ALASKA STATE LEGISLATURE
SENATE JUDICIARY STANDING COMMITTEE
January 25, 2008
1:33 p.m.
MEMBERS PRESENT
Senator Hollis French, Chair
Senator Charlie Huggins, Vice Chair
Senator Lesil McGuire
Senator Bill Wielechowski
Senator Gene Therriault
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CS FOR HOUSE BILL NO. 151(JUD)
"An Act requiring an indemnification, defense, and hold harmless
provision in construction-related professional services
contracts of state agencies, quasi-public agencies,
municipalities, and political subdivisions."
MOVED SCS CSHB 151(JUD) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 7(FIN) am
"An Act relating to false caller identification."
HEARD AND HELD
CS FOR HOUSE BILL NO. 149(RES)
"An Act relating to the authority of the Department of
Environmental Conservation to require certain monitoring,
sampling, and reporting and to require permits for certain
discharges of pollutants; relating to criminal penalties for
violations of the permit program; and providing for an effective
date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 151
SHORT TITLE: INDEMNITY CLAUSE IN PUBLIC CONTRACTS
SPONSOR(s): REPRESENTATIVE(s) JOHNSON BY REQUEST
02/22/07 (H) READ THE FIRST TIME - REFERRALS
02/22/07 (H) STA, JUD
03/20/07 (H) STA AT 8:00 AM CAPITOL 106
03/20/07 (H) Heard & Held
03/20/07 (H) MINUTE(STA)
03/24/07 (H) STA AT 10:00 AM CAPITOL 106
03/24/07 (H) Moved CSHB 151(STA) Out of Committee
03/24/07 (H) MINUTE(STA)
03/26/07 (H) STA RPT CS(STA) NT 6DP
03/26/07 (H) DP: JOHANSEN, JOHNSON, COGHILL, DOLL,
GRUENBERG, LYNN
04/02/07 (H) JUD AT 1:00 PM CAPITOL 120
04/02/07 (H) Heard & Held
04/02/07 (H) MINUTE(JUD)
04/30/07 (H) JUD AT 1:00 PM CAPITOL 120
04/30/07 (H) Moved CSHB 151(JUD) Out of Committee
04/30/07 (H) MINUTE(JUD)
05/01/07 (H) JUD RPT CS(JUD) NT 3DP 4NR
05/01/07 (H) DP: GRUENBERG, LYNN, RAMRAS
05/01/07 (H) NR: COGHILL, DAHLSTROM, HOLMES, SAMUELS
05/09/07 (H) TRANSMITTED TO (S)
05/09/07 (H) VERSION: CSHB 151(JUD)
05/09/07 (S) READ THE FIRST TIME - REFERRALS
05/09/07 (S) STA, JUD
05/12/07 (S) STA RPT 2DP 2NR
05/12/07 (S) DP: MCGUIRE, GREEN
05/12/07 (S) NR: FRENCH, BUNDE
05/12/07 (S) STA AT 1:00 PM BELTZ 211
05/12/07 (S) Moved CSHB 151(JUD) Out of Committee
05/12/07 (S) MINUTE(STA)
01/21/08 (S) JUD AT 1:30 PM BELTZ 211
01/21/08 (S) Heard & Held
01/21/08 (S) MINUTE(JUD)
BILL: HB 7
SHORT TITLE: FALSE CALLER IDENTIFICATION
SPONSOR(s): REPRESENTATIVE(s) LYNN, GARDNER
01/16/07 (H) PREFILE RELEASED 1/5/07
01/16/07 (H) READ THE FIRST TIME - REFERRALS
01/16/07 (H) JUD
01/22/07 (H) JUD AT 1:00 PM CAPITOL 120
01/22/07 (H) Scheduled But Not Heard
01/24/07 (H) JUD AT 1:00 PM CAPITOL 120
01/24/07 (H) Heard & Held
01/24/07 (H) MINUTE(JUD)
01/31/07 (H) JUD AT 1:00 PM CAPITOL 120
01/31/07 (H) Heard & Held
01/31/07 (H) MINUTE(JUD)
02/01/07 (H) JUD AT 1:00 PM CAPITOL 120
02/01/07 (H) Heard & Held
02/01/07 (H) MINUTE(JUD)
02/05/07 (H) JUD AT 1:00 PM CAPITOL 120
02/05/07 (H) Heard & Held
02/05/07 (H) MINUTE(JUD)
02/08/07 (H) JUD AT 1:00 PM CAPITOL 120
02/08/07 (H) Moved CSHB 7(JUD) Out of Committee
02/08/07 (H) MINUTE(JUD)
02/12/07 (H) JUD RPT CS(JUD) 2DP 4NR
02/12/07 (H) DP: GRUENBERG, LYNN
02/12/07 (H) NR: COGHILL, SAMUELS, HOLMES, RAMRAS
