Legislature(2015 - 2016)BUTROVICH 205

02/02/2015 03:30 PM Senate RESOURCES

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03:30:01 PM Start
03:30:23 PM Overview: Department of Environmental Conservation
05:08:57 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Scheduled but Not Heard
Scheduled but Not Heard
Resolution: Opposing Recent Presidential Action
on OCS
<Pending Introduction & Referral>
Overview: Department of Environmental
Conservation, Commissioner Larry Hartig
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                        February 2, 2015                                                                                        
                           3:30 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Cathy Giessel, Chair                                                                                                    
Senator Mia Costello, Vice Chair                                                                                                
Senator John Coghill                                                                                                            
Senator Peter Micciche                                                                                                          
Senator Bert Stedman                                                                                                            
Senator Bill Stoltze                                                                                                            
Senator Bill Wielechowski                                                                                                       
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
OVERVIEW: DEPARTMENT OF ENVIRONMENTAL CONSERVATION                                                                              
     - HEARD                                                                                                                    
SENATE JOINT RESOLUTION NO. 10                                                                                                  
Opposing   the  revised   Comprehensive  Conservation   Plan  and                                                               
Environmental Impact  Statement for the Arctic  National Wildlife                                                               
Refuge; opposing attempts by President  Obama to alter management                                                               
of  the coastal  plain of  the Arctic  National Wildlife  Refuge;                                                               
encouraging  the  United States  Congress  to  reject a  proposal                                                               
based  on   the  revised   Comprehensive  Conservation   Plan  or                                                               
accompanying  Environmental  Impact  Statement;  encouraging  the                                                               
United States  Congress to reject  a proposal that does  not open                                                               
the coastal plain  of the Arctic National Wildlife  Refuge to oil                                                               
and gas  development; and finding that  decision-making authority                                                               
over the coastal plain of  the Arctic National Wildlife Refuge is                                                               
reserved exclusively to the United States Congress.                                                                             
     - SCHEDULED BUT NOT HEARD                                                                                                  
SENATE JOINT RESOLUTION NO. 11                                                                                                  
Urging the President  of the United States and  the United States                                                               
Congress to  acquire the area  commonly known as Central  Park on                                                               
Manhattan in New  York City on behalf of  the federal government;                                                               
urging the United  States Congress to declare Central  Park to be                                                               
a  wilderness area  and to  prohibit any  further improvement  or                                                               
development of Central Park unless authorized by an Act of                                                                      
     - SCHEDULED BUT NOT HEARD                                                                                                  
PREVIOUS COMMITTEE ACTION                                                                                                     
No previous action to record                                                                                                    
WITNESS REGISTER                                                                                                              
LARRY HARTIG, Commissioner                                                                                                      
Department of Environmental Conservation (DEC)                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Provided Department of Environmental                                                                      
Conservation (DEC) overview.                                                                                                    
KRISTIN RYAN, Director                                                                                                          
Division of Spill Prevention and Response (SPAR)                                                                                
Department of Environmental Conservation (DEC)                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Provided Division of Spill Prevention and                                                                 
Response (SPAR) overview.                                                                                                       
ALICE EDWARDS, Director                                                                                                         
Division of Air Quality                                                                                                         
Department of Environmental Conservation (DEC)                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Provided Division of Air Quality overview.                                                                
MICHELLE HALE, Director                                                                                                         
Division of Water                                                                                                               
Department of Environmental Conservation (DEC)                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Provided Division of Water overview.                                                                      
ACTION NARRATIVE                                                                                                              
3:30:01 PM                                                                                                                    
CHAIR  CATHY   GIESSEL  called  the  Senate   Resources  Standing                                                             
Committee meeting  to order at 3:30  p.m. Present at the  call to                                                               
order  were Senators  Costello,  Stedman, Coghill,  Wielechowski,                                                               
Micciche and Chair Giessel.                                                                                                     
^Overview: Department of Environmental Conservation                                                                             
       Overview: Department of Environmental Conservation                                                                   
3:30:23 PM                                                                                                                    
CHAIR GIESSEL  announced the  annual Department  of Environmental                                                               
Conservation  (DEC)  overview  and  welcomed  Commissioner  Larry                                                               
Hartig. She  said she  was particularly  interested in  the Spill                                                               
Response Fund.                                                                                                                  
3:31:24 PM                                                                                                                    
LARRY   HARTIG,   Commissioner,   Department   of   Environmental                                                               
Conservation (DEC),  Anchorage, Alaska, said DEC's  mission is to                                                               
protect human health  and the environment. The  outcomes they are                                                               
looking at are:                                                                                                                 
-Clean  water,  healthy air,  and  good  management of  hazardous                                                               
materials and waste                                                                                                             
-Safe drinking water and sanitary waste disposal                                                                                
-Food safe to eat                                                                                                               
-Low  risk  of  spills  of  hazardous  materials  and  efficient,                                                               
effective response when spills occur                                                                                            
-Wise resource  development for  a growing  state, so  people can                                                               
feel  safe with  DEC's  permits  and authorizations,  contingency                                                               
plans, oversight, inspections, and so forth.                                                                                    
