willing to take that risk … The benefits far outweigh the potential costs in that." 9:49:35 AM Senator Dyson asked what would be included in the Contractual Services $154,700 expense depicted on the Department of Transportation and Public Facilities fiscal note #1. Mr. MacKinnon understood the expense would provide for a NEPA "expert" attorney in the Department of Law. A Reimbursable Services Agreement (RSA) between the Department of Transportation and Public Facilities and the Department of Law would address that expense. Senator Dyson concluded therefore that adding this position to the Department of Law would be preferred to contracting out for that service. Mr. MacKinnon affirmed. He noted that a legal sufficiency review must be conducted on each NEPA document before it is finalized. Senator Dyson asked whether this would be a new position in the Department of Law or whether the Department of Transportation and Public Facilities would be contracting for an existing employee's services. Mr. MacKinnon responded that while there is a person in the Department of Law who is "very well versed in NEPA", that person oversees a number of attorneys. The person being referenced in the fiscal note would be required to have "a fairly specific education and orientation towards NEPA". Senator Stedman requested that the issue of cost of planning per road mile built be set aside; else wise, upon review, the costs "would be alarming". Continuing, he was curious of the reason that Alaska was one of a select group of states chosen for this pilot program; specifically whether Alaska was chosen because it "has a harder time than other states in getting its projects through the NEPA process. Co-Chair Green remarked that Alaska Congressman Don Young included the State in this project. She attested to the time and effort that the State conducts in regards to the NEPA process. 9:52:13 AM Co-Chair Green stated that, in her opinion, the majority of the "projects that are very important to us are very small potatoes in Washington DC as far as their importance on the NEPA interest level", particularly in comparison to larger projects being conducted in other states. Mr. MacKinnon characterized Co-Chair Green's comments as "accurate". He noted that half of the other four states designated for this program "have ranking members" on the federal Transportation Committee. They want their states to be included in the five and a half year pilot program. This is an opportunity that the Department would not want "to lose". Senator Stedman asked the Department to provide the Legislature a report comparing the program expenditures to the road miles constructed at the conclusion of the pilot program, were it enacted. Mr. MacKinnon trusted that the Department would be able to provide "a metric that will hopefully show an improvement over the status quo". Senator Bunde shared that he had "serious reservations" about what Co-Chair Wilken coined as "growing government: four more fulltime State employees and the risk of lawsuits." The net gain is questionable. He would vote no on the bill. Co-Chair Wilken moved to report the bill from Committee with individual recommendations and accompanying fiscal notes. Senator Bunde objected. Senator Stedman preferred the bill to be held in Committee for further consideration. Co-Chair Wilken moved and asked unanimous consent to withdraw the motion. Without objection, the motion to report the bill from Committee was WITHDRAWN. Co-Chair Green ordered the bill HELD in Committee. 9:55:28 AM