02/12/07 (H) FIN REFERRAL ADDED AFTER JUD
02/21/07 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/21/07 (H) Heard & Held
02/21/07 (H) MINUTE(FIN)
03/05/07 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/05/07 (H) Moved CSHB 7(FIN) Out of Committee
03/05/07 (H) MINUTE(FIN)
03/07/07 (H) FIN RPT CS(FIN) 2DP 7NR
03/07/07 (H) DP: CRAWFORD, MEYER
03/07/07 (H) NR: GARA, STOLTZE, JOULE, NELSON,
THOMAS, HAWKER, CHENAULT
03/16/07 (H) TRANSMITTED TO (S)
03/16/07 (H) VERSION: CSHB 7(FIN) AM
03/19/07 (S) READ THE FIRST TIME - REFERRALS
03/19/07 (S) JUD, FIN
01/23/08 (S) JUD AT 1:30 PM BELTZ 211
01/23/08 (S) -- MEETING CANCELED --
01/25/08 (S) JUD AT 1:30 PM BELTZ 211
BILL: HB 149
SHORT TITLE: POLLUTANT DISCHARGE PERMITS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/21/07 (H) READ THE FIRST TIME - REFERRALS
02/21/07 (H) RES, JUD
03/12/07 (H) RES AT 1:00 PM BARNES 124
03/12/07 (H) Heard & Held
03/12/07 (H) MINUTE(RES)
03/19/07 (H) RES AT 1:00 PM BARNES 124
03/19/07 (H) Moved CSHB 149(RES) Out of Committee
03/19/07 (H) MINUTE(RES)
03/21/07 (H) RES RPT CS(RES) 4DP 1DNP 4NR
03/21/07 (H) DP: WILSON, ROSES, JOHNSON, GATTO
03/21/07 (H) DNP: SEATON
03/21/07 (H) NR: KAWASAKI, GUTTENBERG, EDGMON,
KOHRING
04/11/07 (H) JUD AT 1:00 PM CAPITOL 120
04/11/07 (H) Moved CSHB 149(RES) Out of Committee
04/11/07 (H) MINUTE(JUD)
04/13/07 (H) JUD RPT CS(RES) 3DP 3NR
04/13/07 (H) DP: GRUENBERG, LYNN, RAMRAS
04/13/07 (H) NR: SAMUELS, HOLMES, COGHILL
04/20/07 (H) TRANSMITTED TO (S)
04/20/07 (H) VERSION: CSHB 149(RES)
04/23/07 (S) READ THE FIRST TIME - REFERRALS
04/23/07 (S) JUD
01/23/08 (S) JUD AT 1:30 PM BELTZ 211
01/23/08 (S) -- MEETING CANCELED --
01/25/08 (S) JUD AT 1:30 PM BELTZ 211
WITNESS REGISTER
JEANNE OSTNES, Staff
to Representative Craig Johnson
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Answered questions related to HB 151 on
behalf of the sponsor.
JOHN ASHENBRENNER, Deputy Attorney
Matanuska-Susitna Borough
Palmer, AK
POSITION STATEMENT: Expressed concern with HB 151.
NELSON PAGE, Attorney
Anchorage, AK
POSITION STATEMENT: Spoke in support of the Senate CS for HB
151.
MICHAEL CARLSON, Partner
McCool Carlson Green Architects
Anchorage, AK
POSITION STATEMENT: Supported HB 151.
LEANNE BOLDNOW, Insurance Broker
Marsh USA
POSITION STATEMENT: Testified on HB 151.
REPRESENTATIVE BOB LYNN
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Sponsor of HB 7
DIRK MOFFET, Staff
to Representative Bob Lynn
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Provided information on HB 7 on behalf of
the sponsor.
ED SNIFFEN, Assistant Attorney General
Civil Division
Department of Law (DOL)
Anchorage, AK
POSITION STATEMENT: Answered questions related to HB 7.
RODNEY DIAL, Lieutenant
Alaska State Troopers
Department of Public Safety (DPS)
POSITION STATEMENT: Responded to questions related to HB 7.
LARRY HARTIG, Commissioner
Alaska Department of Environmental Conservation (DEC)
Juneau, AK
POSITION STATEMENT: Provided introductory remarks for HB 149.
CAMERON LEONARD, Assistant Attorney General
Civil Division, Environmental Section
Department of Law (DOL)
Fairbanks
POSITION STATEMENT: Gave a sectional analysis for HB 149.
