Legislature(2003 - 2004)
03/01/2004 03:30 PM Senate RES
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 275-DEPT. OF ENVIRONMENTAL CONSERVATION FEES
CHAIR SCOTT OGAN announced SB 275 to be up for consideration.
MS. KRISTIN RYAN, Director, Division of Environmental Health,
Department of Environmental Conservation (DEC), said SB 275
allows DEC to recover the estimated cost of services provided
for the pesticide registration program to the seafood and food
safety laboratory services - PSP testing, in particular,
contingency plan review and financial responsibility for non-
crude oil operations. It also eliminates the prohibition on the
department to include travel costs and actual costs for services
and allows the department to add late fees and revoke permits
when companies do not pay for their services.
SENATOR WAGONER asked if the fees include any amortization of
the bonds that are going to be sold to build a new lab in
Anchorage.
MS. RYAN recalled that last year during bond discussions
legislators asked the department to increase fees to cover the
costs to construct the new seafood and food safety facility
along with the higher operating costs.
The work we do at the laboratory are the two areas [in
which] we have proposed to increase or charge fees for
services we haven't in the past. But, the bond bill
has already been completed and construction of the new
laboratory will start this spring. These fees would
offset the operating costs of the facility.
CHAIR OGAN asked if the bonds had been sold.
MS. RYAN replied yes.
SENATOR WAGONER asked Ms. Ryan if she had copies of
correspondence from the growers associations and various
aquaculture projects dealing with shellfish.
MS. RYAN replied that she has had some contact with Roger
Painter, in particular, and some other growers about the new
$125 PSP test fee.
SENATOR WAGONER said he was concerned that a lab was being built
that would put the shellfish growers out of business.
SENATOR SEEKINS asked what the fee is for testing pesticides
regarding page 2, line 14.
MS. RYAN replied that SB 275 proposes a $40 fee. Other states
charge $125 for similar services. The reason the department is
only charging $40 is because the intent is to offset the general
funds used in the pesticide program.
SENATOR ELTON asked if the department's goal is to offset the
general fund cost, did it use the same logic in setting the
proposed fee for PSP testing.
MS. RYAN replied:
That is a difficult question to answer. The fee that
we propose for PSP testing is related to the costs
associated with doing the test only. It is not
associated with necessarily offsetting other general
fund expenses at the laboratory.
SENATOR ELTON still wanted clarification on why the department
is not fully recovering the costs associated with the pesticide
program. He asked if it fears the fees would have too much of an
impact, but that it wants to fully recover the costs associated
with the PSP testing program.
MS. RYAN replied that the registration process is already
occurring and the general fund expenses to provide that service
are $69,000, which a fee of $40 completely covers.
SENATOR WAGONER asked what portion of the bond amortization the
fees would cover.
MS. RYAN replied that she would have to get back to him on that,
but amortization of the bonds is a portion of the increased
operating costs. The rent payments on the current facility are
similar to what the bond payback fees would be. However, the new
facility has increased electricity demands to operate the
equipment and, therefore, higher operating costs.
SENATOR SEEKINS asked where the refinery fits into the
hierarchy.
MS. RYAN replied that she can't respond to that part of the
legislation and would get back to him on that.
MR. EDMOND COLLAZZI, Program Coordinator, Division of Spill
Prevention and Response, DEC, explained that refineries were not
going to be charged since they handle crude oil coming in and
turn it into refined oil. "The fees are intended for the
handlers and transporters of refined oil, once it is refined."
MR. GARY ZAUGG, Pac Alaska (geoduck mariculture), said he is
against SB 275 unless the PSP testing fee is modified.
MR. TOM HENDERSON, Kake, said he is an oyster grower and a
member of the Alaska Shellfish Growers Association that opposes
the fees in SB 275. Saying, "The PSP testing fees would just
about kill every shellfish growing business in Alaska," he
contended that the industry is new and most growers aren't
making any money, yet. A quick look at a grower who is just
starting out reveals an investment of about $10,000 to $30,000.
An oyster farmer starts selling about 25 dozen oysters per week
and has to submit samples for two tests to be able to sell the
oysters - a total of $250. The grower probably gets $6 per dozen
net from the oysters - $150 in gross sales. Some growers would
end up paying $10,000 to $15,000 per year just for their
testing. Other growers who were also growing clams would pay up
to $25,000 a year. "Nobody in this state is making $25,000 per
year profit on their farm."
