HOUSE RESOURCES STANDING COMMITTEE February 16, 1996 8:15 a.m. MEMBERS PRESENT Representative Joe Green, Co-Chairman Representative Scott Ogan, Vice Chairman Representative John Davies Representative Don Long MEMBERS ABSENT Representative William K. "Bill" Williams, Co-Chairman Representative Alan Austerman Representative Ramona Barnes Representative Pete Kott Representative Irene Nicholia COMMITTEE CALENDAR HOUSE BILL 447 "An Act providing that state land, water, and land and water may not be classified so as to preclude or restrict traditional means of access for traditional recreational uses." - HEARD AND HELD *HOUSE BILL 360 "An Act prohibiting the Department of Environmental Conservation from including an administrative fine in certain consent orders or other agreements." - HEARD AND HELD (*FIRST PUBLIC HEARING) PREVIOUS ACTION BILL: HB 447 SHORT TITLE: CAN'T CLOSE LAND TO TRADITIONAL REC. USES SPONSOR(S): REPRESENTATIVE(S) MASEK,Toohey,Kohring JRN-DATE JRN-PG ACTION 01/24/96 2524 (H) READ THE FIRST TIME - REFERRAL(S) 01/24/96 2524 (H) RESOURCES 01/26/96 2548 (H) COSPONSOR(S): WILLIAMS 02/05/96 (H) RES AT 8:00 AM CAPITOL 124 (H) MINUTES 02/16/96 (H) RES AT 8:00 AM CAPITAL 124 BILL: HB 360 SHORT TITLE: PROHIBIT DEC FINES IN CONSENT ORDERS SPONSOR(S): REPRESENTATIVE(S) THERRIAULT JRN-DATE JRN-PG ACTION 12/29/95 2360 (H) PREFILE RELEASED 01/08/96 2360 (H) READ THE FIRST TIME - REFERRAL(S) 01/08/96 2360 (H) RESOURCES, FINANCE 02/16/96 (H) RES AT 8:00 AM CAPITOL 124 WITNESS REGISTER REPRESENTATIVE BEVERLY MASEK Alaska State Legislature Capitol, Room 418 Juneau, AK 99801-1182 Telephone: (907) 465-2679 POSITION STATEMENT: Agreed with changes in CS for HB 447. DAVID STANCLIFF, Legislative Staff to Representative Beverly Masek Alaska State Legislature Capitol, Room 418 Juneau, AK 99801-1182 Telephone: (907) 465-2679 POSITION STATEMENT: Testified on CS HB 447. BEVERLY NESTER 5465 Chena Hot Springs Road Fairbanks, AK 99712 Telephone: (907) 488-6356 POSITION STATEMENT: Testified in support of CS HB 447. JOHN LITTEN Sitka Tours P. O. Box 1001 Sitka, AK 99835 Telephone: (907) 747-8443 POSITION STATEMENT: Testified in support of CS HB 447. RON SWANSON, Deputy Director Division of Lands Department of Natural Resources 3601 C Street, Suite 1122 Anchorage, AK 99503 Telephone: (907) 269-8503 POSITION STATEMENT: Available for questions on CS HB 447. DON SHERWOOD 1640 Brick Drive Anchorage, AK 99504 Telephone: (907) 333-6268 POSITION STATEMENT: Testified in support of CS HB 447. TOM STARR P. O. Box 870053 Wasilla, AK 99687 Telephone: (907) 373-7317 POSITION STATEMENT: Testified in support of CS HB 447. KEN RIVARD P. O. Box 871842 Wasilla, AK 99687 Telephone: (907) 376-2140 POSITION STATEMENT: Testified in support of CS HB 447. ROD ARNO P. O. Box 871842 Wasilla, AK 99687 Telephone: 376-2913 POSITION STATEMENT: Testified in support of CS HB 447. JIM STRATTON, Director Division of Parks Department of Natural Resources 3601 C Street, Suite 1200 Anchorage, AK 99503-5921 Telephone: (907) 269-8700 POSITION STATEMENT: Available for questions on CS HB 447. CLIFF EAMES Alaska Center for the Environment 519 West 8th Street, Suite 201 Anchorage, AK 99501 Telephone: (907) 274-3621 POSITION STATEMENT: Has concerns with CS HB 447. TINA LINDGREN, Director Alaska Visitors Association 3601 C Street, Suite 403 Anchorage, AK 99503 Telephone: (907) 561-5733 POSITION STATEMENT: Testified in support of CS HB 447. GARY MARIAN 7050 Fergy Circle Anchorage, AK 99507 Telephone: (907) 349-6496 POSITION STATEMENT: Testified in support of CS HB 447. MICK MANNS Paradise Valley Bettles, AK 99726 Telephone: (907) 479-5704 POSITION STATEMENT: Testified in support of CS HB 447. REPRESENTATIVE GENE THERRIAULT Alaska State Legislature Capitol, Room 421 Juneau, AK 99801 Telephone: (907) 465-4797 POSITION STATEMENT: Testified on HB 360. JANICE ADAIR, Director Environmental Health Department of Environmental Conservation 555 Cordova Street Anchorage, AK 99501 Telephone: (907) 267-7644 POSITION STATEMENT: Testified on HB 360. ACTION NARRATIVE TAPE 96-17, SIDE A Number 000 CO-CHAIRMAN JOE GREEN called the House Resources Committee meeting to order at 8:15 a.m. Members present at the call to order were Representatives Green, Ogan, Davies, and Long. Representatives Austerman, Kott and Nicholia were excused. Members absent were Representatives Barnes and Williams. No quorum was present. HB 447 - CAN'T CLOSE LAND TO TRADITIONAL REC. USES  CO-CHAIRMAN GREEN announced that the committee would take testimony on HB 447 but could not take action without a quorum. Number 070 REPRESENTATIVE BEVERLY MASEK thanked Representative Scott Ogan for chairing the subcommittee on HB 447. She said she had reviewed the proposed committee substitute and is comfortable