ACTION NARRATIVE
CHAIR HOLLIS FRENCH called the Senate Judiciary Standing
Committee meeting to order at 1:33:23 PM. Present at the call to
order were Senator Huggins, Senator Therriault, Senator
Wielechowski, and Chair French. Senator McGuire arrived shortly
thereafter.
CSHB 151(JUD)-INDEMNITY CLAUSE IN PUBLIC CONTRACTS
CHAIR FRENCH announced the consideration of HB 151. [Before the
committee was CSHB 151(JUD).] He highlighted the proposed Senate
Committee Substitute (CS). The only difference is that "where
there is joint liability." is deleted from page 1, lines 13-14
of the current version O.
1:34:22 PM
SENATOR HUGGINS moved SCS CSHB 151, version N, as the working
document.
SENATOR THERRIAULT asked if the prime sponsor agrees with the
language change.
CHAIR FRENCH said he understands that the sponsor requested the
change. He and the drafter saw the language as surplus.
1:34:43 PM
JEANNE OSTNES, Staff, to Representative Craig Johnson, confirmed
that the sponsor agrees with the change.
1:35:08 PM
SENATOR WIELECHOWSKI asked if removing the language changes the
bill.
MS. OSTNES replied, "Through the discussion that the committee
was having and through legal, it just seemed to end some of the
discussion that lawyers would have with more words."
CHAIR FRENCH announced that without objection, version N is
before the committee.
MS. OSTNES clarified that the intent of the legislation is to
address professional services contracts. Page 2, line 25, refers
to professional services as defined in the definitions section
of the state procurement code. She read AS 36.30.990(19) as
follows:
(19) "professional services" means professional,
technical, or consultant's services that are
predominantly intellectual in character, result in the
production of a report or the completion of a task,
and include analysis, evaluation, prediction,
planning, or recommendation;
1:36:43 PM
SENATOR McGUIRE joined the meeting.
1:37:19 PM
JOHN ASHENBRENNER, Deputy Attorney, Matanuska-Susitna (MatSu)
Borough, stated that the Alaska Constitution tasks
municipalities with providing a myriad of services to the
public. To carry that duty to fruition, they should be given
maximum flexibility. He read Article X, Section 1 of the
constitution to support his view.
The purpose of this article is to provide for maximum
local self-government with a minimum of local
government units, and to prevent duplication of tax-
levying jurisdictions. A liberal construction shall be
given to the powers of local government units.
MR. ASHENBRENNER said contract negotiations are part of the
process for reaching agreement between local government and
contractors, and a mandated indemnification clause runs counter
to allowing local government to deliver those services. A second
concern is that this clause could be applied where professional
services are provided in hybrids, such as design built
contracts. The definition of "professional services" in AS
36.30.990(19) and the definition of "construction" in paragraph
(1) of the bill could lead to the conclusion that municipalities
could not use protective indemnification clauses, which are
widely used in construction contracts. If this goes forward, we
would ask that the MatSu Borough be exempted from this
provision, he said. Furthermore, it ought to be clear that it is
not intended to apply to design built contracts because those
save the public money.
1:41:55 PM
MR. ASHENBRENNER expressed concern with the language that talks
about comparative fault basis because it could be construed as
obligating the government in a joint liability claim to
indemnify the contractor. If it were construed that way, an
attorney general opinion from 2005 says that an additional
appropriation at the local and the state level would be
necessary. That would be an additional cost for the government.
1:44:09 PM
CHAIR FRENCH asked how, on a comparative fault basis, either
side could indemnify the other for something they did not do.
"Isn't that exactly what comparative fault's about?"
MR. ASHENBRENNER said he's been struggling with the question of
whether this would be cross indemnification and that may or may
not be the case. However, the larger concern for the MatSu
Borough is that the provision should not apply to design built
or hybrid contracts. It's difficult to think that applying a
mandated contractual provision for all professional related
contracts is appropriate in all contexts, he said.
1:46:57 PM
SENATOR WIELECHOWSKI asked if the suggested indemnification
language is very different than what the borough currently uses.
MR. ASHENBRENNER said yes, but stronger language has been used
in some contracts.
SENATOR WIELECHOWSKI asked if the bill will have a financial
impact to MatSu Borough.
MR. ASHENBRENNER said it could; the cost of litigation will
probably go up because the contractor's obligation to indemnify
and defend the local or state government won't be as broad.