3:33:39 PM                                                                                                                    
The  five divisions  are:  Administration, Environmental  Health,                                                               
Air  Quality, Spill  Prevention and  Response (SPAR),  and Water.                                                               
Air quality  is one of  the smaller divisions,  but it is  one of                                                               
more complex ones.                                                                                                              
3:34:12 PM                                                                                                                    
SENATOR STOLTZE joined the committee.                                                                                           
COMMISSIONER HARTIG said the department  has a variety of funding                                                               
sources.  About 30  percent of  their funding  is federal  money;                                                               
SPAR is about  20 percent of it. There are  two fee programs: one                                                               
is subject to federal law that  limits what the money can be used                                                               
for  (like air  permit fees).  DEC gets  about 1  percent of  its                                                               
budget from the  general fund (UGF). The only  department that is                                                               
smaller  in  terms  of  its  draw on  the  general  fund  is  the                                                               
Department  of  Military  & Veterans  Affairs  (DMVA),  which  is                                                               
largely federally funded.                                                                                                       
3:35:35 PM                                                                                                                    
The Division  of Air Quality is  run on permitting fees  and that                                                               
is required by  federal law. The general fund  draw is relatively                                                               
small, which  means that it  is particularly critical  for things                                                               
like monitoring air quality in Fairbanks.                                                                                       
The  Response Fund  at over  50  percent is  critical for  SPAR's                                                               
budget; if the  Response Fund is not fixed (due  to declining oil                                                               
production) that division would see a 46 percent reduction.                                                                     
SENATOR  WIELECHOWSKI  asked  how much  litigation  for  assuming                                                               
state primacy is costing.                                                                                                       
COMMISSIONER HARTIG  answered that two bills  have authorized DEC                                                               
to  explore taking  primacy for  the 404  program, whose  funding                                                               
($1.4 million  and five  positions) was  stripped last  year, and                                                               
the  402 program,  the waste  water discharge  permitting program                                                               
from the  Environmental Protection Agency (EPA),  which was taken                                                               
in phases and now belongs entirely to the state.                                                                                
3:38:09 PM                                                                                                                    
KRISTIN  RYAN,   Director,  Division  of  Spill   Prevention  and                                                               
Response (SPAR), Department  of Environmental Conservation (DEC),                                                               
Anchorage, Alaska, said the division  has three areas: prevention                                                               
(contingency  work),  the  response unit,  and  the  contaminated                                                               
sites   program,  which   deals   with  the   long  term   legacy                                                               
contamination,  and a  small administrative  unit that  primarily                                                               
focuses  on cost  recovery.  Their  Challenges and  Opportunities                                                               
-Sustainable funding                                                                                                            
-Continued  level  of services  to  protect  the environment  and                                                               
human health                                                                                                                    
The  division's mission  is pretty  much  like the  department's:                                                               
protect  public  safety,  health   and  the  environment  through                                                               
prevention,  preparedness  and  cleanup   of  oil  and  hazardous                                                               
MS. RYAN  said they respond to  all releases of oil  or hazardous                                                               
substances  and  that means  a  lot  of  their responses  are  to                                                               
unregulated   facilities   like:  air   transportation   release,                                                               
vessels, residences, and vehicles.                                                                                              
SENATOR MICCICHE  asked for an  incident table over a  wider span                                                               
of years.                                                                                                                       
MS. RYAN responded  that the number of incidents  is a consistent                                                               
figure, about  2,000 spills per  year. They don't  necessarily go                                                               
out  to all  of them,  but that's  how many  calls they  get. The                                                               
percentage   is  pretty   consistent  between   regulated  versus                                                               
SENATOR STOLTZE asked what events  or products are included in an                                                               
oil spill.                                                                                                                      
MS. RYAN answered that slides 20  and 21 break down the spills by                                                               
industry and  product type in  the last year. She  explained that                                                               
oil is  used as a broad  category and many products  fit into it.                                                               
The majority  of responses are  to refined fuels like  diesel and                                                               
heating oil,  but produced water  is responded  to the most  on a                                                               
volume bases.                                                                                                                   
3:43:45 PM                                                                                                                    
SENATOR WIELECHOWSKI asked if the  state actually pays for spills                                                               
and if the  perpetrator gets billed. He was trying  to figure out                                                               
how the Response Fund money is used.                                                                                            
MS. RYAN  said its  spent on  a variety  of situations;  some are                                                               
produced water spills that don't need  as much of a response as a                                                               
crude oil  spill, but the  laws require  the spiller to  have the                                                               
first  response,  and if  they  are  regulated  by DEC  they  are                                                               
immediately  responding and  are overseen  by the  DEC. If  their                                                               
response  isn't adequate,  SPAR can  take over  and hire  its own                                                               
contractors to finish the process.                                                                                              
SENATOR COGHILL asked her to share  a spill event they had talked                                                               
about earlier.                                                                                                                  
MS.  RYAN responded  that there  are a  lot of  truck roll  overs                                                               
moving  fuel up  the Dalton  Highway, but  recently a  truck from                                                               
Valdez rolled over  and their $1 million  insurance policy didn't                                                               
cover the  whole event, because  it was  over a frozen  creek bed                                                               
that feeds  into the Copper  River system. They wanted  to ensure                                                               
that all the product was  cleaned up before spring thaw occurred.                                                               