with the changes. She said the companion bill in the Senate, SB 230, had received tremendous support there. Number 286 REPRESENTATIVE SCOTT OGAN discussed the changes in HB 447: (1) New title to reflect changes in the bill. (2) Section 1, adds intent language to assure nothing in the bill affects private property interests. (3) Section 3, lines 13 - 16, provides for reasonable alternatives for access when conflict occurs. Lines 23, 24, 27 add new means of access and new activities covered in bill. (4) New Section 4, establishes authority for development interests to control access across leased areas when a reasonable alternative is not available to go around it. Number 535 REPRESENTATIVE JOHN DAVIES noted that there is an exception for the development of natural resources. He speculated supposing that a commissioner wanted to develop a park or a nature trail with a pull out along side of a highway. He asked if the language in CSHB 447 prohibits the commissioner from doing that and also not allowing motorized vehicles on the nature trail. DAVID STANCLIFF, Legislative Staff to Representative Beverly Masek, responded that it does not. CSHB 477 purposefully stayed out of Title 41 authority which is the park authority. This is Title 38, which are general lands where either you have access for traditional recreational activities or development such as mining, timber and land disposals. Number 626 REPRESENTATIVE DON LONG referred to the language in Section 3, subsection (3) hunting, fishing, trapping, harvest of natural foodstuffs and said that he did not consider any of those to mean "traditional recreational activities." He said he prefers the language "traditional outdoor activities" and would like to offer an amendment. Number 692 MR. STANCLIFF responded that Representative Long's suggested language change would be considered a friendly or technical amendment if the language were changed from "traditional recreational activities" to "traditional outdoor activities" throughout the bill. CO-CHAIRMAN GREEN stated to Representative Long that in lieu of a quorum, the committee would continue to hear comments but would be unable to take action on the proposed amendment at this time. REPRESENTATIVE LONG said that the proposed amendment would take care of his concerns. Number 814 REPRESENTATIVE OGAN stated that one other issue was discussed in the subcommittee meeting. Representative Irene Nicholia had recommended the exclusion of "air boats." He said he felt that was a controlled use area and should be regulated by the Department of Fish and Game as a resource problem. CO-CHAIRMAN GREEN referred to the February 15 letter from Steven Borell, Alaska Miners Association, requesting a new subsection in Section 2, (d)(3), by adding "required for protection of public safety." Number 963 MR. STANCLIFF said if the Alaska Miners Association amendment is adopted and it pertains specifically to conflicts with development, that would be considered a friendly amendment. If the amendment is broadened to public safety reasons for the entire concept of the bill, then it creates a loophole for administrative regulators. Number 1054 BEVERLY NESTER testified from Fairbanks stating that public access to and use of public lands, waterways and right-of-ways have often been hindered by interagency battles over authority and (indisc.) existence of right-of-ways. While one agency may recognize right- of-ways such as section lines, another may not. Many public lands are landlocked by privately owned land, Native lands, or reserved public lands such as state parks and do not allow access through their boundaries. Some valid existing trails have through bureaucratic decree have been changed to single use only, thus depriving the general public of access. As a result, public lands become the dominion of a select few. The key to unlocking the door for public use or public lands is access. HB 447 appears to be a step in the right direction. She stated that with the passage of this bill, all state agencies with jurisdiction over public land, waterways and right-of-ways could establish a clear policy and procedure providing for local access to and within public lands. Public lands without access are not public. Number 1165 JOHN LITTEN testified from Sitka stating that he is an operator of a small tourism business, and on a day-to-day basis, his company requires access to public land. He said HB 447 is helpful to all Alaskans and it will provide continual access to public lands for traditional activities. He said his concern about the bill is that it falls short of achieving ultimate goals for tourism uses but it is a step in the right direction. Number 1271 RON SWANSON, Deputy Director, Division of Lands, Department of Natural