    [Senate Hearing 106-952]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 106-952

       BILL TO ESTABLISH REGION 11 OF THE ENVIRONMENTAL PROTECTION AGENCY
    =======================================================================

                                    HEARING

                                   BEFORE THE

                                  COMMITTEE ON

                          ENVIRONMENT AND PUBLIC WORKS

                              UNITED STATES SENATE

                           ONE HUNDRED SIXTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  JUNE 6, 2000
                                   __________

                                       ON

                                    S. 1311

      A BILL TO DIRECT THE ADMINISTRATOR OF THE ENVIRONMENTAL PROTECTION
        AGENCY TO ESTABLISH AN ELEVENTH REGION OF THE ENVIRONMENTAL PROTECTION
        AGENCY, COMPRISED SOLELY OF THE STATE OF ALASKA

      Printed for the use of the Committee on Environment and Public Works

                            U.S. GOVERNMENT PRINTING OFFICE
    71-514                          WASHINGTON : 2002
    ____________________________________________________________________________
    For Sale by the Superintendent of Documents, U.S. Government Printing Office
    Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512-1800
    Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001

                   COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                           ONE HUNDRED SIXTH CONGRESS
                                 second session
                       BOB SMITH, New Hampshire, Chairman
    JOHN W. WARNER, Virginia             MAX BAUCUS, Montana
    JAMES M. INHOFE, Oklahoma            DANIEL PATRICK MOYNIHAN, New York
    CRAIG THOMAS, Wyoming                FRANK R. LAUTENBERG, New Jersey
    CHRISTOPHER S. BOND, Missouri        HARRY REID, Nevada
    GEORGE V. VOINOVICH, Ohio            BOB GRAHAM, Florida
    MICHAEL D. CRAPO, Idaho              JOSEPH I. LIEBERMAN, Connecticut
    ROBERT F. BENNETT, Utah              BARBARA BOXER, California
    KAY BAILEY HUTCHISON, Texas          RON WYDEN, Oregon
    LINCOLN CHAFEE, Rhode Island
                          Dave Conover, Staff Director
                      Tom Sliter, Minority Staff Director

                                      (ii)

                                C O N T E N T S

                                  ----------
                                                                       Page

                                  JUNE 6, 2000
                               OPENING STATEMENTS

    Baucus, Hon. Max, U.S. Senator from the State of Montana.........     2
    Smith, Hon. Bob, U.S. Senator from the State of New Hampshire....     1

                                   WITNESSES

    Brown, Michele D., Commissioner, Alaska Department of
      Environmental Conservation.....................................    14
        Prepared statement...........................................    42
        Responses to additional questions from Senator Smith.........    48
    Diaz, Romulo L., Jr., Assistant Administrator for Administration
      and Resources Management, Environmental Protection Agency......    12
        Prepared statement...........................................    37
        Responses to additional questions from Senator Smith.........    40
    Freeman, Ken, executive director, Resource Development Council...    17
        Prepared statement...........................................    51
    Murkowski, Hon. Frank, U.S. Senator from the State of Alaska.....     3
        Administrative order, EPA Administrator William K. Reilly....     5
        Prepared statement...........................................    36

                              ADDITIONAL MATERIAL

    Statement, Melanie L. Griffin, director, Lands Protection
      Programs, Sierra Club..........................................    54
    Text of S. 1311, A bill to direct the Administrator of the
      Envronmental Protection Agency to establish an eleventh region
      of the Environmental Protection Agency, comprised solely of the
      State of Alaska................................................    56

                                     (iii)

       BILL TO ESTABLISH REGION 11 OF THE ENVIRONMENTAL PROTECTION AGENCY

                                  ----------

                             TUESDAY, JUNE 6, 2000

                                           U.S. Senate,
                     Committee on Environment and Public Works,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 10 a.m., in room
    406, Senate Dirksen Building, Hon. Bob Smith (chairman of the
    committee) presiding.
        Present: Senators Smith and Baucus.

                 OPENING STATEMENT OF HON. BOB SMITH,
              U.S. SENATOR FROM THE STATE OF NEW HAMPSHIRE

        Senator Smith. The committee will come to order.
        Good morning, Senator Murkowski. I'll have a very brief
    opening remark, then Senator Baucus may have a comment, then,
    we'll turn to you, Senator Murkowski.
        Today, we will address the topic as to whether the EPA
    should establish a separate region known as Region 11 for the
    State of Alaska. That question is before us in the form of a
    bill, S. 1311, which was introduced by our colleague, Senator
    Frank Murkowski of Alaska. The bill, S. 1311, would direct the
    EPA to create a separate region for Alaska and to place a
    regional office in Alaska, and would authorize such funding as
    necessary to achieve that goal.
        The bill stems from and reflects a longstanding interest on
    the part of both Senators Murkowski and Stevens to see the
    adoption of a separate region, EPA region, for their home
    State. Several years ago, this subject was addressed in a
    different context. Section 522 of the Department of VA and
    Housing and Urban Development Independent Agencies
    Appropriations Act of 1992, fiscal year 1992, authorized the
    creation of a separate EPA region for Alaska.
        And on the last day of the Bush administration, EPA
    Administrator William Reilly signed an administrative order
    exercising that authority and creating a separate Alaska
    district. However, the Clinton administration never implemented
    that order, and Alaska today is still part of EPA Region 10. So
    in my discussions and questions with the administration, we'd
    like to focus a little bit on that as to what the rationale for
    that is.
        With that in mind, let me turn for a moment to Senator
    Baucus, if you have any opening remarks.
        [Prepared statement of Senator Smith follows:]
        Statement of Senator Bob Smith, U.S. Senator from the State of
                                 New Hampshire
        Good morning. Today, we will address the following topic: Should
    the EPA establish a separate region--a Region 11--for the State of
    Alaska? That question is before us in the form of a bill--S. 1311--that
    was introduced by our colleague Senator Murkowski from Alaska. Senate
    bill 1311 would direct the Environmental Protection Agency to create a
    separate region for Alaska and would authorize such funding as is
    necessary to achieve that goal.
        This bill stems from and reflects a longstanding interest on the
    part of Senators Murkowski and Stevens to see to the adoption of a
    separate EPA region for their home State. Several years ago, for
    example, this subject was addressed in a different context. Section 522
    of the Departments of Veterans Affairs and Housing and Urban
    Development, and Independent Agencies Appropriations Act for Fiscal
    Year 1992, authorized the creation of a separate EPA region for Alaska.
    On the last day of the Bush administration, EPA Administrator William
    Reilly signed an administrative order exercising that authority and
    creating a separate Alaska district. The Clinton administration did not
    implement that order, however, and Alaska today, is still part of EPA
    Region 10.
        There are several arguments on each side of this issue. We have
    before us the written statements of today's witnesses, and we will hear
    from those witnesses, their testimony pro and con, on this bill. Rather
    than now summarize their positions, I will let the witnesses themselves
    make their own statements.
        But out of respect for our colleague from Alaska, I will note that
    perhaps the most often-advanced argument in favor of this proposal is
    that the uniqueness of Alaska militates in favor of treating that State
    as a separate EPA region. In that regard, American author Jack London
    once made two points that undergird the argument advanced by our
    colleague--first, that Alaska is a unique land and, second, that, only
    by being willing to adapt to those features of Alaska that render it
    unique, can a person truly come to understand what it means to be an
    Alaskan. Let me read a quote from Jack London that makes those points
    [``In a Far Country'' (1899), reprinted in The Portable Jack London 11-
    12 (Earle Labor ed. 1994)]:

              When a man journeys into a far country, he must be prepared
            to forget many of the things that he has learned, and to
            acquire such customs as are inherent with existence in the new
            land; he must abandon the old ideals and the old gods, and
            oftentimes he must reverse the very codes by which his conduct
            has hitherto been shaped. To those who have the protean
            facility of adaptability, the novelty of such change may even
            be a source of pleasure; but to those who happen to be hardened
            to the ruts in which they were created, the pressure of the
            altered environment is unbearable, and they chafe in body and
            spirit under the new restrictions which they do not understand.
            This chafing is bound to act and react, producing divers evils
            and leading to various misfortunes. It were better for the man
            who cannot fit himself to the new grove to return to his own
            country; if he delay too long, he will surely die.
              The man who turns his back upon the comforts of an elder
            civilization, to face the savage youth, the primordial
            simplicity of the North, may estimate success at an inverse
            ratio to the quantity and quality of his hopelessly fixed
            habits. He will soon discover, if he be a fit candidate, that
            the material habits are the less important. *  *  * For the
            courtesies of ordinary life, he must substitute unselfishness,
            forbearance, and tolerance. Thus, and only thus, can he gain
            that pearl of great price--true comradeship. *  *  *

        With all that in mind, let me thank our colleague Senator Murkowski
    for being here today to speak on behalf of his bill. Senator Murkowski,
    you have the floor.

                 OPENING STATEMENT OF HON. MAX BAUCUS,
                 U.S. SENATOR FROM THE STATE OF MONTANA

        Senator Baucus. Thank you very much, Mr. Chairman.
        Mr. Chairman, I join you, I'm sure, in sympathizing with
    the Senator from Alaska over his concerns, that is, a State
    that's so far away from any of the regional offices of EPA, let
    alone Washington, DC. I must say, we share some of the same
    concerns in our State. We may not be as large as Alaska or as
    sparsely populated or as far away.
        But the fact is, we are a large State and we are sparsely
    populated, and in our case, the Federal Government owns about a
    third, close to a third of our total land area. So to put it
    lightly, the Federal Government has a very strong influence on
    our State. And that's particularly true in western Montana,
    where there are a lot of conflicts, natural resource conflicts.
        I must say, too, just to give an example, that decisions
    that affect Montana are made as far away as either Washington,
    DC. or a distant regional office. EPA, for example, which very
    much affects Montana, is in Denver. The Bonneville Power
    Administration is in Portland. The National Marine Fisheries
    Service, which determines what must be done to recover salmon,
    is in Seattle. The Corps of Engineers, which affects our State
    dramatically, is in Omaha.
        So we often feel that these offices make decisions that
    don't take adequate account of Montana's interest, whether it's
    BPA considering the great effects of a small aluminum plant in
    Columbia Falls, MT, or the Army Corps of Engineers favoring
    downstream over upstream interest on the Missouri River. So I
    share Senator Murkowski's frustration with the way this system
    works, or the way it sometimes doesn't work.
        However, I must say I'm a little bit concerned about a
    proposal to create a separate region for one State. First of
    all, in this case, it would be costly. It would also give
    special treatment to a single State over all the other States.
    And it may raise concerns from the other States in Region 10
    where they might get short shrift. And by creating a full blown
    11th EPA region for a single State, we also have to face the
    question of balance, that is, balance between the goals on the
    one hand of maintaining a national system of environmental laws
    and on the other hand, being sensitive to local concerns.
        Now that we have regional offices that affect several
    States at a time, I think we do strike that balance. Certainly
    the question is raised when the single EPA office, a single
    regional office, is responsible for only one State.
        So, I, at this point, Mr. Chairman, am somewhat skeptical
    about S. 1311. It may be a more radical approach than is
    necessary to strike the balance. But that said, I deeply
    appreciate the presence and the testimony of Senator Murkowski,
    and will listen very closely to what he has to say.
        Senator Smith. Senator Murkowski, the floor is yours.
    Welcome.

    STATEMENT OF HON. FRANK MURKOWSKI, U.S. SENATOR FROM THE STATE
                               OF ALASKA

        Senator Murkowski. Thank you very much, Mr. Chairman,
    Senator Baucus. It's a pleasure to be here. I spent a good deal
    of time in this committee back in 1981 and 1982, wrestling with
    problems that you're still wrestling with today.
        Thanks for scheduling this hearing. As you know, this has
    been on our list for some time. Senator Stevens and I
    introduced the language to establish an EPA region in Alaska.
    Now, a legitimate question has been asked, ``Why does Alaska
    need a separate region?'' Our State is 65 percent owned by the
    Federal Government. We have less than 1 percent of our land
    mass that's privately owned. The native regional corporations
    were given a settlement in our State, and that settlement
    resulted in 40 million acres of land being transferred to them.
        But part of the answer really lies in the uniqueness of our
    ecosystem and the extent of the piece of real estate known as
    Alaska. We have about 365 million acres, about 586,000 square
    miles. I don't see anybody from Texas here, so I won't offend
    anybody if I remind you that it's 2\1/2\ times the size of
    Texas, a little more than 63 times the size of New Hampshire,
    Mr. Chairman. We have about 2,400 miles from east to west, and
    about 1,400 miles north to south.
        I used to run a financial institution in our State. And we
    ran it through four time zones. Trying to balance in one area
    and communicate to another was a problem. So we'd usually
    balance the next day. We have 170 million acres of wetlands,
    that's 65 million acres more than the combined total of
    wetlands in all of the other 49 States. We have a coastline
    larger than the rest of the Nation combined, approximately
    47,300 miles of coastline. We have 3 million lakes larger than
    20 acres. We have ecosystems ranging from an arctic desert to
    temperate rainforest, including ecosystems that are found
    nowhere else in the United States.
        In addition, Alaska is more ecologically diverse than any
    other State. And for the last 40 years, the energy wealth of
    North America has been coming from Alaska, and primarily that
    area that's unique, because it's north of the Arctic Circle.
    It's been supplying nearly 25 percent of the total oil produced
    in this country, and the gas reserves are estimated to be
    somewhere in the area of 40 to 70 trillion cubic feet of gas.
    And the question of the marketing of the gas is a challenge
    that's before the State and before the Nation and will be
    before the EPA.
        Now, that's why virtually every other Federal agency, and I
    would encourage Senator Baucus to reflect on this, every other
    Federal agency with environmental or conservation
    responsibilities has a region distinct in Alaska. That includes
    the National Park Service, that includes the Fish and Wildlife
    Service, the Bureau of Land Management, the Forest Service, the
    Geological Survey, the Bureau of Indian Affairs, the Mineral
    Management Services and the Bureau of Mines. Those have been
    located in Alaska because of the uniqueness of the stewardship
    associated with the Federal agencies and their oversight
    responsibilities.
        Even the Federal Aviation Administration has a region
    comprised only of Alaska. Moreover, the Coast Guard and the
    Army Corps of Engineers have distinct district offices that are
    in Alaska, and specifically devoted to Alaskan issues.
        Congress has already recognized the merits of an Alaska
    region for the Environmental Protection Agency. In the fiscal
    year 1992, the VA-HUD appropriations bill, at that time
    Congress authorized the President to establish an eleventh
    region of EPA consisting solely of the State of Alaska. An
    administrative order to that effect was signed by EPA
    Administrator William K. Reilly, as the chairman mentioned, in
    January 1993. Unfortunately, the order was not carried through.
        I would ask that a copy of the signed order be included in
    the hearing record today.
        Senator Smith. Without objection, it will be included.
        [The information referred to follows:]

                          U.S. Environmental Protection Agency,
                                                        Washington, DC.

                              ADMINISTRATIVE ORDER

        By the authority vested in me as Administrator of the United States
    Environmental Protection Agency in section 3, Reorganization Plan 3 of
    1970, 5 U.S.C.A. App. 1 (Supp. 1992), and as authorized in Section 522
    of the HUD-VA-Independent Agencies Appropriations Act for fiscal year
    1992, Pub. L. No. 102-139, 105 Stat. 736, 781; it is hereby ordered:
        Section 1. Establishment of Region XI. There is hereby established
    Region XI of the United States Environmental Agency, which shall
    consist solely of the State of Alaska.
        Section 2. Transfer of reassignment of resources and designation of
    Regional Office and Regional Administrator. The determination of
    records, property, personnel, and positions, and unexpended balances of
    appropriations that relate to the functions transferred, reassigned, or
    redelegated by this order, and the designation of a Regional Office and
    Acting Regional Administrator will be made by subsequent order.
        Section 3. Effective data. The provisions of this administrative
    order are effective immediately.

        Dated this 20th day of January, 1993.
                                             William K. Reilly,
                   Administrator, U.S. Environmental Protection Agency.

        Senator Murkowski. Thank you, Mr. Chairman.
        Mr. Chairman, I know from my service on this committee when
    I first came to the Senate, and as you know from your
    leadership on environmental issues, environmental protection is
    a complex undertaking. One-size-fits-all approaches cannot be
    written in Washington or Seattle and necessarily applied in our
    State of Alaska. Bringing the regulator closer to the problem
    yields better discussions, more effective and thoughtful
    regulation.
        One of the uniquenesses of our State is we have seasonal
    activities, just as you have in Montana, Senator Baucus. It is
    as a consequence very easy for the EPA administrators to
    reflect on their deliberations and simply put something off for
    a month or two which costs us a whole year, because if we lose
    a construction season, we've lost a year.
        Furthermore, the distance from Seattle to Anchorage is
    about 1,200 miles. So by the EPA traversing back and forth,
    they buildup substantial air miles and they're good for the
    hotels and restaurants in Anchorage, AK, but it's not like they
    live there, send their children to school, relate and get an
    understanding of the uniqueness of our State.
        As I have indicated, over 65 percent of Alaska is
    controlled and owned by the Federal Government. Most EPA
    activities directed at Alaska require coordination with Federal
    land managers who are headquartered in Alaska. That's the other
    land areas, the Forest Service, the Park Service, BLM and so
    forth.
        Other benefits that we expect from this legislation include
    reduced number of appeals and adjudications, reduced travel
    between Seattle and Alaska. And I might add, a 1,200 mile trip
    takes all day. Better service to the public, lower cost. Now,
    while EPA may disagree, the last time we asked the Alaska
    Department of Environmental Conservation to perform an analysis
    of the budgetary impacts of an Alaska region EPA office, they
    projected a modest savings to the taxpayer. I ask that the
    materials related to the cost be included in the record at this
    time.
        Senator Smith. Without objection.

        Senator Murkowski. Thank you, Mr. Chairman.
        I want to leave you with just a few examples of what
    happens when good intentions in the EPA Seattle office go awry
    in Alaska. In the regulation of mining operations, EPA sought
    to require operators to reduce arsenic discharges to a level
    below, below the naturally occurring ambient levels. They were
    apparently unaware that the high level of mineralization in
    many areas of Alaska caused some streams to have naturally high
    levels occurring of contaminants associated with arsenic.
        If you fill your canteen from a stream and later dump the
    portion you did not drink back into the stream, you're
    violating an EPA standard.
        Here's another example. When EPA insisted that Fairbanks,
    which happens to be my hometown, uses MBTE as an oxygenate for
    motor fuels, nobody really understood what happened when MBTE
    volatized in extremely cold air inversions, such as our 40
    below zero temperatures, exposing humans directly to the
    chemical. Well, let me tell you what happened. People started
    to get sick, complaining of headaches, nausea and dizziness.
    I've had pictures of some of these people, and you can readily
    see the reaction.
        For far too long, EPA's distant Seattle office regarded the
    health complaints of Fairbanks residents as little more than
    grumbling of a few crackpots and refused to grant a waiver.
    Many months later, after being confronted with hard evidence of
    sickness, EPA did grant a waiver. How much more quickly that
    waiver might have been done and how many fewer Alaskans might
    have not gotten sick if EPA had a regional office in Alaska.
        Well, today, Fairbanks is a non-attainment area for carbon
    monoxide by virtue of the arctic air inversion that occurs
    several times a year. Seattle has never experienced a true
    arctic air inversion and never will. So it doesn't surprise me
    that the EPA regional office hasn't come to terms with the best
    way to help Fairbanks solve its problems. Instead of
    considering the unique situation that Fairbanks is in, the EPA
    started the sanction clock.
        Well, in Nome where I visited this last weekend, in the
    village of Elg, the EPA wants the smokestacks in Nome on the
    power plant to be raised to better dissipate emissions. Now,
    according to the Federal Aviation Administration, doing so
    would interfere with the landing patterns and require costly
    realignment of the runways at Nome's airport, which would
    largely be undertaken at Federal expense.
        Is this a cost-effective solution? Well, of course not. But
    it's easy to see how this can happen if EPA is sitting in
    Seattle, calling shots without coordinating with the FAA which
    has its regional headquarters in Anchorage.
        Another example, and this is relatively humorous, is the
    Anchorage waste water treatment plant. EPA requires both
    primary and secondary treatment waste water to address elevated
    levels of biological oxygen demand, that's BOD, a measure of
    microable activity in waste water. When Anchorage only had
    primary treatment, the tidal action of the inlet, that's 30
    feet of tidal action twice a day, some of the most extreme in
    the world, I might add, next to the Bay of Fundy, coupled with
    the low BOD levels in Anchorage waste water, argued against the
    need for expensive secondary treatment to lower the BOD
    readings.
        But the EPA determined that Anchorage still needed
    secondary treatment, notwithstanding the low BOD reading and
    the tidal action of the inlet. In order for Anchorage to have a
    sufficient amount of BOD to address, it contacted a fish
    processor to dump some fish waste into the discharge to raise
    the BOD of the effluent, in order that the secondary treatment
    could lower it.
        In Fairbanks, we had an occasion where the bus barn, where
    they park the buses, they were removing the snow, putting them
    in the back area and the back area was determined to be a
    wetland. The placement of the snow in the wetland was a
    violation of EPA regulations. Those came out of Seattle as
    well.
        So in conclusions, Mr. Chairman, I would ask this committee
    to move our legislation that directs the establishment of an
    Alaska region. Because again, many of the activities are unique
    to Alaska. For example, we're the only State in the Union with
    permafrost. We have about 70 percent of our State covered with
    permafrost. The uniqueness of that with any activity associated
    with oil, gas and mineral exploration is indeed unique. We have
    the dynamics of scouring ice on our coastlines, and the
    realization that we're attempting to build pipelines to develop
    oil and gas.
        These are all unique to no other region but Alaska. And as
    a consequence, to the concern from my friend from Montana, who
    is concerned legitimately about why Alaska, I would simply
    refer to the other agencies that have seen fit, because of
    their stewardship responsibility and uniqueness of our State,
    that it's much more effective and more practical to have an
    agency in our State. It reduces the transportation costs of
    people traveling 1,200 miles almost on a continuous basis and
    provides the expertise where it belongs in the area where the
    development is concentrated.
        I'd be happy to respond to any of your questions, and
    again, I would encourage your favorable consideration.
        Senator Smith. Thank you very much, Senator Murkowski.
        I just have one question. It may be better put to
    Commissioner Brown or Director Freeman, and I can ask that when
    they come up. But as I read the Reilly order in January 1993,
    just prior to President Bush leaving office, it says,

        Reilly responding to President's Bush's order, it's hereby
    ordered,

    and then the second paragraph of that,

    that the transfer, reassignment of resources and designation of
    regional office and regional administrator, the determination
    of records, property, personnel, positions and unexpended
    balances of appropriations that relate to the functions
    transferred, reassigned, etc., to the regional office in
    Alaska.

