JUNEAU — The Alaska Legislature, at the urging of Gov. Mike Dunleavy’s administration, is considering a state takeover of a major federal environmental permitting process. The goal, administration officials have said, is to speed the construction of roads, bridges, mines and drilling projects.
Included in the House’s proposed state budget for the coming year is a $4.9 million increase to the budget of the Alaska Department of Environmental Conservation. That agency expects to hire 28 new staff members — the biggest single-year increase in decades.
If the budget increase is included in the state budget, DEC officials plan a two-year process to take over part of the federal Clean Water Act known as Section 404.
Permits issued under that section determine whether or not a builder can fill wetlands, rivers, streams and other bodies of water during construction. It also determines whether a project builder needs to take some sort of action to compensate for the wetlands destroyed by construction.
“We’re obviously very excited about the opportunity to get this going,” Jason Brune, commissioner of the Department of Environmental Conservation, told the Senate Finance Committee on March 15.
“We believe that we can develop this appropriately, get this submitted to the EPA ... and ask them to make a good decision for us, with the implementation in 2024,” Brune said.
Despite that interest, several lawmakers, including key members of the Senate Finance committee, have expressed concerns about the cost and scope of the project, and the idea has become a subject of debate as legislators work toward a final draft of the state budget.
Under federal law, states can take control of the program as long as they meet federal standards. Three states have done so — Michigan, New Jersey and Florida.
The Alaska Legislature authorized a takeover in 2013 but shelved the idea after oil prices plummeted. This year, oil prices — and state revenue — have rebounded and Dunleavy has revived the idea.
EPA has supported the takeover, Brune said, by offering grants and technical support. The Army Corps of Engineers, which typically administers 404 permitting, stayed neutral in legislative hearings.
‘A HUGE deal’
Industry groups have praised the idea of a state takeover, saying the current federal permitting process is too slow.
“I don’t think it could get any worse than it is right now, when I’m talking to our contractors,” said Alicia Amberg, executive director of the Associated General Contractors of Alaska.
“I think it’s worth a shot for the state to try to take this process over to allow the state to work through this process more efficiently,” she said.
About 90% of general permits — those affecting minimal amounts of wetlands — are issued in less than 60 days, according to John Budnik, a spokesman for the Alaska District of the U.S. Army Corps of Engineers. About 70% of the more complicated individual permits are issued in less than 120 days.
Brune said he expects “similar timelines or quicker, especially for general permits” under a state takeover, along with improved performance.
He offered an example: When the proposed Donlin gold mine in Southwest Alaska sought its wetlands permits, its owners wanted to clean up the defunct Red Devil mercury mine as compensation for the harm caused by Donlin. The Corps rejected that proposal, and Donlin instead paid to preserve wetlands elsewhere.
It was a silly result, Brune said — Alaska has more wetlands than the rest of the United States combined, and the terrain that was preserved wasn’t likely to be developed.
“We could have cleaned up that Red Devil mine and that would have had significant positive benefits to that watershed,” he said.
Environmental and fishing organizations have been alarmed by the prospect of a takeover. Though the state would still have to follow federal standards, opponents say the state has traditionally favored development and has underfunded oversight. They believe that attitude could lead to more harm to wetlands.
“I am very concerned. From a fish habitat perspective this is a HUGE deal,” said Lindsay Bloom, a campaign strategist for SalmonState, a group devoted to preserving wild salmon.
“We believe that DEC’s assumption of the program threatens Alaska’s wetlands and salmon rivers that support our fisheries,” the United Fishermen of Alaska, the state’s largest commercial fishing organization, said in an April letter to the Senate Finance Committee.
Questions of cost, staffing
As an example of their concern, opponents point to what happened the last time DEC assumed responsibility for a federal program. In 2005, the state started to take over administration of wastewater permits.