Resources, said he did not have a copy of the committee substitute and would appreciate a chance to review it. Number 1293 REPRESENTATIVE DAVIES asked Mr. Swanson if he had heard the exchange between himself and Mr. Stancliff about whether CSHB 447 prohibits the commissioner from developing a park or a nature trail with a pull out along side of a highway and bans motorized vehicles on the nature trail. MR. SWANSON replied that he would have to review the committee substitute before responding to the question. Number 1343 DON SHERWOOD, Vice Chairman, Susitna Basin Recreational River Management Plan, a civilian advisory committee, testified in support of HB 447. He said it is time that we stopped the inroads of the "big green machine" restricting our access and recommended that the Department of Fish and Game and the Board of Game be included in the bill. He said he was in complete agreement with Representative Long's amendment to delete "traditional recreational activities" and insert "traditional outdoor activities." CO-CHAIRMAN GREEN asked that the record reflect the presence of committee members Representatives Davies, Long, Ogan and Green. Number 1496 TOM STARR, President, Mat-Su Motor Mushers Snowmobile Group, testified in support of HB 447 saying that these areas need to be further established and designated. KEN RIVARD testified on behalf of the Alaska Airmen's Association and the Mat-Su Aircraft Owners Association in support of HB 447. He felt that HB 447 should also encompass Title 16 because Fish and Game regulations restrict motorized vehicles in many areas. He referred to Title 41, Section 23, as having a lot of restrictions on float planes. He expressed frustration in dealing with the Department of Natural Resources concerning the Deshka River. Number 1784 ROD ARNO, President, Alaska Outdoor Council, stated that the council applauds Representative Masek and her staff for the introduction of HB 447. He said the council supports this bill because access to public land for traditional outdoor uses is of great interest to the Outdoor Council. He said that special interest groups, in this case the Alaska Visitors Association, as stated in "Destination Alaska," is determining what they consider to be primary tourism zones without public input. JIM STRATTON, Director, Division of Parks, Department of Natural Resources stated that his participation was just to listen to the witnesses. Number 1840 CLIFF EAMES, Alaska Center for the Environment, testified that the center is concerned with the level of management that HB 447 would involve the legislature in. The present administrative process is entirely adequate with regard to both public participation and opportunities for fine tuning some fairly difficult and complex issues. We think that these matters are best dealt with at the administrative level. He felt that the thrust of the bill prevents the Division of Lands from attempting to manage motorized vehicles. MR. EAMES stated that the center believes that there is a very serious question of fundamental fairness here and that is the state is not providing adequate opportunities for people who enjoy quiet recreational sports. "We believe that this is a gross imbalance, it is greatly unfair and unequitable and it needs to be resolved. We have been urging the Division of Lands and the Division of Parks, for years, to redress this imbalance. So far without success. This bill will make it even more difficult to provide some opportunities for quiet recreation. I am not sure what the Alaska Visitors Association will be saying today, but I would point out that there a lot of tourism operators who do not feel that they are adequately represented by the AVA who rely on wild areas, wild quiet areas to make their living. They are very poorly provided for on state lands." Tina Lindgren, Executive Director, Alaska Visitors Association, testified that over 600 members statewide make up the association. She said the association relies heavily on public lands in Alaska in order to accommodate people who cater to the visitor industry. There is also tremendous pressure to restrict access for commercial purposes of all kinds throughout the state. We believe that it is essential that visitors be allowed to visit public lands and do those things such as hiking with a guide. We support the premise of HB 447 which is to protect recreational access to state land. She responded that Mr. Arno misinterpreted "Destination Alaska," the AVA did not establish any zones. It was a recommendation made by the report. GARY MARIAN, Vice President, Alaska Boaters Association, and member of the Alaska Outdoor Council testified stating that he should urge the committee to go against this bill, but he felt that a temporary