HB 149-POLLUTANT DISCHARGE PERMITS  CHAIR FRENCH announced the consideration of HB 149. Before the committee was CSHB 149(RES). The bill was heard previously. 1:41:05 PM RON WOLFE, Natural Resource Manager for Sealaska Corporation, said that Sealaska has significant interest in 22 log transfer facilities (LTF) in Southeast Alaska, all of which are covered by a general National Pollutant Discharge Elimination System (NPDES) permit. For years Sealaska has supported state assumption of the NPDES program just as 45 other states have done. The three issues regarding NPDES primacy are whether the Alaska Department of Environmental Conservation (DEC) may be a less trustworthy steward of Alaska's waters than the Environmental Protection Agency (EPA); whether DEC personnel have the qualifications to administer the program; and Sealaska's comfort level as a federally-recognized Indian tribe regarding the degree of consultation it will receive if DEC assumes primary for the NPDES program. To illustrate the DEC commitment to protecting water quality he compared provisions of the LTF permits that were inserted by EPA and those that were imposed by DEC. The permits are intended to limit bark on the ocean floor as logs are transferred for shipment by sea. EPA permit conditions are the typical operational restrictions found in any NPDES permit, while DEC created a plan process that forces operators to begin remediation of bark accumulation at very low thresholds. 1:43:52 PM MR. WOLFE said DEC personnel are qualified to regulate LTF operations because of their on-the-ground knowledge. DEC regulators have made a great effort to visit the LTFs, examine the operations, and carefully review water quality around the facilities. In contrast, gaining field experience with Alaska LTFs has never been an EPA priority. That's understandable given the significant water quality issues in this region. When Sealaska's LTF permits were renewed, EPA contracted with DEC to draft the permits. 1:45:38 PM Finally, although Sealaska has always had the opportunity to comment on EPA proposals, that federal agency has never sought tribal consultation. In contrast, DEC has always sought Sealaska views on policy initiatives affecting Southeast Alaska at the earliest stages of those proposals. Oftentimes Sealaska's views have not prevailed, but it has always felt that DEC was very mindful of the need to bring affected tribes into the policy development process. DEC has not relegated Sealaska to the role of reacting to policy decisions through general public comments. 1:46:31 PM KATHIE WASSERMAN, Executive Director, Alaska Municipal League (AML), said the AML has submitted written testimony supporting HB 149. She explained that when she became the mayor of Pelican she learned that their NPDES permit had expired six years ago, but the EPA had never contacted the city. When she contacted EPA it became clear that they knew nothing about small remote Alaska communities. DEC helped Pelican get the permit back on track. As she said in her letter, there are some concerns with DEC, but at least it has a process and everyone knows who to call and talk to. AML is in favor of primacy going to the State of Alaska, she said. 1:49:02 PM VANESSA SALINAS, Campaign Director, Alaskans for Responsible Mining, said giving the state primacy sounds like a good idea because permitting responsibilities should be close to the projects, but she questions the feasibility of such a move when DEC is so woefully under staffed. The fiscal note attached to SB 110 that mandated this move back in 2005 required more than $1.5 million in general funds revenue each year. Industry fees are capped at 16 percent and she wonders where the funds will come from to fund this initiative. According to a program coordinator with DEC, just 7 of the 17 environmental health officers that have been hired in the last seven years are still employed and five have been with the agency for six months or less. The additional long-term employees may retire in the next 5 years. Clearly, DEC is experiencing a staffing shortage and there is no solution in sight. State salaries are down and the benefit package for new hires has been severely cut. Until new hires can be offered a competitive employment package, qualified candidates won't be knocking at agency doors. The division of geological and geophysical survey director has stated that the increased mineral activity this year will test that section. According to a DNR career development coordinator, state government is looking at a 45 percent retirement rate through 2011. Another area of concern is tribal sovereignty. EPA has the legal obligation to formally consult with Alaska Native tribes on a government-to-government basis on all permits. Under the proposed Alaska program, tribes will lose sovereign authority because the state doesn't formally recognize tribes. 