        I guess I would be interested in what transpired in Alaska
    once that happened. I'm assuming that after that order was
    signed, the anticipation was that you were going to have a
    regional office. Yet, when President Clinton came in, that was
    not executed.
        Did something happen in Alaska? Were decisions made? Were
    preparations made to open offices or to do things in
    anticipation based on that order?
        Senator Murkowski. Well, there was nothing extraordinary
    that happened associated with the order. Senator Stevens and I
    lobbied the effort through the previous administration and very
    frankly, it just got lost in the dying days of that
    administration and was never effected. I'm not aware of any
    particular incident. I think there were a lot of priorities, as
    there usually is when an administration is about to go out. And
    this one fell in the crack.
        I guess I have no explanation for why.
        Senator Smith. I don't have any further questions. Do you,
    Senator Baucus?
        Senator Baucus. Just a couple, Frank, and I understand the
    concern, believe me. Some of the agencies you mentioned have
    field offices, not regional offices, in Alaska. In addition,
    they're basically land resource agencies which have a little
    bit different mission than the EPA.
        But I guess the main point, the main question here
    obviously is, is responsiveness and balance. Those are the two
    most salient questions here. To me, it's not easy. For example,
    in Montana, we have the largest Superfund site in the Nation.
        Senator Murkowski. The largest what?
        Senator Baucus. The largest Superfund site in the Nation,
    by far. We don't have a regional office in Montana. There's a
    State office which deals with it. There is a little bit of
    tension, as one would expect. My guess is there would be
    tension even if there were a regional office in Montana.
    Because obviously the issues are Federal and State, regardless
    of where the regional office is.
        We also in Montana have a huge asbestos problem. A couple
    hundred people have died. Several hundred are infected by
    asbestosis, or mesophilioma, or some form of asbestos-related
    disease. It's huge. This is a massive problem that's affecting
    not only Libby, MT, but many parts of this country.
        EPA has sent to Montana, to Libby, several personnel. They
    have done a terrific job, EPA personnel. The people in Montana,
    Libby, MT, particularly, have nothing but praise for EPA, the
    way EPA has handled this. EPA has sent a very good person,
    onsite person, his name is Paul Paranard.
        I've got to tell you, I wish that everybody in the country,
    who sometimes criticizes the Federal Government, would meet
    Paul Paranard. This guy is one of the most special persons I've
    ever met in any capacity anywhere. He's a basic, down to Earth
    kind of a guy. We had a hearing there just last week. This is
    typical of Paul. He comes in his jeans and kind of a black tee-
    shirt. He's got a ring in his ear. He's just a basic guy, but
    he is so smart. He is so responsive, he listens so much to
    people and he's moving things so quickly.
        We've got a couple sites that are already on the schedule
    to be cleaned up in a very short period of time since he's been
    there. One's a nursery, a tree nursery, another is a lumber
    yard. The main point being that there's no magic formula here.
    Sometimes EPA is handling things quite well and sometimes it's
    not.
        But the only point I want to make is, in this case, EPA is
    handling a very, very, very difficult State and national
    problem without a regional office in Montana. People are OK,
    they're happy. It's just a slight concern that my folks in
    Montana are going to think, ``Well, gee, Alaska gets one, why
    don't we in Montana.'' I'm going to run into that in spades. As
    I mentioned, there are just lots of EPA issues in Montana. I
    mentioned just two. There are many, many others. EPA is very
    prevalent in Montana.
        There's also a slight question, that has to be raised, by
    looking at the various regions. You know, Florida is not very
    much like Kentucky, yet EPA handles both. One could argue
    Florida should have its own regional office. Maybe Kentucky
    should have its own regional office. Same thing with the region
    that includes Texas, Louisiana, and I think New Mexico are in
    the same region. Some people in Louisiana may think, gee, our
    State's a lot different than New Mexico, and vice versa. Why
    shouldn't we have our own regional offices?
        I guess the only point I'm making is I very much sympathize
    with what your concern is, because Alaska is considerably
    farther away. But I don't know that necessarily, a regional
    office is going to solve the problem here. It's really kind of
    a guess as to what the problem is. If the problem is the way
    EPA is administering the statutes in Alaska, there are ways to
    skin that cat, have hearings in Alaska, as I've had in Montana.
    Lots of EPA hearings in Montana. And I call EPA personnel, they
    come to Montana. It's very good for them, it's very good for
    us. And it works.
        So all I'm saying, Senator, is I deeply, deeply appreciate
    your concern. But I don't know that it's necessarily the right
    public policy for the country. But I certainly will listen to
    the testimony very carefully.
        Senator Murkowski. Well, thank you. Obviously, I don't have
    much time left to convince you. But I would like to remind you
    that all the Interior offices, the BLM, the Park Service, are
    full regional offices, with a full regional administrator, I
    might add. Forest Service, full regional offices. They are not
    sub-regional offices.
        I've been criticized in my State for, as you know, the EPA
    is not necessarily the most popular agency in many regards.
    They have a job to do, and I've been criticized for suggesting
    that there should be a regional office in my State. I
    understand and appreciate that criticism, but the reality is
    that we live under the law of the land. But if the law of the
    land is interpreted in an environment that is substantially
    removed from the circumstances associated with the uniqueness
    of our area, you spoke of your concern over your Superfund
    site. You spoke of your concern over asbestos problems.
        It's my hope, as you know, we became a State in 1959, we're
    relatively new. It's my hope that by having the EPA establish a
    regional office, we will not be confronted with the problems
    associated in your State or other States that have Superfund
    sites.
        Now, the uniqueness is the technological application
    associated with a 65 percent of the area's permafrost. You say
    you can do the same thing in Kentucky that you can do in
    Florida relative to an EPA region. But our State's the only one
    with permafrost. Our State's the only one producing volumes of
    oil. And like any other area, only the uniqueness is it's not
    like Texas, it's in the Arctic. The engineering technology is
    entirely different. The movement of ice on our coastlines, we
    have scouring. How do you put--these are all unique to Alaska
    and as a consequence, I think, deserve consideration.
        We talk about the role of EPA in Alaska. It's a developing
    role. We spent $9 billion, the largest construction project in
    the history of North America, was that oil pipeline. Senator
    Baucus, you were here, you were aware of what was going on.
        Senator Baucus. I was up there twice.
        Senator Murkowski. Yes. It was one of the more significant
    engineering events ever to occur. We're talking about putting a
    gas line in. We're talking about $10 billion to $14 billion.
    These are things that are not happening anywhere else in Region
    10. They're going to happen in Alaska. Justification for EPA is
    to ensure that we don't have happen in Alaska what happened in
    Montana.
        Senator Baucus. What--wait a minute. Whoa, Senator----
        Senator Murkowski. I'm talking about your Superfund site,
    I'm talking about your asbestos.
        Senator Baucus. No, no.
        Senator Murkowski. If we have EPA in our State managing, we
    won't have these problems.
        Senator Baucus. Frank, in all respect, that's irrelevant.
    Because, because----
        Senator Murkowski. Well, history has a way of repeating
    itself. What comes around goes around.
        Senator Baucus. I'm just saying, the asbestos problem, the
    problem there is, we found the problem, and EPA is doing a
    great job at managing the cleanup.
        Senator Murkowski. I'm sure they are. We want EPA to do a
    great job in our State as well.
        Senator Smith. I think one other point that needs to be
    made, too, this is not simply the case of a Senator making a
    request for something in his State. This has gone through the
    legislative process, has gone to the President's desk for
    signature, although it was not a mandatory action. Then it was
    supposedly implemented and has not been. We will hear from the
    next panel as to perhaps why that would be the case.
        In any case, we can all agree that William Seward made a
    good investment, otherwise we'd be dealing with the Russians
    now.
        Senator Murkowski. Well, we're ready to buy it back any
    time. Thank you, gentlemen.
        Senator Smith. Thank you.
        If the next panel would please come up. The Honorable
    Romulo Diaz, Assistant Administrator of Administration and
    Resources Management, EPA; The Honorable Michele Brown,
    Commissioner, Alaska Department of Environmental Conservation;
    and Mr. Ken Freeman, the Executive Director of the Alaska
    Resource Development Council. Welcome. We're glad to have you
    here.
        Let's start with Mr. Diaz. Your comments will be made part
    of the record, and if you can summarize in a few minutes, we'd
    appreciate that.

     STATEMENT OF ROMULO L. DIAZ, JR., ASSISTANT ADMINISTRATOR FOR
        ADMINISTRATION AND RESOURCES MANAGEMENT, ENVIRONMENTAL
                           PROTECTION AGENCY

        Mr. Diaz. Thank you, Mr. Chairman.
        Mr. Chairman and members of the committee, I am Romulo L.
    Diaz, Jr., EPA's Assistant Administrator for Administration and
    Resources Management. I am pleased to appear before you to
    present the Agency's views on S. 1311, a bill to create a
    separate EPA region for Alaska.
        I would like to begin by providing a brief history of the
    efforts to establish an eleventh EPA region in Alaska. In 1990,
    then-Governor Walter Hickel called upon the EPA Administrator,
    William Reilly, to create a separate regional office for
    Alaska. In response to the request by the Governor and Senators
    Stevens and Murkowski, as well as the concerns expressed by the
    delegations of potentially affected States, EPA undertook a
    study of the ``Implications of Establishing a Regional Office
    in and for Alaska.''
        This study, which was completed in 1992, concluded that the
    proposed new region would not be cost effective and outlined
    alternative approaches to meeting the concerns of Alaska's
    elected officials. In January 1993, then-President Bush signed
    a memorandum ordering Administrator Reilly to establish Region
    11. On January 20, 1993, Administrator Reilly signed an
    administrative order establishing the new region, subject to
    implementation steps necessary for such a reorganization.
        Following careful consideration by the incoming
    administration, EPA believed that the concerns expressed by
    Alaska officials, industry and environmental groups,
    particularly in light of the 1992 Alaska study, could be more
    effectively and efficiently satisfied through a variety of
    other means. These included better collaboration with the State
    in developing program priorities, improving program delivery
    strategies, and better deployment of EPA resources in the
    State.
        Let me review just a few of the ways that EPA today
    demonstrates its commitment to one of this Nation's most
    geographically diverse areas. EPA's Alaska operations office is
    unique among EPA's State organizations. With 39 employees, it
    is the largest of any EPA State-based operation and is
    responsible for on-the-ground implementation of EPA programs in
    the State. In addition to administering some programs directly,
    the Operations Office provides technical assistance to help
    State, local and Tribal governments in administering delegated
    programs.
        An essential element to EPA and Alaskan cooperation is the
    2-year partnership agreement that integrates federally-funded
    programs administered by EPA with related programs funded by
    the State and by other Federal agencies. The recently revised
    agreement contains mutually determined priorities to achieve
    environmental goals and gives the State maximum flexibility to
    address its specific needs while maintaining a core level of
    environmental protection.
        Let me just give a few examples to illustrate this
    flexibility. In light of the State's unique geographical,
    meteorological, air quality and economic factors, EPA has
    granted Alaska an exemption from meeting the current sulfur
    standard for highway diesel fuel. To help Alaskan rural
    communities, EPA has provided in excess of $100 million since
    1995 for construction of drinking water and wastewater
    facilities. In addition, a Rural Sanitation Coordinator and
    staff in the Alaska Operations Office works directly with
    Native Villages and with State agencies to provide rural
    sanitation services.
        EPA and the Corps of Engineers have worked to develop a
    wetlands permitting process that takes into account the State's
    highly diverse environmental, economic, and geographical
    conditions. The Operations Office director is authorized to
    approve wetlands permits for Alaska, which is itself unique
    within EPA.
        A number of measures point to the success of EPA's efforts.
    For example, major NPDES permit backlogs for municipal
    discharges, mining, pulp and seafood operations have been
    reduced from 69 percent in 1996 to 21 percent in March 2000,
    and are expected to be further reduced by the end of this
    calendar year. Over the past 7 years, EPA has listened to the
    concerns expressed by Alaskan officials. Although there is
    always room for improvement, much progress, we believe, has
    been made, and we remain committed to addressing Alaska's
    unique needs in cost-effective ways that recognize
    environmental and public health needs.
        On behalf of the Environmental Protection Agency, I pledge
    that we will continue to work with this committee as well as
    the State of Alaska and others to consider additional cost-
    effective ways to better serve the environment and the people
    of Alaska. Thank you for the opportunity to appear before you
    today, and I'd be pleased to answer any questions you might
    have.
        Senator Smith. Thank you, Mr. Diaz.
        Commissioner Brown, welcome.

    STATEMENT OF MICHELE D. BROWN, COMMISSIONER, ALASKA DEPARTMENT
                     OF ENVIRONMENTAL CONSERVATION

        Ms. Brown. Thank you, Mr. Chairman, Senator. I am Michele
    Brown, Commissioner of the Alaska Department of Environmental
    Conservation. On behalf of Governor Tony Knowles, I thank you
    for allowing me to come here and state the State of Alaska's
    support for the bill before you.
        Alaska is not just our treasure, it's a national treasure.
    You have participated in the debates over opening the Arctic
    National Wildlife Refuge and the timber harvest levels in the
    Tongass National Forest. There is great passion in those
    debates, as you certainly experienced. That's because Alaska is
    a proud symbol of environmental purity for America. It should
    also be America's model for environmental management. Yet the
    Federal agency charged with environmental management has only a
    meager presence in Alaska.
        A lot has changed since 1970, when the EPA regional
    structure was set up. We were only 10 years into statehood
    then. A lot has changed since then. Today, our issues range
    from addressing Third World sanitation conditions in hundreds
    of inaccessible villages to regulating the country's most
    complex oil development, transportation and production system,
    one which yields 20 percent of the domestic oil production.
        The issues range from protecting the water quality of our
    massive coastline that produces and processes over 50 percent
    of the U.S.'s seafood while regulating the discharges from the
    U.S.'s largest zinc and silver mines and the highest production
    placer gold and tin mines. Issues range from generating
    electricity from diesel engines, because there is no other
    available power source for all of our villages and most of our
    industrial activity, while assuring air quality for two-thirds
    of the U.S. national parklands, the largest State park system
    in the United States and the largest U.S. national forest.
        We also have to do this while we preserve the vistas and
    the fresh air quality for the millions of tourists who visit
    Alaska every year. All this needs to be done over a land base
    that's 20 percent of the United States.
        There's a map in your packet that shows the State of Alaska
    superimposed on the rest of the country and the blue is Region
    10. As you can see from this map, we extend from the Canadian
    border down to southern California and from Tennessee to Texas,
    even not including the chain.
        Senator Murkowski has given you a lot of the overwhelming
    statistics about our size and complexity. I would just like to
    mention in addition that we share no border with another State,
    and at our closest point, we're 2\1/2\ miles from Russia.
        As Senator Murkowski pointed out, virtually all the
    pertinent Federal agencies do have regional offices in Alaska,
    and those are not just land management agencies. They're also
    those that have regulatory protection programs, such as NOAA,
    the Corps of Engineers and MMS. It's EPA alone that tries to
    provide this management from Seattle with a core and small
    staff in Alaska.
        I'm not here to criticize EPA. We have worked on a number
    of issues productively. But I'd like to highlight a serious
    problem in allocation of resources and attention. I'd like to
    give you four brief reasons why I think the current regional
    structure isn't working, and some examples. First, is Alaska's
    environment needs more effective management. Despite efforts by
    Region 10 to be responsive, we've seen that managing for
    results isn't working from the Seattle office. EPA's Alaska
    office is a minimal presence and does not really have a key
    voice on issues. My staff and I spend 90 percent of our time
    dealing with either Seattle or Washington, DC, on our key
    Alaska issues.
        The performance partnership agreement has unfortunately not
    been a big success in Alaska, and we've had a very hard time
    reaching a meeting of minds on priority of issues. Seattle
    staff, despite their best efforts, often do not understand the
    conditions in Alaska. Lacking any sense of the big picture of
    all the issues there, they merely tackle what shows up on their
    desk. Lacking an understanding of the on-the-ground conditions,
    they adhere to one-size-fits-all solutions. This can often lead
    to a lot of time and energy without producing environmental
    results.
        I would like to give you one example. Thousands of
    migratory birds are dying year after year in a wetlands estuary
    just outside of Anchorage. It was contaminated by the Army's
    use of phosphorus in its weapons. Two-thirds of Alaska, by the
    way, is owned and managed by the Federal Government. Much of it
    does have residual contamination.
        But EPA, the fellow Federal agency with the clout to
    address this, isn't working on this issue. Instead, less than
    15 miles away, the Anchorage sewer treatment plant that Senator
    Murkowski mentioned, we've been going through 3 years of
    paperwork to try to renew its permit, because there is some so-
    called pollution in the discharge.
        Well, that pollution is due to trace metals and high
    sediments from naturally occurring conditions from glacier
    runoff. So although we've spent countless hours on this permit,
    we're not going to see any improvement in water quality when
    it's said and done. But the wetlands issue just up the road is
    being ignored.
        Senator Murkowski mentioned to you the situation we had
    with the arsenic standard. Although we were able to address
    that, I'd like to point out it took 4 years to address that.
    Many large and small mines were delayed while that was being
    addressed. The ones that were able to proceed had to spend an
    inordinate amount of money with paperwork to be able to proceed
    in light of this unreasonable standard.
        The point in this particular issue is that we want and we
    need effective management. We don't want relaxed standards. We
    don't want to escape from requirements. But we also don't want
    to go through a lot of pointless exercises that aren't bringing
    about environmental improvements.
        The second reason is that we believe EPA's investment in
    Alaska's public health infrastructure needs to fit arctic
    conditions, not the conditions in the rest of the country. EPA
    has a large role in our rural public health infrastructure.
    This infrastructure is very difficult, because there are no
    roads between the villages, transportation corridors are only
    available when the rivers aren't frozen, and the system's
    design and operation must meet extreme arctic engineering
    requirements.
        EPA has been very supportive in terms of funding, but its
    numerous management requirements and funding requirements need
    more attention to Alaska's specific conditions. They also need
    to integrate this effort with the other Federal agencies that
    are working in this field. We need a master plan where housing
    development, energy improvements, sewage lagoons and water and
    sewer systems are all coordinated, so that you don't have
    different pieces of a system being built in different villages
    at the same time.
        All of those other agencies working in this field have
    positions in Alaska, have regional offices in Alaska, EPA does
    not.
        The third reason is that tribal relations in Alaska are
    very complex. We have a cultural diversity unlike any other
    area, 17 percent native population with 5 distinct groups. We
    have unique government to government relationships. Because one
    half of the tribes in this country, 228, are located in Alaska.
    Yet only one has a reservation land base.
        EPA is developing government to government tribal policy
    out of Seattle in a way that may make sense for tribes with
    reservations, but is very difficult in Alaska. For instance,
    EPA has provided construction funding to help fill, this will
    illustrate both the last two points, they provided construction
    funding to help fulfill the desperate need for safe drinking
    water systems for thousands of public water systems that serve
    very small communities. The average income in these communities
    is $13,000. There's no real good economic base.
        Once a system is built, it has to be owned and operated and
    managed by a local government, a tribal entity or a non-profit.
    That's hard enough to do in this economic structure under the
    best of circumstances. But it's made much more difficult when
    EPA requires that there be constant testing for contaminants
    that have never been found in Alaska, or where we have to
    repeatedly fly samples to a lab because arbitrary sample
    holding times cannot be met due to weather or distance in
    flying the samples.
        The situation is even further complicated when EPA's tribal
    office passes funds to tribal entities to begin development of
    new water systems. These are in communities where often there
    is a local government already struggling to operate a water
    system, and the result is you have two water systems competing
    for ratepayers in a town of a couple hundred people.
        The fourth and final reason I'd like to raise to you is
    that arctic contamination is becoming a serious threat to
    Alaska's ecosystem and the people who rely on those resources.
    The Arctic is a sink, and it's capturing chemicals coming from
    Russia and Asia. Heavy metals and persistent organic pollutants
    are concentrating into the Arctic, and they persist longer in
    the Arctic. These chemicals accumulate in the ecosystem and in
    particular in the fatty tissue in animals. They are threatening
    subsistence food, the seafood trade and traditional ways of
    life.
        EPA is participating in this arctic research and
    contamination management, but in a very fractured and
    uncoordinated fashion. Having a regional focus on this issue
    would greatly assist the State Department as it develops
    treaties on these contaminants.
        I know that although we can give you good reasons for why
    there should be a region, it has to be cost effective, and it
    cannot reduce the resources available to other States. Given
    the analysis that EPA prepared the last time around, we believe
    that a thoughtful and gradual transition, especially one that
    focuses on a core task analysis, could basically use Alaska's
    proportionate share of Region 10 resources and not hurt the
    other Region 10 States.
        Senator Baucus. Mr. Chairman, I've noticed the red light's
    been on about 5 minutes, and I have to leave this somewhat
    soon, and I'd like to listen to the other witnesses, just so we
    have an expeditious hearing.
        Senator Smith. Go ahead and finish.
        Ms. Brown. I'm sorry.
        I just want to say, we want and need a true partner to help
    us manage Alaska's resources and America's national treasure.
        Thank you.