That ended up being a  pretty expensive event, because the ground                                                               
was saturated  much further  down than  expected. The  EPA, their                                                               
partners on  inland spills,  decided to take  that one  over, but                                                               
they  could have  just as  easily done  so with  their authority.                                                               
Then  they turn  around  and  ask the  responsible  party to  pay                                                               
costs, which  sometimes doesn't happen and  sometimes happens but                                                               
with a lag of several years.                                                                                                    
SENATOR COGHILL remarked that an  event like this could literally                                                               
put a  business out of  business. So  having the ability  for the                                                               
state to  clean it  up and  then billing  the operator  who would                                                               
then figure out the financing is a good thing.                                                                                  
3:47:12 PM                                                                                                                    
MS. RYAN said everyone knows  about how the decline in production                                                               
has  caused  a  shortfall  to the  Oil  and  Hazardous  Substance                                                               
Release  Prevention  and Response  Fund,  which  needs 1  million                                                               
barrels a  day production to  sustain itself.  It is now  down to                                                               
$500,000.  Settlements  and  penalties  come  in,  but  they  are                                                               
SPAR has reduced use of the fund  by limiting growth to 2 PCNs in                                                               
10 years and  eliminating some large draws on  the account, which                                                               
was  traditionally  used  to fund  the  clean-up  of  state-owned                                                               
contaminated sites  to the  tune of $17  million over  the years.                                                               
They have also  been doing a better job of  cost recovery without                                                               
reducing services  by automating those efforts  and combining two                                                               
programs:  the   prevention  and   the  response   programs.  The                                                               
prevention program told industries in  general what to do in case                                                               
a spill occurred  and the response groups would come  in and tell                                                               
them  what  to  do  when  a spill  was  occurring.  They  saw  an                                                               
opportunity for synergy there to  make sure that the planners are                                                               
also  responders and  vice versa,  so the  same message  is being                                                               
provided before,  during and after  an event. These  efforts have                                                               
saved $520,000 and eliminated four positions.                                                                                   
SENATOR STOLTZE asked if she  had any recommendations in terms of                                                               
sustainability of  the Response  Fund in  the light  of declining                                                               
COMMISSIONER   HARTIG   responded    with   the   following   key                                                               
considerations  in addressing  the  shortfall and  who pays,  how                                                               
much,  and  how   to  allocate  with  and   among  the  different                                                               
-No one is looking at increasing risk                                                                                           
-Recognize that declining production affects the Response Fund                                                                  
-Look to  other sources  that aren't paying  into the  fund right                                                               
now, but are causing the spills                                                                                                 
-Continue  to look  for efficiencies  in SPAR,  partnerships, new                                                               
technologies,  better assessment  of  risks,  and improvement  to                                                               
cost recovery                                                                                                                   
COMMISSIONER HARTIG said he had  several discussions with the oil                                                               
and  gas  industry,   had  met  with  the  Alaska   Oil  and  Gas                                                               
Association (AOGA) and is setting up  a committee to work on this                                                               
issue. They  are also having  discussions with others  inside and                                                               
outside  of state  government  on  what they  get  from SPAR  and                                                               
whether they should be contributing.                                                                                            
3:53:51 PM                                                                                                                    
He said that  prevention is the most important  element in saving                                                               
money. Who pays for Industry  preparedness? The bulk of what they                                                               
do really  concerns the oil  and gas industry:  contingency plans                                                               
(C-plans) for  producing and  storing oil, how  it will  be moved                                                               
down  pipelines, put  on tankers  and sent  out of  the state  to                                                               
refineries  without  spilling  any. Those  are  very  complicated                                                               
plans that  take years to develop;  they go through all  sorts of                                                               
public review and comment and  often litigation. They get renewed                                                               
every  five years.  In  the meantime,  the  department does  best                                                               
available   technology  conferences   and  leak   detection  from                                                               
pipelines and other things. Since  it's mainly about oil and gas,                                                               
maybe oil  and gas should  pay more of the  Industry Preparedness                                                               
and Response Program bill.                                                                                                      
He explained that  maybe 10 percent of the  2,000 reported spills                                                               
have  some real  response from  DEC  and probably  10 percent  of                                                               
those  make the  news.  Cost recovery  figures  are being  pulled                                                               
together, so  a fair  discussion can  be had;  the same  with the                                                               
contaminated site program.                                                                                                      
COMMISSIONER HARTIG  said SPAR  will have a  $7 million  hole (46                                                               
percent of  its operating  budget) as a  result of  declining oil                                                               
production. The  oil and  gas industry didn't  think it  was fair                                                               
that  they  pay the  whole  thing  and  other avenues  are  being                                                               
considered,  like  the  motor  fuel   tax  and  a  surcharge  for                                                               
3:58:05 PM                                                                                                                    
SENATOR STEDMAN asked for a brief history of previous increases.                                                                
COMMISSIONER HARTIG answered that  the legislation was adopted in                                                               
1989, not too long after the  Exxon Valdez oil spill; the Federal                                                               
Prevention Act of 1990 passed around  the same time and they have                                                               
never been changed.  In that time, the SPAR's budget  has gone up                                                               
about 1.7  percent less than  Anchorage's CPI. In the  meantime a                                                               
barrel of oil has gone from around  $10 to $140 and now it's back                                                               
down to $50  and lower. But the surcharge has  never changed. The                                                               
only thing  that did  change was  about three  or four  years ago                                                               
