HOUSE RESOURCES STANDING COMMITTEE January 25, 1995 8:04 a.m. MEMBERS PRESENT Representative Joe Green, Co-Chairman Representative Bill Williams, Co-Chairman Representative Scott Ogan, Vice Chairman Representative Alan Austerman Representative Ramona Barnes Representative Pete Kott Representative John Davies Representative Eileen MacLean Representative Irene Nicholia MEMBERS ABSENT None COMMITTEE CALENDAR Overview by the Department of Environmental Conservation (DEC) WITNESS REGISTER GENE BURDEN, Commissioner Designate Department of Environmental Conservation 4l0 Willoughby, Ste. 105 Juneau, Alaska 99801 Phone: 465-5050 POSITION STATEMENT: Provided an overview of DEC and answered  questions LEN VERRELLI, Acting Deputy Commissioner Department of Environmental Conservation 410 Willoughby, Ste. 105 Juneau, Alaska 99801 Phone: 465-5100 POSITION STATEMENT: Provided an overview of DEC and answered  questions MIKE BURNS, Section Chief Facilities Construction and Operation Division Department of Environmental Conservation 410 Willoughby, Ste. 105 Juneau, Alaska 99801 Phone: 465-5136 POSITION STATEMENT: Provided information and answered questions DAN KANOUSE, Director Division of Information & Administrative Services Department of Environmental Conservation 410 Willoughby, Ste. 105 Juneau, Alaska 99801 Phone: 465-5024 POSITION STATEMENT: Provided information and answered questions JOHN BARNETT, Executive Director Board of Storage Tank Assistance Department of Environmental Conservation 410 Willoughby, Ste. 105 Juneau, Alaska 99801 Phone: 465-5219 POSITION STATEMENT: Provided information and answered questions ACTION NARRATIVE TAPE 95-2, SIDE A Number 000 The House Resources Committee was called to order by Co-Chairman Joe Green at 8:04 a.m. No other committee members were present at the call to order. CO-CHAIRMAN JOE GREEN announced the committee would hear an overview of the Department of Environmental Conservation. GENE BURDEN, COMMISSIONER DESIGNATE, DEC, stated he would review the direction and approach the department will pursue in managing the programs. He said program performance objectives will be implemented, which is a process of establishing clear mission objectives for each of the functions and attempting to make those objectives as measurable and performance related as possible. In that process the department hopes to be able to share those objectives with interested parties to ensure that the mission and specific objectives are better understood. MR. BURDEN stated DEC has initiated an employee attitude survey which was conducted several weeks ago. Early indications from that survey indicate employees want to see a clear chain of command and embrace the idea of specific and measurable objectives. He said DEC plans to instill customer service considerations into the delivery of services the department provides. He felt that was particularly important in view of several new regulatory obligations DEC has. MR. BURDEN advised DEC will also be examining how the agency interacts with the public and the regulated community in all program areas. He noted that DEC's components are involved in enforcing a very technical set of laws and regulations representing a challenge to clearly communicate what is required. He added that DEC will do its best to translate very technical issues into understandable issues. Number 044 MR. BURDEN advised DEC has an organizational structure issue involving the relationship of the program-based versus the regional-based. He stated the department hopes to eliminate the versus in that issue. There are four regions presently involved in the day-to-day enforcement and program implementation activities. He said there is a desire to work those two groups closer together. He stressed DEC's objective is to bring a budget to the legislature and respond to questions on a programmatic basis. MR. BURDEN stressed the time period was very brief to establish the initial organization and make decisions related to staffing, which are important to the success of the program. He explained the initial organization is an interim organization subject to further tweaks. He said there will be an attempt to fill positions with the best qualified people possible and make those appointments on the basis of vacant existing positions. Number 067 MR. BURDEN noted there will be an attempt to promote from within DEC on appointments when possible. He said the technical aspect of the programs generate a narrow group that can step in and get the technical programs going immediately. He stated there are benefits in implementing these programs from within by recognizing staff professionals who have worked within the programs and are in support of the direction being taken. MR. BURDEN told committee members there are several program issues needing to be addressed. He said the public health component covers food inspections, animal industry inspections, and a variety of public health areas. This component is an increasingly challenging section of the department because there are more expectations of paying your own way. He stressed DEC will give this component more prioritization and attention as this section works in conjunction