        STATEMENT OF KEN FREEMAN, EXECUTIVE DIRECTOR, RESOURCE
                          DEVELOPMENT COUNCIL

        Mr. Freeman. Mr. Chairman, Senator Baucus, thank you. Good
    morning. For the record, my name is Ken Freeman. I serve as
    executive director of the Resource Development Council for
    Alaska, commonly known as RDC.
        I'm here today to express RDC support for S. 1311. RDC is
    an Alaska statewide organization consisting of all resource
    sectors including oil and gas, mining, fisheries, tourism and
    forestry. Our membership also includes business associations,
    labor unions, native corporations, local governments and
    hundreds of individuals. Our purpose is to encourage a strong,
    diversified private sector in the State and expand our economic
    base through the responsible development of our natural
    resources.
        Historically, RDC has supported the creation of an EPA
    regional office focusing exclusively on Alaska, and there is
    consensus among our members on the merits of establishing an
    EPA region specific to our State. Alaska has always provided
    unique challenges for both industry and regulators, because of
    our vast physical dimensions and our uniqueness. I won't go
    into detail, Senator Murkowski and Commissioner Brown, I think,
    gave you an idea of how large the State is and how different we
    are. But special circumstances truly do present special
    problems that demonstrate the need for an EPA region for
    Alaska.
        Oil production from Alaska accounts for nearly 20 percent
    of all the oil produced in the United States, as Commissioner
    Brown mentioned. Yet Alaska is the only State within the EPA
    region that has oil and gas exploration and production. Given
    the importance of Alaska oil to the Nation's energy security,
    it's imperative that agencies have an in-depth understanding of
    oil and gas exploration and production operations.
    Specifically, operations conducted in extreme arctic
    conditions.
        Although Alaska is large in size, its small population and
    industries, and as such, the focus of Region 10 employees'
    expertise oftentimes is on industries and conditions in the
    Pacific Northwest, not on upstream oil and gas operations and
    certainly not on operations conducted in extreme arctic
    conditions. While EPA does have much appreciated staff based in
    Anchorage, decisions vital to Alaska's environment and economy
    are largely driven by Region 10's Seattle headquarters.
        A good example of why a new Alaska EPA region is needed
    comes from the timber industry. At issue is recent permitting
    for a general permit on log transfer facilities known as LTFs.
    There was a huge and unnecessary amount of time that was
    required to work through this process. Region 10 regulators
    from Seattle do not fully understand the unique challenges
    proposed by the remoteness of Alaska, or the isolation of the
    LTFs. Regulators requested street addresses and towns of the
    LTFs, they asked for road directions to the sites. They didn't
    understand that these facilities were located far from local
    communities, that there were no roads, no services, no
    infrastructure, just remote isolated wilderness accessible only
    by aircraft or boat.
        It took permittees months to get all the logistical issues
    resolved, and the permittees noted that Region 10 regulators
    shows little trust for those in Alaska they were regulating,
    and did not have a reasonable understanding of sense of
    magnitude of Alaska, its remoteness or unique circumstances.
        A current issue making headlines in Alaska is the State's
    rights in respect to its air permitting program. Alaska cannot
    administer a viable air permitting program if EPA Region 10's
    office in Seattle continues to summarily overrule carefully
    made decisions that take into account Alaska's unique
    circumstances. The Alaska Department of Environmental
    Conservation has appealed a recent order by EPA prohibiting the
    issuance of prevention of significant deterioration permits,
    known as PSDs, for a diesel generator at the Red Dog Mine in
    northwest Alaska. This permit is vital and necessary to Komiko,
    Alaska's operations at this, the largest deposit of zinc in the
    world. The generator will have a negligible environmental
    impact.
        DEC has an EPA-approved State program for issuing these
    types of permits. This approved program gives DEC full
    permitting and discretionary authority over the PSD permits for
    the State of Alaska.
        Our members across Alaska from resource developers to local
    communities need to be able to rely on DEC's decisions on air
    permits and be able to proceed based upon those decisions. The
    EPA Region 10 action at Red Dog is alarming because of the harm
    it may cause our members in planning for new or modified air
    permitting to meet their needs. Permittees unsure of the
    reliability of the State's process will wonder if EPA's Seattle
    office can nullify a permit at any time, thus delaying projects
    until appropriate authority has been defined.
        If EPA has the authority to summarily overrule DEC's permit
    decisions and demand additional measures beyond what has been
    determined sufficient, then our members in effect would be
    forced to permit their project a second time through EPA. I
    don't believe this is the goal.
        This issue is not only a battle between agencies on Clean
    Air Act jurisdiction, but it shows once again how a distant EPA
    office does not fully understand Alaska's circumstances. The
    Red Dog Mine sits in complete isolation, far removed from any
    community. It is not connected to Alaska's road system, and
    there are no air quality concerns, especially given its
    location.
        A new Region 11 office could go further than a local branch
    office with limited latitude, staffing and capabilities in
    overcoming these challenges and developing a much needed
    northern arctic expertise and wetlands management, permafrost,
    ice fog, NPDES permitting, background levels of metals and
    other issues. A Region 11 office could better respond to
    Alaska's special problems with Alaska's solutions, and the
    establishment of an EPA region specific to our State would be a
    major step toward achieving the goal of ensuring that Federal
    regulations applied in Alaska reflect Alaska realities.
        Concluding, I would just like to commend Commissioner Brown
    and the Alaska Department of Environmental Conservation. I
    think what we have in Alaska is an agency that aggressively
    works to protect the environment, but at the same time, does
    allow flexibility in the regulatory regime through zones of
    deposits, mixing zones and site specific criteria. This is, I
    think, a great example of a State agency that works well with
    industry, and again also stringently protects the environment.
    I think at the end of the day, it would be great to have an EPA
    regional office that could respond in the same way.
        Thank you, Mr. Chairman, Senator. I would be pleased to
    respond to questions.
        Senator Smith. Thank you very much, Mr. Freeman. I know
    both you and Ms. Brown traveled a long way to be here, and we
    appreciate your testimony.
        Let me start with you, Mr. Diaz. On the issue that we've
    all discussed already about the Presidential order to
    Administrator Reilly in mid-January, just prior to President
    Bush leaving office, it's my understanding that OGC, the Office
    of the General Counsel, has told the Administrator that
    reversing that order would require the written approval of the
    President. Is that EPA's position?
        Mr. Diaz. I don't know what the Office of General Counsel
    might have stated to the Administrator on that particular
    point. But I think the situation as I have been advised by the
    Office of General Counsel at EPA is that the order by both the
    President and former Administrator Reilly were not self-
    executing, that there was not a legal obligation for the
    implementation of those decisions.
        Senator Smith. Right. But is it the EPA's position that the
    President, that it would take the written approval of the
    President not to execute it? Is that the EPA's position, yes or
    no?
        Mr. Diaz. The position of the agency is that they were not
    self-executing, that we were not under an obligation to
    implement them. Technically, I understand that those actions
    remain on the books and have not been rescinded.
        Senator Smith. President Clinton has never revoked the
    order, has he? He's never revoked the Reilly order?
        Mr. Diaz. To the best of my understanding, the Reilly order
    has not been rescinded. But I think it's important, Mr.
    Chairman, that we focus on the fact that the priorities that
    were raised at the time to Administrator Reilly and to
    President Bush by the Alaskan officials and by others including
    environmentalists, and the Pacific Northwest delegation
    members, have been addressed in terms of the priorities
    established to meet the needs of Alaska.
        Senator Smith. OK, but I'm just trying to clarify where we
    are here. It's my understanding that the Office of General
    Counsel has told the Administrator of EPA that in order for
    that order not to be implemented that the President would have
    to so indicate, in other words, he would have to have his
    written approval, the President would have to issue his written
    approval of that order. That is, as I've understood, is the
    position of the Administrator.
        Now, as I understand it, President Clinton has not revoked
    that order. He's not taken any formal action to revoke what
    happened, yet he's not implemented it either. So he's not done
    either.
        Mr. Diaz. Let me, if I may, Mr. Chairman, try to be a
    little bit more direct.
        Senator Smith. Who made the determination not to implement
    the order? Who indicated? We had an order, President Clinton
    takes office in January 1993, he's got an order before him to
    create Region 11. All I'm asking you is, who made the
    determination not to implement it? President Clinton never made
    a written approval or disapproval. So who issued the order not
    to implement the action of the President and the former
    Administrator?
        Mr. Diaz. To the best of my knowledge, no order was issued
    indicating that the Reilly administrative order not be
    implemented. The information, the counsel that I have received
    from EPA's Office of General Counsel, is that we were not under
    an obligation to implement the decision by President Bush or
    Administrator Reilly. Technically, those decisions remain on
    the books. They have not been rescinded.
        But we have not, I'm not aware of any counsel by the EPA
    Office of General Counsel which suggests that we have an
    obligation to implement in the absence of a decision to
    rescind.
        Senator Smith. Well, OK, I don't want to argue it. But I
    want to get clarification on that. Because it's my information
    that OGC has told the Administrator that reversing the order
    would require the written approval of the President, written
    approval of the President. The President has in effect reversed
    the order, because he hasn't implemented it. That's been 7
    years ago.
        So I just want to get for the record somewhere some
    clarification on what OGC said or didn't say. But it's my
    understanding that they've told the Administrator, I don't know
    if there's a document so indicating or not, and if they have,
    then the President needs to either implement this or rescind it
    by some written document. To the best of my knowledge, that has
    not been done. Neither has been done.
        So basically he's ignored the act of Congress and the law.
        Mr. Diaz. I think, Mr. Chairman, we have met the priorities
    that have been raised to the agency's attention with regard to
    the concerns of Alaska. But I would be pleased to provide for
    the record information with regard to the question that you
    raised.
        [Additional information follows:]

        A June 23, 1993 document supplied to the committee
    entitled, ``Region XI Approaches to Closure,'' states in the
    Background section, ``The 12th floor has been told by OGC that
    reversing the order establishing Region XI will require the
    written approval of the President.'' The Office of General
    Counsel (OGC) did not prepare the June 23, 1993 document. OGC
    has been unable to locate any memoranda which would verify the
    advice represented in this June 23, 1993 document. After
    informally consulting with the Office of Legal Counsel (OLC),
    Department of Justice, it is OGC's understanding that only the
    President can rescind a Presidential memorandum but that it
    does not have to be rescinded in writing.

        Senator Smith. Yes, I would like that clarified. Thank you.
        Mr. Baucus.
        Senator Baucus. Thank you, Mr. Chairman.
        First, I might say with respect to the orders, there are
    other documents and there are other statements of documents
    that frankly cloud the whole issue here, and that could be
    probably be brought out at a later time. But it's not as clear
    as has been somewhat indicated here.
        Ms. Brown, you've heard Mr. Diaz say all the things EPA is
    now doing to help. He listed some things, better collaboration,
    exemption of the sulfur diesel fuel, he mentioned the $100
    million water facilities, wetlands permits for Alaska only, and
    I forgot something that was delayed, the 69 percent down to 29
    percent lower rate, I mean, is that accurate? Is it better?
    Your reaction and Mr. Freeman's, just general reaction to the
    progress and the cooperative efforts that EPA has made.
        Ms. Brown. Thank you, Senator.
        We have had good cooperation with EPA. But it requires a
    lot of work. We have to elevate issues to the senior management
    to get the attention, because staff----
        Senator Baucus. Now, when you say senior management, what
    level?
        Ms. Brown. Of Region 10. What Alaska would like is not to
    be in the position of having to seek exemptions and waivers for
    things that don't make sense, but to be part of the initial reg
    making process, so that alternative compliance, if it's
    necessary, so that we achieve the same goal but through a
    different way, can be worked out in the course of the regs,
    rather than seeking exemptions later or coming even before you
    to look for exemptions. We think it would be a lot less time
    consuming and a lot more productive if we could get those
    issues resolved sooner rather than later.
        Senator Baucus. Mr. Freeman, do you have a reaction to what
    Mr. Diaz said?
        Mr. Freeman. Thank you. I think most of our members have a
    very good working relationship with the EPA officials in the
    State of Alaska. But unfortunately, most of the time, the
    decisions are made in Seattle. I think Commissioner Brown
    brought up an interesting point when she mentioned that nearly
    all of her time and staff's time deals with the Seattle office.
    I think that this is clearly an indication that the majority of
    decisions are made in Region 10.
        I think EPA has done a lot. But I don't think anything
    could be done other than having a Region 11 that would really
    get to the heart of the issue here.
        Senator Baucus. Well, I must say that we have the same
    problem in Montana, that, often, when you want something done,
    you've got to go to Denver, you've got to go to the regional
    office. I do it myself, I just call up Denver. I appreciate
    that and I understand that.
        I don't know if that necessarily solves the issue before us
    here, because one could say, ``Gee, there should be a regional
    office in Anchorage or Fairbanks or wherever so you don't have
    to go so far.'' On the other hand, every State could make that
    argument, too, as we in Montana face the same situation that
    Alaska does.
        Mr. Diaz, I suppose one possible solution here is more
    delegation of authority to the various States divisions, rather
    than, from the regional office. You have heard their
    testimonies. What about it? It sounds like sometimes EPA is not
    as responsive as it should be.
        Mr. Diaz. As I said, I think, in my opening statement,
    there are certainly areas where I think we can always make
    cost-effective improvements. But the reality is that the
    delegations and the authorities of the Alaska Operations Office
    are real, and as I mentioned, a particular example, we're
    unique in the EPA system, the Alaska Operations Office director
    is authorized to sign wetlands permits and to initiate any
    raising of concerns about those permits on his own volition.
    That is unique within EPA.
        Senator Baucus. I suppose that helps? It doesn't solve the
    problem, but I suppose it helps?
        What about the migratory birds dying, this 3-year delay?
    I'm not very familiar with that issue, are you? Can you shed
    some light on that?
        Mr. Diaz. I am not personally aware of that issue. I
    understand that there are concerns with regard to the waste
    treatment facility. I'd be more than happy to take a look into
    it and provide that information for the record.
        [Additional information follows:]

                                migratory birds
        Concern: Dead migratory birds were discovered at Eagle River Flats
    and EPA has not acted to discover the cause.
        Region X response: Eagle River Flats, north of the City of
    Anchorage, is located on Fort Richardson Army Base Artillery Range, an
    active artillery range. In the 1980s, dead migratory waterfowl were
    discovered in the Knik Arm of Cook Inlet. There was no apparent cause
    of death. EPA worked with other State and Federal agencies to determine
    that the cause of death was white phosphorus from artillery rounds and
    bombs that had been dropped since WWII. Once the agent was identified,
    development of methods for clean-up and remediation began.
        The fact that the range is active and contains many rounds of
    unexploded ordnance presents the greatest obstacle to site clean-up.
    Work has progressed with the development of remediation methods such as
    a specially built armored dredge that can withstand a direct explosion
    while dredging material contaminated by white phosphorus. The
    ``hottest'' spots containing white phosphorus have been or are now
    being remediated, and the number of waterfowl deaths has dropped
    drastically.

