HOUSE FINANCE COMMITTEE April 7, 1998 2:10 P.M. TAPE HFC 98 - 94, Side 1. TAPE HFC 98 - 94, Side 2. TAPE HFC 98 - 95, Side 1. TAPE HFC 98 - 95, Side 2. CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 2:10 P.M. PRESENT Co-Chair Hanley Representative Kelly Co-Chair Therriault Representative Kohring Representative J. Davies Representative Martin Representative Grussendorf Representative Moses Representative Foster Representative Mulder Representative G. Davis was not present for the meeting. ALSO PRESENT Senator Loren Leman; Annette Kreitzer, Staff, Senator Leman; Diane Barrans, Executive Director, Postsecondary Education, Department of Education; Mike Maher, Director, Student Financial Aid, Postsecondary Education Commission, Department of Education; Al Ewing, Deputy Commissioner, Department of Environmental Conservation; John Stone, Air Program Director, Department of Environmental Conservation; Kyle Parker, Alaska Chapter, International Association of Drilling Contractors (IADC); Russ Douglas, Alaska Chapter, International Association of Drilling Contractors (IADC); Kirsten Shelton, Alaska Conservation Voice (ACV), Juneau; John Shively, Commissioner, Department of Natural Resources; Representative Joe Green; Jeff Logan, Staff, Representative Joe Green; Sam Trivette, Chief Probation Officer, Southeast Region Probation, Department of Corrections. TESTIFIED VIA TELECONFERENCE: Patti Saunders, Anchorage; Pamela Miller, Program Director and Biologist, Alaska Community Action on Toxics, Anchorage; Jay Hermanson, Program Director, American Lung Association of Alaska, Anchorage; Cheryl Richardson, Clean Air Coalition, Anchorage; Mike Coumbe, Self, Anchorage; Brian Petty, Senior Vice President, International Association of Drilling Contractors (IADC), Washington D.C. SUMMARY HB 272 An Act to permit a court to order a defendant who receives a sentence of imprisonment for a misdemeanor to serve the sentence by electronic monitoring; and relating to the crime of unlawful evasion. HB 272 was HELD in Committee for further consideration. SB 299 An Act relating to the treatment of well test flares, non-road engines, and aggregated fuel burning equipment associated with non-road engines under the state's air quality control program; defining 'stationary source' for purposes of the state's air quality program. SB 299 was reported out of Committee with an individuals recommendations and with a fiscal note by the Senate Finance Committee dated 4/2/98. HB 325 An Act making appropriations for the operating and loan program expenses of state government, for certain programs, and to capitalize funds; making appropriations under art. IX, sec. 17(c), Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date. RESULTS BASED GOVERNMENT - Final Committee Action Postsecondary Education Water Quality HB 325 was HELD in Committee for further consideration. HOUSE BILL NO. 325 "An Act making appropriations for the operating and loan program expenses of state government, for certain programs, and to capitalize funds; making Appropriations under art. IX, sec. 17(c), Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date." RESULTS BASED GOVERNMENT - Final Committee Action Postsecondary Education Water Quality POSTSECONDARY EDUCATION DIANE BARRANS, EXECUTIVE DIRECTOR, POSTSECONDARY EDUCATION COMMISSION, DEPARTMENT OF EDUCATION, stated that the Commission had no problems with the proposed mission statement. Representative Foster MOVED to adopt the Postsecondary mission statement. There being NO OBJECTION, it was adopted. WATER QUALITY Representative Foster MOVED to adopt the proposed mission statement for Air and Water Quality. There being NO OBJECTION, it was adopted. HB 325 was HELD in Committee for further consideration. SENATE BILL NO. 299 "An Act relating to the treatment of well test flares, non-road engines, and aggregated fuel burning equipment associated with non-road engines under the state's air quality control program; defining 'stationary source' for purposes of the state's air quality program." ANETTE KREITZER, STAFF, SENATOR LOREN LEMAN, stated that SB 299 clarifies that Alaska's air quality control program as it relates to the treatment of stationary and mobile sources of emissions in air quality control permitting. She stressed that the legislation would not create an exemption from the Clear Air Act. It would simply codify in statute, the federally recognized distinction between mobile and stationary emission sources. The Department of Environmental Conservation (DEC) regulators do not distinguish between mobile and stationary sources of emissions when determining whether an air quality control permit is required. Although, State regulations clearly require DEC to take into consideration the mobility of emission sources when determining whether to regulate them. She advised that DEC continues to treat mobile and stationary sources alike. Ms. Kreitzer commented that the federal program recognizes that the same emission control technologies used for oil and gas refineries and power plants are not suitable for mobile applications like lawn mowers, snow machines, bulldozers, and marine vessels. The cost as well as the size and weight of emission control technologies limits their use with mobile source emissions. All mobile