commissioner should not have the right to close access. He urged the committee to pass HB 447 stating that he did not feel that any individual should have the right to close access to our public lands. Number 2131 MICK MANNS, representing Paradise Valley Mining, the miners from the Wiseman, Coldfoot and Bettles areas, and the recreational dog mushers and snowmachiners in the area, urged the passage of HB 447. He said Section A of the Alaska Constitution reads, "the lessee has the right to control trespass" and the UCC code adopted by the state of Alaska reads, "a landlord who retains complete control over an area also retains liability." He recommended the inclusion of a no trespass provision for snowmachiners, dog mushers and other people using those areas to stay out of the designated area. Number 2230 MR. STANCLIFF commented that Mr. Manns may not have a copy of the committee substitute. Page 3, lines 7 and 8 says that the lessee may control and direct access across the development parcels. Number 2277 CO-CHAIRMAN GREEN reiterated that the committee could not take action on CSHB 447 due to a lack of quorum. He expressed appreciation to the sponsor and the subcommittee for their work on the committee substitute. HB 360 - PROHIBIT DEC FINES IN CONSENT ORDERS Number 2306 REPRESENTATIVE THERRIAULT read the sponsor statement for HB 360 into the record: "This legislation is intended to halt a practice currently in use by the Department of Environmental Conservation that allows the agency to levy fines without having the specific statutory authority to do so. Under current law, DEC has broad authority to `enter into contracts necessary or convenient to carry out the functions, powers and duties of the department.' Under that authority, DEC can issue a `consent order' that functions as a contract with an entity the DEC believes has violated an emission standard or law. In the contract, DEC agrees to forgo other remedies in return for the agreement of the other party to abate the alleged pollution and pay a fine for past alleged pollution. Although this practice could possibly hold up in court if challenged, I do not believe it is appropriate as a policy matter for an agency to levy administrative fines and penalties when the Legislature has chosen not to grant them that specific power." REPRESENTATIVE THERRIAULT said the legislature has not given the DEC the power to fine individuals through administrative mechanism. However, if a person is out of compliance with an operating permit, rather than challenge the person's permit and institute actions to review and, perhaps, pull that person's permit, they negotiate with the permittee and enter into a contract with them to bring the facilities into compliance and do certain things. In negotiating that contract, one of the provisions of the contract may be that the person pay a fine in the future if they are again out of compliance. However, there have been instances where part of the contract stipulates that they will pay a fine or fee for being out of compliance in the past, so retroactively fining an individual. REPRESENTATIVE THERRIAULT felt that there is an incredible amount of pressure for facilities to, basically, do whatever the DEC wants so that they can keep operating. REPRESENTATIVE THERRIAULT said when it comes to large businesses that is not so much of a problem. In Southeast Alaska, where you have large logging operations, pulp mills, etc., they would rather use the consent order than go to litigation to retain their permit. In Southcentral, the Anchorage area, where you have a lot more large corporations, they also see benefit in the consent orders. But, in Fairbanks, we do not have that many large industries, we have a lot of small moms and pops. They feel that they are under considerable pressure from the DEC to capitulate to the demands of the DEC or else their permit will be challenged through legal action.....(change tape) TAPE 96-17, SIDE B Number 000 REPRESENTATIVE THERRIAULT said he has a real problem with consent orders that levy fines retroactively. He hypothesized --if my facility is out of compliance and the DEC wants to pressure me to take certain steps to come into compliance, I do not have as much a problem with that. If I have done something that is out of compliance and cause a spill or pollution in the past and DEC wants to negotiate with me to clean up that past violation, I do not have that much of a problem. But just fining somebody retroactively, and having them agree to be fined prospectively, I have a problem with that. I think there is a policy call that the legislature should make. Number 039 CO-CHAIRMAN GREEN conjectured that if today, the DEC were to come to a company and say we are going to get you for stuff