        Senator Baucus. You mentioned, Ms. Brown, EPA requiring
    testing for contaminants that don't exist in Alaska. Is that
    pre- or post-1996? Because we changed, as you know, the Safe
    Drinking Water in 1996 to hopefully deal with that problem,
    which is a national problem, and that was a statutory problem,
    more than it was a delegation problem. Are you talking about
    problems that even exist with the reform of the Safe Drinking
    Water Act and if so, could you give an example, please?
        Ms. Brown. Yes, it does still exist. It's a number of
    pesticides, in particular, that have never been used in Alaska
    that we still have to test----
        Senator Baucus. Oh, pesticides.
        Ms. Brown. Yes. We were able to work out a waiver system so
    that we could apply for waivers on behalf of the small
    communities. But again, it was a labor intensive process to
    deal----
        Senator Baucus. What would happen if EPA would make a--
    really go full bore, and say, ``Boy, we're going to show you
    Alaskans that we really care, we're there?'' Now, there's a
    Federal statute, and there's State concerns, local concerns. If
    they were to do that, why wouldn't that solve the problem?
    Because your argument is that you need a regional office for
    that to happen.
        Ms. Brown. Do you mean if they were to use the operations
    office?
        Senator Baucus. Yes, the operations in the current
    structure.
        Ms. Brown. Because where the management decisions are
    happening are still in Seattle. That's where you have to go
    through weighing all the other Pacific Northwest priorities.
    The Alaska operations office can raise a point, but it tends to
    get lost.
        Senator Baucus. Yes, I guess there's no easy answer here.
    This guy I mentioned, Paul Paranard, he is delegated immense
    authority with this asbestos problem in Libby, MT. He's from
    Denver. They sent him out. Probably because he's such a good
    guy, they dispatch him other parts, you know, where he's
    needed.
        All I'm suggesting is that, I don't know, maybe you do need
    a regional office, maybe you don't. But it just--so many of
    these issues can be resolved just with a lot of cooperation and
    good faith efforts on both sides. I do think, Mr. Diaz,
    sometimes it is true that EPA, my experience in Montana, seems
    a little distant, not really that cooperative, that seems not
    to really care, show that extra effort in really trying to do
    what's right, not to do just what immediately the local folks
    want, but to work out the solution in a fair, practical, common
    sense way that affects that part of the country.
        My advice, for whatever it's worth, is to get more of your
    people out, just to travel a lot more and meet a lot more of
    these folks. You probably have a travel budget problem and so
    forth. But it's, just having a regional office there might not
    necessarily solve this problem.
        I am not saying it's a huge problem. I'm always saying,
    it's still there, to a degree. As I said, one major exception
    is this guy, Paul Paranard. You've got to give him a huge
    raise. This guy's aces.
        Mr. Diaz. Might I respond, Senator Baucus? Clearly there is
    a need to make sure that our folks are on the ground in Alaska,
    which we have provided for. We also clearly need to let folks
    in Alaska know that we are there from Region 10 as well. We
    have a significant travel budget which is allocated to provide
    for travel to Alaska. Yes, it has been pointed out that there
    is a distance of 1,200 miles to the Seattle regional office.
    But Senator Murkowski himself pointed out that when one takes
    that in the context of the size of Alaska, that's only half of
    the distance north to south in the State of Alaska.
        I have also been advised that by veteran career folks in
    the regional office in Seattle that the regional administrator
    from Region 10, Chuck Clarke, has probably spent more time in
    Alaska than any other regional administrator in recent history.
    We have significant senior management attention to Alaska and
    on the ground in Alaska.
        Senator Baucus. Is it better? EPA sensitivity to Alaska?
        Ms. Brown. I think it is better when we can get the
    attention of the regional administrator. But I would have to
    say on the travel issue, most of the time you see troops of
    State regulators and facility operators going to Seattle to
    meet with a regulator there, because they don't have the travel
    budget to come up. So you'll have five, six Alaskans working on
    an Alaska permit traveling to Seattle to visit with one
    regulator who's never seen the facility.
        Senator Baucus. With all that oil, you can't buy a few more
    airline tickets?
        Thank you very much, Mr. Chairman. Thank you all.
        Senator Smith. Thank you.
        I just want to follow up one more thing, Mr. Diaz. Then I
    have a couple of questions for the other two witnesses.
        Senator Baucus. Mr. Chairman, I've got to leave. I just
    want to say that several environmental groups have an interest
    in this bill. But because of the scheduling problems, they were
    not able to testify. I just ask that the record be held open a
    week for others to submit their testimony.
        Senator Smith. We can hold it open until the end of the
    week.
        Senator Baucus. Thank you.
        Senator Smith. Until Friday.
        Senator Baucus. OK.
        Senator Smith. Just one final point. I don't mean to put
    you on the spot here, Mr. Diaz. I just want to get this
    clarified. A document was provided to us, it's marked
    privileged, but it's EPA work product, dating back to June 23,
    1993, in which there is a discussion about this issue. I
    realize it's work product and I'm not trying to say this is
    policy. But one of the options was ``do nothing,'' referring to
    acting on this issue. Do nothing, hope no one makes an issue of
    it, if they do, deal with it then.
        Also, going back to my original point to you, one of the
    bullets here on these, in the background is, the 12th floor of
    the EPA has been told by OGC that reversing the order
    establishing Region 11 will require the written approval of the
    President. So in your own documents, you're indicating that OGC
    has told you that. So I would like that clarified for the
    record, as to what OGC told you. Because that's what is in the
    documents from June 23, 1993, which was at the time that this
    matter was there.
        So I mean, it's clear, based on if you read, and I'll make
    the whole document part of the record, but it's clear that in
    that document, that the discussion is obvious that EPA, the new
    EPA, does not support the action, which is fine, they have that
    right. But I think it is also important in my view that they
    did not, to note that they did not pay attention to OGC's
    recommendation, which is if that the President doesn't want to
    do this, he should so indicate in writing, and then that would
    at least, the folks in Alaska would at least, wouldn't be held
    in limbo for 7 years wondering what was happening, and we
    wouldn't need another piece of legislation.
        Mr. Diaz. Might I respond, Mr. Chairman, very briefly?
        Senator Smith. Yes.
        Mr. Diaz. First of all, I believe I have seen that
    particular document. Its origin is not clear. I don't know to
    whom it was sent. I do take the point that the formal
    rescission of the President's order, as well as the
    Administrator's internal directive, need also to be formal.
    Having said that, I would certainly be pleased to provide for
    the record the information that you requested.
        Senator Smith. Thank you very much.
        Ms. Brown, just in response to what Mr. Diaz said, how
    often are EPA officials from Seattle in your State?
        Ms. Brown. We see the regional administrator probably
    around three times a year, I would say. The operations people
    are there presently all the time. But they work on primarily
    programs that the State doesn't have delegated direct program
    implementation. The things that we both have jurisdiction over,
    we tend to work with Seattle on. The Region 10 staff does not
    spend that much time traveling out of Region 10 to the State.
    We have to go there.
        Senator Smith. Your testimony was very good in defense of
    having Region 11. But try to focus, if you can, and you can
    answer as well, Mr. Freeman, if you like, what is your specific
    complaint? That they're not knowledgeable, they're not there? I
    mean, is it that they have to be on the ground right there all
    the time to get a handle on this? I'm just trying to get an
    idea from your perspective in Alaska just what the problem is.
        I mean, you make the same argument I guess, that all of us
    here in Washington, DC, don't know what's going on around the
    country. We hear that all the time. But I'm trying to get a
    handle on, I understand the size, when you put Alaska,
    superimposed it over the map of the United States, we can see
    the size, you can certainly make the case for sizes. I'm
    frankly undecided on the legislation, I'm trying to make up my
    mind. You did make a very forceful argument.
        But again, what specifically is the concern? That they'll
    have more knowledge if they're on the ground there, or you can
    work with them better? I hear so many times in the other 10
    regions, we're in complaints a lot, that the EPA's there too
    much, that it's causing more grief and more aggravation than
    it's worth, and a lot of people, I've been waiting for some of
    them to come forth and say, ``Why don't you get them out of
    here?'' Now you folks are asking for Region 11. So I'm just
    trying to make sure I don't go down the wrong path here. So
    help me out.
        Ms. Brown. Thank you, sir. That's a risk we're willing to
    take.
        I think in a nutshell, there's too much for the State to do
    alone. Two-thirds of the State is federally owned and operated.
    We need somebody with clout to help us, but to help us in a way
    that really makes sense. What we have now is help that's not
    making sense too frequently. It's one-size-fits-all, it doesn't
    take into consideration permafrost, arctic conditions, arctic
    engineering.
        So what we would like is a regional office that has the
    clout within EPA to say, ``Here's the outcome that you want,
    headquarters. We want to give you that outcome, but we want to
    do it by method B as opposed to method A.'' That is what I
    think the difference would be, that you would have somebody on
    the ground who knows the difference, who knows that frequently
    our mine discharges in heavily mineralized areas make water
    quality actually better instead of worse. So we need to have
    someone who can actually look for results and compliance in a
    way that makes sense.
        Senator Smith. Without embarrassing anybody personally,
    that's not my intention here, do you have indications that some
    of the EPA folks in the Seattle office are not knowledgeable of
    your concerns in Alaska, or not dealing with those concerns
    appropriately?
        Ms. Brown. A number of the staff just do not have the time
    or the travel funds to study and learn enough about the
    conditions. You will have situations like Mr. Freeman
    mentioned, where a log transfer facility that's located in a
    bay that doesn't even have a name, they want to know what the
    street address is. So those are the kinds of issues that we
    have to deal with that waste a lot of both our time and EPA's
    time, and that's why I think ultimately you might see a savings
    in Region 11, because you'd be spending time on things that
    matter.
        Senator Smith. Did you want to respond, Mr. Freeman?
        Mr. Freeman. Sure, Mr. Chairman, thank you. I guess the
    first point is that the State of Alaska truly is just
    remarkably different than any of the other States. I appreciate
    Senator Baucus' comments about his State is different than
    others on the east coast, for instance. But Alaska has the only
    arctic and sub-arctic conditions, almost half of our State is
    made up of wetlands. Just the vast area, it is remarkably a
    different State. You can't beat having the people that regulate
    the activities with regard to resource development and
    community in the State itself, that have an understanding of
    our uniqueness.
        I also would quickly point out the LTF example. I spoke in
    detail with one of my members who went through the process of
    trying to establish a general permit for the log transfer
    facility. He was really blown away at how adamant EPA staff in
    Seattle were that he come up with an address and a road, for
    when EPA staff did come, if they came to Alaska, to actually
    find the log transfer facility, even though it was well over
    dozens of miles away from any infrastructure.
        Senator Smith. If you could both just try to characterize
    for me the relationship in Alaska among those who would be
    determined as regulators, those who would be determined as
    environmental groups, those who might be businesses, or the
    public generally. What is the relationship between all of those
    groups in Alaska? Why don't you start, Mr. Freeman?
        Mr. Freeman. Thank you, Mr. Chairman.
        I think the relationship between, for instance, the
    business community and our State regulators is very positive. I
    think the relationship between the business community and the
    EPA officials that are in Alaska is very positive. Any time
    that you can meet on a basis, you can meet with someone more
    than three times a year, you can meet with someone on a regular
    basis, I think it helps establish personal relationships that
    build trust and then can lead to flexibility.
        With regard to the environmental community, I think that
    really varies. You have some in the environmental community
    from my perspective that truly are looking to protect Alaska,
    while at the same time understanding the role of resource and
    community development. I think you have other environmental
    interests that I think would like ultimately for the State of
    Alaska to be protected from Alaskans and maybe become a park
    indefinitely.
        Senator Smith. I find myself sitting here thinking that the
    two of you should be on different sides, that the EPA should be
    pushing for Region 11 and you guys should be opposing it.
        Do the environmental, so-called environmental groups in
    Alaska support the Region 11 designation?
        Mr. Freeman. I haven't spoken with any in the environmental
    community recently as to their position. Generally, I believe
    historically they've been opposed because of concerns, drawing
    resources away from the other States in Region 10. I have to be
    honest, many of our members share a point that you brought up,
    there are some concerns about having additional EPA regulators
    in Alaska, a lot more EPA regulators. But as Commissioner Brown
    noted, I think it's well worth the risk. Any time you can have
    more people, more information, more data, I think it leads to
    better decisionmaking. So we welcome the addition of a Region
    11.
        Senator Smith. Mr. Diaz, if you took the cost out of
    whatever the proportionate cost of Region 10 staff, if you took
    that cost out, what would be the additional cost, in your rough
    estimate, to have a Region 11 office?
        Mr. Diaz. I don't have that figure before me. I'd be happy
    to provide it for the record.
        [Additional information submitted by Mr. Diaz follows:]

        The information that follows is derived from EPA's 1992 study of
    the cost of establishing a separate Regional Office for Alaska. As
    indicated, additional resources would be necessary for administration
    and managerial functions, for relocation costs for new or current
    employees (other than those already in Alaska), and for facilities and
    equipment. These costs are not adjusted for inflation.
            resources in region x and estimated costs for region xi
    I. Current situation in Region X
                A. Total resources
        1. 623.6 FTEs
        2. $2.0 million travel
        3. $151.7 million State grants (FY00)
        4. $22.6 million Tribal grants (FY00)
        5. $44.2 million Congressional Adds
                B. Resources devoted to Alaska activities
        1. There are 100 Full Time Equivalents (FTE) in Region X working on
    Alaska issues. Of the 100 FTE, 30 FTE are located in the Alaska
    Operations Office in Juneau and Anchorage, and 70 FTE are located in
    Seattle, Washington.
        2. 376.3K travel
        3. $25.3 million State grants (FY00)
        4. $17.5 million Tribal grants (FY00)
        5. $37.6 million Congressional Adds (includes, $30M AK Native)
                C. Status of authorized programs
        1. Air, drinking water, and pesticides programs are authorized to
    be administered by Alaska. RCRA, NPDES, and 404 programs are not.
        2. Alaska Department of Environmental Conservation is not prepared
    to administer the NPDES program at this time. Funding for RCRA's
    hazardous waste program has been virtually eliminated by the State.
        3. Except for one State, wetlands permitting is Federal.
    II. Resources required for Region XI
        A. To have needed core of technical expertise, administrative and
    management support, Region XI would need about 180 FTEs; see Table 1.
    That would include 30 FTES (and 4 SEES) currently working in Alaska;
    the remainder would have to be new resources or come from elsewhere in
    EPA.
        B. The net costs (shown in Table 2) to start up the Alaska Regional
    Office assume that, of the 180 FTEs required, 60 FTE would come from
    reallocations within EPA and 120 FTE would be for new employees.
        C. Start up costs (e.g. furniture and equipment, building
    modifications, employee relocation) would be at least $12 million. This
    cost could also spread over more than 1 year.
        D. To make cost estimates, assumptions were made that Region XI
    would be operating at full strength by June 2002.
        1. In reality, it would take 2 or 3 years (perhaps even longer) for
    Region XI to hire and relocate staff, locate office space and make
    necessary modifications, purchase and install equipment, etc.
        2. Functions would have to be transferred gradually from Region X
    as Region XI staffs up; to assure a smooth transition period, the two
    might have to operate in tandem in many program areas for a period of
    time.
        3. Region XI's annual operating costs would be lower during this
    time, but savings would be offset to some extent by the cost of having
    Region X run some programs in tandem with Region XI, a cost that is
    impossible to estimate without detailed planning for a transition.
        E. EPA's Regional lab is not included because the workload would be
    too small to justify the cost of establishing a new lab. EPA Region XI
    could contract with private labs.
    III. Foundation for estimating staffing requirements: key
            characteristics of an EPA Regional Office
        A. An EPA Regional Office (RO) has an established role, which is
    firmly embedded in the Agency's culture, systems, and practices.
        B. Headquarters is the source of policy and procedural guidance.
    Regional Offices are the focal points of program execution and
    integration. Regional Offices maintain strong working relationships
    with States and Tribes, as well as local governments.
        C. A Regional Office is headed by a Regional Administrator (RA)
    appointed by the EPA Administrator. RAs are directly responsible to the
    Administrator and have direct line authority over Regional Office
    activities.
        D. Deputy Regional Administrators and most office directors are
    career-Senior Executive Service (SES) managers.
        E. ROs are self-sufficient with respect to most functions, although
    they may rely on other EPA offices for certain services.
        F. ROs are full participants in Agency-wide planning, budgeting and
    management activities. They work extensively with national program
    managers on budgeting and policy issues.
        G. RO policy decisions are subject to statutory and national policy
    constraints.
    IV. Assumptions and methods used to estimate resource needs: Operating
            expenses include costs of equipment purchases and rental,
            printing, supplies and materials, and services obtained through
            contracts (excluding Superfund program contracts). Support
            includes the cost of office space rental, postage, security,
            fitness center and operation of wellness/daycare facilities.
                A. Staffing
        1. Assumed Region XI would be largely self-sufficient.
        2. Need for core of technical expertise was the primary
    consideration.
        3. Assumed existing delegations to Alaska.
        4. Estimate does not include special staffing for start-up (e.g.,
    to lay out workspace, design telecommunications systems, design
    information systems).
                B. Costs
        1. Salary and expense cost per FTE was based on Region X data; 25
    percent Cost of Living Allocations were added to all salaries.
        2. Cost of relocating new or current employees (except those
    already assigned in Alaska) was included.
        3. Estimate includes building modifications, furniture, equipment,
    telecommunication, information technology, and other start up items.
        4. June 2002 was assumed as the start-up date for the purpose of
    making estimates. In reality, operations would be phased in over a few
    years. Thus actual outlays in early years would be lower, but costs
    would be affected by inflation.

            Table 1.--Estimating Staffing Requirements for Region XI
    ------------------------------------------------------------------------
                                                           Office/
                           Office                           unit     Office
                                                            total     total
    ------------------------------------------------------------------------
    Regional Administrator's Office:                                       4
      Regional Administrator............................         1
      Deputy Regional Administrator.....................         1
      Administrative Support............................         2
    Office of Management Programs:                                        22
      Assistant Regional Administrator..................         2
      Human Resources Unit..............................         2
      Finance Unit......................................         3
      Infrastructure Unit...............................         3
      Information Resources Unit........................         4
      Grants Administration Unit........................         6
      Acquisitions......................................         2
    Office of Water:                                                      45
      Office Director...................................         3
      Drinking Water Unit...............................        10
      NPDES Permits Unit................................         5
      NPDES Compliance Unit.............................         6
      Groundwater/UIC/UST Unit..........................        10
      Watershed Restoration Unit........................         6
      Standards and Planning Unit.......................         5
    Office of Air Quality:                                                10
      Office Director...................................         2
      State and Tribal Programs.........................         4
      Air Enforcement...................................         2
      Federal and Delegated Program.....................         2
    Office of Environmental Assessment:                                    9
      Office Director...................................         2
      Quality Assurance and Data........................         2
      Investigations and Engineering....................         3
      Risk Evaluation...................................         2
    Office of Environmental Clean-up:                                     13
      Office Director...................................         2
      Program Management................................         3
      Emergency Response................................         2
      Site Cleanup Unit.................................         6
    Office of Waste and Chemicals:                                        16
      Office Director...................................         2
      Solid Waste and Toxics Unit.......................         5
      Resource Management...............................         2
      RCRA Compliance Unit..............................         4
      Permits...........................................         3
    Office of Ecosystems and Communities:                                 21
      Office Director...................................         3
      Community Relations/Outreach Unit.................         1
      Aquatic Resources.................................         6
      Pesticides Unit...................................         3
      Geographic Implementation & Natural Resources              8
     Management Unit....................................
    Office of Regional Counsel:                                           14
      Office Director (Lead Attorney)...................         2
      Attorneys.........................................        12
    Office of External Affairs:                                            3
      Office Director...................................         2
      Public Affairs Officers...........................         1
      Office of Enforcement and Compliance..............                   5
      Office of Tribal Operations.......................                  14
      Office of Civil Rights and Environmental Justice..                   2
      Office of Innovation..............................                   2
                                                         -------------------
        Total...........................................                 180
    ------------------------------------------------------------------------
    Note: Region XI staffing would include 30.3 FTEs allocated to the Alaska
      Operations Office currently. The remainder would have to come from an
      increase in EPA resources or reallocation from other EPA offices.
      Administrative support positions are included in the table.

      Table 2.--Estimated Cost \1\ of Start-up and Hypothetical First Full
                                Year of Operation
    ------------------------------------------------------------------------
                                             Total           Net cost \2\
    ------------------------------------------------------------------------
    Personnel Compensation and        $16,880,220.......  $11,309,747
     Benefits (PC&B).
    Travel..........................  652.000...........  436,840
    Operating expenses, contracts, &  5,132,800.........  3,438,976
     support \3\.
    Start-up costs..................  $12 million         $12 million
                                       minimum.            minimum
                                     ---------------------------------------
        Total.......................  ..................  ..................
    ------------------------------------------------------------------------
    \1\ Estimates are based on an assumption that Region XI would begin full
      operation June 2002; in reality, it will take two or three years
      (perhaps even longer) for Region XI to reach that point. During that
      time, annual operating costs would be lower than the figures shown
      here. Even start-up costs would be spread over a period of more than
      one year. While such a phase-in would reduce EPA's outlays during this
      period, inflation would increase the ultimate cost.
    \2\ Net cost was calculated by assuming 60 FTEs of the estimated 180
      FTES required for Region XI would come from reallocations within EPA.
    \3\ 0perating expenses include costs of equipment purchases and rental,
      printing, supplies and materials, and services obtained through
      contracts (excluding Superfund program contracts). Support includes
      the cost of office space rental, postage, security, fitness center and
      operation of wellness/daycare facilities.

                                   __________
        Mr. Diaz. But I think it's important to point out, if I may
    very quickly, that the net costs of the 1992 study done on a
    regional office suggested that the incremental net cost would
    be $25 million. Now, one can argue about the numbers. I wasn't
    there, I don't claim to say that those are the accurate
    estimates. I don't say that the number of people that were
    estimated to staff a regional office were exactly accurate.
    They assumed 180 full time equivalents.
        I would note, however, that with regard to the other
    agencies that Senator Murkowski referred to earlier, their
    staffing level is in the range of about 200 full time
    equivalents to as high as about 1,700. We're dealing with a
    regional office that has about 600-plus full time equivalents.
    We're in a zero sum game, essentially. Sometimes even worse in
    dealing with resource allocation within the agency at a time
    that we're under a congressional mandate to reduce our FTE
    utilization by 400 FTE.
        These are very, very difficult resource decisions for us.
    We are attempting to meet the needs that have been indicated as
    representing the concerns of the Alaskan officials and others
    today and into the future. But it is clear to my way of
    thinking, regardless of the exact numbers and dollars that may
    be associated here, we're talking about significant impact on
    the resources available to other States within Region 10 at a
    time when the agency is under congressional mandate to reduce
    our resources, particularly with regard to people.
        Having said that, I once again reiterate the point I made
    earlier, that is that while we have done, I think, some things
    well, we are committed to continuing to work with Commissioner
    Brown and others in Alaska to try to address their concerns
    with regard to on the ground folks, with regard to delegations
    of authorities which are already unique, and with regard to
    Region 10 attention to the needs of Alaska.
        Senator Smith. I would make a request of you, Mr. Diaz, if
    you could have your Region 10 administrator provide some
    testimony for the record as to the rationale directly from that
    region as to how things are working or not working or in
    response to the comments that were made here specifically by
    Mr. Freeman and Ms. Brown. It would help the committee, I
    think. You've made the comments in general for the agency, but
    a little more specificity on the relationship between Seattle
    and Alaska would be helpful as we try to make a determination
    on what direction to go with the legislation.
        Mr. Diaz. We'd be happy to do that, and also respond
    directly to some of the examples that are raised in the
    testimony today.
        [Additional information submitted by Mr. Diaz follows:]