equipment must be manufactured to meet Environmental Protection Agency (EPA) established emission standards. Appropriate emission control technologies are built into the mobile equipment as opposed to requiring modification of the equipment at the time of initiating operations. Ms. Kreitzer commented that the current situation results in confusion when applying laws regarding stationary and mobile sources of emissions regulated under the same permitting program. PATTI SAUNDERS, (TESTIFIED VIA TELECONFERENCE), SELF, ANCHORAGE, testified in opposition to SB 299. She stated that the bill could effect the health of Alaskan citizens and workers. She emphasized that it was unfair that testimony in other committees was only heard and considered by the industry. Ms. Saunders noted that the Clean Air Act specifies two divisions between mobile and stationary sources which have a different set of regulations designed to take into account the type and amount of solutions that come from the sources. She suggested that this should be regulated in order to protect human health. Ms. Saunders voiced concern that if the legislation passes, there will be serious implications for the State's regulatory program on air pollution. That program would then go to the feds. She recommended that the Committee require testimony from qualified scientists, medical professionals and the people living in the areas which will be affected by implementation of the bill. PAMELA MILLER, (TESTIFIED VIA TELECONFERENCE), PROGRAM DIRECTOR AND BIOLOGIST, ALASKA COMMUNITY ACTION ON TOXICS, ANCHORAGE, noted that Alaska Community Action on Toxics is a program in the umbrella of the Alaska Conservation Foundation. This group adamantly opposes SB 299. Ms. Miller commented that the bill was moving through the Legislature much too quickly to have appropriate public, medical and scientific input. She reiterated that testimony from the public had been excluded in most committee hearings. Ms. Miller stated that SB 299 exempts significant sources of air pollution from permit requirements and regulatory oversight. She added that there is no upper limit to the amount of air pollution exempted by the bill. Facilities proposed by the bill for exemption include some of the largest producers of air pollutants in the State. Ms. Miller continued, the bill also would have adverse economic consequences including the imposition of a federal highway fund station. Passage of the bill will cause increased health care costs to the State, as health problems become exasperated. Ms. Miller stressed that the bill does not take into consideration science or public health. Co-Chair Therriault questioned Ms. Miller's reference to a federal take-over. Ms. Miller replied that SB 299 would deregulate significant portions of air pollutants at which time the Environmental Protection Agency (EPA) would be forced to take the program over. Co-Chair Therriault believed that the Clean Air Act would regulate those provisions at the time of production, suggesting that Ms. Miller's assessment was unfair. Representative Kelly understood that the bill would bring the State into compliance by mirroring the federal act. Ms. Miller replied that the bill was below the federal minimums required in the Clean Air Act. JAY HERMANSON, (TESTIFIED VIA TELECONFERENCE), PROGRAM DIRECTOR, AMERICAN LUNG ASSOCIATION OF ALASKA, ANCHORAGE, testified in opposition to SB 299. It will adversely affect the health of lungs in the State, particularly for those persons who currently suffer from lung disease. He noted concern with the high level of sulfur dioxide and nitrogen dioxide emanating from non-road engines. Representative Mulder inquired if Alaska currently experiences non-road agent problems in relationship to lung disease. Mr. Hermanson replied that he did not have specific information on that problem, although, he knew that exhaust from city buses could cause respiratory distress for those predisposed to lung disease. Representative Mulder suggested that the testimony was being aggrandized. Co-Chair Therriault pointed out that the federal government is taking steps to force manufactures to move toward cleaner burner technology and that those protections would continue to be in place. CHERYL RICHARDSON, (TESTIFIED VIA TELECONFERENCE), CLEAN AIR COALITION, ANCHORAGE, testified in opposition to SB 299. She stressed that drilling rigs are pollutants and that one drilling rig could equal the pollution of 100 city buses. City buses emit the kind of pollution that causes respiratory disease. She added that the Clean Air Coalition most recently has been focusing on particle pollution. In order to protect human health, the EPA regulates that concern. Ms. Richardson noted that current monitoring on the North Slope has indicated an unhealthy level of particulents at 50 micrograms per cubic meter. The established federal standard is 150. It has been found in Anchorage that 50 micrograms of particle matter cause respiratory disease and bronchitis during inversion periods. She pointed out that with passage of SB 299, Alaska would be the only State in the Union which allows its refiners to sell high sulfur fuel. Representative Martin questioned the facts presented by Ms. Richardson. Ms. Richardson responded that information originated