During a routine EPA review in 2014, the federal agency found DEC had significantly understaffed the wastewater program and wasn’t performing enough inspections to meet federal standards. DEC itself determined it needed more than 21 full-time employees to meet federal guidelines, but by 2019, it still had only 13.
Asked about that issue, Brune said that when the EPA raised the problem, he lobbied for more staffing at the agency. Today, the department handling wastewater issues is staffed enough to meet the federal standards, budget documents indicate.
He said he would make similar requests of the Legislature if the takeover project needs more staff or funding.
The state’s $4.9 million funding request is based on a 2014 estimate by DEC that was updated by current employees.
“That’s the number that we believe is necessary,” Brune said, “and if at the end of the day, we need more, I’m committed to going for more, but I believe that number that was done and looked at by both that team then and my team in water now, I’m trusting their analysis.”
Michelle Hale, now retired from DEC and serving on the Juneau Assembly, led the team that performed the analysis in 2014.
“It’s probably too low,” she said of the cost estimate.
The Army Corps in Alaska has a regulatory team of about 50 people and a budget of about $8.5 million per year to handle wetlands permitting, Budnik said.
“This does not include legal fees, and the Department of Justice does not charge us for support. This can range about $1 million per year,” he said.
The state of Virginia considered taking over wetlands permitting in that state in 2012 but ultimately concluded that the costs outweighed the benefits. When Florida took over wetlands permitting in that state at the end of 2020, the project turned out to be more costly than expected.
The environmental legal group Earthjustice challenged EPA’s approval of the Florida takeover, and Florida itself is in a legal battle with EPA over where state authority ends and federal authority begins. As a result of that dispute, dozens of permits have been placed on hold.
Like Florida, Alaska wouldn’t be able to take over all wetlands permits — those affecting the ocean, tidally influenced wetlands and navigable rivers or lakes still have to go through a federal process. Those represent about 25% of the Section 404 permits in the state, DEC estimated in 2014, but that proportion could change, depending on the result of an ongoing lawsuit in the U.S. Supreme Court.
The bottom line, Brune and others said, is that big development projects like the proposed Pebble mine, Donlin mine, and North Slope oil development will still have to go through a federal process. That comes with a caveat: Developers could break their projects into multiple pieces, with some pieces going through the federal process and some going through a state-only process.
“I know there are project proponents out there that would be very interested in bifurcating,” Brune said, but he added that he’s not sure whether it would happen.
Before becoming commissioner, Brune worked for the mining conglomerate Anglo American. That corporation backed the Pebble mine until 2013.
“The reason why we’re pursuing this has nothing to do with Pebble. Pebble definitely has an impact on the investment climate of our state ... but why we’re doing this is to have state oversight of our permitting authority,” he said.
A spokesman for the Army Corps of Engineers said it isn’t clear whether projects like Donlin or Pebble would need to go through a federal process.
Caution in the Legislature
Development groups supporting the state takeover have significant influence in the Alaska Legislature, where even Democrats support drilling in the Arctic National Wildlife Refuge. As the budget is debated in the state Senate, opponents of the takeover are using fiscal concerns to make their case.
On April 19, partially because of those concerns, the Senate Finance Committee removed funding for the takeover from its draft of the state operating budget.
Sen. Bert Stedman, R-Sitka, is co-chair of the Senate Finance Committee and said he’s personally opposed to the idea. In addition to the costs, he’s concerned about starting a major new project in the last year of a gubernatorial term.
“If we do this, we should really start it at the start of a governor’s term so he has or she has the ability to troubleshoot issues that come up with it,” he said.
“I think there’s a timing issue, there’s a budget growth issue, and there’s a lot of concern amongst my district as far as just DEC and EPA growth and involvement in the overall economy. I’m a little cautious,” Stedman said.
The decision to remove funding from the Senate budget doesn’t kill the idea. Funding could be restored in a Senate amendment, and even if it doesn’t reappear in the Senate budget, it will be a topic of debate as lawmakers compromise the House and Senate proposals before the Legislature adjourns on May 18.