1:48:44 PM
NELSON PAGE, Anchorage Attorney, spoke in support of the Senate
CS for HB 151. He explained that he represents a large number of
design professionals statewide and indemnification is a very
difficult issue for his clients. For example, the
indemnification clause that the MatSu Borough and others use
requires a design professional to accept all legal and financial
responsibility for errors made by any party to the contract even
if another party is 99 percent responsible and someone other
than the design professional is responsible for the other 1
percent. Usually he recommends that his clients not sign those
clauses. When the other party won't agree to amend the clause,
his client has to either turn down the work or sign the contract
and assume huge risk for which there is no insurance. Insurance
usually covers negligence of the design professional but not
contractual obligations.
MR. PAGE said in some respects the CS favors the people who are
contracting with the design professionals. First, the bill
allocates responsibility fairly; the entity that is negligent
and causes damages will be held responsible to the extent of
those damages. Second, it's an advantage to state and local
governments to the extent that it's easier for design
professionals to bid on projects. Smarter design professionals
won't bid on contracts with an onerous indemnification clause,
he said. Finally, government may save money to extent that
design professionals are padding their bids to cover the
additional risk.
1:52:07 PM
MICHAEL CARLSON, Partner, McCool Carlson Green Architects, said
he supports HB 151 because it makes everyone responsible for
their own mistakes and negligence. It's the right thing to do
and it's good public policy. Part of the advantage of HB 151 is
that when the language is consistent, it can be consistently
interpreted by the court. He encouraged the committee to move
the bill.
1:55:27 PM
LEANNE BOLDNOW, Insurance Broker, Marsh USA, said she has been a
member of the Alaska Design Professional Council and was on the
contract task force. Stating support for HB 151, she said she
has represented more than 30 design firms across the state and
has continually reviewed poorly written contracts. Many of those
contracts are uninsurable because of contract wording and the
indemnification clause. She explained that a design consultant's
work is intellectual property and as such design professional
insurance provides defense when negligent act, errors, or
omissions are tied to the intellectual property. When public
entities publish contracts that reference general construction,
she recommends that design professional insurance will not cover
that contract.
MS. BOLDNOW relayed that it was not the intent of the task force
or the sponsor to allow a building contractor to morph into the
design contract and thereby gain from HB 151.
1:57:56 PM
CHAIR FRENCH, finding no one else who wanted to testify, closed
public testimony and asked for committee discussion.
SENATOR WIELECHOWSKI stated that HB 151 doesn't appear to be
particularly interesting on its face, but it presents very
interesting and colliding ideas. There's the concept of fairness
and the fact that each party should bear the cost of their own
negligence. That clashes with the free market and the ability of
municipalities or agencies to negotiate contracts to their
liking. But if a municipality can negotiate and get another
party to accept their liability, it's not a bad thing under the
free market theory. Another thing that collides is the inability
of the designer to get insurance. It's been an interesting
discussion, he added.
CHAIR FRENCH agreed it is a lively issue, but he believes that
it boils down to the issue of fairness.
1:59:41 PM
SENATOR McGUIRE motioned to report Senate CS for CSHB 151,
version N, from committee with individual recommendations and
attached fiscal note(s).
CHAIR FRENCH announced that without objection SCS CSHB 151 (JUD)
moves from committee.
CSHB 7(FIN)am-FALSE CALLER IDENTIFICATION
2:01:39 PM
CHAIR FRENCH announced the consideration of CSHB 7(FIN) am.
REPRESENTATIVE BOB LYNN, sponsor of HB 7, explained that the
bill relates to false caller identification. That means that
your caller ID may not be accurate, he said. This has the
potential to create serious mischief and it could facilitate
fraud. We ought to take proactive steps to make false caller ID
illegal in Alaska, he said.
2:03:25 PM
DIRK MOFFET, Staff, to Representative Bob Lynn, explained that
the technology for false caller ID isn't new, but it's easier
and less expensive. Now someone with a $10 calling card can
alter their caller ID and even change the sound of their voice.
For example, someone could change their caller ID so that you'd
think that Bank of America is calling. He referenced an AP
article that discussed how easy spoof caller ID has become.
MR. MOFFET relayed that Congressman Tim Murphy from Pennsylvania
testified that someone falsely entered his office phone number
on caller ID. That person called his constituents and slandered
the congressman. He only learned about the calls when people
from his district called his office questioning why the
congressman would say such negative things about himself. There
are many other examples, he said.
MR. MOFFET said the bill doesn't address the technology of how
the spoof gets on the caller ID. It simply says that it is a
crime to insert false caller ID information into a caller ID
system with the intent to defraud. HB 7 establishes that this is
a class A misdemeanor.