when  a  3 cent/2  cent  allocation  between the  Prevention  and                                                               
Response Accounts was changed to 4  cent/1 cent to put more money                                                               
into the Prevention Account.                                                                                                    
SENATOR STEDMAN  asked if  a vessel sinks  with 5,000  gallons of                                                               
fuel on board do they guestimate the net spillage or measure it.                                                                
COMMISSIONER  HARTIG said  they hope  all the  vents get  plugged                                                               
before the boat goes down, and the  estimate is made on a case by                                                               
case basis.                                                                                                                     
MS. RYAN replied that they count  gallons spilled. If any fuel is                                                               
recovered then it doesn't count as a spill.                                                                                     
CHAIR GIESSEL noted  a 2013/14 Spill Response  Report that listed                                                               
the various spill statistics.                                                                                                   
SENATOR  MICCICHE said  slide 20  shows volumes  released by  all                                                               
products and four  of the categories -  processed water, drilling                                                               
muds, crude and  produced water which add up to  48 percent - are                                                               
oil  and gas  related. He  asked if  that risk  footprint reduced                                                               
from the  decline if  that potentially could  mean less  money is                                                               
needed  or has  industry  supported the  previous  spills to  the                                                               
point where that correlation just  doesn't exist. Historic levels                                                               
of funding will be needed  going forward even though the industry                                                               
performs better than it has in the past.                                                                                        
MS.  RYAN  answered  that  prevention has  caused  a  decline  in                                                               
spills, but because  of changes in infrastructure  the spills are                                                               
different  now. Double-hull  tankers  and double  escorts are  in                                                               
place in  Prince William  Sound, so  Exxon Valdez  type incidents                                                               
are a lot less likely today, but  that risk is being picked up by                                                               
aging infrastructure issues with all the pipelines.                                                                             
4:02:55 PM                                                                                                                    
CHAIR GIESSEL recognized Senator Huggins in the audience.                                                                       
SENATOR MICCICHE asked  if the gallons spilled per  year has been                                                               
MS. RYAN answered yes; they  are pretty consistent at about 2,000                                                               
per year. When regulated companies have  a spill, they tend to be                                                               
bigger,  but they  are more  equipped to  respond. The  state has                                                               
more investment in  the small spills in homes  and small villages                                                               
that don't have any resources to address them.                                                                                  
4:03:45 PM                                                                                                                    
SENATOR COGHILL asked  if "do not increase the risk"  on slide 11                                                               
meant the department  was against any new  development in Alaska.                                                               
He also asked if the state will  need to partner with the EPA and                                                               
the Coast Guard on Bering Sea risk issues.                                                                                      
MS. RYAN  answered no in  reference to  slide 11; they  believe a                                                               
robust  prevention   effort  is   necessary  so  people   can  be                                                               
comfortable with the  risks that are occurring. As  for the risks                                                               
in the Bering Sea, they work  a lot on addressing those concerns;                                                               
one was by  commenting on the Polar Code for  the state. She also                                                               
had  been  attending Artic  Council  meetings  on prevention  and                                                               
response  to  form  relationships  with Russia  and  Canada,  our                                                               
partners  in any  sort of  a  response. Shell  is bringing  their                                                               
entire response  capacity with  them to  the Arctic,  because the                                                               
state can't  provide it.  If development  continues in  the Outer                                                               
Continental Shelf (OCS)  more partnerships will be  seen. It's to                                                               
industry's benefit to share the response resources.                                                                             
COMMISSIONER HARTIG added that they  have been working on keeping                                                               
10 or 12  balls in the air  at any one time in  looking at marine                                                               
transportation  and OCS  development;  some  is state  regulated,                                                               
some is national, and some is  international. He works as part of                                                               
the U.S. delegation under the  federal umbrella to affect things,                                                               
works with  the Coast  Guard on national  rule making  on safety,                                                               
and works directly  with the Canadian government  and through the                                                               
U.S.  government on  mutual  aid agreements.  He  is planning  on                                                               
doing  a  strategy paper  about  how  those are  prioritized  and                                                               
linked up.                                                                                                                      
SENATOR COGHILL  commented that our  crews got high marks  in the                                                               
Gulf of Mexico, which gave Alaska a lot of credibility.                                                                         
COMMISSIONER  HARTIG gave  kudos to  all the  oil spill  response                                                               
organizations in the  state that he said are  private co-ops. The                                                               
Gulf disaster  took up a third  of his time in  deciding what was                                                               
going to  leave Alaska and  what couldn't. He explained  that all                                                               
the  West  Coast states  have  agreements  on sharing  resources;                                                               
during  the  Gulf  spill,  Alaska   would  send  certain  things,                                                               
California  would send  certain things,  and nearby  states would                                                               
back  them up  with what  they  could. The  whole process  worked                                                               
fairly well.                                                                                                                    
SENATOR  WIELECHOWSKI asked  if  the state  has any  jurisdiction                                                               
over how the  Shell drilling in the Beaufort and  Chukchi Seas is                                                               
done, like the use of blow-out preventers.                                                                                      
COMMISSIONER HARTIG  answered that  the state  would look  at the                                                               
blow-out  preventers,  but  Shell's   operations  are  all  under                                                               
federal  jurisdiction,   which  has   been  open  to   the  state                                                               
commenting on their  plans as they recognized that  a plume could                                                               
easily  go  ashore where  the  Alaska  Oil and  Gas  Conservation                                                               
Commission has jurisdiction. She said  they are working on an MOU                                                               
