This photo shows the Alaska State Capitol where lawmakers have been briefed on a plan state regulators say will allow more flexibility that benefits both businesses and the environment in “Alaska’s unique conditions.” However, some senators expressed skepticism over efforts to take over what are known as “Clean Water Act Section 404” permits. (Peter Segall / Juneau Empire File)

This photo shows the Alaska State Capitol where lawmakers have been briefed on a plan state regulators say will allow more flexibility that benefits both businesses and the environment in “Alaska’s unique conditions.” However, some senators expressed skepticism over efforts to take over what are known as “Clean Water Act Section 404” permits. (Peter Segall / Juneau Empire File)

Alaska seeking a 404 redirect for wetlands development

State wants to take over permitting control from feds, but costs and murky legal questions linger.

A massive change in Alaska’s development rules, where the state rather than the federal government decides if companies can dredge and fill wetlands and waterways for projects, is facing something of a “404” glitch that has nothing to do with a broken website (although the state’s FAQ page for the topic is indeed blank).

State regulators say that taking over what are known as “Clean Water Act Section 404” permits will allow more flexibility that benefits both businesses and the environment in “Alaska’s unique conditions.” Most construction, resource and community development projects require such 404 permits, and regulators hope the state could take over up to 75% of them beginning in 2024.

But since almost every other state is opting against such control, the question is if Gov. Mike Dunleavy’s administration is pitching only the positive aspects while ignoring the drawbacks — such as $5 million in annual costs and murky rules that allow the federal government to retain the ability to overrule the state’s decisions.

A detailed overview of Alaska’s possible takeover has been presented to legislators this session, based on a feasibility study the state Department of Environmental Conservation was asked during last year’s session to conduct. The 404 permits involving projects where dredged or fill material is discharged into what are officially classified as “Waters of the United States” are currently issued by the U.S. Army Corps of Engineers, which considers about 775 cases annually in the state.

Shannon Miller, the DEC’s program manager, told the Senate Resources Committee last Monday that Alaska has two-thirds of the country’s wetlands, with 174 million acres representing 43% of Alaska’s surface area. Such terrain includes tundra, permafrost, marshes and bogs. Less than 0.1% have been developed to date.

“We need to be able to focus in on a program that is written and built for Alaska,” Miller said.

The federal government would retain authority for permits affecting oceans, tidally influenced wetlands, and navigable rivers and lakes.

Such a takeover was approved by the Legislature in 2013, but abandoned after oil prices plummeted.

Dunleavy is requesting nearly $5 million in next year’s budget to begin implementing the takeover, and expects it will cost about that much for 32 employees to administer the program annually. The Army Corps in Alaska has about 50 regulators and an $8.5 million annual budget for wetlands permitting.

State DEC officials said they plan to submit an application for the takeover to the U.S. Environmental Protection Agency at the beginning of 2025 in the hope of getting approval later that year.

While a primary intent of state control is streamlining the permitting process compared to the EPA, DEC Commissioner Jason Brune said state regulations would need to be at least as strong as the federal agency’s — but could be adapted so they are more suited to Alaska’s geography.

“Permittees are required to compensate for unavoidable impacts to wetlands,” he wrote in an introduction in the feasibility study. “We will have the opportunity to provide compensatory mitigation options that are presently not utilized and veer from the federal focus of restoring damaged wetlands, creating new wetlands, or putting lands into perpetual conservation easements as their primary mitigation options.”

Nearly 90% of Alaska’s wetlands already have protected status and there are few in need of restoration, Brune noted.

“In short, the existing federal tools provided for mitigation do not maximize environmental benefit to Alaska,” he wrote. More flexible state regulation, for instance, “could allow project developers to remediate contaminated sites that affect water quality in the watersheds of their activities.”

But the credibility of the analysis was questioned by some senators who noted the feasibility study authors declared their purpose was to show legislators the advantage of a state takeover rather than an objective analysis.

“I think as a Legislature we want to know the whole picture,” Sen. Bill Wielechowski, an Anchorage Democrat, told Dunleavy administration officials during Monday’s meeting. “The pros, the cons, whether this is something good to go forward with, whether or not this is a financial black hole, which I think is probably a big reason why 47 other states haven’t assumed this is because it just takes an enormous bureaucracy to administer this program.”

Miller said the intent language was vague when legislators approved the study last year, and those conducting the study were directed to assume a takeover would happen and thus assess how to do so. She also noted challenges the state will need to address are specified in the report, along with how other states have assessed such permitting authority.

Wielechowski, during an initial hearing on the same issue a few weeks ago, also noted Alaska has far more wetlands and far fewer staff to provide oversight than the three states — Florida, New Jersey and Michigan — that have taken over control of some 404 permitting. Brune, in response, said DEC’s hope is user fees from developers would cover some funding needs and efforts to have the federal government provide some money are being made by multiple states.

The DEC commissioner also said regulations related to 404 permits have changed during the past three administrations, with the most recent change in January expanding areas subject to such control.

“Lands that will be subjected to 404 permits will only be increasing,” Brune wrote in his introduction to the study. “It’s the ideal time for Alaska to take this step.”

But even if Alaska’s takeover occurs, the EPA still has oversight, said Julie Pack, an assistant attorney general for the Alaska Department of Law. She said the EPA gets a copy of every permit and regulatory activity, and state must submit an annual audit, and the EPA and other federal agencies have up to 90 days to object.

That objection period raised more concerns for Wielechowski, who asked if developers essentially are forced to put their projects on hold for up to three months.

“That’s potentially a whole development season depending on when it’s filed,” he said.

Pack said there are only a handful of legal cases involving such situations so far, so the effect of the waiting period isn’t clear. That legal uncertainty extends to other issues that in some cases are largely unique to Alaska, such as whether permafrost is classified as wetlands since that has fluctuated along with the broader definition of regulated waters in recent years. Currently such frozen terrain are not considered wetlands.

Sen. Scott Kawasaki, a Fairbanks Democrat, asked Pack what happens if the EPA alters its position yet again.

“Would that suddenly mean the state would be on the hook to permit those activities instead of the EPA doing it?” he asked.

It’s unknown if the EPA could legally take such action without a notice and comment period, Pack said. The state would likely get into legal disputes at that point, which “triggers a lot of follow-up questions that are hard to speculate on at this point.”

Possibly the biggest legal dispute in the state vs. federal regulatory question involving 404 permits is awaiting a ruling from the U.S. Supreme Court, which last October heard arguments in Sackett v. U.S. Environmental Protection Agency. The key issue, based on a dispute involving the construction of a home by an Idaho couple, is federal authority under the scope of the Clean Water Act and whether wetlands are “Waters of the United States” regulated by the act.

• Contact reporter Mark Sabbatini at mark.sabbatini@juneauempire.com

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