        Chairman Smith asked for an EPA response to the specific concerns
    voiced by the other two witnesses on the panel. The following
    information is submitted in connection with this request.
                                    cominco
        Concern: The Resources Development Council alleges that EPA did not
    defer to the State's authority with respect to its air permitting
    program, specifically with regard to the permit application for the Red
    Dog Mine.
        Response: Cominco, the operator of the Red Dog Mine in Northwest
    Alaska applied for a ``Prevention of Significant Deterioration'' permit
    for a significant expansion of the mine, which included an additional
    diesel generator. The State approved the issuance of a permit. The
    National Park Service (NPS), under its authority to review such
    permits, expressed concern about the potential for environmental
    degradation of a nearby National Monument and National Preserve if the
    diesel generator were to be installed as permitted and asked EPA to
    intercede. EPA also was aware of concerns expressed by eleven Alaska
    Native Villages representing about 6,000 Natives who depend on the
    local environment for subsistence.
        Five substantive technical issues were identified by NPS and all
    but one were resolved. The remaining issue related to the adequacy of
    the record to make a ``best available control technology'' (BACT)
    determination for the diesel engine under the Clean Air Act. When
    Alaska awarded the permit with the unsupported BACT determination,
    Region X, in consultation with EPA Headquarters, issued an
    Administrative Order to Cominco instructing it not to build the engine
    pursuant to the invalid permit. The rest of the expansion, however, was
    unaffected. While Alaska has authority to issue permits, it must do so
    in accordance with the Clean Air Act. EPA's actions were taken in its
    oversight role to ensure that the Clean Air Act was followed, pursuant
    to Sections 167 and 113 of that Act.
        The State and the company have filed petitions for review in the
    Ninth Circuit Court of Appeals, who will determine whether EPA's
    actions were appropriate. On June 1, 2000, the Court denied Cominco's
    request for a stay of EPA's order prohibiting construction of the
    diesel engine in question. The final decision of the Court is pending.
        We appreciate the National Park Service alerting us to this matter.
    Rather than a lack of understanding of the specific circumstances in
    Alaska, we believe this example of the Red Dog Mine reflects an alleged
    failure to meet Clean Air Act requirements.
                                    arsenic
        Concern: A claim was made that the point discharge level for
    arsenic established by EPA for placer mining permits is 300 percent
    lower than the drinking water standard for arsenic.
                               region x response
        In 1996, Alaska Department of Environmental Conservation reported
    to EPA that the human health standard for arsenic established by EPA
    under the National Toxics Rule was a problem for the State due to the
    naturally high levels of arsenic in some Alaskan waters. The rule that
    gave rise to Alaska's particular concern was developed under the normal
    notice and comment provisions and was broadly applicable to all States
    not then in compliance with the Clean Water Act. Once Alaska's concern
    was brought to EPA's attention, the Agency (Region X and Headquarters)
    worked collaboratively with the State to explore ways of addressing the
    situation. Alaska proposed that the Safe Drinking Water Act maximum
    contaminant level should be used to meet the requirements of the Clean
    Water Act. EPA agreed that the arsenic levels in freshwater, in
    conjunction with Alaska's aquatic life criteria for arsenic, met the
    requirements of the Clean Water Act.
        The Administrative Procedure Act requires EPA to promulgate a new
    rule in order to remove a State from the National Toxics Rule. EPA
    published a proposed rule and request for comments in the Federal
    Register on May 21, 1997. The final rule was published on March 2,
    1998, with an effective date of April 1, 1998.
        When Alaska was removed from the National Toxics Rule, Region X was
    asked by the State to modify the placer mining general permit. EPA
    proposed the general permit using the practical and flexible standard
    for allowable discharges of arsenic under the Safe Drinking Water Act
    maximum contaminant level. This became effective on November 27, 1998.
        We believe that EPA worked effectively with the State to address
    the effects of this rule to take into account the special circumstances
    of Alaska.
                         state revolving funds programs
        Concern: The State Revolving Funds (SRF) programs set project
    construction time requirements and costs that Alaska cannot meet due to
    seasonal and geographical construction constraints unique to Alaska.
        Region X Response: National rules for SRF Loan Programs are
    flexible and do not define time frames in which construction must be
    complete. The rules allow States to establish construction schedules
    that take into account a variety of factors, including seasonal and
    geographical considerations. Construction projects funded by the SRF
    may be phased and funded over a multi-year period, since SRF loans
    carry over from year to year. The SRF programs do require that States
    commit project loan funds (i.e. enter into loan agreements) at levels
    specified in grant payment schedules prepared by the State and approved
    by EPA. However, specific project costs and project schedules are not
    subject to SRF rules once a project has met eligibility requirements.
         safe drinking water testing requirements for rural communities
        Concern: EPA requires testing for contaminants that have never been
    found in Alaska and requires the State to re-draw samples due to
    arbitrary sample holding times.
        Region X Response: The Safe Drinking Water Act requires EPA to
    monitor drinking water for the protection of public health. EPA
    recognizes that some contaminants may not be found in Alaska or may be
    found very infrequently. In these cases, EPA grants a waiver to Alaska
    allowing samples to be taken infrequently (periodically over a 3- to 9-
    year period, usually every 6 years), once the water is initially
    certified to be contaminant free.
        With regard to the sample holding times, EPA requires that
    bacterial samples be analyzed within 30 hours to preserve sample
    integrity. Although a shorter holding time is recommended, the 30-hour
    limit is based on the die-off rate of bacteria after which the
    likelihood of detection is greatly reduced. In the case of Alaska, EPA
    has granted a variance from this requirement under certain
    circumstances, such as remote locations and weather delays when these
    factors impede the collection and transportation of samples.
                   safe drinking water operator certification
        Concern: Alaska's request for alternative drinking water operator
    certification requirements was ignored by EPA.
        Region X Response: The 1996 amendments to the Safe Drinking Water
    Act authorize the Safe Drinking Water Operator Certification Program.
    The purpose of the Program is to improve public health protections
    through training and certification of small water systems operators.
    National guidelines, published in February 1999, provide States with
    flexibility to design programs that fit their specific needs and
    circumstances. Various options have been discussed with Alaska,
    including the concept of traveling trainers and certification by oral
    method, correspondence course, or Web-based methods.
        At a Citizen's Advisory Board meeting in Anchorage last February,
    there was a general consensus that an expanded Operator Certification
    Program was needed and a new framework program was presented. Although
    the Alaska Department of Environmental Conservation has delayed
    development of an alternative certification program, EPA continues to
    work with the State on the revised rules in anticipation of the
    upcoming deadline of February 5, 2001.
                                 npdes permits
        Concern: EPA's NPDES permit system does not work well for Alaska.
        Region X Response: EPA's Alaska-based staff involved in permitting
    includes two professionals who play major roles in permits for mineral
    and storm water management programs. Normally, at least one EPA
    professional makes an on-site inspection of any project requiring an
    NPDES permit.
        EPA understands that oil companies face special challenges on
    Alaska's North Slope with respect to EPA's multi-sector storm water
    permit requirements. Industry has requested that EPA modify the North
    Slope general permit to include storm water discharges. EPA has been
    willing to accommodate the industry's concern but has awaited ADEC's
    proposed modification. We understand that at least one oil company has
    been willing to provide financial support to the State for such work,
    but our most recent information is that ADEC currently has no staff
    member assigned to the effort.
        The State of Alaska has a critical role in this process by
    certifying EPA's proposed final permits. We continue to work with ADEC
    staff to prioritize the permit workload and take into account State
    concerns in developing NPDES permits.
                           relationships with tribes
        Concern: EPA does not have a good relationship with Alaska Tribes,
    primarily due to its lack of understanding, which results in EPA's
    placement of treatment systems in Native Villages where they are not
    necessary.
        Region X Response: EPA Region X has committed extensive resources
    and effort to work with and fully understand the environmental concerns
    of Alaska Tribes and Alaska Natives. Region X has a Tribal Office with
    a staff of 18. In addition there is a Tribal relations unit in the
    Alaska Operations Office with six full-time staff, three of whom are
    Alaska Natives. In addition, EPA has transferred one employee to
    support the work of the Alaska Intertribal Council, which consists of
    178 Alaska Tribal Governments.
        The Tribal Office Director and Tribal relations unit make regular
    site visits to Alaska Tribes and have completed 31 site visits over the
    last nine months. In addition, EPA has taken the following actions to
    improve its relationship with the Tribes and Native Villages:
         EPA provides regular training on managing Federal grants
    and working with the Agency.
         EPA has developed a Tribal sensitivity training course
    (one conducted in Seattle and two in the Alaska Operations Office) for
    EPA employees, taught by Tribal representatives and leaders from
    throughout Alaska.
         Region X has established a Tribal advisory committee
    consisting of four Tribally-elected representatives from each region of
    Alaska. This committee meets monthly to advise the Agency's Regional
    leadership of Tribal concerns, priorities and issues, and to assist the
    Agency in developing policy for working with Tribes and Native Villages
    of Alaska.
         EPA has engaged in extensive outreach efforts to consult
    with Tribes on specific Agency actions, such as Cook Inlet NPDES permit
    for oil platforms discharging into sensitive Tribal subsistence areas;
    promulgation of the Tribal Authority Rule (TAR) under the Clean Air
    Act; development of Tribal unified Watershed Assessments and Clean
    Water Action Plans.
        EPA staffwork closely with the State Village Safe Water program and
    with other Federal agencies in determining priority placements of
    treatment systems in Tribal villages. In addition, EPA is an active
    participant in the Governor's rural sanitation task force and chaired
    the Operation and Maintenance Subcommittee of that task force.
                              wetlands enforcement
        Concern: Regulators based in Alaska are more likely to respond to
    local realities and the need for flexibility in permitting.
        Region X Response: There is substantial local input in EPA's Alaska
    wetlands program. There are four EPA wetlands program staff in the
    State, three of whom operate from EPA's Operations Office in Anchorage
    and one based in the Kenai Peninsula. These staff members are trained
    wetlands ecologists who provide technical assistance and other support
    to address aquatic resources issues in the State. All work closely with
    the Army Corps of Engineers (the Corps) and other Federal and State
    agencies. This primary focus is on population centers and areas of
    development that are likely to have significant wetland impacts. These
    include:
         Anchorage Bowl: special emphasis on coordinating with the
    Municipality of Anchorage and the Corps on re-issuance of the Anchorage
    General Permit.
         Kenai Peninsula: special emphasis on developing local
    plans to address wetlands and other natural resource concerns (e.g.
    Community Rivers Planning Coalition in Anchor Point).
         North Slope Oil and Gas: coordinate with the Corps,
    Federal and State agencies, Tribes, and oil companies on wetlands
    issues pertaining to development on the North Slope.
         Matanuska-Susitna Borough: coordinate with the Corps and
    local watershed councils.
        EPA believes that these efforts reflect substantial collaboration
    with affected entities by experts located in Alaska.
                               coal mine project
        Concern: The distance between the Region X Office and Alaska may
    have posed problems for the Chuitna Coal Mine ``greenfield'' project.
        Region X Response: EPA Region X, in cooperation with the Army Corps
    of Engineers and the Alaska Department of Natural Resources, led the
    preparation of the environmental impact statement (EIS) for the Diamond
    Chuitna Coal Project. In accordance with provisions of the National
    Environmental Policy Act (NEPA), EPA Region X also coordinated with the
    project developer (located in Dallas), other Federal and State
    agencies, local organizations, and the public throughout the
    development, comment period, and finalization of the EIS.
        Environmental impact statements for large energy projects such as
    this one are inevitably time-consuming because of the participation of
    substantial numbers of affected public and private organizations and
    other requirements of NEPA and the Clean Water Act (CWA). To streamline
    the review processes, EPA combined the preparation of the EIS with the
    development of the National Pollution Discharge Elimination Permits
    (NPDES). The draft NPDES permits were included in the draft EIS and the
    proposed final permits were in the final EIS. The public hearings for
    the draft EIS and draft NPDES permits, held by EPA in Alaska, also were
    combined.
        Additional time was needed for this project due to delays by the
    developer in providing needed information for the preparation of the
    EIS and changes made to the proposed project during the course of the
    NEPA review. Coordinating the project review in Alaska would not have
    reduced the time needed for NEPA- and CWA-mandated procedural and
    public review requirements. In our view, distance has not been a factor
    in the evolution of this project.
                        anchorage sewage treatment plant
        Concern: The permit for the Anchorage Sewage Treatment Plant has
    not been issued yet, and the Alaska Department of Environmental
    Conservation has stated that the permit is unnecessary and the delay is
    unreasonable.
        Region X Response: EPA must issue a permit under the Clean Water
    Act (CWA) that conforms to the requirements of the Endangered Special
    Act (ESA), regardless of whether decisions are made in Seattle or in
    Anchorage.
        Review of the application for permit renewal has been prolonged
    because new prospective environmental impacts have been identified
    since the first permit was issued which are considered more significant
    and require further study and project redesign. These new impacts
    include the location of a new seafood processor in Anchorage and new
    concerns about the Beluga whale population.
        During the permit process, it was discovered that Upper Cook Inlet
    exceeded Alaska Water Quality Criteria for a number of metals and
    turbidity. In order to reissue the permit, the State agreed to complete
    a site-specific criteria revision for the affected area of Cook Inlet.
        Alaska submitted the criteria revision to EPA for approval in May
    1999. EPA issued a draft permit in November 1999. Before final EPA
    approval is given, action on the site-specific criteria and permit, EPA
    must complete endangered species consultation with the National Marine
    Fisheries Services (NMFS). Since this project was initiated, concerns
    over the Beluga whale population have increased. EPA Region X decided
    to prepare a biological evaluation for these two Federal actions and
    submitted the evaluation to NMFS for review in April 1999. EPA also
    must address new Essential Fish Habitat (EFH) requirements. EPA is
    currently waiting for a response from NMFS on both the endangered
    species and EFH evaluations. Once Region X adequately addresses
    concerns raised by NMFS, EPA will take final action on the criteria
    revision and NPDES permit.
                             oil and gas expertise
        Concern: In the testimony of the Resource Development Council, the
    point was made that EPA Region X does not have staff with in-depth
    understanding of oil and gas exploration activities.
        Region X Response: Region X staff, both in Seattle and the Alaska
    Operations Office, has had extensive education, training, and
    experience with respect to arctic oil and gas facilities and practices.
    Employees working in this field have undergraduate degrees in mining
    engineering, geology, and petroleum engineering, some with advanced
    degrees in geology, marine geology, geophysics, and chemical
    engineering. Prior to joining EPA, many have had Alaska-based oil and
    gas experience either with the State of Alaska or with private
    industry. More detailed information on the education, training, and
    expertise of individual employees in the oil and gas exploration field
    is available on request.
                             fairbanks air quality
        Concern: Fairbanks is at risk of losing Federal funding and of
    facing sanctions if it does not come into compliance with the Clean Air
    Act.
        Region X Response: We recognize that Alaska faces air quality
    challenges that are different from other areas, and we are committed to
    working with the State to address those challenges. In the case of
    Fairbanks, Alaska has not submitted a plan to demonstrate how Fairbanks
    will meet the health-based air quality standard for carbon monoxide.
    Nor has Alaska submitted information showing that Fairbanks cannot
    attain the carbon monoxide standard by adopting reasonable control
    measures. Because the plan has not been submitted, Fairbanks could be
    subject to offset sanctions (requirements that new CO sources offset
    their emissions by a 2:1 ratio) in October 2001 and to limitations on
    Federal highway funds in April 2002.
        These sanctions would be avoided if Alaska submitted and EPA
    approved a plan for Fairbanks to meet the CO standard. EPA has pledged
    to continue to work with the State and North Star Borough to identify a
    range of measures to address the specific circumstances applicable to
    Fairbanks and to provide healthy air to the citizens of Fairbanks.
        EPA Headquarters and Region X have provided technical and financial
    support for a number of special projects aimed at gathering scientific
    data on air quality for temporal and spatial patterns in Fairbanks
    compared to other major cities, on the sources of air pollution and
    their relative contributions, and on the impacts of various control
    strategies to abate pollution levels. EPA also has begun discussions
    with the Department of Energy and a manufacturer of heat storage
    catalytic converters to examine the technology's potential for use in
    cold weather climates, such as Anchorage and Fairbanks.