1:51:46 PM MS. SALINAS said that DEC is only committed to making reasonable efforts to inform and seek participation of local and federally recognized tribes. She urged the committee to halt the transfer of the NPDES permit authority until funds are allocated for adequate departmental staffing, and tribal trust obligations of government-to-government relations are addressed in a manner that is acceptable to tribes. 1:52:24 PM JASON BRUNE, Executive Director, Resource Development Council (RDC), said RDC's diverse membership of includes: oil and gas, tourism, fisheries, mining, timber, construction, labor organizations, all of the regional Native corporations, local communities, and a variety of industry support firms. He characterized HB 149 as a cleanup bill that relates to what the legislature charged DEC to do in 2005 under SB 110; these provisions are required by EPA for Alaska to assume primacy over NPDES. Currently only five states do not have primacy. For a state to obtain primacy its requirements must be at least as strong as the EPA requirements, and HB 149 makes the changes to ensure that Alaska statutes achieve this. It goes without saying that Alaskans have a strong interest in ensuring that things are done right in their state so NPDES primacy for Alaska is a no- brainer. He urged the committee to move HB 149 so that the final steps toward assuming this program can be completed. 1:54:52 PM BOB SHAVELSON, Executive Director, Cook Inlet Keeper, said the organization has worked on water quality and fish habitat protection for about 13 years. There are a lot of good arguments for getting primacy, but the bill that passed under the Murkowski Administration has a number of flaws, principally the workgroup that set up the process was dominated by industry dischargers. There was a municipal seat for wastewater dischargers, but the public was not part of the process, so it was a lopsided prospect. The notion of states rights arises because that workgroup recommended not allowing the state to have more strict laws than the federal government. That denies the fact that Alaska has the best fish management program in the country and it ties Alaska's hands. "If we're concerned about states rights we should recognize that there's a provision in there that undermines those rights," he said. MR. SHAVELSON pointed out that the bill caps fees for industry so the general fund and the public will pick up any cost overruns from the very low $1.5 million fiscal note attached to SB 110. By comparison industry pays 57 percent of the fees in Oregon, 75 percent in Washington, and 100 percent in Montana. Alaska will be providing a public subsidy. Looking at streamlining is good, but when it goes too far, permit quality is diminished. As currently proposed the permitting staff is reduced by 28 percent, and the compliance and enforcement staff is reduced by 16 percent, so DEC would be trying to do the same amount of work that EPA has done with less staff. RDC fears that will result in rollbacks to protection of fish and water quality. Referring to comments Mr. Wolfe made about tribal sovereignty, he said that RDC understands that the executive order was meant to cover federally recognized sovereign tribes, not corporations. In working with tribes in Cook Inlet he found that EPA has been very good in the government-to-government consultation required by that executive order. DEC has made a good effort, but there is no legal recognition of tribes at the state level. That is reflected in this final plan and there is considerable loss of tribal sovereignty. He suggested that there is a need for a third-party review to understand the fiscal and substantive impacts. The system in place works and it would be a good idea to look carefully and get an objective opinion on what this change will mean. 1:58:28 PM CHAIR FRENCH asked who would conduct the third-party review. MR. SHAVELSON suggested a broad-based commission that includes: industry, tribes, fishing, conservation, and the public. EARL HUBBARD, Vice President of Regulatory Affairs, Trident Seafoods, said the more Trident tunes in to the advantages of primacy, the more it looks at it as a problem solver. He explained that to process seafood in Alaska a company needs a general or individual federal NPDES discharge permit. A problem with EPA is that resources to reissue or write new permits are severely limited. In fact, every single general permit that EPA has issued has expired. A new discharger wishing to get into the fish processing business could not do so legally because EPA does not have the resources to write a new permit. That is a difficulty when you look at the considerable contribution that seafood processing makes to the economy of Alaska, he said. It most definitely is not possible to have allowed every NPDES discharge permit in the state to expire and at the same time to argue that EPA has adequate resources to cover its responsibilities. 