from the industry, as provided through DEC permitting process. She reiterated that the numbers she provided were accurate. Representative Grussendorf requested further information regarding the level of sulfur fuel burnt in oilrigs in Alaska. Ms. Richardson commented that the Clean Air Act amendments of 1990 required that tail-pipe standards be met. That standard was followed by requests that fuel manufacturers produce a lower sulfur gasoline. Alaska and Hawaii were allowed to seek an exemption. Hawaii then choose to produce the low sulfur diesel, whereas, Alaska continued the exception. MIKE COUMBE, (TESTIFIED VIA TELECONFERENCE), SELF, ANCHORAGE, spoke against SB 299. He stressed that he liked to breathe clean air and questioned why the Legislature would support legislation polluting it. AL EWING, DEPUTY COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL CONSERVATION, advised that this Administration has been clear that Alaska is "open" for business. The area-wide oil and gas leases on the Kenai Peninsula, in Cook Inlet and on the North Slope have caused renewed leasing which has further indicated that commitment. The Governor has been equally clear that development in the State must be done correctly from an environmental perspective. Both these concerns must be balanced in all legislation. Mr. Ewing pointed out that passage of SB 299 would be the exact opposite of doing it right. If enacted, it would prohibit regulation of oil drilling rigs which are significant sources of air pollution. Additionally, because of the imprecise wording of the bill, it could be interpreted to prohibit regulation of a wide range of significant sources of air pollution throughout the State. He stressed that the bill would authorize even "mandate" significant backsliding in Alaska's air quality, resulting in dirtier air for Alaska. Mr. Ewing continued, even if the interpretation could be limited to oil drilling rigs, it would be unacceptable to the Administration and the people living, working and playing on the Kenai Peninsula, Cook Inlet and in the village of Nuiqsut. He added that the timing of the bill is bad, having the potential to jeopardize the progress we are making on National Petroleum Reserve-Alaska (NPRA) leasing and the expectations the State has for other development. Air pollution standards are designed to protect human health and the environment. They are not limited in their scope to protection of people who live in urban areas. Mr. Ewing advised that state-of-the-art air quality models tell us that if oil-drilling rigs are allowed to operate unregulated, they will, and in many cases will cause violations of clean air standards. The industry suggests that DEC should not regulate the rigs until it is confirmed that there are air quality standard violations. The law states that DEC has a responsibility to prevent violations of air quality standards. He emphasized that it would be unwise to wait until the health and welfare of Alaskans is adversely impacted before taking action. Oil drilling rigs are mobile and need the flexibility to move quickly from site to site. The Department understands their need for flexibility in how they operate. The Department has been working with the industry for the past three years to design regulations that would provide flexibility and necessary air quality controls. Several alternative solutions have been submitted, although, each has been rejected by the drillers as unsatisfactory. Their solution is "no" regulation. A single rig can emit as much pollution as more than a hundred city buses operating in a single, very crowded intersection. Mr. Ewing stressed that would not be an insignificant amount of pollution. State of the art air quality models predict violations of air quality standards if the rigs are allowed to operate without controls. The Department's objective is to maintain clean air in ways that are consistent with the law and with common sense. Mr. Ewing noted that in conversations with air program managers in other states, the Department has found that drilling rigs outside of Alaska and other non-road engines use low sulfur fuel (.05%) because that is what is available except in Alaska. He noted that if Alaska were using .05% sulfur fuel, drilling rigs would be insignificant sources of SO2, thus not requiring stringent pollutant regulations. Mr. Ewing pointed out that Alaska's models are the best in the world. They have a standard assumption used in law and which is used throughout the country. He concluded, DEC would like to do ambient air quality monitoring in the future to assess air quality conditions of trends on the North Slope and elsewhere in the State. That would cost money which the Department does not have. At present time, the State's best tools are the models. Mr. Ewing concluded that the Department strongly opposes SB 299. He stated that it is a major threat to the air quality of Alaska. It would put our citizens and our environment at risk. (Tape Change HFC 98- 94, Side 2). Co-Chair Therriault asked if the proposed DEC regulations would differentiate between mobile and non-mobile sources. Mr. Ewing replied that the proposed regulations were focused on drilling rigs with intent to provide flexibility which the drilling industry needs to