2:06:23 PM
SENATOR THERRIAULT noted a discrepancy in the penalty between
the bill and the fiscal notes and asked what the sponsor's
intent is.
MR. MOFFIT clarified that the intent is a class A misdemeanor.
SENATOR THERRIAULT asked what that penalty includes.
MR. MOFFIT replied it carries a $10,000 fine and 365 days in
jail.
CHAIR FRENCH said that's the maximum penalty.
MR. MOFFIT agreed.
CHAIR FRENCH asked what "intent to defraud" means and whether
the situation with the congressman would be a crime under this
bill.
2:07:49 PM
MR. MOFFIT deferred the question to the Department of Law.
SENATOR THERRIAULT provided a copy of the statutory language for
"intent to defraud."
2:08:40 PM
ED SNIFFEN, Assistant Attorney General, Civil Division,
Department of Law (DOL), read the definition of "intent to
defraud" in AS 11.46.990(11)(A) and (B) and said he believes it
is broad enough to include fraud aimed at financial harm,
deception, reputational injury or other harm. He believes that
the definition is broad enough to include the harassment of the
congressman.
CHAIR FRENCH agreed. He said his interest is to cover situations
where someone is trying to obtain a Social Security number, a
bank account number, an attempt to contact a women's shelter, or
an attempt to harass someone.
2:10:24 PM
SENATOR WIELECHOWSKI asked if each call that goes out with the
same message constitutes a separate offense.
MR. SNIFFEN said DOL would view it that way if the recipients
were different. The Alaska Consumer Protection Act defines a
violation to include every separate transaction that could
potentially affect a consumer. If a call center switchboard
calls 10,000 people with the push of a button, each of the
potential victims would have a claim and so each call would
potentially be a violation.
SENATOR WIELECHOWSKI commented the example above could send
someone to prison for life and that seems a bit harsh.
MR. SNIFFEN said he'd defer to Ms. Carpeneti, but he believes
the sentencing judge would have discretion.
2:12:14 PM
MR. MOFFET reminded members that this sort of crime is difficult
to detect and catch so the deterrent effect is important.
SENATOR THERRIAULT highlighted typical home electronics and
questioned whether it really would be difficult to detect.
CHAIR FRENCH asked if spoof caller ID is a problem in Alaska.
MR. MOFFET said his research shows it's happening in the Lower
48.
CHAIR FRENCH asked Lieutenant Dial if there have been cases of
spoof ID in Alaska.
2:13:56 PM
RODNEY DIAL, Lieutenant, Alaska State Troopers, Department of
Public Safety (DPS), said it's unclear how many of these cases
are occurring. But DPS suspects that spoof ID is involved in
some theft and deception, impersonation, and extortion cases.
SENATOR McGUIRE said a company is defined as a person and she
doesn't recall if a company can be charged with a crime.
MR. SNIFFEN explained that a company can be charged with
violation of the Consumer Protection Act. In general DOL tries
to identify individuals within the company who are responsible
for making decisions. However, Federal Trade Commission cases
have looked at phone boiler rooms where clerks make illegal
telemarketing calls. If those clerks know that their conduct is
illegal and they continue, it's not a defense to place the blame
on the supervisor. Each of those clerks could be responsible for
their own conduct.
2:15:57 PM
SENATOR WIELECHOWSKI asked if there's already a law prohibiting
this behavior.
MR. SNIFFEN said he believes this conduct is covered by a
variety of statutes. For example, it could be theft by
deception. Under the Consumer Protection Act the conduct is
arguably already prohibited because unfair trade practice is a
violation. But this would make it clear and it would add the
criminal element to the conduct.
SENATOR WIELECHOWSKI asked Lieutenant Dial if he foresees any
cost associated with the bill.
MR. DIAL said yes, primarily in the cost for training specific
to this type of crime. The estimate is $25,000 or less.
2:17:54 PM
CHAIR FRENCH announced he would hold HB 7 in committee.
CSHB 149(RES)-POLLUTANT DISCHARGE PERMITS
CHAIR FRENCH announced the consideration of HB 149. [Before the
committee was CSHB 149(RES).]
2:18:31 PM
LARRY HARTIG, Commissioner, Alaska Department of Environmental
Conservation (DEC), described HB 149 as a clean-up bill. Several
years ago the legislature passed a bill directing DEC to apply
to EPA (Environmental Protection Agency) to transfer primacy,
which is the authority to issue National Pollutant Discharge
Elimination System (NPDES) permits in Alaska. He explained that
the federal Clean Water Act (CWA) requires that certain
dischargers are required to have an NPDES permit and then they
must comply with the terms of the permit.