2:03:05 PM MR. HUBBARD said that the alternative to a general permit is an individual permit and for those there's a 3-5 year waiting list. Consider, he said, that every general permit has expired and there is no opportunity to discharge legally for 3-5 years for any newcomer to the industry. The impact to coastal and rural communities in Alaska is stunning. EPA does offer enforcement discretion in the absence of an authority, but enforcement discretion isn't needed unless you're breaking the law. In these litigious times nobody wants to rely on that. These are good people, but there aren't enough of them. MR. HUBBARD acknowledged that there have been issues with DEC, but that agency does respond and listen to find ways that are legal and appropriate. Primacy is an opportunity with good timing because the components are in place, he said. You have DEC professionalism, the tools, and an application that's ready to go. EPA is probably thankful that Alaska can do this so it can focus on the three other Region 10 states. 2:07:04 PM NIKOS PASTOS, Environmental Coordinator, Alaska Inter-Tribal Council, said he's also treasurer of a non-profit called The Center for Water Advocacy. He read a resolution opposing NPDES primacy until the State of Alaska demonstrates tribal consultation. It resolves that transferring NPDES primacy to the state is an act of cultural destruction in violation of federal statutory and trust obligation. Until the state has demonstrated a record of government-to-government consultation with tribal governments. All the tribes that have been consulted are opposed to the state taking primacy. It would be a mistake to say that the state would manage discharge permits as well as EPA. The federal government is obligated to include tribes and the state hasn't even recognized the legitimacy of long-standing tribal governments that existed before the United States became a country. 2:11:13 PM MR. PASTOS said there is a consensus among tribes that water is sacred; it's vital to the well being of the people and their traditional food. He doesn't understand why foreign corporations have more priority than people who have lived in Alaska since time immemorial. There are flaws in the way the permitting process would be streamlined for large mining industry, foreign fishing fleets, and outside timber interests. The Alaska Inter- Tribal Council is opposed to HB 149 and to the state taking primacy. 2:12:43 PM CHAIR FRENCH asked for a copy of the resolution to make it part of the record. CARL WASSILIE, Yupik Alaskan and member of Resisting Environmental Destruction on Indigenous Lands (REDOIL), said he is speaking on behalf of Alaska Action Center (AAC). AAC supports communities that are impacted by outside interests that threaten the well-being and health of future generations. REDOIL is a group of Alaska Natives that addresses human and environmental impacts of the fossil fuel industry in Alaska, and supports sustainable development on indigenous lands. He supports tribal self-determination and the recognition that the state has failed to recognize the tribes of Alaska. That needs to be addressed before the issues about the permitting system , he said. The relationship between the state and the tribes and the communities in Alaska need to be well defined and established. MR. WASSILIE said he and REDOIL are opposed to HB 149. It' important to know the history of the Clean Water Act to understand its relation with human health impacts. The fact that that has been forgotten can be seen in Cook Inlet in the streamlined process of waiving permits for more pollution. These issues need to be addressed before permitting is turned over to the state, he said. At this time the state doesn't have the personnel capacity or the relationship with communities to recognize tribes even though most industry is operating in or around tribal waters. 2:17:00 PM SENATOR WIELECHOWSKI asked DEC to respond to the testimony on the loss of tribal sovereignty, government-to-government interaction, and whether DEC has a plan to consult sovereign tribes as EPA does now. 2:18:31 PM LARRY HARTIG, Commissioner, Alaska Department of Environmental Conservation, explained that tribal consultation does not go away with state primacy. EPA still has its government-to- government obligations to the tribe and its oversight of all permits that DEC would issue. Tribes would not have direct consultation with DEC, but they could consult with EPA and have all the rights they have now. If EPA thought that DEC wasn't listening to the tribe it would say so. The other point is that DEC is making a concerted effort to have in place an equivalent government-to-government consultation for the APDES program. DEC developed a guidance document to get tribes interested and is sending copies to tribes that have expressed a concern. The document is still in draft form and comments are being accepting. That will be part of the application package to EPA, which is scheduled to be presented on May 1. As part of the application package, it will become part of the program. However, if better ways of doing the consultation are found that could be modified. DEC is attuned to the issue and ready to provide the functional equivalent of what tribes have now with the federal government. Because the State of Alaska is not a nation there can only be a state-to-tribe relationship, which by its very nature will be different than the government-to-tribe relationship. It will have to be different, but it doesn't mean the DEC won't listen to their concerns. 