continue operation. Following discussion between Mr. Ewing and Co-Chair Therriault regarding regulations in other states, Mr. Ewing pointed out that engines and drilling rigs in Alaska emit a lot more pollution because they are using non-sulfur fuel. The bill would remove the Department's authority to regulate that concern. Co-Chair Therriault questioned the reference to the "dark cloud" hanging over Prudoe Bay. Mr. Ewing commented that he had quoted a letter written by the North Slope Borough Mayor. There is no current monitoring being done on the North Slope Borough. Representative Mulder inquired why there was no testing currently being done there. Mr. Ewing explained that in areas that are meeting the standard, regulations are approached so as to avoid violation. The program is designed to minimize the amount of pollution going into the area, and not to avoid the standards. Representative Mulder asked if industry had been trying to work with the Department for the past two years. Mr. Ewing replied that the Department has been attempting to work with the industry for the past three years to resolve this issue. Representative Mulder asked for documentation verifying correspondence between the industry and DEC. Representative Grussendorf questioned if the Department had received a letter from BP, notifying the drilling contractors of their opposition to resolve this issue through legislative action. Mr. Ewing responded that DEC had received that letter. Representative Grussendorf pointed out that "industry" as referenced in the proposed legislation, is specifically the drilling contractors. He noted that they are technically the subcontractors of the oil industry. In response to Representative Martin, Mr. Ewing replied that the letter received from the North Slope Mayor's office was dated May, 1997, a memo written to ARCO. He reiterated that DEC actions are aimed at minimizing the effect. The Department uses models to predict what is occurring. Mr. Ewing noted that State laws are consistent with federal laws. If the bill were passed, the Department's ability to regulate a number of other sources would be removed; the State would be subject to a federal government take-over of the program. He emphasized that the feds would be inclined to do that, since it is a moneymaking endeavor. He emphasized that their fees would be higher. Representative Kelly asked if the bill were adopted, would the State be out of compliance with federal requirements. Mr. Ewing stressed that we would absolutely be out of compliance. Representative J. Davies asked how big of a problem would it be for drilling rigs to use low sulfur fuel in Alaska. Mr. Ewing explained that low sulfur is not generally available in Alaska because of the waiver for mobile source automobiles. He stated that .15% would be adequate to meet DEC standards. In order to provide that fuel, BP and ARCO would have to upgrade their topping plants, a cost they claim would be between a $500 thousand to $1 million-dollar expenditure. They are willing to do that. For new engines, it is mandatory that provisions be incorporated to address that concern. The issue is that BACT needs to be applied to older engines. The Department has proposed that there be a check every five years verifying that the older engines do comply. Representative Foster requested a list of fines and violations which had been issued by the Department regarding this concern. Mr. Ewing explained that for both Fairbanks and Anchorage, there has been a very specific plan worked out between the State and local governments, approved by the feds. He added, if a city is not in compliance, the federal government then withholds their transportation funds. Representative Grussendorf questioned why BP and ARCO were not supporting the drilling contractors in the proposed legislation. Mr. Ewing responded that the oil companies have witnessed a practical example of how this is accomplished through the "Wart hog" project; also, industry knows that if the federal government runs the program, it will cost three to four times the amount it does now. EPA's regulations and fees are much higher than those issued by the State. Co-Chair Therriault asked the steps which the Department would take when a group is out of compliance with air quality standards. Mr. Ewing responded that if the legislation were passed, the most likely scenario would be the federal government taking over the administration of the program. He emphasized that law is established to avoid coming to a non-attainment situation. Co-Chair Therriault questioned if there would be information indicating that the State was out of compliance before EPA stepped in. Mr. Ewing explained that the base decisions for EPA to delegate or to leave a delegated program in place, is not the quality of the air, but the quality of the legal structure in place to maintain the quality of the air. JOHN SHIVELY, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES, reminded Committee members that Al Ewing previously ran EPA for the federal government. He added that the Knowles Administration has been very active in increasing oil production in the State. He emphasized that the proposed legislation sends the wrong message to the U.S. Department of Interior and the Alaskan