        Senator Smith. Does anyone else have any further comment? I
    know especially you two, came all the way from Alaska.
        Ms. Brown. If I could, Senator, I just want to, in the
    study that was done in 1992, it said that there were 84 FTEs
    that were working on Alaska issues. I don't know how it went
    from 84 to 180 is necessary for a new region. But if you use
    the 84 number that was provided, if there are 39 already in
    Alaska, and then that report said 40 others could come out of
    Region 10 without causing harm, you're pretty close to 84 right
    there. If you do the core task analysis, it's not just how much
    time you spend, but what you're producing with that time and
    are you spending the time in really core tasks versus busy
    tasks. A lean but focused Region 11 I think would still make an
    improvement.
        Senator Smith. Just a reminder, I also would like to have
    for the record your estimate of the costs, factoring out
    whatever portion of the Seattle office would be attributed to
    Alaska. Let me just remind the clerk, we'll keep the record
    open until 5 o'clock on Friday for any additional questions
    from the members or additional information.
        Thank you all very much for coming. The hearing is now
    closed.
        [Whereupon, at 11:27 a.m., the committee was adjourned, to
    reconvene at the call of the chair.]
        [Additional statements submitted for the record follow:]
     Statement of Senator Frank H. Murkowski, U.S. Senator from the State
                                   of Alaska
        Mr. Chairman, thank you for scheduling this hearing on a bill that
    I have introduced with Senator Stevens to establish an EPA Region in
    Alaska.
        Why does Alaska need a separate region? Part of the answer lies in
    the uniqueness of our ecosystems and the extent of our real estate.
        Alaska is comprised of 365 million acres or 586,000 square miles.
    That's two and a half times larger than Texas--or a little more than 63
    New Hampshires, Mr. Chairman. Alaska stretches 2,400 miles from east to
    west, and 1,420 miles from north to south.
        Alaska has 170 million acres of wetlands--that's 65 million acres
    more than the combined total of wetlands in the other 49 States.
        We have more coastline than the rest of the Nation combined--some
    47,300 miles of shoreline.
        We have 3 million lakes larger than 20 acres.
        We have ecosystems ranging from arctic desert to temperate rain
    forests, including ecosystems that are found nowhere else in the United
    States. In addition, Alaska is more ecologically diverse than any other
    State.
        That's why virtually every other Federal Agency with environmental
    or conservation responsibilities has a regional office in Alaska. These
    include:
         The National Park Service
         The U.S. Fish and Wildlife Service
         The Bureau of Land Management
         The U.S. Forest Service
         The U.S. Geological Survey
         The Bureau of Indian Affairs
         The Mineral Management Service
         The Bureau of Mines
        Even the Federal Aviation Administration has a region comprised
    only of Alaska. Moreover, the Coast Guard and the U.S. Army Corps of
    Engineers have District Offices that are in Alaska and specifically
    devoted to Alaskan issues.
        Congress has already recognized the merits of an Alaska region for
    the EPA. In the fiscal year 1992 VA-HUD appropriations bill, Congress
    authorized the President to establish an eleventh region of the EPA
    consisting solely of the State of Alaska. An Administrative Order to
    that effect was signed by EPA Administrator William K. Reilly on
    January 20, 1993. Unfortunately, the order was not carried through. I
    ask that a copy of the signed order be included in the hearing record.
        Mr. Chairman, as I know from my service on this committee when I
    first came to the Senate, and as you know from your leadership in
    environmental issues, environmental protection is a complex
    undertaking. ``One-size-fits-all'' approaches cannot be written in
    Washington or Seattle and applied in Alaska. Bringing the regulator
    closer to the problem yields better decisions and more effective,
    thoughtful regulation.
        Moreover, because 65 percent of Alaska is owned and controlled by
    the Federal Government, most EPA activities directed at Alaska require
    coordination with the Federal land managers who are headquartered in
    Alaska.
        Other benefits we expect from this legislation include:
         Reduced number of appeals and adjudications;
         Reduced travel between Seattle and Alaska;
         Better service to the public;
         Lower costs.
        While EPA may disagree, the last time we asked the Alaska
    Department of Environmental Conservation to perform an analysis of the
    budgetary impacts of an Alaska Regional EPA office, they projected a
    modest savings to the taxpayer. I ask that materials related to cost be
    included in the record.
        Mr. Chairman, I wanted to leave you with just a few examples of
    what happens when good intentions in the EPA Seattle office go awry in
    Alaska.
        In the regulation of mining operations, EPA sought to require
    operators to reduce arsenic discharges to a level below the naturally
    occurring ambient levels. They were apparently unaware that the high
    level of mineralization in areas of Alaska cause some streams to have
    high levels of naturally occurring contaminants.
        Here is another example: When EPA insisted that Fairbanks, my home
    town, use MBTE as a oxygenate for motor fuels, nobody understood what
    happened when MBTE volatilized in an extreme cold air inversion,
    exposing humans directly to the chemical. Let me tell you what
    happened--people started getting sick--complaining of headaches,
    nausea, and dizziness. For far too long, EPA's distant Seattle office
    regarded the health complaints of Fairbanks residents as little more
    than the grumblings of crackpots, and refused to grant a waiver. Many
    months later, after being confronted with hard evidence of sickness,
    EPA granted a waiver.
        How much quickly might that waiver had come, and how many fewer
    Alaskans would have gotten sick, if EPA had a regional office in
    Alaska?
        Today, Fairbanks is a non-attainment area for Carbon Monoxide by
    virtue of the Arctic air inversions that occur several times a year.
    Seattle has never experienced a true Arctic air inversion, so it
    doesn't surprise me that the EPA regional office hasn't come to terms
    with the best way to help Fairbanks solve its problem. Instead of
    considering the unique situation that Fairbanks is in, the EPA started
    the sanctions clock.
        In Nome, where I visited this past weekend, the EPA wants the
    smokestack on the powerplant raised to better dissipate emissions.
    According to the Federal Aviation Administration, doing so would
    interfere with the landing pattern and require a costly realignment of
    the runway at Nome's airport, which would largely be undertaken at
    Federal expense. Is this a sensible, cost-effective solution? Of course
    not. But it's easy to see how this can happen if EPA is sitting in
    Seattle calling the shots without coordinating with the FAA, which has
    its regional headquarters in Anchorage.
        These are just some examples. Commissioner Brown will talk about
    the Anchorage Wastewater Treatment Plant permit where a great deal of
    time, effort and money has been expended for no improvement in water
    quality.
        Let me stress that it is not my intent to question the dedication
    and good intentions of the EPA people in Seattle--but if they are
    closer to the action, they will do a better job.
        In conclusion, I ask that this committee move our legislation that
    directs the establishment of an Alaska region.
        In the interim, you might ask the EPA why they haven't done so
    already.
        Thank you, Mr. Chairman.
                                   __________
         Statement of Romulo L. Diaz, Jr., Assistant Administrator for
                    Administration and Resources Management
        Mr. Chairman and members of the committee, I am Romulo L. Diaz,
    Jr., Assistant Administrator for Administration and Resources
    Management at the Environmental Protection Agency (EPA). I am pleased
    to have the opportunity to appear before this committee to present the
    Agency's views on S. 1311, a bill to create a separate EPA Region for
    Alaska.
        Prior to discussing S. 1311, I'd like to provide a brief history of
    EPA's current ten-region structure. EPA was established by
    Reorganization Plan No. 3, signed by President Nixon in 1970. Under the
    terms of the Plan, components of several departments and agencies were
    consolidated in the new EPA, including components of the Departments of
    Interior, Agriculture, and Health, Education and Welfare (HEW).
        EPA inherited two distinct regional structures from its predecessor
    agencies. Those components from HEW followed the ten standard Federal
    regions suggested by a Presidential directive issued in March of 1969.
    Components inherited from the Department of the Interior used a nine-
    region system divided along river basins. In order to facilitate easier
    operations with local and State governments as well as other with
    Federal agencies using the ten standard regions model, EPA chose to
    adopt this model.
        In 1974, the Office of Management and Budget issued OMB Circular
    No. A-105, which formalized the 1969 Presidential directive and
    required agencies to adopt the standard ten-region structure unless
    specifically exempted. OMB Circular A-105 remained in force until it
    was rescinded in 1995. In its recommendation to rescind the circular,
    OMB cited the Federal Government's expanded use of technologies to
    interact with the public and other factors that made a strict regional
    structure no longer necessary. The rescission, however, did not require
    agencies to re-examine existing regional structures. While EPA has in
    recent years completed several reorganizations within individual
    regions, it has not found any basis for changing the existing ten-
    region structure.
        In 1990, Walter Hickel, then Governor of Alaska, called upon EPA
    Administrator William Reilly to create a separate Regional office for
    the State. Reasons given by the Governor and others in support of this
    request included among others, the State's unique environment and size,
    the predominance of oil exploration and development in the State's
    economy, and security issues related to Alaska's proximity to the
    Soviet Far East.
        In response to the request to create a new region and the concerns
    expressed by the delegations of the potentially affected States, EPA
    undertook a study of the Implications of Establishing a Regional Office
    in and for Alaska. This study, which was completed in 1992, concluded
    that the proposed new region would not be cost effective and that there
    were better approaches to meeting the concerns of Alaska's elected
    officials.
        On January 19, 1993, President Bush signed a memorandum ordering
    Administrator Reilly to establish Region XI. Administrator Reilly
    responded to the President's memorandum on January 20, 1993, by signing
    an ``administrative order'' establishing the new region.
        Under the new Administration, the Agency reviewed the report and
    the history of the proposal. After careful consideration was given to
    the concerns expressed by Alaska's elected officials, its citizens, and
    State, industry, and environmental groups, and the findings of the
    Alaska study, EPA believed that the concerns of Alaska could be more
    effectively and efficiently satisfied through a variety of other means.
    These included better collaboration with the State in developing
    program priorities, in improving delivery strategies, and in modifying
    administrative structures. In light of the 1992 study and EPA's
    experience in the intervening years, we remain convinced that the
    creation of a separate Regional Office for Alaska would not be the most
    effective structure for addressing the unique circumstances faced by
    Alaska. We also remain committed to working with the State to most
    effectively and efficiently serve our mutual goals of protecting public
    health and the environment.
        Let me review a few of the most important ways in which EPA today
    is working to fulfill its commitment to one of this nation's most
    geographically diverse areas.
                        recognizing alaska's uniqueness
        The administrative structure that EPA's Region 10 created for its
    Alaska operations is unique among EPA's State organizations. With 39
    employees, it is the largest of any EPA State-based operation, and EPA
    intends to maintain the necessary emphasis to keep pace with the
    State's needs.
        The Alaska Operations Office makes recommendations on a wide range
    of environmental and human health issues affecting the people of
    Alaska. These recommendations form the basis of final Agency decisions
    on matters relating to the State.
        The Alaska Operations Office is responsible for on-the-ground
    implementation of EPA programs in the State. In addition to
    administering some programs directly, the Operations Office provides
    technical assistance to help the State and local and Tribal governments
    in administering EPA programs that have been delegated to them at their
    request.
        EPA offices in the cities of Juneau and Anchorage provide the
    public in those population centers with access to EPA staff. The
    Agency's office in Juneau facilitates close coordination of EPA
    programs with related departments of the State government. The
    Anchorage office is readily accessible to the businesses and industries
    regulated by EPA.
        In addition to these offices, EPA employees work with the
    Department of Interior in a Joint Pipeline Office, assist the
    Department of Defense in waste clean up, and work in the office of the
    Alaska Inter-Tribal Council. To support preservation and restoration of
    the watersheds in the Kenai Peninsula, EPA has one staff member in that
    location.
        These employees are highly trained professionals, many with
    advanced degrees in scientific and technical fields, specifically
    selected because of their familiarity with the arctic and subarctic
    climate and with the challenges of dealing with environmental issues in
    remote areas. To broaden the expertise of EPA staff and to maintain
    their in-depth knowledge of local issues, the Alaska Operations Office
    has used agreements for the exchange of personnel with State and local
    government organizations such as the city of Anchorage, the Alaska
    Department of Environmental Conservation, the Alaska Inter-Tribal
    Council, the Joint Pipeline Office, the Alaska Native Health Board, and
    the Denali Commission. In addition, interagency exchanges are in effect
    between EPA and the U.S. Department of Defense and the U.S. Forest
    Service. These exchanges help the Agency develop programs that are
    tailor-made for local conditions and that build coalitions with various
    organizations with similar Alaska-related concerns and goals.
                   flexible program implementation for alaska
        In 1995, EPA initiated a National Environmental Performance
    Partnership System. Under this system, the Agency's partnership
    agreement with the State of Alaska, initially drafted in May 4, 1977
    and updated every 2 years, is an integrated and flexible strategic plan
    for addressing the State's environmental problems. The recently revised
    agreement contains mutually determined priorities and a plan of action
    that involves both the EPA and the State in working together to achieve
    environmental goals. The plan encompasses all EPA-financed assistance
    that goes to the State, including that designated for air quality,
    water quality, drinking water, facility construction, underground
    storage tanks, wellhead protection, toxic waste clean-up, hazardous
    waste, and pollution prevention programs.
        A central element of the partnership between EPA and Alaska is that
    the agreement integrates federally-funded programs administered by EPA
    with related programs funded by the State and by other Federal
    agencies. It is intended to give the State maximum flexibility to
    address its specific needs while maintaining a core level of
    environmental protection.
        A few examples will serve to illustrate the flexibility that EPA
    gives to Alaska:
         Fuel standards. In light of the State's unique
    geographical, meteorological, air quality, and economic factors, EPA
    has granted Alaska an exemption from meeting the current sulfur
    standard for highway diesel fuel. The Agency is now proposing to lower
    the national standard to 15 ppm (parts per million) for sulfur, but
    also proposed permitting Alaska to develop its own alternative low-
    sulfur transition plan. In addition to flexibility on the sulfur
    standard, the State also has authority to develop its own method for
    reducing carbon monoxide, and has been working with Region 10 to
    identify alternative approaches to achieve carbon monoxide reductions.
         Rural sanitation. Region 10 created a Rural Sanitation
    Coordinator position in the Alaska Operations Office to work directly
    with villages and with other agencies and organizations that provide
    rural sanitation services. The Operations Office played a substantial
    role in the development of the State Rural Sanitation Action Plan,
    which recognizes the challenging sanitation issues faced by communities
    in rural Alaska and the difficulties these communities have in
    managing, operating, and maintaining sanitation facilities. EPA's
    Office of Wastewater Management provides funds to the Alaska Native
    Health Board to assist rural Alaskan communities in meeting their sewer
    and water system management, operation, and maintenance needs.
         Drinking water. The Agency recognizes the particular
    challenge Alaska faces in ensuring that communities have water that is
    safe for drinking, swimming, and fishing. There are more than 3,500
    public water systems in Alaska, 95 percent of which serve fewer than
    500 people in rural and remote locations. To help communities in Alaska
    meet this challenge, EPA has provided in excess of $100 million since
    1995 for construction of drinking water facilities in Alaskan
    communities.
         Wetlands protection. EPA and the Corps of Engineers have
    worked to develop a wetlands permitting process that takes into account
    the State's highly diverse environmental, economic, and geographical
    conditions. In 1994, as part of the Alaska Wetlands Initiative, EPA and
    the Corps convened a panel of stakeholders and solicited broad public
    input to identify and address concerns with the implementation of the
    Section 404 program in Alaska. Some 2000 comments were received over
    the course of the initiative. In response to concern's raised by these
    stakeholders, guidance was issued that emphasizes the discretion and
    flexibility afforded to the Corps to craft decisions that take into
    account environmental conditions unique to Alaska. As part of EPA's
    ongoing Section 404 efforts in Alaska, the Agency is working closely
    with local interests in the Kenai to determine how recreational and
    economic activities can proceed while protecting important aquatic
    resources.
                       making progress, achieving results
        A number of measures point to the success of EPA efforts to tailor
    programs to the specific needs of the State and to give the State the
    greatest possible flexibility to establish priorities and allocate
    funds. Here again are some examples:
         Permit backlogs for municipal discharges, mining, pulp,
    and seafood operations have been reduced from 69 percent in 1996, to 21
    percent in March 2000, and are expected to be further reduced by the
    end of this calendar year.
         The Alaska Operations Office has worked successfully with
    the State, the city of Juneau, and the cruise industry to help ships
    comply with State and Federal air and water standards in a cost-
    effective and environmentally protective manner. This project, and
    others such as Superfund site cleanups and the restoration of abandoned
    industrial sites to productive use, demonstrates that environmental
    protection and economic development in Alaska, as elsewhere, are
    complementary.
         EPA has been the primary sponsor, both financially and
    technically, of the Yukon River Inter-Tribal Council, which is
    conducting research on ways of protecting the Yukon River Watershed.
         EPA, the State of Alaska, the Canadian Government, and
    related other Federal and State agencies are currently in negotiations
    on ways to protect the Taku Watershed and Alaska fisheries from the
    harmful effects of mining wastes.
         EPA created an arctic monitoring program to assess the
    impact of circumpolar and transpacific pollutants such as persistent
    organic pollutants and radioactive contaminants on the State's
    sensitive arctic region and its indigenous peoples.
    Summary
        During the past 7 years, EPA has worked to address all the issues
    that prompted the proposal to create a separate Regional office for the
    State. Although there is always room for improvement, much progress has
    been made. As I have already indicated, we are addressing Alaska's
    unique and varied geography directly in a number of cost-effective
    ways. We will continue to assess our program needs for the State.
        On behalf of the Environmental Protection Agency, I pledge that we
    will continue to work with Members of Congress as well as the State of
    Alaska and others to consider additional ways to better serve the
    environment and people of Alaska.
        Thank you for the opportunity to appear before you today. I would
    be pleased to answer any questions you may have.
                                   __________

      Responses by the Environmental Protection Agency (EPA) to Questions
                               from Senator Smith

        Question 1. The EPA and the Alaska Department of
    Environmental Conservation agree that there are unique features
    about Alaska that require special regulatory treatment. The EPA
    and the State, however, disagree over whether Alaska should be
    a separate region. It could reasonably be argued that having a
    separate Regional Administrator for Alaska is necessary because
    only a political appointee can effectively go to bat for the
    State. Political appointees carry more weight in the battle for
    scarce funds than even the most talented civil servants. The
    policy views of political appointees also carry more weight in
    the debate over the best environmental regulation. Does the EPA
    agree or disagree with the proposition that a political
    appointee can better represent the views of Alaska within the
    EPA than can a civil servant?
        Response. EPA does not agree with the proposition that a
    political appointee could better represent the interests of
    Alaska than a civil servant. Nonetheless, we note that the
    Regional Administrator for Region X, which has responsibility
    for Alaska, has traditionally been a political appointee. The
    experience of this Agency is that environmental and public
    health priorities must be balanced with resources available to
    address them, and that it is the strength of the argument
    rather than the status of the advocate that is likely to be
    most persuasive.

        Question 2a. In your testimony, you said that having a
    separate Region for Alaska is not the most effective means of
    addressing the unique circumstances faced by Alaska. Please
    explain in detail your reasons for that conclusion. In doing
    so, please address the following subjects.
        Please identify the cost and non-cost factors on which you
    rely for that conclusion, as well as identify the relative
    weight given to each factor.
        Response. The data that was analyzed when the establishment
    of a Regional Office for Alaska was first proposed suggested
    that the creation of such an office would not be cost
    effective. That conclusion remains valid. For example, one
    expert on the subject of underground storage tanks provides
    service to the four States in Region X. Creating a separate
    Regional Office for Alaska would necessitate duplicating this
    expertise for Alaska alone. Other areas of scientific and
    technical expertise would also have to be duplicated.

        Question 2b. What is the cost of establishing a separate
    Alaska region? Please separately identify and distinguish the
    cost of immediately creating a fully staffed Regional Office
    from the cost of creating a fully staffed office gradually.
        Response. Information on the cost of establishing a
    separate Regional Office was provided to the committee on July
    27. A table with ``phase-in'' information on estimated costs of
    creating such an office over a 4-year period is attached.

        Question 2c. Please identify all personnel positions (e.g,
    Regional Administrator) that would need to be filled in order
    to operate a separate Alaska Region, as well as all other
    matters (e.g., office space) that would be needed in order to
    establish a separate Alaska Region.
        Response. This information has been provided as above in
    answer to (b).

        Question 2d. Please provide to the committee any formal
    analysis of the foregoing factors that has been prepared during
    this Administration.
        Response. No analysis of the foregoing factors was
    undertaken during this Administration.

        Question 3a. Mr. Diaz, one of the documents that you
    provided to the committee is entitled ``Region XI Approaches to
    Closure'' and is dated June 23, 1993. The document is unsigned.
    The document states the following (at page 1): ``The 12th floor
    has been told by OGC that reversing the order establishing
    Region XI will require the written approval of the President.''
    Please explain this statement in detail for the committee. In
    doing so, please address the following subjects.
        Who prepared this document?
        Response. We have not been able to determine the author of
    this document.

        Question 3b. To whom was this document sent?
        Response. We have not been able to determine the intended
    recipient of this document nor whether it was ever sent.

        Question 3c. Was the Administrator or Deputy Administrator
    ever briefed regarding this document or the subject of this
    document?
        Response. The Administrator was briefed on the Alaska
    Region XI issue, but has no recollection of being briefed on
    the document or the subject of the document. We have not been
    able to find any information in the files of the Administrator
    or Deputy Administrator indicating that either official had
    been briefed on the document.

        Question 3d. Does the quotation note[d] above represent the
    EPA's current position?
        Response. No.

        (i) If not, what is the EPA's new position?
        Response. After informally consulting with the Office of
    Legal Counsel, Department of Justice, EPA's Office of General
    Counsel (OGC) has advised that only the President can rescind a
    Presidential memorandum and that the President may do so orally
    or in writing. To the best of our knowledge, this is not a
    ``new'' position because the unsigned document dated June 23,
    1993, entitled ``Region XI Approaches to Closure'' did not, and
    did not purport to, State EPA's position on this issue.

        (ii) When did the EPA change its position?
        Response. As indicated in the answer to (i), to the best of
    our knowledge, EPA has not ``changed'' its position. OGC
    examined this issue once Chairman Smith questioned Mr. Diaz
    about the June 23, 1993 background document at the committee's
    June 6, 2000 hearing.

        (iii) Who was involved in the process by which the EPA
    changed its position?
        Response. To the best of our knowledge, EPA has not changed
    its position. Subsequent to the hearing, staff in the Office of
    General Counsel, EPA, and in the Office of Legal Counsel,
    Department of Justice, were involved in addressing the legal
    issues of whether the President must rescind a Presidential
    memorandum and whether this must be done in writing.

        Question 3e. Did the Office of General Counsel issue a
    written opinion on the following subjects:
        (i) The validity of the ordered entered by former President
    Bush on January 19, 1993, or the order entered by former EPA
    Administrator William Reilly on January 20, 1993, establishing
    a separate Region 11 for Alaska?
        Response. Based on a thorough inquiry and review of our
    files, to the best of our knowledge, the Office of General
    Counsel did not issue a written opinion on this question.

        (ii) The steps necessary to implement the order entered by
    former President Bush on January 19, 1993, or the order entered
    by former EPA Administrator William Reilly on January 20, 1993,
    establishing a separate Region 11 for Alaska?
        Response. Based on a thorough inquiry and review of our
    files, to the best of our knowledge, the Office of General
    Counsel did not issue a written opinion on this question.

        (iii) The steps necessary to rescind the order entered by
    former President Bush on January 19, 1993, or the order entered
    by former EPA Administrator William Reilly on January 20, 1993,
    establishing a separate Region 11 for Alaska?
        Response. Based on a thorough inquiry and review of our
    files, to the best of our knowledge, the Office of General
    Counsel did not issue a written opinion on this question.
        If so, please provide a copy of those opinions to this
    committee.

        Question 4. At the hearing, you acknowledged that President
    Clinton has never revoked the order entered by former President
    Bush on January 19, 1993, or the order entered by former EPA
    Administrator William Reilly on January 20, 1993.
        Why has the EPA not established a separate Region 11 for
    Alaska?
        Response. The proponents for establishing a separate region
    for Alaska argue that the special geographic, climatic, and
    economic conditions of the State require unique responses to
    its environmental and public health conditions. A study
    undertaken by EPA, Implications of Establishing a Regional
    Office in and for Alaska, at the request of the Alaska
    Department of Environmental Conservation and Senator Murkowski,
    concluded that a proposed new region would not be cost
    effective nor would it provide the advantages that the State
    and others believed possible. After reviewing the report and
    considering the concerns expressed by Alaska's elected
    officials, its citizens, and State industry and environmental
    groups, EPA determined that the issues which formed the basis
    for the order to create a new Region could be more effectively
    and efficiently satisfied through a variety of other means.
    These included improving collaboration with the State in
    developing program priorities, improving delivery strategies,
    and modifying administrative structures. We believe these
    strategic and administrative improvements have been effective
    in addressing the unique circumstances faced by Alaska and have
    eliminated the need for establishing a separate Regional Office
    for the State.

                                   Table.--R11 Estimated Costs Over a Four-Year Period
    ----------------------------------------------------------------------------------------------------------------
                Category                  Year 1          Year 2          Year 3          Year 4           Total
    ----------------------------------------------------------------------------------------------------------------
    Personnel compensation and             3,854,052       3,683,206       4,657,038       4,685,924      16,880,220
     benefits (PC&B)................
    Travel..........................         283,100         101,900         133,500         133,500         652,000
    Operating expenses, contracts &        2,258,100         833,100       1,018,100       1,023,500       5,132,800
     support........................
    Start-up costs..................       5,787,500       2,290,100       2,085,200       1,837,200      12,000,000
                                     -------------------------------------------------------------------------------
        Total per year:.............      12,182,752       6,908,306       7,893,838       7,680,124      34,665,020
                                     -------------------------------------------------------------------------------
           Totals...................      12,182,752      19,091,058      26,984,896      34,665,020
    ----------------------------------------------------------------------------------------------------------------
    Assumptions:
     Costs do not include any inflation factors.
     The RA's Office would be fully staffed the first year.
     The support offices would not exist the first year, but would be phased in at \1/3\ total strength for
      Years 2 thru 4.
     The program offices would be at \1/3\ total strength the first year, \1/2\ strength the second year and
      \3/4\ strength the third year.