2:21:21 PM SENATOR WIELECHOWSKI asked about DEC recruitment and retention and the statement that it may not be able handle the increased workload associated with primacy. COMMISSIONER HARTIG said that Mr. Shavelson brought up good points, but they also apply to federal and state agencies and private industry. Everyone is faced with those demographics. It comes down to whether the state will be a competitive employer. He is a member of the Governor's task force on recruitment and retention and she is acting on recommendations that have been made, he said. DEC has an internal advisory group, and it has also contracted for a private survey to improve recruitment and retention. DEC probably compares with EPA or any other agency on this issue, he said. 2:23:53 PM COMMISSIONER HARTIG said the other point that Mr. Shavelson raised about DEC having fewer people to work on primacy than EPA doesn't take into account the current DEC permitting staff. His recollection is that the combination of the current permitting staff and the NPDES staff will be larger than the current EPA permitting staff. LYNN TOMICH KENT, Director, Division of Water, Department of Environmental Conservation, explained that to implement NPDES primacy DEC will have 43 positions dedicated to the program. That includes compliance, permitting, record keeping, and data management. SENATOR WIELECHOWSKI asked if 43 new positions will be created. MS. KENT replied that includes existing staff and the 13 additional positions that were allotted under SB 110; 12 of those positions have been filled. 2:25:35 PM SENATOR WIELECHOWSKI asked what percentage of the fees will be paid by industry. COMMISSIONER HARTIG explained that it varies among states, but there is a misassumption here that only industry gets NPDES permits. Everybody that has a discharge of pollutants to waters of the United States needs a permit so , municipalities and small villages would carry the ball too. Few states cover 100 percent of the program. In the last year or so the General Accounting Office (GAO) tried to get EPA to require states to fully fund NPDES programs by providing a disincentive for federal grant dollars. There was pushback from the states and GAO backed off. The states said they shouldn't be told how to spend their general fund dollars. He believes Alaska's percentage is about the same as other states, and the oil and gas industry already supports a large portion of the program through general fund contributions. He added that the fee structure is up to the legislature and not DEC. 2:27:48 PM CHAIR FRENCH clarified that he is commenting tangentially on Mr. Shavelson's point that some states get from 57-100 percent of their fees paid by industry, and he is saying that is something the legislature has the authority to institute. COMMISSIONER HARTIG replied that is up to the state. Currently Alaska permittees pay 16 percent of the program fees and more municipalities than industry folks have permits. SENATOR WIELECHOWSKI recalled that there was a question about DEC writing letters to EPA on behalf of industry dischargers, and asked if DEC would continue that practice if the state assumes primacy. COMMISSIONER HARTIG replied it's not a policy. SENATOR WIELECHOWSKI asked if DEC would do that anymore if this bill is enacted. COMMISSIONER HARTIG said no. 2:29:09 PM SENATOR THERRIAULT asked if the dynamic before was that DEC was encouraging the EPA to issue a permit. If the state assumes primacy it would be the issuing entity so it wouldn't write a letter to itself. COMMISSIONER HARTIG explained that DEC will regulate by following the law, the science, the facts, and good public policy. CHAIR FRENCH asked if DEC has contacted the Inter Tribal Council to discuss sovereign-to-sovereign relations. COMMISSIONER HARTIG said he welcomes that conversation; he has an open door. "We're serious about wanting to have a good relationship with the tribes." Good input is part of that and he looks forward to any comments or discussion on the draft guidance. 2:31:07 PM SENATOR MCGUIRE motioned to report CSHB 149 from committee with individual recommendations and attached fiscal note(s). CHAIR FRENCH announced that without objection, CSHB 149(RES) is moved from the Senate Judiciary Committee.