Legislature(2003 - 2004)
03/01/2004 03:30 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.