with federal regulators to solidify this arrangement.                                                                           
4:11:17 PM                                                                                                                    
SENATOR WIELECHOWSKI  asked if the  department is  confident that                                                               
the drilling and  exploration can be done safely  without risk to                                                               
Alaskan waters and land.                                                                                                        
COMMISSIONER HARTIG said you have to  be a realist, but he didn't                                                               
know of any gaps in their  risk mitigation measures. It has to be                                                               
done well, because there isn't a lot of room for slippage.                                                                      
SENATOR  STOLTZE   asked  if  he   had  discussions   with  other                                                               
department  heads  about  reflecting  the actual  costs  of  risk                                                               
COMMISSIONER HARTIG answered yes; it  has been recognized that if                                                               
spill response  is left to  each separate department, it  may not                                                               
be as  efficient as if it  was centralized in the  one department                                                               
that does that  for a living. He explained that  the states sites                                                               
are all prioritized  in terms of which ones need  to be addressed                                                               
most  immediately because  of the  human health  risk. Those  are                                                               
addressed  through  capital  appropriations and  then  DEC  would                                                               
typically would have  the lead and work with the  other agency in                                                               
terms of access.                                                                                                                
SENATOR STOLTZE stated that DEC takes the budget brunt.                                                                         
MS. RYAN responded  that the current MOU  between the departments                                                               
is that DEC oversees the clean-up of their contaminated sites.                                                                  
SENATOR STOLTZE  asked how many  positions were funded  first and                                                               
how many there are now.                                                                                                         
4:16:29 PM                                                                                                                    
MS.  RYAN responded  that the  prevention  and response  programs                                                               
have  been  combined  and four  positions  are  being  eliminated                                                               
saving $520,000  in personnel costs.  They are continuing  to see                                                               
what other synergies  can occur. For example, a  company may have                                                               
multiple  C-plans and  have to  drill each  one, but  maybe in  a                                                               
certain  body  of water  they  can  do  one drill  and  everybody                                                               
operating  in that  body of  water  can participate  in that  one                                                               
drill together, because  for a large response all  assets will be                                                               
called to the table. This is on the top of their list.                                                                          
COMMISSIONER HARTIG added  that they were starting  down the road                                                               
of consolidation  and efficiency they  found a $2.1  million hole                                                               
in their FY15 budget. He explained  there are three inputs to the                                                               
Response Fund: the surcharge, interest  income on the $50 million                                                               
account,  and  the  cost  recovery  money.  The  legislature  had                                                               
appropriated $15 million with the  understanding a certain amount                                                               
would be realized on that  account from investment. It turned out                                                               
that  wasn't  there. They  cut  internally  and  are down  to  an                                                               
$800,000 hole, but  that's in the current fiscal  year before the                                                               
8 percent  reductions; so  it comes  out to  about a  9.5 percent                                                               
reduction in their operating budget.                                                                                            
He also pointed  out a timing problem with the  $2.1 million hole                                                               
and a  $7 million gap  starting in FY16. Increasing  the Response                                                               
Fund by  getting some money  from somebody else will  take effect                                                               
July 1, 2015,  then it has to be collected  for another year, and                                                               
then it has to be appropriated.                                                                                                 
4:21:03 PM                                                                                                                    
MS.  RYAN  added  that  there  are  two  uses  of  the  fund  for                                                               
administrative costs: one is $2  million a year by the department                                                               
for  administrative  overhead  overall (leases,  phones,  parking                                                               
lots, supplies)  and then  $1.6 million is  used by  the division                                                               
primarily to do cost recovery but  also to provide the data bases                                                               
and tracking  tolls needed to provide  everyone information about                                                               
what they are doing.                                                                                                            
CHAIR GIESSEL asked if those were considered indirect costs.                                                                    
MS. RYAN  answered yes; that term  could be used. It  is impacted                                                               
by the  rate the  departments charges  the federal  government to                                                               
pay for services.                                                                                                               
4:22:33 PM                                                                                                                    
She  said  the   new  program  will  be   called  the  Prevention                                                               
Preparedness and Response  Program (PPR) and relies  on five main                                                               
local response organizations.  It will serve the  same people but                                                               
some regulations will  need to be streamlined.  Alaska has state-                                                               
of-the-art  response  capacity,  but they  are  seeing  increased                                                               
problems with aging infrastructure.                                                                                             
CHAIR GIESSEL asked how old her pictures were.                                                                                  
MS. RYAN answered that they cover several years.                                                                                
SENATOR  WIELECHOWSKI  asked  her  the  status  of  the  Pipeline                                                               
Coordinators   Office   that   was   beefed  up   a   couple   of                                                               
administrations ago.                                                                                                            
MS.  RYAN  said  funding  was  provided to  DEC,  but  the  State                                                               
Pipeline  Coordinators Office  is  in the  Department of  Natural                                                               
Resources (DNR), which she wasn't  able to address, but explained                                                               
that because of a large problem  with a well pad, the legislature                                                               
appropriated  a  couple  of  hundred  thousand  dollars  to  hire                                                               
engineers  to work  with companies  to  evaluate their  corrosion                                                               
integrity systems to find problems  before they occurred. That is                                                               
in existence and that is a change to their budget.                                                                              
COMMISSIONER HARTIG  added that in  2006, BP had two  spills from                                                               