that has been going on for 10 years, but during that 10 year period, the DEC had not approached the company to try and correct it. Number 052 REPRESENTATIVE THERRIAULT said this particular instance, the DEC and the permittee were negotiating back and forth. When they finally entered into the agreement, the company agreed to be fined in future, but also the DEC said, well, we have got these three past notices of violations. The company felt like they were really under the gun, they had contracts to perform on and DEC was threatening to start legal proceedings to pull their permit. He said if he had been involved in that particular case earlier, he would have advised them not to sign a consent order, particularly because of the retroactive fining. He said the company did sign the consent order and now they are trying to bring their facility into compliance and pay this retroactive fine and they find themselves stretched almost to the point of breaking. Number 128 REPRESENTATIVE THERRIAULT stated that he understood the DEC's responsibility in being responsive to allegations and people operating out of compliance and complaints. Number 195 REPRESENTATIVE DAVIES asked Representative Therriault the nature of the alleged violation. REPRESENTATIVE THERRIAULT responded odor problems from an incinerator. He said one of the complaints was that an individual called up and said there was a smell of burning hair. He said the plant does not put out that kind of a smell. Number 239 JANICE ADAIR, Director, Division of Environmental Health, Department of Environmental Conservation read her statement on HB 360 into the record: "HB 360 would prevent DEC from including a fine for violations or alleged violations of AS 46.03 in any `consent order" or other agreement. The way this bill has been drafted is somewhat confusing - DEC does not have the authority to levy fines. In addition, consent orders are judgements entered by a court and agreed to by both parties involved. We have not prepared a fiscal note yet because we need to get clarification on both the question of fines, and whether or not the intent of the bill is to divest the judiciary of its ability to levy penalties. MS. ADAIR continued, "It is probably worthwhile to first review what kinds of costs can be assessed for violations of DEC statutes and also review the kinds of agreements, including consent orders, that DEC negotiates with permittees. MS. ADAIR proceeded, "AS 46.03.760 outlines the costs a person who violates provisions of Title 46 may be liable to pay in a civil action. These costs are: (1) liquidated damages that represent reasonable compensation for adverse affects of the violation; (2) reimbursement of reasonable costs incurred by the department in the detection, investigation, and attempted correction of the violation, and (3) the economic savings realized by the person for not complying. MS. ADAIR said, "The statute specifically states that these sums must be compensatory and remedial in nature. They may not be punitive. The only penalties that are authorized may be imposed by the court for violations of the air statutes and hazardous waste statutes. The language in the statute refers to `the need for an enhanced civil penalty to deter future noncompliance.' The imposition of penalties is not mandatory by the ability to do so is a requirement for state primacy in both air and hazardous waste programs. MS. ADAIR said, "When we have a situation where there is a violation, the department's preferred option is to negotiate a compliance schedule with the permittee. There are two kinds of negotiated agreements we use. The most common is a Compliance Order by Consent, and the other is a Consent Order, or Consent Decree. Both of these documents are negotiated with the permittee who is allegedly violating some statute which DEC is required to implement. They are contracts where both sides - the state and the permittee - get something out of it. A Consent Decree is filed with the Court, while a Compliance Order by Consent is not. Other than that, they are essentially the same thing. MS. ADAIR continued, "As I said, both sides get something out of these agreements. The permittee gets time to come into compliance while remaining in operation. The state gets compliance with the law. Both sides stay out of court. Compliance Orders by Consent and Consent Decrees or Orders will forestall an EPA action because the state is actively seeking compliance. Consent Decrees can also forestall citizen lawsuits which are allowed under most all federal environmental laws for the same reason - the state is actively seeking compliance. MS. ADAIR proceeded, "Negotiated into these contracts will be `stipulated' penalties. That is, penalties the permittee agrees