with the state's efforts to promote and improve the seafood industry within the state and other basic food related industries. MR. BURDEN stated the department is looking at a centralized permitting operation within the Air Quality Management section. He said DEC has obligations during 1995 to implement Title 5 - the Clean Air Act. He noted the Clean Air Act is a federal law and will require permitting from the current approximately 200 air permitees to approximately 600 in the fall of 1995. Many of the new permitees are small businesses making it important that DEC communicate and work with the businesses to get them in compliance with the law. MR. BURDEN said DEC expects to employ seasonal task force efforts to assist in getting areas cleaned up which can only be addressed during a short season. He noted the department is also looking at efforts to improve the time it takes to have a permit or contingency plan reviewed and accepted or rejected. Number 115 MR. BURDEN stated there is great interest in pollution prevention efforts and he felt every program has specific obligations to be actively engaged in pollution prevention work. He said the department plans to review that area and make it become an adopted objective of every program function. Mr. Burden distributed a hand out (may be found in the House Resources Committee Room, Capitol Alaska State Legislature, in the Legislative Reference Library) which outlined the scope of services within the various existing divisions as well as the operating budget. CO-CHAIRMAN GREEN noted for the record that Representatives WILLIAMS, OGAN, DAVIES, KOTT, BARNES and AUSTERMAN had joined the committee. REPRESENTATIVE RAMONA BARNES observed that Mr. Burden had referred to the Clean Air Act as a federal act. She recalled the state passed a law and now has new regulations to implement the law. MR. BURDEN answered that was correct. He added that law was a direct reaction to the Clean Air Act amendments. REPRESENTATIVE BARNES clarified the state's act does replace that. MR. BURDEN said that was correct. Number 154 CO-CHAIRMAN GREEN recalled Mr. Burden had indicated there was a reorganization underway and there would be an increase in the department's responsibilities. He asked if DEC will be able to handle the increased load without an increase in staff. MR. BURDEN stated at this time he would not be able to give a knowledgeable answer. He said as the department goes through the reorganization process and he becomes more acquainted with the existing work units, he will then be able to answer the question. He added that on the air program side, the department will be able to meet the requirements of the Clean Air Act without additional staff. LEN VERRELLI, ACTING DEPUTY COMMISSIONER, DEC, stated if the other programs come in like the air program did, the department will realize a savings on permanent full-time staff. REPRESENTATIVE JOHN DAVIES clarified that air regulations have been adopted but still require the Environmental Protection Agency's (EPA) approval. If that is correct, he wondered if DEC had a time frame established. Number 182 MR. VERRELLI stated EPA has agreed to parallel processing of the regulations and DEC hopes EPA will have them completed by the end of June. It is important that DEC begin accepting permit applications and processing them July 1, 1995. REPRESENTATIVE BARNES noted Governor Knowles stated publicly he will not be asking for increases in the budget but in the previous Governor's budget which was presented, there was an increase. She wondered if DEC plans to maintain what Governor Knowles has stated publicly, so the fiscal year (FY) 1996 request of Governor Hickel will be at the FY 1995 level. MR. BURDEN responded that DEC's general fund budget represents a slight reduction in 1996 versus 1995. The department is reflecting an increase in federal funds coming into the program and is also showing an expected reduction in the response fund. MR. VERRELLI stressed the goal is to stay within the administration's target. However, things do happen. For example, the air program sustained a $1.4 million cut in program receipts because DEC did not have the ability to collect those program receipts. REPRESENTATIVE BARNES reflected that program receipts are state treasury dollars and she does not look upon them as something belonging to the department. CO-CHAIRMAN GREEN noted for the record that Representative NICHOLIA had joined the committee. Number 225 MR. VERRELLI, referring to the hand out, said on page 2 there is an overview of the department and the major tasks within each division. He stated the seafood inspection section is one of the primary goals of environmental health and is viewed as one of the driving forces in allowing Alaska's seafood to be processed. He said a recent example is the problem with dungeness crabs. The department was able to interact with that fishery to determine a way to eviscerate the crab and still market it. MR. VERRELLI stated the pesticide program is a very small program with a $260,000 budget and is basically a federally funded program. Initially, the department did not feel there was a problem with pesticides in the