COMMISSIONER HARTIG explained that EPA has identified several
areas where state statutes must be changed in order for the
state to get primacy The concern is that Alaska law must be at
least as rigorous as the federal law. The Palin Administration
recognizes the importance of having local decisions made with
local input and oversight and is strongly supporting HB 149.
2:23:17 PM
COMMISSIONER HARTIG explained that primacy does not change the
standard for making decisions about permits. In fact, the
permits that EPA currently issues are based on state approved
water quality standards and DEC certifies that those permits
comply with state law. When DEC assumes primacy it will base
permit decision on those same water quality standards. Also, EPA
will continue to provide oversight once DEC begins to administer
the program.
COMMISSIONER HARTIG stated that DEC's objective is to have an
exemplary program that's based on the best science, the best
public process, and founded on good public policy.
2:24:55 PM
CAMERON LEONARD, Assistant Attorney General, Civil Division,
Environmental Section, Department of Law (DOL), Fairbanks, drew
attention to several documents in the packet that might be
helpful: "NPDES Program Approval Criteria" and "Sectional
Analysis of CSHB 149(RES). He explained that the statutory
changes will make the state program at least as stringent and
comprehensive as the federal law, which is necessary to receive
EPA sanction.
2:26:58 PM
MR. LEONARD said he will give a sectional analysis. Sections 1
and 5 address the kinds of monitoring, sampling, and reporting
requirements that can be placed within or outside a discharge
permit. Section 1 gives DEC authority to require monitoring,
sampling, and reporting outside the permit that is equivalent to
Section 308 of the federal Clean Water Act (CWA). Section 5
deals with monitoring, sampling, and reporting within a permit.
The state law will be equivalent to the federal law with regard
to what can be put in a permit.
MR. LEONARD said Section 2 addresses differences in terminology.
The CWA uses the term "discharges" and Alaska Statute uses a
different term, which caused EPA concern about equivalent
authority. To address the concern, the phrase "or discharge" is
added to Alaska Statute to ensure that the scope of DEC's
permitting authority is as broad as the federal law. Also, the
last sentence in this section is deleted because it is redundant
and inconsistent. Discharges into publicly owned treatment works
is addressed in Section 4.
Section 3 simply clarifies that DEC makes the decision about
which form of authorization to use for any given discharge or
activity.
2:31:02 PM
MR. LEONARD pointed out that Section 4 changes three current
exemptions in AS 46.03.100(e). EPA was concerned that the
federal exemptions were not as broad so the state exemptions
were tightened. The first change in .100(e)(1) deletes reference
to "sewerage system" and inserts "publicly owned treatment
works" to match the federal exemption.
CHAIR FRENCH clarified that neither EPA nor DEC would require a
permit for discharge into a publicly owned treatment plant.
MR. LEONARD agreed.
CHAIR FRENCH asked if there's really a difference or if it's a
matter of semantics.
MR. LEONARD explained that under state law the term "sewerage
system" is defined more broadly than "publicly owned treatment
works." That could be interpreted to include a pipe running from
your house to the river so it was probably too broad.
CHAIR FRENCH asked if he would say that this is more restrictive
than under current state law.
MR. LEONARD said there's no question about that.
2:33:23 PM
MR. LEONARD said the second change occurs in .100(e)(4) and
relates to incidental discharges such as water from trenching,
drilling, or ditching. It's referred to as the incidental
discharge exception, but basically there was only an exemption
if the activity did not result in a discharge into surface
waters. Current state law uses the term "surface water of the
state" and federal law uses "waters of the United States." The
phrases are similar but not identical, so this ensures that the
state exemption isn't any broader than what is allowed under
federal law.
The third change occurs in .100(e)(7) and relates to discharge
of munitions. Generally, the discharge of munitions is exempted
from the requirement of getting state authorization unless it
results in a discharge into water. To match federal law the
phrase "unless it results in a discharge into waters of the
United States" is added.
CHAIR FRENCH asked if this will impact the enormous amount of
military training exercises that occur around Anchorage and the
Interior.
MR. LEONARD replied it's really just a change in the permitting
agency. Applications will go to the state instead of EPA.
2:35:28 PM
MR. LEONARD reminded members that Section 5 is linked to Section
1. It expands DEC's authority to include monitoring and
reporting requirements in permits to be equivalent to EPA
authority under the CWA.
He explained that Sections 6 and 7 clarify that the state's use
of the term "waste material" includes "pollutants" as defined in
the CWA.