                                   __________
       Statement of Michele D. Brown, Commissioner, Alaska Department of
                           Environmental Conservation
        Chairman and members of the committee: I am Michele Brown,
    Commissioner of the Alaska Department of Environmental Conservation. On
    behalf of Alaska Governor Tony Knowles, I am pleased to testify that
    the State of Alaska supports the bill before you to create a separate
    region of the EPA for Alaska, which will foster a far more effective
    Federal-state partnership to protect Alaska's environment and the
    health of its people.
          alaska's environmental challenges are unique and distinctive
        Alaska is a national treasure. You have participated in the debates
    over opening the Arctic National Wildlife Refuge, about timber harvest
    levels in the Tongass National Forest, and over how to prevent and
    improve response to oil spills such as the Exxon Valdez. There is great
    passion in those debates. Alaska is America's proud symbol for
    environmental purity and primal wilderness. It should also be America's
    model for environmental management. Yet, the key Federal agency charged
    in this country with environmental management has only a meager
    presence in Alaska.
        EPA's 1992 report entitled ``Implications of Establishing a
    Regional Office in and for Alaska'' states that a new Alaska region
    should not be established because no one wants to live and work in
    Alaska. My 450 employees and I would like to tell you that when it
    comes to environmental splendor and to the ability to practice creative
    and meaningful environmental management, it simply doesn't get any
    better than Alaska.
        For public health and environmental challenges, and for the
    opportunity to do development right, as Alaska's Governor Tony Knowles
    requires, Alaska is where the rubber meets the road.
        Issues range:
         from addressing third world sanitation conditions in
    hundreds of inaccessible, tiny communities in a State where there is
    virtually no county or borough regional health management system, to
    regulating the U.S.'s most sophisticated and complex oil development,
    production and transportation system, one which yields 20 percent of
    the U.S.'s oil production. Another 30 percent of the U.S.'s proven oil
    reserves lies under Alaska's surface and we all know that Americans
    will not tolerate drilling those reserves without assurances that it
    can be safely managed.
         from protecting the water quality that produces and
    processes over 50 percent of the U.S.'s seafood production and houses
    the largest seafood landing port in the U.S., while regulating the
    discharges from the U.S.'s largest zinc and silver mines and the U.S.'s
    leading placer gold and tin production mines.
         from generating electricity from diesel engines for almost
    all of Alaska's numerous remote villages, and all the mines and oil and
    gas production facilities I just mentioned, because there is no other
    available power source, while assuring air quality for two-thirds of
    all the U.S.'s national parklands, the largest State park system in the
    United States, and the U.S.'s largest national forests, as well as
    preserving the vistas and fresh air quality for the 1.4 million
    tourists who visit Alaska each year.
        And, this all needs to be done over a land base that equals 20
    percent of the United States. As you can see from the map, when
    superimposed on the lower 48 States, Alaska extends north to south from
    the United States-Canada border to southern California and, east to
    west, from Tennessee to Texas and that's not even including the
    Aleutian Islands.
        Alaska shares no border with another State and at our closest point
    is 2\1/2\ miles from Russia. Alaska has 7 ecosystems, including the
    United State's only arctic and subarctic ecosystems. Alaska has 6,600
    miles of coastline (3 times the coastlines of California and Florida
    combined), 34,000 miles of shoreline, 3,000 rivers, 3 million lakes
    over 20 acres each, and more wetlands than those in all the other
    States combined.
        Alaska's entire economic base--oil and gas, seafood, tourism, and
    mining--depends upon its natural resources and its environment and how
    well they are managed. And, our Nation too depends heavily on these
    products.
        Alaska needs strong and effective environmental management from our
    Federal agency partners. Virtually all pertinent Federal agencies, with
    the notable exception of EPA, recognize both the importance and the
    difficulty in managing some of America's most important assets and have
    Regional Offices in Alaska. This includes not just land management
    agencies but also those with regulatory protection programs such as the
    National Oceanic and Atmospheric Association, the Corps of Engineers,
    and the Minerals Management Service. EPA alone tries to provide this
    management from Seattle with a small operations staff in Alaska. Region
    10 covers the largest geographic areas of any EPA region, yet has the
    fewest staff of any region.
        We believe that having a lean, but focussed EPA Region 11 can
    accomplish far more in effective environmental management than the so-
    called leveraging of its larger staff in Seattle.
        It takes strong environmental management and standards to balance
    competing demands on the environment and to protect Alaska's national
    assets. Strong and effective management means setting priorities based
    on sound risk assessments and tailoring management to real-time
    conditions to produce on-the-ground, meaningful results. In the multi-
    layered and increasingly complex Federal/State/tribe local system of
    environmental management that has developed in this country, Alaska
    needs a Federal partner that is aware of and can produce solutions
    rather than rote and oft-times arbitrary applications of rules
    developed for other circumstances.
        I am not here to criticize EPA but to highlight a serious problem
    in allocation of resources and attention. Let me explain why. I'd like
    to give you four reasons and some brief examples:
          first, alaska's environment needs more effective management
        Despite efforts by EPA Region 10 to be more responsive in Alaska,
    we have seen that managing for results simply does not work from a
    Seattle office. EPA's Alaska operations office basically does direct
    implementation of programs that have not been delegated to or are not
    shared with Alaska's regulators. Consequently, my staff interacts with
    Seattle 90 percent more than it does with the Alaska operations office.
    It's quite frustrating to see State regulators and facility operators
    troop to Seattle to meet with an EPA regulator who has never even
    viewed the facility's site.
        Unfortunately, Seattle staff too often have neither the knowledge
    of Alaska's conditions and cultural diversity or the funds or time to
    travel and study. Lacking that core understanding and a sense of the
    big picture, they merely tackle what shows up on their desks. They do
    this by adhering to tunnel vision one-size-fits-all solutions
    prescribed in regulations and guidance while facing intense pressure
    under a large Region 10 workload and trying to advance EPA headquarters
    virtually endless assault of new initiatives. It's a hard job and one
    that leads to wasted time and resources without producing environmental
    results; and, at its worst, results in nonsensical situations.
        Let me share some examples:
        First, thousands of migratory birds die year after year in a
    wetlands estuary outside of Anchorage due to poisonous phosphorous from
    Army weapons. Two-thirds of Alaska is federally owned and managed, much
    with left over contamination such as this from past management
    practices. Yet, EPA, the Federal agency charged with preventing and
    remediating fellow Federal agencies' actions, has virtually no presence
    to address these hundreds of acres of contaminated wetlands.
        At the same time, however, less than 15 air miles away, the
    Anchorage sewage treatment plant has been through three years of
    bureaucratic red tape to renew its permit in order to account for
    naturally occurring conditions in the Cook Inlet waters. The so-called
    ``pollution'' being addressed is due to trace metals and high sediments
    caused by the glaciers grinding up the local mountains. Despite
    countless hours by EPA and Alaska's environmental staff, this permit is
    still not done and, even when it is finished, it will not improve water
    quality whatsoever.
        Second, EPA imposed on Alaska an arsenic standard for point
    discharges that was virtually impossible for any discharger to meet due
    to naturally occurring arsenic in Alaska's waters. No arsenic was being
    added in the mine process. This discharge standard was 300 percent
    lower than the drinking water standard for arsenic. This meant that you
    could dip a glass into a stream and drink the water. That was safe. But
    if you didn't finish the water, you would not be allowed to pour it
    back into the stream because it would violate the arsenic discharge
    standard. It took four years to get this resolved while dozens of major
    and minor mine permits were substantially delayed or went through
    expensive, time-consuming paperwork processes to get around the
    requirement. Again, there was no resulting benefit in water quality for
    all this effort.
        Third, Alaska has a desperate need for safe drinking water for
    thousands of public water systems serving less than 500 people, most
    located in isolated communities that lack any economic base. The
    average annual income in a village in Alaska is $13,000. EPA is
    generous with the construction funding granted by Congress, but the
    community is expected to maintain the system at its own expense once
    built. That's hard enough to do under the best of circumstances, but it
    becomes nearly impossible when the community has to meet EPA
    requirements that don't make sense in Alaska, such as testing for
    contaminants never found in Alaska or having to repeatedly re-draw and
    fly water quality samples to a lab because EPA rejects the results when
    arbitrary sample holding times cannot be met due to distance and
    frequent weather delays. Communities who fail these requirements don't
    get help; they face fines.
        In short, Alaska wants and needs effective management. We do not
    want relaxed standards or to skate from requirements. But, neither do
    we want to go through pointless activities that don't produce
    environmental improvements. A Region 11 would allow Alaska to structure
    compliance in a way that works and to target resources on what truly
    engenders better environmental performance.
         second, public health infrastructure programs must fit arctic
                                   conditions
        EPA's role in water, sanitation, and waste disposal infrastructure
    development in Alaska villages is unique in the region, if not the
    country, especially when you consider that there is virtually no road
    access to the villages, transportation corridors are only open when
    rivers aren't frozen, each village is autonomous, and system design and
    operation require the most extreme arctic engineering. EPA's assistance
    in funding construction is great, but its system management
    requirements can be frustrating and an enormous waste of time due to
    its lack of specific knowledge of Alaska's condition.
        For instance, there's a new requirement that operators of small
    drinking water systems be trained and certified. That's good, but it is
    based upon a model that envisions that a single, certified operator
    will be able to circuit ride from one drinking water system to the next
    and serve as the certified operator for a number of systems in an area.
    This works fine when the circuit rider can drive from one system to the
    next and visit several systems in a day, but sure doesn't work in
    Alaska, where traveling from one system to another can often take two
    days, cost thousands of dollars in air fare, and involves overnighting
    when there are no facilities. Despite the pleas from Alaska to have
    alternative certification requirements, we're now scrambling to figure
    out how to comply.
        The national rules for State Revolving Loan programs for drinking
    water and wastewater projects set the course for disbursing loan funds,
    for construction times, and for costs based upon a 9- or 12-month
    construction season. Those standards assume that materials can be
    purchased nearby and relatively easily trucked to a construction site.
    That simply isn't the case in Alaska. Even the best run, most cost-
    effective projects often take longer and cost more in Alaska.
        Further, there is a serious need to integrate the water and
    wastewater system activities with other Federal agencies working in
    same field: Housing and Urban Development, U.S. Department of
    Agriculture-Rural Development, Army Corps of Engineers, and Indian
    Health Service. It is critical to have master planning where housing,
    energy improvements, sewage lagoons, and water and sewer systems are
    all coordinated. All of these other agencies have key, decisionmaking
    offices in Alaska. EPA does not.
     third, tribal relations in alaska require more relevant participation
        Alaska's cultural diversity--a 17 percent native population from
    five distinct ethnic groups--and unique government to government tribal
    relationships requires more attention and coordination than Seattle has
    been able to offer. One-half of all federally recognized tribes are in
    Alaska, yet only one has a reservation land base. EPA out of Seattle is
    now forming environmental policy and passing large amounts of grant
    funds to 228 tribes in Alaska in a way that may make good sense in the
    other Region 10 States, but sure doesn't in Alaska.
        For instance, EPA passed grant funds to tribes to collect and
    recycle batteries and other household hazardous materials. That was
    good in the other Region 10 States where there is both recycling
    opportunities and a road system to move these materials. When the
    village of Galena, located on the Yukon River, received funds to do
    that, villagers collected the hazardous materials and then started
    calling around to find someone to fly or boat hundreds of miles to pick
    up the materials. When they couldn't find anyone to volunteer to do
    that, the villagers dumped the batteries into the local, substandard
    landfill that was being closed out and created a serious water
    contamination threat.
        As I previously mentioned, communities must operate and maintain
    their water and wastewater systems after construction is completed.
    This requires a community organization such as a tribal entity, a city
    government, or a non-profit. Several times, EPA's tribal office has
    passed funds to tribal entities to begin development of new water or
    sanitation systems in communities where villagers are already
    struggling to maintain a current system operated by a local government.
    The result, in a community with a few hundred people, is duplicate
    systems competing for ratepayers.
        Facilitating the government to government relationship that EPA
    promotes must happen in a knowledgeable and sensitive way. It cannot be
    done by merely replicating activities undertaken with tribes with
    reservations. Surely, when half of the tribes that EPA deals with in
    the U.S. are in Alaska, a regional leader is critical to develop that
    government to government relationship in a meaningful and effective
    manner.
     fourth, arctic contamination is becoming a serious threat to alaska's
            ecosystems and the people who rely upon arctic resources
        The Arctic is a sink capturing chemical coming from the former
    Soviet Union and Asia. Heavy metals and persistent organic pollutants
    concentrate in the Arctic due to air and water currents and persist
    longer in the Arctic than in more temperate climates. These chemicals
    accumulate in the ecosystem and, in particular, in fatty tissues in
    animals. These threatened ecosystems are relied upon for subsistence
    foods, for the seafood trade, and for traditional ways of life.
    Northern people rely on fatty animal foods and there is now increasing
    and frightening evidence of long-term health effects on Alaskans and
    other Arctic peoples.
        EPA is participating in Arctic research and management to address
    these issues but in a fractured and uncoordinated fashion. Having a
    regional focus on this issue would greatly assist the State Department
    as it negotiates treaties on international management of these
    pollutants, would be a more effective partner with the National Oceanic
    and Atmospheric Association, the U.S. Fish and Wildlife Service and
    other Federal agencies grappling with this issue, and could make
    valuable information available to subsistence users on the quality of
    their natural food sources.
         funding region 11 doesn't have to negatively affect region 10
        Those are some of the reasons why a Region 11 would make a positive
    difference in promoting and effectuating meaningful environmental
    management in Alaska. However, I know it must be cost effective and
    must not lessen resources devoted to other Region 10 States.
        EPA's 1992 report on costs--I do not know if that has been
    updated--says 84 FTEs in Region 10 work on Alaska issues. It also says
    that 40 FTEs could be removed from Region 10 without harm to other
    States' coverage.
        There are currently 30 positions on the books for the Alaska
    operations office. Together, that makes 70 positions available for
    Alaska work without compromising the Region 10 workload, pretty close
    to the 84 EPA said work these issues already.
        Somehow, however, EPA then adds about 130 percent more staff when
    it says in that same report that it needs 180 FTEs to run a Region 11
    office. Even if the 84 FTEs it cites as working on Alaska issues does
    not include administrative or legal staff, surely a new Region would
    not need 96 more staff for these functions.
        Maybe it would take 180 positions to open an ideal regional office.
    It would probably take a 130-percent increase to create an ideal Region
    10 too. But, we're not asking for that. Rather, we're asking that an
    Alaska-proportionate share be placed in a regional office that can make
    knowledgeable, relevant decisions and be an equal voice as headquarters
    develops rules and guidance on how to achieve compliance in ways that
    make sense.
        A thoughtful and gradual transition could ameliorate the costs.
    This is especially true if, through a core task analysis, staff were
    actually tasked with work that produced tangible environmental results.
    We believe that a Region 11 can be created that would not have negative
    consequences to the other Region 10 States.
                                   conclusion
        Alaska wants and needs a true partner to manage Alaska's national
    treasures and provide a healthy quality of life for Alaskans. The best
    government is the one closest to the people and Alaskans need our
    Federal EPA partner to be present in a way that furthers rather than
    frustrates our mutual goals.

      Responses of Michele D. Brown to Additional Questions from Senator
                                     Smith
        Question 1. Your written testimony states that the EPA has pursued
    several misguided policies in Alaska--such as requiring small Alaskan
    communities to have duplicate drinking water systems.
        Please identify specific examples of the problems that you have
    found in working with the EPA. In giving examples, please address the
    following matters:
        (a) How long have these problems existed?
        (b) Have you brought those problems to the attention of the EPA?
        (c) If so, to whom in Alaska and in Seattle?
        (d) If so, what was the EPA's response to your action?
        (e) Is action by the EPA necessary to resolve those problems?
        (f) If so, please identify what action is necessary; whether you
    brought that action to the attention of the EPA; if so, to whom; when
    that was done; and what was the EPA's response?
        Response. The following are examples in several areas where EPA has
    generated needless work or wasted limited, valuable resources due to
    the lack of Alaska-specific knowledge.
                            water quality standards.
         Arsenic--EPA imposed an arsenic standard for point
    discharges that was virtually impossible for any discharger to meet due
    to naturally occurring arsenic in Alaska's waters. No arsenic was being
    added in the mine process. This discharge standard was 300 percent
    lower than the drinking water standard for arsenic. The result, in
    effect, was that you could dip a glass into a stream and drink the
    water. That was safe. But if you didn't finish the water, you would not
    be allowed to pour it back into the stream because it would violate the
    arsenic discharge standard. It took four years to get this resolved
    while dozens of major and minor mine permits were substantially
    delayed.
         Anchorage sewage treatment plant--the Anchorage sewage
    treatment plant has been through three years of bureaucratic red tape
    to renew its permit in order to account for naturally occurring
    conditions in the Cook Inlet waters. The so-called ``pollution'' being
    addressed is due to trace metals and high sediments caused by the
    glaciers grinding up the local mountains. The permit was finally
    completed after hundreds of hours of work for no improvement in water
    quality whatsoever.
                                  solid waste
         Although courts have ruled that most Alaska tribes do not
    have Indian Country, EPA Headquarters has mailed a number of letters
    and publications to all 200+ tribes in Alaska concerning solid waste
    management in Indian Country. These mailings were done without notice
    to the State and resulted in considerable confusion, as the State has
    jurisdiction over solid waste in most tribal areas.
         EPA has issued solid waste grants to tribes without
    notifying the State. In some instances, the work funded by these grants
    duplicates work already being done by the State. In another instance,
    the work funded by these grants increased the threat of environmental
    contamination. EPA passed grant funds to tribes to collect and recycle
    junk vehicles, batteries, and other household hazardous materials. That
    worked in the other Region 10 States where there is both recycling
    opportunities and a road system to move these materials. When the
    village of Galena, located on the Yukon River, received a ``cleanup''
    grant, villagers dutifully collected the hazardous materials and then
    started calling around to find someone to fly or boat hundreds of miles
    to pick up the batteries and dispose of or recycle them. When they
    couldn't find anyone to volunteer to do that, the villagers disposed of
    the batteries in the local, substandard landfill. This landfill was in
    the process of being closed out and the additional hazardous material
    created a serious water contamination threat.
                       drinking water and sewage disposal
         Alaska has a desperate need for safe drinking water for
    the thousands of public water systems serving less than 500 people,
    most located in isolated communities that lack any economic base. The
    average annual income in a village in Alaska is $13,000. EPA is
    generous with construction funding but the community must maintain the
    system at its own expense. That's hard to do under the best of
    circumstances but even more so when limited dollars have to be spent
    testing for contaminants never found in Alaska and repeatedly re-
    drawing and flying water quality samples to a lab because EPA rejects
    the results when arbitrary sample holding times cannot be met due to
    distance and frequent weather delays. Communities who fail these
    requirements don't get help; they face fines.
         EPA has imposed a new requirement that operators of small
    drinking water systems be trained and certified. That's good, but it is
    based upon a model that envisions that a single, certified operator
    will be able to circuit ride from one drinking water system to the next
    and serve as the certified operator for a number of systems in an area.
    In Alaska, traveling from one system to another can often take two
    days, costs thousands of dollars in air fare, and involves overnighting
    when there are no facilities. Despite the pleas from Alaska to have
    alternative certification requirements, we're now left scrambling to
    figure out how to comply or face loss of construction funds.
         The national rules for State Revolving Loan programs for
    drinking water and wastewater projects present another set of problems
    for Alaska. For example, national standards for the pace of disbursing
    loan funds, for construction times, and for costs envision a 9- or 12-
    month construction season. Those standards assume that materials can be
    purchased nearby and relatively easily trucked to a construction site.
    That simply isn't the case in Alaska. Even the best run, most cost-
    effective projects often take longer and cost more in Alaska.

        Question 2. You recommended that the EPA create a separate region
    for Alaska, while the EPA believes that the special needs of Alaska can
    be addressed by devoting more resources to Alaska's needs. Please
    explain in detail why the problems and needs of Alaska can be addressed
    only (or better) through the creation of a separate Region for Alaska,
    instead of (for example) increasing the number of EPA employees devoted
    to Alaska's issues, either in Alaska or in Seattle.
        Response. EPA's Alaska operations office implements programs that
    have not been delegated to or are shared with Alaska's regulators.
    Although EPA claims that the Alaska operations office has more staff
    than any other State operations office, my staff interacts with Seattle
    90 percent more than it does with the Alaska operations office. It's
    quite frustrating to see State regulators and facility operators troop
    to Seattle to meet with an EPA regulator to discuss a site never viewed
    or understood. In the last fiscal year, DEC employees spent over 120
    work days in Seattle meeting with Region 10. Even when we do work with
    EPA's Alaska office, it is often ``overruled'' by Seattle staff.

        Question 3. One argument against having a separate Alaska office is
    that having such an office is inefficient, because of the separate
    infrastructure needed for a separate EPA Regional Office. Please
    address that concern. In so doing, please address the following issues
    as well:
        (a) Based on your experience with your own agency, what personnel
    would be necessary to establish a separate Alaska region?
        (b) What would be the cost of creating separate Alaska region cost?
    In making an estimate, please address both the cost from immediately
    staffing an EPA regional office fully and the cost from doing so
    gradually.
        (c) To what extent can the EPA hire from Alaska new employees in
    whatever scientific and technical fields are necessary to staff a
    regional office?
        (d) How much additional time and resources would you and your staff
    have to serve Alaska better if there were an EPA Regional Administrator
    located in Alaska, instead of in Seattle?
        Response. If efficiency is measured in terms of genuine
    environmental protection and the quality and relevance of EPA's
    decisions, opening a separate Alaska region will increase efficiency.
    Being closer to the regulated resources and activities will increase
    the amount of time staff can spend directly on protection activities
    and reduce the amount of time required to gather information or correct
    misguided policies.
        We believe that having a lean, but focussed Region II can
    accomplish far more in effective environmental management than the so-
    called leveraging of its larger staff in Seattle. Local expertise and
    knowledge about Alaskan conditions should increase efficiency as less
    time will be spent heading down wrong paths. More relevant decisions
    will mean less time spent on reviews and appeals.
        EPA's 1992 report entitled ``Implications of Establishing a
    Regional Office in and for Alaska'' states a new region should not be
    established because no one wants to live and work in Alaska. Despite
    their claims to the contrary, however, many people enjoy living in
    Alaska--especially people with an environmental background. The
    stability and possibilities for advancement that EPA offers should be
    sufficient to find technically well-qualified applicants with
    specialized knowledge and experience in Alaska's unique conditions.
        EPA's earlier report on costs--I cannot comment on its updated
    version since I haven't seen it--says 84 FTEs in Region 10 work on
    Alaska issues. It also says 40 FTEs could be removed from Region 10
    without harm to other States' coverage. There are currently 30
    positions on the books for the Alaska operations office. Together, that
    makes 70 positions available for Alaska work without compromising the
    Region 10 workload, pretty close to the 84 EPA said work these issues
    already.
        Somehow, however, EPA then adds about 130 percent more staff when
    it says it needs 180 FTEs to run a Region 11 office. Even if the 84
    FTEs it discusses earlier does not include administrative or legal
    staff, surely the Region would not need 96 more staff for these
    functions.
        Maybe it would take 180 positions to open an ideal Region. It would
    probably take a 130 percent increase to create an ideal Region 10 too.
    But, we're not asking for that. Rather, we're asking that an Alaska-
    proportionate share be placed in a regional office that can make
    knowledgeable, relevant decisions and be an equal voice as headquarters
    develops rules and guidance on how to achieve compliance in ways that
    make sense.
        A thoughtful transition could ameliorate costs and impacts. This is
    especially true if, through a core task analysis, staff were actually
    tasked with work that produced real results rather than bean counting,
    creating Region 11 would not have negative consequences to the other
    Region 10 States.