state. However, with increased farming activities in the Delta, Kenai, etc. many pesticides are starting to be used in the state and are finding their way into the waterways. He said the pesticide program, therefore, is becoming more important. MR. VERRELLI informed members that DEC has laboratory monitoring facilities in Palmer and Juneau which handle all the health related issues. In regard to the meat/poultry/animal health and dairy program, he said one of the failures in the state was that it has not come up to speed with the Midwest in farming products. MR. VERRELLI stated the Environmental Quality Division includes the public drinking water section. He said a goal of all administrations, particularly the current one, is to bring safe drinking water to the table. He noted there is a lot of controversy regarding drinking water regulations. A few years ago, the department only had 67 anolytes to look at and now there are over 127 anolytes to review. He noted this issue is being discussed at the National Governors Conference and in Congress because there are additional costs involved. CO-CHAIRMAN GREEN questioned if there is a way to review anolytes regionally rather than statewide. MR. VERRELLI stated the initiatives were started during the last administration and arrangements were being made with the states of Oregon and Washington which would eliminate the need for Alaska to have the entire array of instruments to test all the anolytes. He said the only problem is that travel might be required. The program has not started yet however, so the pros and cons need to be determined. CO-CHAIRMAN GREEN noted for the record that Representative MACLEAN had joined the committee. Number 288 REPRESENTATIVE DAVIES wondered if after the first round of testing no anolytes are found, whether or not that anolyte can be removed from the list. MR. VERRELLI confirmed that is the ultimate goal. Currently the anolytes have to be looked at all the time and the cost is prohibitive. He felt there is so much outcry, however, that eventually there would be a more rational approach. CO-CHAIRMAN GREEN noted there are several cooperative attempts to reduce the number of federal mandates. He asked if there are other states involved in the attempt to reduce this mandate. MR. VERRELLI said the National Governors Association is organizing an effort. MR. VERRELLI stated the air quality management program is ongoing and the goal is to implement the Clean Air Act program under budget. He felt the staff has done an excellent job of consolidating what is required to be done in the Act and a good service will be provided for the dollar. REPRESENTATIVE EILEEN MACLEAN asked what DEC is doing in regard to public drinking water, particularly the problem with hepatitis in rural Alaska. MR. VERRELLI said many of the areas in the state which have specific problems are being addressed directly. REPRESENTATIVE MACLEAN asked what the program is called. MR. VERRELLI said it is called the Village Safe Water Program. REPRESENTATIVE MACLEAN asked if those problem areas are on the priority list for DEC in the capital bill. MIKE BURNS, SECTION CHIEF, FACILITIES CONSTRUCTION AND OPERATION DIVISION, DEC, answered that the projects have been prioritized. CO-CHAIRMAN GREEN noted there had been a significant effort made by the prior administration to review water quality. He wondered if the current review is in addition to or a redesign of that review. MR. VERRELLI answered it is a continuation. Number 355 MR. VERRELLI continued that the water quality management program addresses water quality standards which have been quite controversial. He said DEC is in the process of bringing the issue before the public again due to the challenge brought forth by the Sierra Legal Defense Fund. He stressed the solid waste management problem remains and will become a major issue with the state. He noted the commissioner has ideas on how to best approach the problem and hopefully will help mitigate some of the situations existing all over the state. MR. VERRELLI explained the hazardous waste management program has been attempting to receive authorization over the years, but due to budget cuts, the program is only at a maintenance level. In regard to the industrial and domestic wastewater control programs, he determined that the new proposed regulation on mining wastewater was a result of the A-J Mine and the fish kill last spring. REPRESENTATIVE MACLEAN asked for an update on the A-J Mine situation in regard to the dead fish. MR. BURDEN stated in regard to the most recent fish kill, DEC had people on the scene taking samples and fish. It was determined there was no water in the area where the fish were discovered. Speculation is that due to the city taking its water, there had been a draw down and the fish had been left dry. He stressed there is no indication of any relationship between the fish kill and the mine. Number 425 MR. VERRELLI told committee members the pollution prevention office is a separate group within the department. The commissioner's plan includes blending the office in with all the programs. He said most of the programs have incorporated pollution prevention efforts. He