flow  lines in  a gathering  center, and  those aren't  regulated                                                               
under the federal law. They tend  to be smaller and clustered and                                                               
hard  to pig.  So,  the  DEC put  regulations  in  place and  has                                                               
inspections. As a  result most of those flow  lines were replaced                                                               
by industry.                                                                                                                    
4:26:30 PM                                                                                                                    
SENATOR WIELECHOWSKI asked if there  are other ticking time bombs                                                               
like the transit lines.                                                                                                         
COMMISSIONER HARTIG answered that he  is most concerned about the                                                               
things  one  can't  see  like  buried  lines  that  haven't  been                                                               
inspected  for a  long time  and about  sub-sea pipelines  in OCS                                                               
MS.  RYAN  said  they  limited  response  capacity  for  innocent                                                               
passing vessels near Alaska in  light of development occurring in                                                               
Canada and in those areas was also of concern.                                                                                  
COMMISSIONER   HARTIG  said   those   vessels   are  subject   to                                                               
international law but not federal or state law.                                                                                 
SENATOR  STEDMAN   asked  him  to   comment  on   what  potential                                                               
integration plans we have with British Columbia (B.C.).                                                                         
COMMISSIONER HARTIG  replied if  their oil sands  production goes                                                               
to Asia  it will  go on  the Great Circle  Route and  come north;                                                               
Dixon Entrance would be the first  place it comes close to Alaska                                                               
and then  other places in  the Aleutians  and some of  the recent                                                               
worst accidents have been drift  groundings in the Aleutians. The                                                               
state participated in a risk  assessment on marine transportation                                                               
in the Aleutians with expert  panels and stakeholders that looked                                                               
at  the  history  of casualties  and  suggested  what  mitigation                                                               
measures could  be put in place.  Some of them are  already being                                                               
done, but  he is working  with the Coast  Guard to see  what else                                                               
can be done.                                                                                                                    
MS. RYAN  related a close  call in  Dixon Entrance when  a vessel                                                               
lost  control  and how  SPAR  worked  closely  with B.C.  in  the                                                               
response,  but  said   it's  harder  to  work   together  on  the                                                               
prevention side.                                                                                                                
4:31:21 PM                                                                                                                    
MS. RYAN  said the number of  C-plans approved in Cook  Inlet are                                                               
more than  on the  North Slope.  She said  during the  Deep Water                                                               
Horizon event it was found that  relief well drilling was the key                                                               
prevention measure  to stop oil  from being released. It  is very                                                               
expensive for  Shell to have two  drill rigs in the  same area of                                                               
the  OCS, so  there  is a  lot  of discussion,  but  that is  the                                                               
standard that  is expected. She  showed slide 20  with statistics                                                               
about spills.                                                                                                                   
4:32:59 PM                                                                                                                    
Slide 22  showed the top five  causes of spills in  2014 and they                                                               
all involved produced water.                                                                                                    
SENATOR  MICCICHE  asked why  not  combine  the human  error  and                                                               
overfill categories.                                                                                                            
MS. RYAN said she couldn't answer that one.                                                                                     
CHAIR  GIESSEL remarked  that  all five  categories  are not  all                                                               
occurring on the North Slope. They are  all over the state - at a                                                               
school or gas station.                                                                                                          
MS. RYAN agreed.                                                                                                                
4:33:45 PM                                                                                                                    
She said  the Contaminated  Site Program  does critical  work, as                                                               
well. They are  working with the Bureau of  Land Management (BLM)                                                               
to make sure  the state's clean-up standards are  met in cleaning                                                               
up the legacy  wells. The settlement money for  those sites takes                                                               
a long time to come back to the state, sometimes up to 10 years.                                                                
Flint Hills is  the largest and most famous  contaminated site in                                                               
the state with a large plume  impacting the ground water of North                                                               
Pole.  They  have  an  approved on-site  clean-up  plan  for  the                                                               
refinery now,  so it can be  sold with some assurance  as to what                                                               
would be  expected of a future  owner to maintain the  systems to                                                               
keep the product from leaving the property.                                                                                     
4:35:37 PM                                                                                                                    
SENATOR WIELECHOWSKI asked for a sense  of when the plume will be                                                               
controlled so it's  no longer expanding and  if additional houses                                                               
would be subject to it.                                                                                                         
MS. RYAN said the plume is  moving, which is common to underwater                                                               
contamination; this product in particular  is attracted to water.                                                               
So as the  ground water moves in this area,  it's moving with it.                                                               
It's a  difficult ground water  area to map, and  the contaminant                                                               
is  being found  in  not  only the  shallow  aquifer  but in  the                                                               
extremely deep  aquifer, which is  confusing. But there  are some                                                               
predictive models,  so they  assume it will  continue to  move in                                                               
one direction. It's  currently impacting over 300  homes that are                                                               
on private water.                                                                                                               
SENATOR  WIELECHOWSKI  asked how  long  before  the sulfolane  is                                                               
under control.                                                                                                                  
MS.  RYAN  answered  they  have  found  that  air  exposure  (air                                                               
sparging)  is working  in breaking  the sulfolane  down, but  the                                                               
extent and depth of the plume is a problem.                                                                                     
SENATOR STOLTZE asked  if the problem is  still being identified,                                                               