to pay if he fails to comply with the Compliance Order, or if more time is needed for compliance, fails to work out a new schedule with the department. Because the compliance schedule is negotiated with the permittee based on the time lines they can meet, it is not common for these penalty sections to be invoked. But the ability to levy the penalty is a critical part of the `quid pro quo' that allows the public and the courts to view these arrangements as fair to both sides. They are also extremely effective in helping to achieve compliance with the laws. MS. ADAIR concluded, "The department questions why the legislature would want to remove the department's ability to negotiate these kinds of agreements with permittees. There is no requirement to sign a Compliance Order by Consent or a Consent Order - they represent a mutual agreement, and can allow a company the time and flexibility they need to come into compliance while at the same time assure the public that action is being taken to achieve that compliance. "Only if an agreement cannot be reached does going to court become a viable option. But if this bill were passed, going to court would be the only option." MS. ADAIR referred to the situation that Representative Therriault spoke to about the penalty for past actions. She said it did happen in that particular instance, but it is the only instance where she can find that it did happened. Number 472 CO-CHAIRMAN GREEN asked for clarification about "the club" or the threat that DEC has. Is this through the Environmental Protection Agency? MS. ADAIR replied that DEC sits down to negotiate a Compliance Order by Consent with someone and, people have been very forthcoming about what they can and cannot do, there is a concern, because they are out of compliance with the law. That all by itself raises the level of concern that they come into these negotiations with. We will have an attorney with us from the Department of Law and, in every case I have been involved with, there has been an attorney there for the other party. MS. ADAIR stated that the principal of the company that negotiated the Compliance Order by Consent is an attorney, so in this particular instance, they were represented by legal counsel. Because they are operating out of violation of the law, there is a concern that if we do not find some way to negotiate then some other action will have to be taken. So to the extent that that situation is there, people could perceive a club or some kind of threat. Number 542 CO-CHAIRMAN GREEN asked if during these meetings there was concern that the violation happened because the requirements were too stringent. Was there a problem that way or was it a malfunction of equipment? He said if you are in violation, I do not see what defense you have. MS. ADAIR replied that these things can be for a variety of reasons. In the drinking water program, we do Compliance Order by Consent in this program frequently. The federal rules which the state also adopts do require a lot of hoops for people to jump through and sometimes they just need more time. Smaller facilities with the surface water source need more time to come into compliance and the Compliance Order by Consent will buy them that. Number 622 REPRESENTATIVE DAVIES expressed his prejudice saying that he felt that consent orders are a good intermediary between doing nothing and allowing the pollution to continue and having the only option of going to court. He asked Ms. Adair if she felt that the Department of Environmental Conservation has adequate statutory authority in doing this kind of process. MS. ADAIR replied that DEC has very limited enforcement authority. We do not have administrative penalty authority which is why we developed these Compliance Orders by Consent. It allows us a way to negotiate with permittees without going to court. The penalty section that I gave you, those are all court ordered, court penalties. Those are for civil actions, and outside of civil actions, the Department of Environmental Conservation has no specific statutory authority for penalties or for compliance enforcement. We developed this process because everyone recognizes that going to court is the last thing you want to do. Most of the major companies, and even some of the smaller companies that operate in this state, they do not want to go to court; they do not want to have a pending environmental lawsuit against them. It is just not good business. This is a very important part of how we achieve compliance with the laws that have been passed. Number 714 REPRESENTATIVE DAVIES repeated his question, do you feel that you have adequate statutory authority? MS. ADAIR responded that absent this legislation, it works. The DEC has in the past taken the