stated the environmental analysis laboratory has been controversial due to the expense of the building and equipment maintenance. REPRESENTATIVE DAVIES asked if the laboratory being referred to is the one which is envisioned to be operated in conjunction with the university. MR. VERRELLI replied it was. MR. BURDEN stressed the facility is under-utilized in its present arrangement and is an expensive activity to maintain. Therefore, partnerships will be looked at to attempt to get better utilization of the laboratory and save money in the process. MR. VERRELLI continued that the Facilities Construction and Operation Division works on sewer and water projects around the state. He noted additional grants requiring matching funds are being sought for that program. He stated there is $14.9 million in federal funds for the state available with the appropriate match. MR. VERRELLI explained the Spill Prevention and Response Division was a result of the Exxon Valdez oil spill. REPRESENTATIVE MACLEAN asked if DEC plans to deregulate any of the Alaska Clean Water regulations because they over exceed the federal standards. MR. BURNS replied statute changes occurred last spring which brought the state in line with the federal standards. Number 515 MR. VERRELLI stated everyone struggled with SB 215 resulting in what is contained in the chart being handed out (may be found in the House Resources Committee Room, Capitol #124, and after adjournment of the second session of the 19th Alaska State Legislature, in the Legislative Reference Library). DAN KANOUSE, ACTING DIRECTOR, DIVISION OF INFORMATION AND ADMINISTRATIVE SERVICES, stated he would outline the Oil & Hazardous Substance Release Prevention and Response Fund for the committee, which is also called the Response Fund. He said last year, after much deliberation, the legislature passed SB 215 in the form designated in the handout. He noted the law took effect October 2, 1994. MR. KANOUSE said originally a five cents per barrel surcharge was collected and put into the General Fund for appropriation to the Response Fund. The intent was to ultimately reach a $50 million cap. He noted, however, because of the language in the former law, there was difficulty in reaching the $50 million cap. He explained that SB 215 provided a change providing for a split of the nickel, with two cents being dedicated to reach the $50 million cap. Once the cap is reached, the two cents collection will be suspended. He stated it is anticipated the $50 million cap will be reached at the end of March 1995. REPRESENTATIVE BARNES said the 470 Fund has been in effect for a number of years and it has been a short time since the fund began the division of the surcharge. She felt the fact the $50 million cap will be reached in March says something about what was happening to the nickel a barrel previously. Number 573 MR. KANOUSE stated the two cents is for emergency spill response and the three cents is for ongoing spill prevention type activities. He explained the three cents covers a spectrum of the spill prevention response division activities, as well as other agencies participating in spill response type of activities. REPRESENTATIVE MACLEAN asked the total amount expected to be collected in the prevention mitigation account for one year. MR. BURDEN replied the projected flow cannot be predicted at this point. REPRESENTATIVE MACLEAN questioned what the total amount collected to date is. She felt there are many problems the department has to deal with and she is concerned about the storage tank assistance fund. CO-CHAIRMAN GREEN thought the amount would total approximately $13-15 million. MR. BURDEN commented that prevention efforts are the biggest and most important aspect of the program DEC has. He said if the interest in expanding the development of the oil and gas industry is reviewed, the avoidance and preparedness for an accident is the department's best defense in not having the problems and delays in development which occurred following the Exxon Valdez spill. CO-CHAIRMAN GREEN added that the committee, as well as the legislature, feels prevention is better than trying to clean up and there is no question that it is a justifiable use of the money. He noted criticisms are due to misappropriations from the fund. REPRESENTATIVE BARNES clarified the commissioner could not project the amount the three cents surcharge would bring in. She wondered if the commissioner is aware of how many barrels of oil go down the pipeline daily. MR. BURDEN replied approximately 1.5 million barrels a day. REPRESENTATIVE BARNES stated if 1.5 million barrels a day go down the pipeline a day and there is a three cents surcharge collected on each barrel, it should not be too difficult to calculate the total amount to be collected in a year. Number 705 CO-CHAIRMAN GREEN stated there have been changes in the fees DEC charges, many of which have received negative reactions. He wondered if there had been a projection on the user fees required to cover DEC's operating costs. MR. VERRELLI replied a savings will be appreciated in the reduced overall budget. He said the air program, based on program receipts and federal dollars coming