people. Commissioner Shively pointed out that the legislation would completely exempt one part of the industry from permitting and regulation. He recommended that there are other options to be considered which could resolve this issue. In response to concerns noted by Co-Chair Therriault, Commissioner Shively pointed out that there is increased drilling activity on the North Slope. (Tape Change HFC 98- 95, Side 1). Representative J. Davies suggested that it would be less expensive and more advantageous for industry to address these concerns up front. Representative Kelly inquired about the on site data used to provide the modeling. Mr. Ewing explained that the modeling checks the emissions coming from a vehicle which at that time, predicts the type of mixing occurring in the air. Based on that information, a conclusion is drawn. Representative Mulder asked how many rigs were operating on the North Slope. SENATOR LOREN LEMAN replied, there are 18 drilling rigs in operation at this time. Commissioner Shively pointed out that the bill does not only address concerns in the North Slope Borough. He noted that the legislation addressed concerns in the entire State and that air quality problems exist in Cook Inlet, also. The State is looking toward expansion of the industry in that area. Representative Mulder voiced resentment that DEC has not been willing to work with the industry or the driller contractors to create a workable scenario to address this concern in Alaska. Senator Leman countered comments made by Commissioner Shively. He stressed that it was not his intent to send the wrong message to the Alaskan people. He pointed out that thirty other states define non-mobile engines in the way proposed in this legislation. He admitted that he shared concern with air quality, although, pointed out that there is no hard evidence on ambient air quality. Senator Leman added that it has been five years since he had worked on the Clean Air Act amendments and that enough time had expired in addressing that concern. Representative Kohring noted for the record his concern with a potential conflict of interest in Mr. Ewing's relationship with EPA. Mr. Ewing replied that he was the Director of EPA in Alaska for twelve years, prior to taking the position at DEC. He noted that he is on "loan" to the Department which does not tie him to EPA policy. He stressed that he now works for the State of Alaska, Department of Environmental Conservation. KIRSTIN SHELTON, ALASKA CONSERVATION VOICE (ACV), JUNEAU, stated that ACV opposes SB 299 and views the legislation as one of the Sessions most threatening to the health of the environment. She commented that the bill, in prohibiting DEC from regulating oil drilling, compromises Alaska's citizens right to breathe clean air. Ms. Shelton pointed out that DEC has specified that unregulated drilling could emit pollutants in quantities that exceed safe levels. Air pollution standards are developed to prevent the pollutants from adversely affecting public health. She urged the Committee's opposition to the legislation. Co-Chair Therriault spoke to the soil remediation plants in his area and the odors resulting from those plants. He asked if passage of the bill could eliminate that. JOHN STONE, SECTION CHIEF, AIR QUALITY MAINTENANCE, DEPARTMENT OF ENVIRONMENTAL CONSERVATION, stated that the bill would be interpreted to apply to the exact operation as referenced. The bill also includes the phrase "associated fuel burning equipment". The soil remediation unit is an example of something that burns fuel. The bill would not eliminate the odor prohibition. It would need to be enforced outside the permit program. BRIAN PETTY, (TESTIFIED VIA TELECONFERENCE), SENIOR VICE PRESIDENT, INTERNATIONAL ASSOCIATION OF DRILLING CONTRACTORS (IADC), WASHINGTON D.C., spoke to concerns with current regulations. He commented that IADC's membership includes major and minor producers and services of the drilling contracting community. He stressed that IADC is concerned with the issues currently being addressed by Alaska as it appears that DEC is assuming a direction radically different from the the rest of the world. Mr. Petty pointed out that IADC has been involved with EPA over the years. In working with that agency, the industry is trying to fashion an appropriate definition under law for non-road engines and mobile sources. Over the last three years, IADC has been involved with EPA processors in Michigan and North Carolina to refine and elaborate the definitions of concern. Mr. Petty commented that Colorado excludes drilling rigs from the permitting requirements. He believed that DEC was not operating in good faith. IADC has been attempting to collaborate with DEC since 1986 in order to establish a reasonable way to work these concerns out. In April, 1997, questions were presented by the industry; IADC then waited eight months for those decisions to be released. Mr. Petty noted frustration in dealing with DEC. IADC has now carefully crafted, with the help of Senator Leman, SB 299, which would track federal definitions in order to help DEC make the required distinctions. He reiterated that if this bill were not passed, DEC would be establishing a course different than exists in the rest of the country. He believed that could