04/12/2011 08:30 AM House FINANCE

HOUSE BILL NO. 89                                                                                                             
                                                                                                                                
     "An   Act  authorizing  the   commissioner  of   natural                                                                   
     resources  to offer  bedload material  for disposal  for                                                                   
     flood control  purposes in exchange for a  percentage of                                                                   
     the profit from the sale of that material."                                                                                
                                                                                                                                
10:12:02 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   PAUL   SEATON,    SPONSOR,   explained   the                                                                   
legislation.  He related that  the legislation authorized  an                                                                   
alternative  sale mechanism  for  certain  gravel, sand,  and                                                                   
rock associated  with flood plain problems or  disasters. The                                                                   
alternative  sale must  proceed in conjunction  with  a flood                                                                   
mitigation  plan. He  pointed  out that  the most  persistent                                                                   
problem was  the outflow of  river gravel and  sediments that                                                                   
built  up in  streambeds and  caused  overflow. The  overflow                                                                   
tended to  accumulate and  rechanneled  the river. The  water                                                                   
travelled  through  people's properties  causing  damage.  He                                                                   
expounded  that  current  law required  bedload  material  to                                                                   
sell  at  fair  market value.  The  legislation  allowed  the                                                                   
commissioner  of the  Department of  Natural Resources  (DNR)                                                                   
to consider  mitigation  of state disaster  expenses as  part                                                                   
of the fair  market value. The percent of  profit calculation                                                                   
was set  at a minimum of  12.5 percent. The material  was not                                                                   
a good  quality gravel  source  and not as  desirable on  the                                                                   
commercial   market.  The  bill   incentivized  removal   for                                                                   
commercial operators;  and enabled  the export of  the gravel                                                                   
from the problem  area. The gravel extractor  was required to                                                                   
have  an   extraction  plan   certified  by  a   professional                                                                   
engineer.                                                                                                                       
                                                                                                                                
10:16:10 AM                                                                                                                   
                                                                                                                                
Representative  Seaton  furthered   that  the  Department  of                                                                   
Transportation  and Public  Facilities  (DOT)  and DNR  would                                                                   
review the  plan for approval.  The review would  ensure safe                                                                   
material  extraction.  The idea  of  the legislation  was  to                                                                   
reduce a hazard  by encouraging safe elimination  of sediment                                                                   
buildup.  He recapped that  the bill  allowed an  alternative                                                                   
mechanism  for  valuing  extracted  gravel.  The  state  will                                                                   
still  receive  value  for  the   bedload  material  but  may                                                                   
consider the value removal offered for disaster mitigation.                                                                     
                                                                                                                                
Co-Chair  Thomas   supported  the  legislation.   He  favored                                                                   
allowing a  private entity  to remove  the gravel instead  of                                                                   
the  state.  He  discussed his  experience  with  gravel  and                                                                   
river  shifting.   He  asked  whether  salmon   streams  were                                                                   
protected.   Representative    Seaton   assured    that   the                                                                   
legislation  would not  preclude any Department  of Fish  and                                                                   
Game (DFG) or DEC processes and permitting.                                                                                     
                                                                                                                                
Representative  Neuman  inquired  about  the  destruction  of                                                                   
spawning  beds.   He  wanted  assurance  that   the  involved                                                                   
agencies  supported  the legislation.  Representative  Seaton                                                                   
repeated that  all permits  would remain  in place  under the                                                                   
legislation.   He  noted   that  the   state  was   currently                                                                   
authorized  to sell  bedload material.  The sale  based on  a                                                                   
gross  up-front  per  yard  fee   was  cost  prohibitive  for                                                                   
commercial operators.  The bill allowed the  alternative sale                                                                   
of bedload material at 12.5 percent of the profit.                                                                              
                                                                                                                                
10:20:29 AM                                                                                                                   
                                                                                                                                
Vice-chair Fairclough OPENED public testimony.                                                                                  
                                                                                                                                
Representative  Gara queried  whether the  bill would  reduce                                                                   
any  standards that  were required  to protect  habitat in  a                                                                   
fish stream.                                                                                                                    
                                                                                                                                
MARTY  PARSONS, DEPUTY  DIRECTOR,  DIVISION  OF MINING,  LAND                                                                   
AND   WATER,    DEPARTMENT   OF   NATURAL    RESOURCES   (via                                                                   
teleconference),responded  in the negative. He  reassured the                                                                   
committee  that  the  legislation  does not  reduce  any  DFG                                                                   
requirements.                                                                                                                   
                                                                                                                                
LARRY  DEVILBISS,  MAYOR,  MAT-SU BOROUGH,  voiced  that  the                                                                   
borough   supported   the  legislation.   He   believed   the                                                                   
legislation   would  help   mitigate   the  borough's   flood                                                                   
problems.                                                                                                                       
                                                                                                                                
Vice-chair Fairclough CLOSED public testimony.                                                                                  
                                                                                                                                
Representative  Guttenberg asked  about the cost  calculation                                                                   
for  extraction.  He  wondered  whether  the  extraction  was                                                                   
contracted  with  standard  calculations   or  site  specific                                                                   
calculated  costs.  Representative  Seaton replied  that  the                                                                   
sale calculations  were site specific. The bill  related very                                                                   
specifically  to  bedload  material extracted  due  to  flood                                                                   
mitigation.  Representative Guttenberg  related a problem  in                                                                   
his district that  led to competition between  two commercial                                                                   
entities  extracting  gravel.   The  business  that  operated                                                                   
under state  permits extracted gravel at  significantly lower                                                                   
costs than the private entity.                                                                                                  
                                                                                                                                
Vice-chair  Fairclough  asked whether  the  bedload sale  was                                                                   
competitive.   Representative   Seaton  replied   that   both                                                                   
competitive  and  non-competitive  sales were  allowed  under                                                                   
current law.                                                                                                                    
                                                                                                                                
10:26:08 AM                                                                                                                   
                                                                                                                                
Co-Chair Stoltze  did not  believe the legislation  presented                                                                   
a loss of  revenue for the state.  He thought that  HB 89 was                                                                   
a  win-win  situation.  The  legislation  provided  important                                                                   
flood mitigation and incentives for private operators.                                                                          
                                                                                                                                
Co-Chair  Stoltze  MOVED to  report  CS HB  89  (RES) out  of                                                                   
committee   with    individual   recommendations    and   the                                                                   
accompanying new fiscal notes.                                                                                                  
                                                                                                                                
CS  HB 89  (RES) was  REPORTED out  of committee  with a  "do                                                                   
pass"  recommendation  and with  one new  indeterminate  note                                                                   
from   the  Department   of   Transportation   and  one   new                                                                   
indeterminate   note   from   the   Department   of   Natural                                                                   
Resources.