into the state, should not have any drawdown except for the matching part of the grant. With other programs, there is some resistance to paying for a service. TAPE 95-2, SIDE B Number 000 MR. VERRELLI said many are used to getting services for free. Therefore, there is a large resistance to pay a fee. He stressed as funds available for these services decline, the only alternative other than stopping the service is collecting fees. CO-CHAIRMAN GREEN wondered if user fees will increase the need for staffing or a shifting of responsibilities. MR. VERRELLI responded that a core group will be developed to handle the fees but added that with a consolidation of efforts, a savings will be realized. MR. BURDEN added that as the department sees expanded funds coming in from other program receipts, it is possible a centralized accounts receivable and billing function will be developed to service all of the programs. Therefore, duplicated efforts will be avoided. REPRESENTATIVE ALAN AUSTERMAN recalled an earlier discussion on the Clean Water Act. DEC took the regulations mandated by the federal government and expanded on them. Now the department has gone back and is now on a level basis with the federal government. He hoped that was an indication that DEC will continue to evaluate the programs and determine how far the regulations have gone from the original intent. He asked Mr. Burden what his top priorities are as commissioner of DEC. Number 049 MR. BURDEN replied he has four top priorities but cannot rate them. He noted the administration has established a high priority of moving further along with the elimination of the honey bucket scene in rural Alaska. He stressed that is a program the department will vigorously support and attempt to expand. He said another high priority is to improve the consistency and predictability of the services provided by DEC. He felt it was important to avoid situations where the regulated community is confronted with new regulations and requirements, without having those communicated adequately. MR. BURDEN stated another priority is to have clearly defined program objectives which the department can interact on with the community and the legislature, enabling everyone to understand the direction a certain program is going. REPRESENTATIVE DAVIES wondered if the storage tank assistance program is an area of concern with the department and asked if the fund provided for the program is adequate. He said his question also relates to the bulk fuel issue in rural Alaska and the contaminated sites remediation issue. Number 097 MR. BURDEN responded the bulk fuel storage issues facing Alaska are enormous. The costs associated with addressing those problems could be in the hundreds of millions of dollars. Although he did not have specifics, he said in dealing with those issues, the department must first focus on how to best protect the public's health in areas that have deteriorated or deteriorating storage facilities. Hopefully, the department will be able to determine measures to prevent and mitigate further degradation of the water supply in those communities. He stated in terms of contaminated site remediation, he does not have a full appreciation of the scope of that issue at this time. REPRESENTATIVE AUSTERMAN noted there is a lot of talk around the capitol in regard to privatization. He asked if the department is looking at areas within the department which may be privatized. MR. BURDEN replied at this time he has not looked at anything related to privatization. He felt privatization is an option which has to be looked at in terms of the alternatives available when trying to more efficiently do the job. MR. VERRELLI stated in regard to the air program and the small business assistance program, there will be consulting firms performing much of the work. He said there are other areas, such as inspections, where private people may be less expensive than state employees. He added one of the reasons the laboratory is in such poor financial shape is because of privatization. All of the labs in the state doing drinking water samplings are taking business away from the state. REPRESENTATIVE AUSTERMAN said he was confused as to why the laboratory was built originally. MR. VERRELLI responded the lab was built because the state is required to have a laboratory fully capable of doing samples. He added that EPA has a mirror image behind the state. If the state fails, EPA is required to have a laboratory. He advised if the state turns the program over to the federal government, it would be more stringent and additional costs would be involved. He said the state is allowed to operate below the national standards which is a benefit. For that reason, privatization usually makes sense. Number 179 CO-CHAIRMAN GREEN wondered if the department might be able to return to the committee in two to three months and review some of these issues. MR. BURDEN stated they could definitely talk to the committee with a lot more authority at that time. REPRESENTATIVE SCOTT OGAN said he was aware of several cases of hostility by DEC towards certain businesses, including inappropriate comments and actions and withholding food permits