MR. LEONARD said Section 8 adds a new subsection (i) to AS
46.03.790. Current state law bases its criminal program for
environmental issues on criminal negligence, which is higher
state of mind as defined in the statute. EPA didn't agree with
that because the state is requiring a higher level of
culpability to do criminal prosecutions than is required under
the CWA. For purposes of the APDES program only, criminal
enforcement is based on ordinary negligence.
MR. LEONARD said Section 9 provides an immediate effective date.
2:38:05 PM
CHAIR FRENCH asked where lawsuits would take place if a citizen
is unhappy about a decision DEC made about issuing a permit.
MR. LEONARD explained that an appeal of a permitting decision
has two stages. Appeals of DEC permits are referred to the
Office of Administrative Hearings (OAH). Following the hearing,
AOH typically makes a recommendation to the commissioner of DEC
who then makes a final decision on the permit. If the citizen is
still unhappy, he or she could appeal to the state superior
court and ultimately to the state supreme court.
The other kind of litigation in this program is called a citizen
suit. That's when a citizen sues for violation of an existing
permit. Those cases would continue to go to federal district
court and those decisions are appealed to the Ninth Circuit.
CHAIR FRENCH asked why a citizen would be forced to go to
federal court when a state agency issued the permit and is
overseeing the program.
2:40:13 PM
MR. LEONARD replied those are the provisions of a citizen suit
under the CWA. He further explained that a suit can't be brought
if the agency that issued the permit is already enforcing it. So
if EPA attorneys bring enforcement action on a federally issued
permit a citizen suit is precluded. It will work the same with
the state. If DEC is already enforcing the terms of a permit
that it issued, the suit will be in state court and that
precludes a citizen suit in federal court. He added that EPA
attorneys have said that most citizen suits are for minor
violations and EPA usually isn't a participant.
SENATOR WIELECHOWSKI asked how many cases have been brought
under the first scenario that in the future will be under OAH.
MR. LEONARD said according to a Region 10 attorney, there are
very few permit appeals that go to the federal environmental
appeals board (EAB) and fewer yet to the Ninth Circuit. There's
not a high volume of appeals on the state side either, he added.
SENATOR WIELECHOWSKI highlighted the zero fiscal note from the
Department of Law and asked if this wouldn't have fiscal
ramification.
MR. LEONARD replied this bill doesn't affect the resources that
DOL will have to invest in the program.
SENATOR WIELECHOWSKI asked if the DEC and EPA fine structures
are comparable.
MR. LEONARD explained that the difference is that EPA has the
authority to assess a penalty administratively and DEC has to go
to court. However, that's not an obstacle to program approval
because the amount of damages DEC can recover satisfies EPA
requirements. He agreed to provide the numbers.
SENATOR WIELECHOWSKI again highlighted the fiscal notes and said
he hopes they adequately reflect the additional legal work.
Referring to testimony in the other body, he asked if DEC
intends to list the same requirements within the permit that EPA
lists or if some of those requirements would be listed outside
the permit.
MR. LEONARD referred to his discussion about the monitoring and
reporting requirements and said that's the only area that the
state has said it may list outside the permits. The testimony in
the other body reflected the belief that information that wasn't
tied to compliance with effluent limits could inappropriately be
subject to citizen suit enforcement if it was listed within the
permit.
2:45:57 PM
SENATOR WIELECHOWSKI summarized that when the state assumes
primacy there will be less monitoring and reporting issues
within the DEC permit.
COMMISSIONER HARTIG stepped in to clarify that there will be no
difference between an EPA and a DEC issued NPDES permit in terms
of the requirements for meeting water quality standards.
Likewise, there will be no difference in the monitoring and
reporting requirements for compliance with those water quality
standards. The difference is that DEC wants more flexibility to
ask permit holders to provide additional data. Currently DEC and
EPA can ask for more data, but EPA does it under the permit. He
described a hypothetical situation of a discharger in a remote
area in Alaska that is asked to collect additional information.
The permit holder knows that the additional data doesn't relate
to compliance with any law. Although they're willing to collect
the data, agreeing to do so within the permit is worrisome
because if they miss even one collection they could be subject
to a citizen suit. Under the CWA there is strict liability so
the fact that the weather was too bad to collect the data one
day is not a defense. The permit holder could be exposed to a
potentially severe penalty.
COMMISSIONER HARTIG said the state wants the flexibility of
putting the request in a separate agreement that's outside the
permit. If anything it increases monitoring because the permit
holder is more likely to agree to enhanced monitoring if they
know it won't expose them to liability that they would not
otherwise have.
2:49:15 PM
CHAIR FRENCH said the obvious policy choice if whether the state
wants control over its own permitting. The potential tradeoff is
whether the entity that assumes control is as tough as the EPA.