threaten the Alaskan livelihood. IADC International is paying close attention to the process occurring in Alaska at this time. Representative Mulder asked what the result would be if Alaskan contractors were placed under the proposed regime. Mr. Petty explained, that result has already been demonstrated. There have been situations in which rigs have had to discontinue work which creates severe problems with Alaska's short drilling season. Co-Chair Therriault questioned if this was a legitimate concern since it is the producers that obtain the permit, not the contractor. Mr. Petty advised that the producers support what IADC is proposing in this legislation. The intent of the legislation is to avoid conflict with DEC. KYLE PARKER, ALASKA CHAPTER, INTERNATIONAL ASSOCIATION OF DRILLING CONTRACTORS (IADC), JUNEAU, addressed a couple of points of concern presented before the Committee. He pointed out that DEC has not worked with IADC in following through on commitments made. He added, the issue of "primacy" looses in the State if the legislation is adopted, and recommended that we look to what other states have legislatively done to address the concern. At present time, there are 12 rigs operating in Alaska, while in Texas 373 rigs are in operation. RUSS DOUGLAS, ALASKA CHAPTER, INTERNATIONAL ASSOCIATION OF DRILLING CONTRACTORS (IADC), JUNEAU, commented that he had checked official records from 1985 through 1995 and that the maximum time of well test flaring was approximately 20 days. In response to Representative Grussendorf's query regarding the sulfur content of the fuel used, Mr. Parker stated that there had been suggestion that DEC provide regulations stating that all industry burn low sulfur fuel. Industry has contested that effort. He interjected that it had been proven that the benefits gained by reducing the incremental amount of sulfur to that level would not measure up in cost terms. Mr. Parker agreed that there is a sulfur content exemption in place in Alaska. Ms. Kreitzer pointed out that the bill adopts the federal definition of a "stationary" source. She clarified for the record that the public has been allowed to testify in all Committees in which the bill has been heard. Representative Grussendorf noted that the fiscal note does not indicate the entirety of the bill. Representative J. Davies discussed Amendment #1. [Copy on File]. The amendment would delete two subsections on Page 2. Ms. Kreitzer responded that the bill had been crafted to follow the federal model as closely as possible. She commented that the well test flare issue is minimal and should be considered an insignificant source. Representative J. Davies MOVED to adopt Amendment #1. Representative Mulder OBJECTED. Representative J. Davies stated that the first section of the amendment would deal with non-road engines and fuel burning equipment. An unintended consequence of the legislation is that it would bring in the possibility of asphalt plants and soil remediation circumstances. He stressed that the issue of the well test flares was a small piece of the air pollutant situation. In response to a question by Representative Mulder, Mr. Douglas explained that the term "ambient quality analysis" is usually modeled and input would be defined as "potential to omit". It is modeled as if it were operating at full tilt all the time. If that situation occurs, the well test flare would then have large potential. Representative Mulder asked if this were just a model, not an actual test. Mr. Stone replied that the permit applicant provides DEC with the rate at which they intent to operate. The applicant is not forced to use a particular application and that they are not the drilling contractors. Mr. Stone added, a permit applicant generally would try to receive authorization for as much of the operation that they need to do under the Clean Air Act. Representative J. Davies reiterated that the reason for removing this section would include potential pollution into the air as part of the ambient air quality analysis. He emphasized that running to the maximum will cause pollution, which exceeds hazardous standards. Representative Kelly asked what the ambient air quality analysis was used for. Mr. Stone stated that it was used by the permit applicant in the Department to check to see if the amount of pollution in an area complies with the clean air standards. Each air quality standard is different. (Tape Change HFC 98- 95, Side 2). Representative J. Davies stressed that a standard threshold must be established with standards at the minimum health standard. Ms. Kreitzer reiterated that well testers are treated this way in four other states with one specific exemption. Representative Kelly questioned if EPA would not allow using emissions as part of an ambient quality analysis. Mr. Stone replied that there is no provision in the Clean Air Act, which allows exempt pollution from any source. There is flexibility within the act for a state to decide how it wants to regulate the various sources of air pollution in order to meet the Clean Air Act standards. Mr. Parker pointed out that in the Committee's packet, there is a letter summarizing how other states have addressed the issue. [Copy on File]. Mr. Parker pointed out that California recently has experienced