without a normal hearing process. He noted DEC has a lot of authority to shut down a business, which prevents a business from recovering. He wondered if DEC is willing to look into the problem. He felt the situation is self-defeating when the state is trying to diversify its economy and an agency with a lot of authority is putting people out of business, instead of working with them to try and resolve the problem. MR. BURDEN stressed the department needs to be aware of any regulated entity which has been treated unfairly. He noted if an inspector encounters a situation which poses an eminent threat to the public health and safety, presently there is that authority to stop the operation until the problem is corrected. He said the manner in which that is done and communicated is important. REPRESENTATIVE OGAN said the specific case he was referring to involved a business who hired an attorney. The attorney was attempting to show DEC the regulation and the fact that the inspector was not following the regulation. MR. BURDEN told Representative Ogan to contact him or someone in the department and provide a brief description of the incident so it could be reviewed. Number 228 REPRESENTATIVE DAVIES stated a laboratory is required because the state has the responsibility to certify the private sector labs. As a consequence, the state laboratory has to maintain the instrumentation in order to accomplish that certification. He wondered if Alaska could use Washington State's labs to satisfy the certification requirement, therefore eliminating the need to maintain such an expensive array of instruments. REPRESENTATIVE DAVIES agreed that privatization often results in cost savings but not always. He stated in the case of the septic tank certification program, it appears the state is getting double- dipped. The private sector is getting their nickel and the state is still charging an unreasonable amount for that stamp of approval of the private sector inspection. MR. BURDEN responded he is familiar with the situation. He added that the department feels there are ways to address the situation and eliminate the duplication. REPRESENTATIVE MACLEAN questioned if the state laboratory is still being used. She recalled last winter the lab froze up. MR. BURDEN replied the laboratory is in operation and is very busy. REPRESENTATIVE MACLEAN agreed that the laboratory should be privatized and felt privatization would save the state dollars, especially in light of the benefits involved. Number 272 CO-CHAIRMAN GREEN recalled the legislature had a painful two years in connection with the 470 fund. He wondered in light of the costs involved with a contingency plan, if DEC might be looking at helping small entities who may contribute to a potential for a spill, to either make the costs less or proportionate to a potential spill. He stated the oil industry has a burden on them through the 470 fund but there are other industries who may be involved in a fineable offense such as cruise ships, harbors, etc. He questioned whether other potential discharges might be charged some sort of user fee or be required to file a contingency plan. MR. BURDEN said he would add it to the growing list. CO-CHAIRMAN GREEN observed this legislature is incensed with requirements and mandates from the federal government and noted many of DEC's requirements are an outgrowth of federal acts. He wondered if there are other issues which may not have justification or applicability for Alaska. If there are, he requested that DEC bring those issues to the attention of the legislature. REPRESENTATIVE AUSTERMAN suggested privatization may be the answer in regard to the bulk fuel tanks issue in the rural areas. He said there is technology now available to add fuel tanks which are safe and to regionally monitor those tanks. REPRESENTATIVE OGAN encouraged DEC to develop a program to help small businesses follow the law. MR. BURDEN responded there is a small business assistance program on the air side. He added one of the objectives in having centralized permitting activities is to enable the department to provide assistance to a broader range of permit applicants. REPRESENTATIVE IRENE NICHOLIA wondered which division in DEC the small business assistance program will fall under. MR. BURDEN stated it will be under the Environmental Quality Division. Number 382 MR. VERRELLI introduced the staff present. MR. BURNS told committee members the Facilities Construction and Operation Division has three sections: Village Safe Water Program; Municipal Grant and Loan Section; and Operations Section. JOHN BARNETT, EXECUTIVE DIRECTOR, BOARD OF STORAGE TANK ASSISTANCE, DEC, said he works with DEC in the Spill Prevention and Response Division to address underground storage tank problems throughout the state and the rural bulk fuel program. CO-CHAIRMAN GREEN thanked the DEC staff for their presentation. CO-CHAIRMAN GREEN informed committee members that meeting packets will be available in Room 126 at 3:00 p.m. on the day prior to each committee meeting. ADJOURNMENT There being no further business to come before the House Resources Committee, Co-Chairman Green adjourned the meeting at 9:20 a.m.