because it seems like the solution is still undefined.                                                                          
MS.   RYAN  replied   that  the   science   is  still   evolving.                                                               
Unfortunately,  not a  lot is  known about  sulfolane; this  is a                                                               
test case.  Several short-term exposure  studies have  been done,                                                               
but the  problem is that  the chronic exposure  information isn't                                                               
there. She  said the commissioner remanded  the clean-up decision                                                               
back to the division where a  panel of experts have looked at the                                                               
available  information  and  came  back with  a  report  that  is                                                               
currently being evaluated.                                                                                                      
SENATOR  STOLTZE remarked  on the  potential  harmful effects  on                                                               
humans  and asked  if  the feds  could  be put  on  the hook  for                                                               
telling us what a safe level is.                                                                                                
COMMISSIONER  HARTIG responded  that  the problem  is  a lack  of                                                               
studies to rely  on and a lack of federal  numbers. Sulfolane has                                                               
not been used  as much as other industrial  solvents, so existing                                                               
studies are short-term and not  on humans. So, short term studies                                                               
on other  organisms are  being used  to say  what they  think the                                                               
long  term effects  might  be on  humans.  Expert information  is                                                               
taken and judgment calls are made  on what is safe. Whenever they                                                               
approve a clean-up it always comes  with a footnote to revisit it                                                               
and maybe call back the responsible party.                                                                                      
He said  nobody wants their  kids to drink an  industrial solvent                                                               
at  any  level.  When  he  first  heard  about  the  Flint  Hills                                                               
situation, he  thought a  public drinking  water system  would be                                                               
needed  and money  was  appropriated last  session  to look  into                                                               
extending  the  existing  public  water  system.  Personally,  he                                                               
thinks that  is the ultimate  solution, because the  people won't                                                               
get 100 percent assurance that  a certain level of contaminant is                                                               
4:45:32 PM                                                                                                                    
SENATOR COGHILL  said he appreciated  Flint Hills' effort  to get                                                               
the water  to a safe drinking  level. He asked if  the department                                                               
had come up with a way  to handle ground water encountered during                                                               
digging foundations and things like that.                                                                                       
MS. RYAN replied  yes and explained that the water  level is very                                                               
high  there and  it's almost  impossible  to dig  a hole  without                                                               
running into it. Collecting the  contaminated water and disposing                                                               
it  somewhere  else  is  difficult, but  a  simple  mechanism  to                                                               
"dewater" was developed using a disposal methodology.                                                                           
4:47:52 PM                                                                                                                    
ALICE EDWARDS,  Director, Division of Air  Quality, Department of                                                               
Environmental Conservation  (DEC), Anchorage, Alaska, said  it is                                                               
a relatively  small program focused on  permitting and compliance                                                               
of air  emissions for industrial  facilities. The also  work with                                                               
communities on air quality issues  and do air monitoring. Some of                                                               
their  key  challenges are  working  with  Fairbanks on  its  air                                                               
pollution issues  and working  on rural  air quality  issues with                                                               
the  villages. Within  their permitting  program they  are always                                                               
watching the changing federal rules.                                                                                            
She said the  Air Permits Program is fee based  and has two basic                                                               
types of  permits: one is  for construction of new  facilities or                                                               
modifications  to  existing  facilities   and  Title  5  permits,                                                               
operating permits  which establish the compliance  monitoring for                                                               
the existing facilities and put that  all into one place once the                                                               
facilities are constructed. The  program also does the compliance                                                               
assurance  inspections  and follows  up  on  permit deviation  by                                                               
4:50:00 PM                                                                                                                    
MS. EDWARDS  said the program  maintains an on-going  process for                                                               
improving consistency and timeliness  of permitting to streamline                                                               
them over time. Most of the  costs are recovered through fees for                                                               
different types  of permits.  She said  the permits  program also                                                               
responds  to a  lot of  the general  air quality  complaints from                                                               
around the  state that aren't  related to  industrial facilities:                                                               
things like open burning.                                                                                                       
She  said  they  work  with  stakeholders  to  identify  ways  to                                                               
simplify things,  make the permits  more understandable  and find                                                               
efficiencies. New  federal rules  and standards are  always being                                                               
imposed  and  the  department  looks   at  them  from  an  Alaska                                                               
perspective and provides comments to EPA on its proposals.                                                                      
The carbon standards  for power plants just came out  and will be                                                               
finalized  next summer.  The wood  heater emission  certification                                                               
standards, also proposed  by the EPA, should be  finalized in the                                                               
next  month. Every  few years  EPA  is required  to update  their                                                               
national ambient  air quality  standards by  looking at  the most                                                               
recent science.  When these new health-based  standards come down                                                               
she tries to  figure out how to bring then  into their permitting                                                               
SENATOR COGHILL  said the new  carbon standards for  power plants                                                               
is  falling under  the 111(d)  rule and  he thinks  they are  off                                                               
their authority in Fairbanks. He  hoped the department would make                                                               
the strongest case possible to stand up against that rule.                                                                      
COMMISSIONER HARTIG said  he deferred to the AG's  office on that                                                               
issue,  but his  main concern  is that  the 111(d)  rule presumes                                                               
that all  these existing  power plants  are tied  to a  grid, but                                                               
Alaska  doesn't have  that. It  would  cost about  $1 billion  to                                                               