a period in which they worked with industry during a three-year course, to develop a drilling rig regulation program. They have addressed serious air quality problems in that state and have looked at all sources of emissions including drilling rigs. EPA issued a final rule acknowledging that the program developed by California is appropriate. EPA then stated that if other states determine that they have emission problems, those states could address these concerns as long as they file the same framework established by California. The legislation would provide DEC, if they determine that there is an air quality problem, to develop an appropriate framework. Representative J. Davies asked what framework would be left to DEC if they could not regulate the drillers. Mr. Parker reiterated that California had created procedures, which the proposed legislation would not eliminate. Representative J. Davies questioned if California had used a regular air quality analysis. Mr. Parker replied that the legislation was intended to prevent DEC from regulating mobile source as though they were stationary sources. It would not prevent them from regulating it if there were a problem. Representative J. Davies pointed out that the California approach used a low sulfur fuel, a proposal put forward by DEC, which was rejected by industry in Alaska. He emphasized that now they want to be totally exempt. A roll call vote was taken on the motion to adopt Amendment IN FAVOR: Grussendorf, J. Davies OPPOSED: Foster, Kelly, Kohring, Martin, Mulder, Therriault Representatives Moses, G. Davis and Hanley were not present for the vote. The MOTION FAILED (2-6). Representative Mulder MOVED to report SB 299 out of Committee with individual recommendations and with the accompanying fiscal note. Representative J. Davies OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Kelly, Kohring, Martin, Mulder, Foster, Therriault OPPOSED: Moses, Hanley Representatives Moses, G. Davis and Hanley were not present for the vote. The MOTION PASSED (6-2). SB 299 was reported out of Committee with individual recommendations and with a fiscal note by the Senate Finance Committee dated 4/2/98. HB272 HOUSE BILL NO. 272 "An Act to permit a court to order a defendant who receives a sentence of imprisonment for a misdemeanor to serve the sentence by electronic monitoring; and relating to the crime of unlawful evasion." REPRESENTATIVE JOE GREEN testified that HB 272 would establish the parameters for an electronic monitoring program in Alaska. He noted that electronic monitoring (EM) is a system where around-the-clock surveillance is provided for certain convicted offenders as an alternative to incarceration. The transmitter emits a signal to a field-monitoring device, which receives and records various types of information about the offender, from location to monitoring alcohol consumption, depending on the degree of sophistication. He stated that as the number of criminal convictions in Alaska continue to rise, the State is faced with only three alternatives: ? Building more prisons to incarcerate offenders; ? Exacerbate already overcrowded prisons in violation of the Cleary decree; ? Allow more offenders to avoid incarceration. Representative Green pointed out that current estimates for new prison construction has exceeded $100 thousand dollars per bed, making construction of new prisons an oppressively expensive proposition. At this time, the public is requesting tougher treatment of criminals. Representative Green suggested that EM is an alternative to that dilemma. It is used widely throughout the U.S., Canada and Europe. Through an EM program, judges can sentence certain, non-violent offenders to house arrest, or other restrictive sanctions which leaves more room in our correction facilities for the violent criminals. HB 272 does not require that judges sentence offenders to wear electronic monitoring equipment; it simply grants authority to the Judiciary Branch to consider EM in sentencing. Co-Chair Therriault inquired about discussions with Department of Corrections regarding the fiscal implication. Representative Green pointed out that the new fiscal note had been significantly reduced. The trial base would be a half-year rather than a full fiscal year. He assumed that if 50 beds were relieved with passage of the bill, costs would be freed up. He reiterated the probable savings given passage of the legislation. SAM TRIVETTE, CHIEF PROBATION OFFICIER, SOUTHEAST REGION PROBATION, DEPARTMENT OF CORRECTIONS, spoke to the fiscal note. With the number of new inmates steadily increasing, even local jails are now being used. Considering all these options, the Department does not anticipate a fiscal savings as jails continue to work over capacity. Not until the facilities operate below capacity, will there be a change to the fiscal impact. Co-Chair Therriault stated that there must be some costs reduced when not paying for the inmate's three meals per day cost. Mr. Trivette believed that the average daily food cost was $3 dollars; not a significant portion of incarceration costs. Co-Chair Therriault requested further information including an estimate indicating that information. HB 272 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 4:55 P.M. H.F.C. 17 4/07/98