position that the administrative penalty authority would be an enhancement to that. Number 741 REPRESENTATIVE THERRIAULT commented that when the bill was being scheduled, he contacted people in the Fairbanks area to let them know it would be teleconferenced to Fairbanks and they could make comments if they wanted. He said that no one was willing to cross the Department of Environmental Conservation when they have this ability to pull a permit or come in and force them into these orders. He said there is something here that is not working right. People should feel comfortable in working with the DEC, but they hear that in doing so they can be not only forced to take steps in the future to come into compliance but also hit with retroactive fines. They are very fearful of dealing with the DEC. Number 800 CO-CHAIRMAN GREEN discussed the circumstances with the sponsor. Representative Therriault replied that the predicament was so bad that the company is willing to agree to anything as long as they can keep operating. REPRESENTATIVE THERRIAULT continued, some of these companies are stretched to the point that if they are shut down for a week they are out of business. They have lost their contracts and will not get their contracts back. So when the DEC and a person from the attorney general's office is across the table, they are under incredible pressure to agree to almost anything. CO-CHAIRMAN GREEN asked if this company is in fact, in violation. Number 845 REPRESENTATIVE THERRIAULT affirmed that was correct, they are in violation but they are taking steps to come into compliance. Number 871 CO-CHAIRMAN GREEN said if the DEC is willing to give them time to come into compliance what is the real crux of the problem. REPRESENTATIVE THERRIAULT explained that the company is going to be fined $5,000 retroactively for three notices of violation. Number 907 REPRESENTATIVE OGAN premised that HB 360 reflects the basic problem of the overall structure of the government. We are supposed to have the executive, the legislative and the judicial. What we have is a fourth branch of government called the bureaucracy that has all three powers wrapped up in it. He quoted from Winston Churchill, "When you have a lack of separation of powers between the executive and the judiciary, you have a formula for tyranny." He commented to Representative Therriault that it seemed to him that HB 360 would take away some of that judiciary power from the DEC. Number 977 REPRESENTATIVE DAVIES stated that if you were to take away that judiciousness on the part of DEC, their only other alternative is to go to court. We all know that is adversarial and expensive, and brings in the opportunity for even more bureaucratic and insensitive activities from the federal government. REPRESENTATIVE DAVIES observed that often what comes to the legislature's attention is almost the worst situation that exists. When situations are worked out amicably, people do not complain about them because they shrug and agree to them. But the absolute worst cases are the ones that come up, like this example. We have to understand that this is probably the most extreme case, we have heard testimony that this is the only case where retroactive fine was even considered. We should recognize that this is probably the most extreme case. Maybe this situation can be resolved by just simply reaching an understanding that it will not happen again or, if necessary, we could do statutory amendments that would say we just do not want this retroactive stuff. He asked Ms. Adair to respond. Number 1088 MS. ADAIR countered that this is the only situation found where the department has done a retroactive penalty. She replied to Representative Davies that it is difficult to say that in no case again would it be necessary. We were getting complaints on this particular facility and we had negotiated the Compliance Order by Consent. It was given to the facility and four months went by before they signed it. In that period of time, they continued to have violations. She said as the sponsor suggested it may be that some of those penalties will be dropped out because we can negotiate with these agreements and that is one of their benefits. MS. ADAIR said that there are certainly some situations that are pretty egregious and by the time we find them there may be damage, there may be an economic savings to this company for not having operated in compliance with the law. That is just inherently unfair to all those people that are operating in compliance with the law. We may need to have that flexibility, that instead of going to court to pursue that penalty or that economic savings, to be able to level a penalty through a compliance order for that economic savings. Number 1199 REPRESENTATIVE