        Question 4. Why is Alaska better off with a separate EPA Region,
    instead of (for example) just having more EPA personnel stationed in
    Alaska and more funds distributed to Alaska?
        Response. Please see answer to question 2.

        Question 5. Please address the following proposition: Alaska needs
    to be a separate Region with its own Regional Administrator because
    only a political appointee, drawn from the State and having the same
    status as the other EPA Regional Appointees, will have sufficient
    awareness of the unique features of Alaska best to address the
    environmental issues that arise in your State, as well as sufficient
    political muscle to represent Alaska's interests to EPA Administrator
    and to obtain for Alaska the needed personnel and fiscal resources from
    the scarce funds available to environmental protection.
        Response. Our experience is that EPA is a bureaucratically bound
    agency rife with second guessing by the regional office over the State
    operations office and by headquarters over the regions. Because of
    this, even relatively simple issues suffer from paralysis by analysis.
    A recent letter from Alaska's Governor took over 6 months for a reply.
        It is necessary to have a Regional Administrator with an equal
    amount of ``clout'' inside the organization to even be heard. Over the
    last several years, Region 10's Administrator has been a great
    resource, but he has to choose carefully which of the many Region 10
    issues he can take on with headquarters. Alaska's issues often don't
    make the list. Furthermore, a Region 11 Administrator could weigh in
    very early in a regulations project to ensure that Alaska-specific
    problems are appropriately addressed, and the result is achieved in a
    way that makes sense, rather than waiting for State comments which EPA
    too often discounts.

        Question 6. Some people may fear that creating a separate Alaska
    Region will lead to the despoliation of Alaska's lands, including its
    wilderness. The argument that could be made is that an Alaska Regional
    Administrator will become too friendly with Alaska's businesses,
    particularly Alaska's oil businesses, to regulate business effectively.
    What is your answer to that concern?
        Alaska's entire economic base--oil and gas, seafood, tourism, and
    mining--depends upon its natural resources and its environment and how
    well they are managed. Alaska wants quality environmental management. A
    Region 11 will foster a far more effective Federal-State partnership to
    protect Alaska and its people. In short, we do not want relaxed
    standards or to skate. A Region 11 would allow Alaska to structure
    compliance in a way that works.
        It takes strong environmental management and standards to balance
    competing demands on the environment and to protect Alaska's national
    assets. Strong and effective management means tailoring management to
    real-time conditions to produce on-the-ground, meaningful results. In
    the multilayered and increasingly complex Federal/State/tribe/local
    system of environmental management that has developed in this country,
    Alaska needs a Federal partner that is aware of and can produce
    solutions rather than rote and oft-times arbitrary applications of
    rules developed for other circumstances.
            Statement of Ken Freeman, Executive Director, Resource
                              Development Council
        Good morning. My name is Ken Freeman, Executive Director of the
    Resource Development Council (RDC). I am a life-long, fourth-generation
    Alaskan. I am here before you today to express RDC's support for S.
    1311.
        RDC is an Alaska statewide organization consisting of all resource
    sectors, including oil and gas, mining, fishing, tourism and forestry.
    Our membership also includes business associations, labor unions,
    Native corporations, local governments and hundreds of individuals.
    RDC's purpose is to encourage a strong, diversified private sector in
    Alaska and expand the State's economic base through the responsible
    development of our natural resources.
        Historically, RDC has supported the creation of an EPA regional
    office focusing exclusively on Alaska and there is consensus among our
    members on the merits of establishing an EPA region specific to Alaska
        Alaska has always provided unique challenges for both industry and
    Federal regulators. Alaska is a State of vast physical dimensions.
    Covering 375 million acres, it stretches over 2,000 miles from west to
    east and over 1,000 miles from north to south. Alaska is one-fifth the
    land mass of the United States. With 10,000 miles of coastline, Alaska
    has more salt water shoreline than the entire continental United States
    combined. It is the only State with an Arctic and Sub-Arctic
    environment. We have more wetlands, more sensitive ecosystems and more
    need for specialized management than any other State. Special
    circumstances present special problems that demonstrate the need for an
    EPA region for Alaska.
        Oil production from Alaska accounts for nearly 20 percent of all of
    the oil produced in the U.S. Yet, Alaska is the only State within EPA
    Region 10 that has oil and gas exploration and production. Given the
    importance of Alaska oil to the nation's energy security, it is
    imperative that agencies have an in-depth understanding of oil and gas
    exploration and production operations, and specifically operations
    conducted in extreme arctic conditions. Although Alaska is large in
    size, it is small in population and industries; as such, the focus of
    Region 10 employees expertise often-times is on industries and
    conditions in the Pacific Northwest--not on upstream oil and gas
    operations--and certainly not on operations conducted in extreme Arctic
    conditions.
        An excellent example of EPA programs uniquely impacted by these
    operating extremes, and why it is critical that agency personnel have
    the appropriate level of understanding of Alaska, is the NPDES Storm
    water program. This program requires sampling following storm events if
    runoff from facilities reaches waters of the U.S. Virtually all of the
    North Slope is classified as wetlands--and therefore ``waters of the
    U.S.'' Facilities are often located in very remote areas with no road
    access. And ``storm events'' usually occur in the dead of winter when
    temperatures can reach -80 degrees, producing a serious safety
    situation. Without a thorough understanding of these factors, it is
    difficult to convince Seattle-based regulators that programs and
    permits must be adjusted to be workable in Alaska.
        Alaska faces special challenges like no other State when it comes
    to regulating development on wetlands. Because of a broad Federal
    definition, nearly half of the State's land area is considered
    wetlands, accounting for three quarters of the State's non-mountainous
    developable land. Virtually all development--from schools, hospitals,
    and roads to public water and sewer systems--requires using lands
    regulated as wetlands. In Alaska wetlands cannot be avoided. Dry land
    is scarce.
        While many States like California have developed most of their
    wetlands, Alaska has achieved its current level of development while
    preserving 99.9 percent of its wetlands. Yet the 49th State must comply
    with a Federal wetlands policy designed to be a solution to the
    alarming loss of wetlands in other States. The policy has presented
    major economic and permitting challenges in Alaska. While Federal
    regulators may flash statistics showing a small percentage of rejected
    permits, those records do not reveal the numbers of permits voluntarily
    withdrawn by a project sponsor--and sometimes at an agency's request.
        The establishment of a Region XI office in Alaska would bring
    opportunities for Federal regulators to become more familiar with
    Alaska wetland issues and unique circumstances. Regulators based in
    Alaska, with decision-making power, are more likely to respond to local
    realities and the need for flexibility in permitting, especially
    considering the fact that many Alaska wetlands are very different than
    those in the Lower 48, especially in terms of critical functions and
    value.
        While EPA does have staff based in Anchorage with representatives
    elsewhere, decisions vital to Alaska's environment and economy are
    largely driven by Region's X's Seattle headquarters. In reality, the
    local office simply does not have the latitude to implement creative
    solutions. Decisions are made by Seattle regulators who do not fully
    understand the unique environmental characteristics and special
    circumstances which prevail in Alaska. As a result, Alaskans face
    longer delays, some questionable or inappropriate decisions and limited
    field knowledge.
        The EPA has made some improvements in Alaska, but much more remains
    to be achieved and it would be best accomplished through a new regional
    office. The new EPA region would have increased opportunities to build
    knowledge based on first-hand observation of Alaska conditions. As the
    new Region's primary focus, Alaska would get more policy-level
    attention than it would from a regional office serving three other
    States with conditions much different than Alaska.
        Another issue which doesn't reflect realities found in Alaska is
    the Clean Air Act. For example, the geography and winter climatic
    conditions found in Fairbanks creates an extreme atmospheric inversion
    unlike anywhere else. As a result, Alaska's second largest city has a
    greater inversion problem than not only Los Angeles, but perhaps
    anywhere in the world. In previous years, the EPA regional director
    threatened to close downtown Fairbanks to autos because of high carbon
    monoxide levels recorded during the winter inversions.
        In the fall of 1992, the EPA required the additive MTBE (methyl
    tertiary butyl ether) in local gasoline supplies, but then-Governor
    Walter Hickel ordered the program stopped less than two months after it
    began, and the EPA backed off after admitting it had done nothing to
    test the effectiveness and health effects of MTBE in cold climates.
        The city has made progress in complying with air quality
    regulations, but despite its best efforts, Fairbanks still exceeds
    national standards at least three days per year, two more than allowed.
    But that's a big improvement over previous years when Fairbanks was out
    of compliance on dozens of days each year. Yet despite major progress,
    the community is at risk of losing Federal funding and faces other
    punitive sanctions if it does not come into compliance. According to
    local officials, there isn't much else the community can do--short of
    impounding every vehicle in Fairbanks and forcing people to walk to
    work in 50 below zero temperatures.
        Alaska is truly different than the Lower 48 States. Its weather,
    remoteness, vast distances, and special Arctic conditions such as
    permafrost, glacier till and high background levels that contribute to
    higher metals in rivers, set Alaska apart from other States. Frankly,
    Alaska has very little in common with its neighbor 2,000 miles to the
    south. Washington State, the home base of EPA's Region X, is more like
    its neighboring States, Oregon and Idaho, than Sub-Arctic and Arctic
    Alaska.
        Establishing an Alaska EPA region does not set a precedent since
    eleven other Federal agencies have fully staffed offices in the 49th
    State specifically dedicated to Alaskan issues. These agencies range
    from landlords like the U.S. Forest Service to others like the EPA with
    specific oversight and regulatory functions, including the Army Corps
    of Engineers, the Bureau of Indian Affairs, Federal Aviation
    Administration and U.S. Geological Survey.
        Many Alaskans believe Federal and State regulators could do a
    better job of addressing our environmental challenges when decision
    makers are based in Alaska, together, rather than formulating policy
    and implementing regulation by telephone or air shuttle from Seattle.
    Having a regional EPA office in Alaska would overcome distance,
    communication and coordination problems. It would also quite likely
    improve the agency's responsiveness to specific permitting needs.
        For example, the Chuitna Project, a ``green field'' coal
    development located in the Beluga Field of Southcentral Alaska, has had
    two significant engagements with Region X. One involved preparation of
    a third party EIS and the other required processing the renewal of
    NPDES permits. In the first circumstance, Region X was the lead agency
    with the Army Corp of Engineers Regional Office in Anchorage being the
    cooperating agency. The third party was an Anchorage contractor, Dames
    and Moore. With the EPA Regional Office located some 1,500 miles from
    the contractor, the project and the cooperating Federal agency, the
    project developer encountered significant communication and
    coordination problems, many of which could have been avoided if all the
    participants would have been located in Alaska
        In the second instance, the project developer has had an
    application for renewal of four NPDES permits on file with Region X for
    approximately five years. The original permits were issued in 1990
    after publication of a Final Environmental Impact Statement. In spite
    of several initiated contacts by the project developer, no response has
    been received from Region X on renewal of the permits. Here again, were
    the permitting office located closer to where the ``action'' is, the
    agency would most likely be more responsive.
        Another example of why a new Alaska EPA region is needed comes from
    the timber industry. At issue is recent permitting for a general permit
    on Log Transfer Facilities (LTFs). There was a huge and unnecessary
    amount of time that was required to work through the process. Region X
    regulators from Seattle apparently did not fully understand the unique
    challenges posed by the remoteness of Alaska and the isolation of the
    LTFs. Regulators actually requested street addresses and towns for the
    LTFs. They asked for road directions to the sites. They didn't
    understand that these facilities were located far from local
    communities and that there were no roads, no services, no
    infrastructure--just remote, isolated wilderness accessible by aircraft
    or boat. It took the permittee months to get all the logistical issues
    resolved. The permittee noted that Region X regulators showed little
    trust toward those in Alaska they were regulating and did not have a
    reasonable understanding or sense of the magnitude of Alaska, its
    remoteness and unique characteristics.
        A new Region XI office could go further than a local branch office
    with limited latitude, staffing and capabilities in overcoming these
    challenges and developing a much-needed northern and arctic expertise
    in wetlands management, permafrost, ice fog, NPDES permitting and other
    issues. A Region XI office could better respond to Alaska's special
    problems with Alaska solutions. The establishment of an EPA region
    specific to Alaska would be a major step toward achieving the goal of
    ensuring that Federal regulations applied in Alaska reflect Alaska
    realities.
        A current issue making headlines in Alaska is the State's rights in
    respect to its air permitting program. Alaska cannot administer a
    viable air permitting program if EPA's Region X office in Seattle
    continues to summarily overrule carefully made decisions that take into
    account Alaska's unique circumstances.
        The Alaska Department of Environmental Conservation's (ADEC) has
    appealed a recent order by EPA prohibiting the issuance of a Prevention
    of Significant Deterioration (PSD) permit for a diesel generator at the
    Red Dog Mine in Northwest Alaska. This permit is vital and necessary to
    Cominco Alaska's operation at the world's largest deposit of zinc. The
    generator will have a negligible environmental impact.
        ADEC has an EPA-approved State program for issuing PSD permits.
    This approved program gives ADEC full permitting and discretionary
    authority over PSD permits for the State of Alaska.
        Our members across Alaska, from resource developers to local
    communities, need to be able to rely on ADEC's decisions on air permits
    and to be able to proceed based on those decisions. The EPA Region X
    action at Red Dog is alarming because of the harm it may cause our
    members in planning for new or modified air permitting to meet their
    needs. The uncertainty or nullification of the State's PSD program
    would likely have adverse economic effects on Alaska. Permitees, unsure
    of the reliability of the State's process, will wonder if EPA's Seattle
    office can nullify a permit at any time, thus delaying projects until
    PSD authority has been defined.
        If EPA has the power to summarily overrule ADEC's permit decisions
    and demand additional measures beyond what has been determined
    sufficient by ADEC, then our members in effect would be forced to
    permit their projects a second time through EPA.
        Cominco Alaska and ADEC spent an exhaustive 18 months working on
    the permit for this engine, resulting in a determination that Low NOx
    Technology was Best Available Control Technology (BACT). Cominco Alaska
    even agreed to install Low NOx technology on all of the existing
    engines not requiring permits. In short, ADEC is requiring more Best
    Available Control Technology in this PSD permit on these engines than
    EPA or any other State has ever required on any other diesel
    generators.
        To develop the permit, Cominco Alaska and ADEC held meetings every
    other week for over a year. These discussions often centered on the
    Best Available Control Technology decision for the diesel-fired
    generators. Because Selective Catalytic Reduction (SCR) provided the
    greatest decrease in nitrogen oxides (NOx) emissions, ADEC
    staff strongly pursued determining SCR to be Best Available Control
    Technology for the Red Dog Mine diesel-fired generators.
        However, according to EPA guidelines, the Best Available Control
    technology determination is not solely based on pollution control
    efficiency, but must also consider energy, environmental, and economic
    factors. The selection of SCR for the Red Dog Mine would not have been
    similar or comparable, as required, to the economic imposition placed
    on other, recently permitted diesel-fired engines. In fact, with the
    exception of one demonstration unit, SCR has not been required on any
    diesel-fired engine in the United States except in areas where an
    ambient health standard is being exceeded.
        Cominco Alaska and ADEC noted that the cost of implementing SCR at
    the Red Dog Mine would be prohibitively expensive. Additional concerns
    related to the use of SCR at Red Dog include the loss of waste heat
    availability to provide building heat and the lack of a demonstration
    proving that SCR is reliable control technology for diesel-fired
    engines in an Arctic environment.
        Furthermore, the high cost of SCR was not justified because the
    predicted ambient nitrogen dioxide (NO2) impact was less
    than one third of the ambient air quality standard that was adopted to
    protect human health.
        As a result, ADEC determined Best Available Control Technology for
    the diesel-fired generators at the Red Dog Mine would be the Low NOx
    Technology. Prior to issuing a final permit, but after the public
    review process, EPA contacted ADEC to inform them that Region X
    objected to the determination. EPA also informed ADEC that it would
    issue an order against the State if ADEC did not change the
    determination to require SCR. Several months of discussion among EPA,
    ADEC and Cominco Alaska then followed. After this discussion, ADEC
    resumed the process of issuing the final permit because EPA had not
    convinced ADEC that SCR was justified. That final permit required Low
    NOx on the new engine and also required, through the voluntary
    agreement, Low NOx on all other existing powerhouse engines, bringing
    those engines up to current standards in pollution control technology.
        Just prior to issuance of the final permit, EPA issued an order
    prohibiting the issuance, or requiring retraction, of the permit unless
    SCR is implemented. ADEC, acting under their EPA-approved authority to
    use their own discretion in determining Best Available Control
    Technology, decided that EPA's order was not legally valid and issued
    the permit. In a written request, ADEC asked EPA to retract the order.
    EPA refused the request. ADEC then filed a petition for review with the
    U.S. Ninth Circuit Court of Appeals where the issue now resides.
        This issue is not only a battle between agencies on Clean Air Act
    jurisdiction, but it shows once again how a distant EPA region does not
    fully understand Alaska's circumstances. The Red Dog Mine sits in
    complete isolation, far removed from any community. It is not connected
    to Alaska's road system and there are no air quality concerns,
    especially given its location.
        In concluding, a specific Alaska region would allow EPA to work
    closer with Alaska regulators and other Federal agencies on many
    critical issues ranging from wetlands management to NPDES permitting.
    NPDES permits issued from an Alaska regional office would be more
    efficient and reduce the backlog of applications in Region X. While it
    would be wrong to imply that Region X is doing a poor job in respect to
    Alaska issues and concerns, Federal decision makers in Seattle and
    Washington are relatively insulated from Alaska realities. An Alaska
    region is a better option for implementing solutions that protect
    Alaska's environment while supporting the State's economy.
        Thank you for the opportunity to testify on the merits of
    establishing a separate EPA region for Alaska.
                                   __________
    Statement of Melanie L. Griffin, Director of Lands Protection Program,
                                  Sierra Club
        The Sierra Club is opposed to the bill, S. 1311, put forward by
    Senator Frank Murkowski (R-AK) to direct the Administrator of the
    Environmental Protection Agency (EPA) to establish a separate EPA
    region for the State of Alaska. While the idea of a separate Alaska EPA
    region may seem appropriate given Alaska's size and its distance from
    the contiguous United States, we believe that the proposal is neither
    cost-effective, nor equitable, nor necessary given the administrative
    structure already specially tailored to address the needs of our 49th
    State.
        The Sierra Club agrees that the great State of Alaska has unique
    and varied natural resources that deserve the highest level of
    protection. In fact, protecting the unparalleled landscapes of wild
    Alaska has long been a top priority for Sierra Club members. Because
    Alaska's abundant clean water and air are vulnerable to ever expanding
    oil and gas exploration and other extractive industries, we also agree
    that the State could benefit from additional on-the-ground personnel
    and oversight. However, the political environment in Alaska indicates
    that a new Alaska EPA region would not be in the public interest at
    this time.
        Establishing a new Alaska EPA region would be imprudent given the
    hostile attitude towards national environmental goals, policies, and
    regulations on the part of the majority of elected Alaska officials at
    the local, State, and national levels. In addition, numerous large and
    politically influential national and multi-national corporations
    involved in the exploration and development of Alaska's natural
    resources tend to oppose EPA policies and regulations in Alaska.
        To establish an Alaska EPA region under these circumstances would
    deprive Alaska EPA decision-making officials of the appropriate degree
    of insulation and protection from undue political pressure that they
    now have as part of the Northwest Regional Office. Northwest region
    officials, operating in a political setting where environmental
    protection enjoys widespread support among elected officials and the
    public, are able to support their Alaska colleagues as national
    policies and regulations are applied in Alaska. An Alaska regional
    office, cut-off from the EPA Northwest Region, would be more vulnerable
    than at present to direct pressure and interference by Alaska
    development interests and their elected supporters. EPA's mandate to
    protect the public health and environment in Alaska would be made more
    difficult.
        EPA has previously studied the proposal to create an 11th region
    for Alaska and determined that it was not cost effective. The Sierra
    Club believes that the tremendous costs involved in the establishment
    of a separate region are unwarranted. The proposal also raises
    questions as to fairness to other States, as the ranking member from
    Montana has raised in his own statements during the hearing.
        In the interest of protecting Alaska's abundant clean air and
    water, Congress should not agree to the proposed change in the existing
    EPA organizational structure.
        We recommend that no further action be taken on S. 1311.
        Thank you for considering our views.