The next administration may view these matters differently. He
asked if any state has returned primacy to the EPA.
COMMISSIONER HARTIG said he knows that Alaska is one of five
states that does not have primacy, but he doesn't know the
answer to the specific question.
MR. LEONARD said he isn't aware of any state that has given it
back.
2:50:38 PM
SENATOR THERRIAULT referred to work he did years ago to take
over the 404 discharge permits. He said he doesn't recall any
state that ever gave that authority back. He also worked on this
legislation initially and in doing that research he doesn't
recall any state that gave primacy back.
SENATOR McGUIRE highlighted the document titled "NPDES Permits"
and read the following:
Under federal regulations, any state permit program
must be as stringent as EPA's program in order for EPA
to approve it. That means that the state must require
permits for the same operations as does EPA. Stated
another way, Alaska cannot exempt from permit coverage
anyone who needs a federal permit.
SENATOR McGUIRE said that although it appears that states have
never given back control, any administration that wasn't doing a
good job would attract the attention of lawmakers or the federal
government. "I like the fact that the EPA has to continue to
approve it," she added.
2:52:12 PM
SENATOR WIELECHOWSKI asked if there are requirements for DEC to
consult with other agencies such as U.S Fish and Wildlife or
National Marine Fisheries over critical habitat issues or
endangered species listings.
MR. LEONARD explained that most of the federal consultation
duties do not apply to a state permit decision. However, most
major projects that require an NPDES permit also require some
other federal permit so consultation will go on base on those
permits.
SENATOR WIELECHOWSKI asked if that won't result in more third-
party lawsuits.
MR. LEONARD explained that DEC is required by regulation to send
copies of draft permits to all the relevant federal agencies.
Only time will tell if more citizen suits will be brought.
COMMISSIONER HARTIG added that the basic requirements of the
Endangered Species Act still apply. Although the Section 7
requirement that one federal agency consult another federal
agency doesn't apply, the taking prohibition under Section 9 is
there. It would be a violation of the federal act if the
permitted action resulted in the taking of an endangered
species. DEC doesn't want to set anyone up to violate the
Endangered Species Act. Currently the APDES workgroup is
reviewing a guidance document that will be available to the
public in several weeks. It discusses communication with federal
agencies, local communities and individuals to assure everyone
that nothing will be lost when the state gets primacy. Federal
agencies, including the EPA, will review that document. He
offered to share it with the committee.
2:55:39 PM
COMMISSIONER HARTIG said his last point is that the EPA has
oversight on each permit, not just the overall program. It has
its own memorandum of agreement established with the federal
agencies that DEC consults with under essential fish habitat or
the Endangered Species Act. It establishes to how EPA will
review the state's permits and consult with the agencies. It
also sets out the procedure if it is disgruntled with a proposed
permit action.
SENATOR WIELECHOWSKI reiterated the importance for having
guidelines in place to protect the state from lawsuits. Little
or no consultation increases the likelihood of lawsuits, he
said.
SENATOR THERRIAULT asked if he is specifically referring to
consultation with federal agencies.
SENATOR WIELECHOWSKI said yes; the EPA is required to consult
with those federal agencies, but DEC doesn't have that
requirement.
Commissioner HARTIG relayed that DEC provides draft copies of
all its permits to the agencies directly. They can comment
directly to DEC or they can work through EPA. He reiterated that
EPA has the authority to veto DEC permits.
2:57:31 PM
SENATOR HUGGINS asked if this impacts DEC's role at Pebble Mine.
COMMISSIONER HARTIG said Pebble is on the radar, but it's a bit
far off. The timeline is that the state will hopefully get
primacy about a year from now. Then there will be a three-year
phase-in during which time the state will address the less
complicated permits first. Unless the Pebble application comes
in 3-4 years from now, it's more than likely that the EPA will
write that permit.
2:59:07 PM
SENATOR HUGGINS asked if any individuals or organizations will
have "their hair on fire" over DEC receiving this authority.
COMMISSIONER HARTIG acknowledged that some people have expressed
concerns and those are being addressed in various ways including
the guidance document. For example, that document calls for
consultation with tribes. Although some are concerned that the
EPA is more rigorous than the state, he agrees with Senator
McGuire. If people don't respect the job DEC is doing, he firmly
believes that the legislature, the EPA, and the courts will do
something about it.
3:00:58 PM
CHAIR FRENCH commented that it says something that a long list
of environmental groups has not signed up to testify today. He
thanked Commissioner Hartig and announced that he would hold HB
149 in committee.
There being no further business to come before the committee,
Chair French adjourned the meeting at 3:01:09 PM.