SRES - 3/22/95 HB 128 WASTE DISPOSAL PERMIT EXEMPTION  JACK PHELPS, staff to Representative Williams, prime sponsor of HB 128, gave the following testimony. HB 128 was introduced as a result of a recommendation from the Alaska Minerals Commission. Recently the Department of Environmental Conservation (DEC) began a general permitting process for incidental discharges associated with mineral drilling and well drilling. For years, those discharges were treated as minimal and inconsequential under AS 46.03.100. That statute is extremely broad and states any discharge to any waters, surface or land, to the state, requires a permit. The mineral and well drilling industries feel the process presents unnecessary compliance problems. HB 128 exempts the industry from the permit process if the operation does not produce a point source discharge into a surface water of the state and is incidental to the general industry activity. The first two sections of the bill deal with the transference of current dual jurisdiction, eliminates DEC oversight, and places oversight authority with the Alaska Oil and Gas Conservation Commission (AOGCC). Representative Williams worked with DEC on Section 3 to satisfy DEC's concerns regarding specificity. The Department of Fish and Game (DF&G) was concerned about affects on habitat therefore direct surface water discharges were excluded from the exemption. He noted the Alaska Oil and Gas Association (AOGA) has suggested an amendment to Section 3, to page 2, line 27 and page 3, line 16. SENATOR LEMAN announced there is a proposed amendment from DEC as well, and that he planned to take testimony and hold action on the amendments until Monday. MR. PHELPS explained the DEC amendment rearranges Section 3, but does not appear to make any changes. SENATOR TAYLOR asked about the word "annular." MR. PHELPS replied it refers to the space between the casings in an oil well. Number 120 SENATOR LEMAN noted some of the mud produced from drilling is radioactive. He asked if that material is included under hazardous wastes (EPA 40 C.F.R., Part 261) or if it could be reinjected into the annular space. MR. PHELPS could not specifically answer, but stated that is the precise reason for the transfer of authority to AOGCC since they are familiar with those activities and are able to make those determinations. SENATOR LEMAN commented he was referring to the natural material that is produced. DAVE JOHNSTON, Chairman of the AOGCC, testified in support of HB 128, especially in regard to the transfer provision. The AOGCC believes HB 128 will improve oversight by consolidating authority for annular disposals and streamline permitting requirements. Currently two agencies have oversight authority, the AOGCC and the DEC. THE AOGCC has the expertise to evaluate proper casing, proper submitting programs, proper injecting procedures, etc. This is an outgrowth of the Underground Injection Control Program (UIC) implemented by the AOGCC since 1986, and mandated by the federal Safe Drinking Water Act. The annular disposal program is very similar. The transfer of this authority was recommended by the Interstate Oil and Gas Compact Commission when they conducted a peer review of Alaska's exploration and production waste management program. Number 177 Regarding Senator Leman's question about radioactive materials, MR. JOHNSTON replied naturally occurring radioactive material (NORM) is a class 2 fluid, and is injected under a UIC program. The EPA has reviewed UIC procedures for disposal of class 2 fluids. Number 222 CHRIS PHILLIPS, Operations Engineering Manager for BP Exploration in Alaska, testified as a representative of AOGA. AOGA supports the intent of Sections 1 and 2 of HB 128, transferring oversight authority to AOGCC as the transfer of jurisdiction will promote regulatory efficiency. Regarding the exemptions contained in Section 3, subsection (f)(1)(B), he suggested the following clarifying amendment. Delete: (f) Except as to discharges arising out of exploration and development drilling for oil and gas resources, Add to page 3, line 16: "otherwise required" after the word "permit." He explained the first amendment would remove any danger that the language could be construed as creating a new permitting requirement; the second amendment would prevent expansion of the scope of permitting requirements. Number 274 SENATOR TAYLOR questioned the need for the legislation at this time if it merely preserves the status quo in statute. MR. PHELPS responded that last spring and summer the DEC began a public comment period on a new general permit, as the result of a concern raised by a member of the general public. That process raised a great deal of reaction among industry members because they saw no reason to create a new permitting process for activities that had gone on for years without causing any problems. HB 128 restores the status quo. Number 300 SENATOR FRANK asked if the public member's concern was aimed at challenging DEC for not enforcing the law. MR. PHELPS answered affirmatively, and clarified that the current statute is so broad that any discharge without a permit under AS 46.03.100 could probably be considered a violation. Section 3 places in statute, provisions that were assumed to have been there. SENATOR TAYLOR felt it is ludicrous that so much time has to be wasted to pass a bill that has been unnecessary for the past 20 years. He expressed concern about DEC's budget. Number 320 NEIL MACKINNON, representing the Alaska Minerals Commission (AMC), stated HB 128 is one of the top recommendations of the AMC. He stated when he attempted to begin drilling on his property at Jualin, he was notified that he needed a drilling permit. In researching AS 31.05.030, he found any discharge into the air, land or water of the state, other than domestic wastewater, must be permitted. He noted that could be interpreted to mean businesses discharging wastewater into municipal treatment plants would require permits. After contacting DEC, he was told DEC received a complaint from a member of the public about Echo Bay's drilling operations, which prompted the enforcement of the statute. MR. MACKINNON felt the situation raises a serious equal protection issue and enforcement of this statute is a deterrent to mineral exploration. He added no other state or country requires such permits. Number 398 STEVE BORELL, Executive Director of the Alaska Miners' Association (AMA), testified in support of HB 128. He agreed with Mr. Mackinnon's comments. The AMA is primarily concerned with Section 3, regarding water well drilling and incidental construction. He believed DEC selectively applied the statute to the proposed permit regulations. He commented the bill will correct a technicality in statute, to allow the status quo to continue. Without the passage of HB 128, burdensome requirements will be added to the permitting process which will not provide any benefits. He believes Governor Knowles supports the measure. SENATOR TAYLOR asked how long Mr. Borell has lived in Alaska. MR. BORELL replied he has been in Alaska since 1986, but also lived in Alaska in 1970-71. SENATOR TAYLOR commented on the change of attitude toward mining and wildlife from 40 years ago. DAVID ROGERS, representing the Producer's Council, testified in support of HB 128. He reserved judgement on the proposed amendment until he had time to review it. SENATOR LEMAN announced HB 128 and the proposed amendments would be held until Monday.