build the system to be able  to move power around, the rule being                                                               
to  get the  power from  the least  carbon intensive  source when                                                               
there is a power demand.                                                                                                        
SENATOR    COGHILL   appreciated    them   talking    about   the                                                               
impracticability of it.                                                                                                         
SENATOR  STOLTZE  asked  if  more challenges  would  be  seen  on                                                               
particulate matter (PM) attainment areas.                                                                                       
COMMISSIONER  HARTIG  said they  are  concerned  about the  Butte                                                               
MS.  EDWARDS said  other areas  of the  state can  have pollution                                                               
problems from things like wood  stoves; it's not just confined to                                                               
the Fairbanks  area. The Butte area  has high PM values,  but not                                                               
in Palmer or Wasilla.                                                                                                           
She  said  Fairbanks  is  the  one area  of  the  state  that  is                                                               
designated  by EPA  as not  complying with  health standards  for                                                               
fine  particulate  matter  and  they  submitted  an  initial  air                                                               
quality plan  to EPA on December  31 that was focused  on getting                                                               
cleaner burning wood heaters and  dry wood into the community and                                                               
expansion of natural gas.                                                                                                       
SENATOR COGHILL  commented that Fairbanks  went from PM 10  to PM                                                               
2.5 in  short order  at the same  time fuel oil  was going  up to                                                               
$145 a barrel.                                                                                                                  
4:57:57 PM                                                                                                                    
MS. EDWARDS  said it's  really important to  avoid this  in other                                                               
parts of the state and  she does community outreach and education                                                               
on a  number of issues  like dust,  wood smoke and  open burning.                                                               
They are  always looking for  partnerships with  communities, the                                                               
tribes and  federal agencies to  try to bring things  together to                                                               
improve air quality.                                                                                                            
SENATOR  MICCICHE asked  if the  EPA  looks at  a community  like                                                               
Fairbanks  that  is  noncompliant  due  to  survival  differently                                                               
because of  the lack  of choice  and, if so,  does it  have grant                                                               
programs that might be used to get natural gas to the Interior.                                                                 
COMMISSIONER HARTIG answered  they had a lot  of discussions with                                                               
EPA on this  and so has the Fairbanks North  Star Borough. An EPA                                                               
administrator  came up  to Fairbanks,  and  yes it  does look  at                                                               
Fairbanks  differently, because  in  other areas  of the  country                                                               
where  wood stoves  have become  more  popular burn  bans can  be                                                               
implemented.  Those can't  be done  in Fairbanks,  because things                                                               
would freeze up pretty quick. One  grant was made to Fairbanks by                                                               
the federal government.                                                                                                         
5:02:25 PM                                                                                                                    
MICHELLE  HALE,  Director,  Division   of  Water,  Department  of                                                               
Environmental  Conservation (DEC),  Anchorage,  Alaska, said  her                                                               
division  has   two  components:   the  water  quality   and  the                                                               
facilities  components:  facilities  is where  the  Village  Safe                                                               
Water Program  is and the  water quality is where  the permitting                                                               
and water quality standards programs are.                                                                                       
She said the  state has had full primacy of  the Alaska Pollutant                                                               
Discharge  Elimination  System  (APES) since  2012,  but  primacy                                                               
began in 2008. A large backlog  of permits was inherited but they                                                               
are doing  great with those; last  year 19 major permits  and 744                                                               
authorizations were issued. In 2013,  a bill was passed directing                                                               
the state to see if it  should assume primacy for the 404 program                                                               
and improvements  were made  to some  of the  wetland permitting,                                                               
but the  funding for that was  lost in 2014. A  detailed plan for                                                               
assumption should  funding be restored  was developed  and neatly                                                               
put  it away  so  it will  be  easy  to pick  up  again and  move                                                               
A wetland mitigation strategy for Alaska  is a big issue and will                                                               
become even bigger as the  Corps requires mitigation for wetlands                                                               
MS. HALE  noted the 64  percent ($62 million) decline  in funding                                                               
for drinking  water and waste  water facilities in  the villages.                                                               
About  4,500  homes  in  rural  Alaska  have  never  had  primary                                                               
drinking  water and  waste water  service and  there is  a direct                                                               
correlation between  clean water and public  health. In Pakistan,                                                               
a hand washing with soap  study demonstrated that it dramatically                                                               
reduced death rates. Children in  Southwest Alaska suffer some of                                                               
the  highest death  rates due  to pneumonia  in the  world. Homes                                                               
that  don't have  running  water  to wash  hands  in  have an  85                                                               
percent higher rate of hospitalization  in infants for pneumonia.                                                               
To  address the  huge  funding gap,  the  department launched  an                                                               
international challenge  - a  public/private partnership  to look                                                               
at  in-home  water/sewer  service  systems that  take  much  less                                                               
capital to install and have lower operating costs.                                                                              
SENATOR  COGHILL  remarked  that  a  Fairbanks  entrepreneur  was                                                               
actually looking at water treatment that can clean sewer water.                                                                 
COMMISSIONER HARTIG said their idea  is to leverage private know-                                                               
SENATOR  COGHILL said  he  was looking  forward  to the  villages                                                               
benefiting from  this type of  research and  development, because                                                               
operation of the bigger systems has not gone well, in his view.                                                                 
5:08:57 PM                                                                                                                    
CHAIR GIESSEL  adjourned the  Senate Resources  Committee meeting                                                               
at 5:08 p.m.                                                                                                                    

Document Name Date/Time Subjects
Senate Resources DEC Overview 02.02.15.pdf SRES 2/2/2015 3:30:00 PM