DAVIES interpreted that without the possibility of the DEC "hammer," it seems that we are inviting people to operate in violation of the law until they got caught. Why bother, if we are never going to be fined retroactively for being in violation of the law. Why follow the stipulations of the permit until somebody slaps you on the hand. Operate without fear of the consequences. Number 1246 CO-CHAIRMAN GREEN discussed a case in Anchorage where a company's incinerator was creating air pollution and they were given multiple notices, the company made multiple promises, and no action. He said that the frustration of the people he represents is that the Department of Environmental Conservation needed a bigger club. REPRESENTATIVE DAVIES said that in a case where there is notice and then no action, to fine in that situation, from the time of the notice, I would not consider that retroactive. Number 1304 REPRESENTATIVE THERRIAULT replied that the particular case in Fairbanks, the company had taken steps throughout the summer to bring the facility into compliance and modify the plant to bring it into compliance. The DEC always has the ability to challenge or start a proceeding against the person's permit. If they are negotiating and they really feel the operator is just leading them on or stalling at any time, that person is truly out of compliance, the DEC has the authority to start the process. For the small operators, it is a different world than large industry who has personnel that deal with this specifically and do nothing but negotiate on compliance or noncompliance. Number 1407 C0-CHAIRMAN GREEN commented that it was his observation that the DEC was very swift to act against large companies because the amount of pollution is greater. He expressed concern of the threat or the hammer that the DEC would grab a license, and stated that, from his viewpoint, the DEC is very workable and continue almost `ad nauseam' to allow this compliance to be done. Number 1454 MS. ADAIR stated that revoking a permit is a long drawn out process. It is just not practical, it is costly and time consuming. It is a very serious action. Number 1530 REPRESENTATIVE LONG asked for clarification of statutes in the DEC document, Compliance Order by Consent, page 7, section 23. MS. ADAIR stated that this is the DEC's legal enforcement authority and it says that if the compliance order does not work, we have the right to take other action against the permittee to achieve compliance or to enforce the provisions of law. We reserve our right to bring an action in court for failure to comply. Number 1622 REPRESENTATIVE THERRIAULT asked the committee to look at the retroactive portion which is the real problem that needs to be fixed. He referred to the comments about encouraging somebody to be in violation until they are caught. He said that is the way it is with any law, you speed until you get a ticket but they do not look back and say we caught you speeding last week, we are going to give you a ticket for that one too. It seems like the retroactive portion which is not used by the department by their own admission often seems to be the most egregious part. Number 1664 MS. ADAIR said that when the department finds a violation, it gives a notice of violation which says, in case you did not know, you are violating the law and this is what you need to do to come into compliance. We may do that several times before we negotiate a Compliance Order by Consent. She said that taking away the ability to use past violations to factor in the penalties for the Compliance Order by Consent may result in not doing an (indisc.) and going right to Compliance Order by Consent so we can get people the first time. There may be instances where it is appropriate. There may be instances where the violations are just so bad and the department has tried everything to get them to comply that we ask the company to agree to pay DEC this penalty for having not played ball. Number 1834 REPRESENTATIVE DAVIES supposed that at any time in the process, the party can say no, I will see you in court. I do not agree to negotiate, I do not agree to pay this fine. I do not agree to do any of this stuff. Number 1883 MS. ADAIR stated that that has happened. What the department has then asked is, okay, what can you agree to, how can we work this so that you can agree to it. Number 1919 CO-CHAIRMAN GREEN assigned HB 360 to a subcommittee composed of Representatives Ogan, Long and himself to consider the retroactive issue and other questions. He invited Representative Therriault and Ms. Adair to participate in those meetings. ADJOURNMENT There being no further business to come before the House Resources Committee, Chairman Green adjourned the meeting at 9:20 a.m.