MR. HENDERSON said that he had been involved in growing for 10
years and has not started making a profit yet as far as income
tax is concerned. "I might survive, because I'm at the lowest
level of PSP testing." He noted that Alaska's fees are already
higher than any other state; it also has the highest rate of PSP
in the world with no public testing. The only testing that is
done is done on the farms. He related how farmers in Kachemak
Bay publicized high levels of PSP at one point and probably had
a positive impact on the public use of shellfish in that area.
SENATOR WAGONER asked if he currently paid the cost of
transporting samples for testing.
MR. HENDERSON replied that he does and sends them through the
post office express mail. It costs $13.50 per sample and takes
one and half to two days. Occasionally the sample arrives partly
decomposed, but it's always been good to use.
MR. ANDREW HACKMAN, Consumer Specialty Products Association
(CSPA), said he supports the $40 fee, but would like to see
clarification that would limit it to no more than $40 per
registration. He explained briefly that the association
represents manufacturers of antimicrobial products, like Mr.
Clean, which is considered a pesticide according to
federal/state law. It also represents products such as
insecticides and insect repellants like Off or Raid.
CHAIR OGAN asked if the association is based in Washington, D.C.
MR. HACKMAN indicated that is correct.
MR. ART KING, President, [Indisc.] Homeowner's Association on
Prince of Wales Island, said that having to pay for PSP testing
would discourage newcomers to the industry and cause some
existing farmers to fold.
MR. JOHN PUGH, [Indisc.] one of the largest growers in the state
on Prince of Wales Island, said he produces steamer clams and
oysters and sends out six PSP samples per week for seven months
a year and one sample a month for five months a year. He
estimated having to pay $25,500 per year if he had to pay $125
per sample. He has been in operation for four years and had
never been in the positive. "This would surely drive my business
into the ground."
MR. JIM WILD, Elfin Cove Oysters, said he had been operating
since 1994. Currently, he does two PSP samples per week in the
summer, which would cost $250 and another $20 for express mail.
He sells $600 to $1,000 worth of oysters and didn't think he
would be able to maintain if he had to pay the high testing
fees. He pointed out that he already pays $1,500 per year to the
Department of Natural Resources (DNR) for his five-acre lease
and suggested transferring some of that money over to the DEC
budget. All he gets for the lease is an annual envelope from DNR
asking for payment.
CHAIR OGAN said he would take his suggestion to the commissioner
of DNR.
MR. JEFF LONGRIDGE, Alaska Trollers Association, said he is also
a direct marketer and processor of fish on his vessel. He
restricted his comments to page 1 of SB 275. Currently, he pays
a standard fee for inspection of vessels based on the size of
the operation.
Modifying this bill to add travel costs to the permit
fee structure leaves us with a very uneven playing
field. We in the organization, and me personally, feel
that the fee structure should be set up on a statewide
basis and be a flat level playfield for all. When we
start including travel costs, we could have a very
wide disparity between someone who lived in a more
developed area and someone who lived in a more rural
area. That is an unfair situation.
SENATOR BEN STEVENS asked Ms. Ryan how the $125 was formulated
and how it relates to amortization of the bonds. Secondly, he
asked if any other system is set up where a user fee is tied
into the amortization of a state-owned asset. He felt this fee
goes to a new level.
CHAIR OGAN asked if he was concerned about the dedication of
funds issue.
SENATOR STEVENS, slightly outraged, replied:
Perhaps we should go to the Alaska Bar Association and
put a user fee on the retirement of every courthouse
bond that we have on the lawyers that walk through the
door.... We ought to be equitable and spread it across
everything.
MS. RYAN responded that she would provide him with the
calculation for the fees adding that the department was asked to
offset the costs of operating the lab regardless of the bond
payment. The staff doing the testing is paid for out of general
funds. The department is not looking for ways of paying off the
debt, but of keeping the lab operating and payment of the bonds
is part of that cost. The reason that PSP tests are targeted for
fees is because they are the largest quantity of testing, about
984 per year, submitted to the department.
SENATOR STEVENS cordially thanked her for the follow-up.
CHAIR OGAN held SB 275 for further work and adjourned the
meeting at 5:05 p.m.
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