Legislature(1999 - 2000)
02/22/2000 01:45 PM House FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
February 22, 2000
1:45 P.M.
TAPE HFC 00 - 37, Side 1.
TAPE HFC 00 - 37, Side 2.
TAPE HFC 00 - 38, Side 1.
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 1:45 P.M.
PRESENT
Co-Chair Therriault Representative Williams
Co-Chair Mulder Representative Grussendorf
Representative Bunde Representative Moses
Representative G. Davis Representative Phillips
Representative J. Davies
Representative Austerman and Representative Foster were not
present for the meeting.
ALSO PRESENT
Mike Tibbles, Staff, Representative Gene Therriault; Janice
Adair, Director, Division of Environmental Health,
Department of Environmental Conservation; Jon Tillinghast,
Attorney, Sealaska Corporation, Juneau; Ken Freeman,
Executive Director, Resource Development Council (RDC),
Anchorage; Steven Daugherty, Assistant Attorney General,
Department of Law; Carol Carroll, Director, Division of
Administrative Services, Department of Natural Resources;
Pamela LaBolle, President, Alaska State Chamber of Commerce;
Tadd Owen, Project Coordinator, Resource Development Council
(RDC), Anchorage; Richard LeFebvre, Deputy Director,
Division of Mining, Land and Water, Department of Natural
Resources.
TESTIFIED VIA TELECONFERENCE
Robert Stiles, Senior Vice President, Executive Committee,
Resource Development Council (RDC), Anchorage; Charlotte
MacCay, Senior Administrator, Environmental and Regulatory
Affairs, Council of Producers, Anchorage; Charlie Boddy,
Vice President, Governmental Relations, USIBELLI Coal Mine,
Fairbanks; Richard LeFebvre, Deputy Director, Division of
Mining, Land and Water, Department of Natural Resources.
SUMMARY
HB 361 An Act relating to charges for state services;
requiring that fees levied by resource agencies
for designated regulatory services be based on the
actual and reasonable direct cost of providing the
services, except in the case of certain negotiated
or fixed fees; relating to negotiated or fixed
fees of resource agencies; relating to invoices
for designated regulatory services; establishing a
petition process regarding fees charged by
resource agencies for regulatory services; and
providing for an effective date.
HB 361 was HEARD and HELD in Committee.
HOUSE BILL NO. 361
An Act relating to charges for state services;
requiring that fees levied by resource agencies for
designated regulatory services be based on the actual
and reasonable direct cost of providing the services,
except in the case of certain negotiated or fixed fees;
relating to negotiated or fixed fees of resource
agencies; relating to invoices for designated
regulatory services; establishing a petition process
regarding fees charged by resource agencies for
regulatory services; and providing for an effective
date.
Co-Chair Therriault explained that for many years, the
Legislature has debated the issue of appropriate fees for
permits provided by the State's resource agencies,
particularly the Department of Environmental Conservation.
While policy direction has been given through the
appropriation process, budgetary authorization for the
collection and expenditure of program receipts has failed to
address two primary questions. Co-Chair Therriault asked
what was the appropriate level of fees to be assessed for
various services. Additionally, he questioned how could the
Department be held accountable for delivering the services
being charged for in an efficient manner.
Co-Chair Therriault noted that several years ago, the House
Finance Committee (HFC) attempted to provide statutory
direction for State agency permitting fees through an
amendment to HB 144. Initially, the language was found to
be too broad in the application. The bill did pass both the
House and Senate. However, the bill failed to return to the
House for a concurrent vote on the final day of session.
That process generated two important outcomes:
? Identified the need for industry-wide consensus
and discussions among the public and private
sector entities; and
? Determined that regulatory efficiency and permit
streamlining could be accomplished in relatively
small increments.
Co-Chair Therriault noted that HB 361 includes the following
provisions:
? Requires fees levied by a resource agency for a
"designated regulatory service" to be based on the
actual and reasonable direct cost of providing the
service.
? Requires each resource agency to establish a
schedule of fixed fees for "standard designated
regulatory services". Those services include
simple repetitive permitting activities.
? Requires a resource agency to make an effort to
negotiate a reimbursable service agreement for
charges being levied on a time and expense basis.
? Requires a resource agency providing a "designated
regulatory service" to employ a uniform accounting
and invoicing system. Detailed monthly invoices
are required for fees charged on a time and
expense basis. A permittee may appeal the merit
of any invoice to the Office of Management and
Budget (OMB).
? Provides that a person requiring a "designated
regulatory service" many petition a resource
agency to amend or supplement an existing schedule
of fixed fees or establish a fixed fee for a new
category of service.
? Provides that a person requiring more than one
regulatory service may petition an agency or
agencies involved for a single project fee.
MIKE TIBBLES, STAFF, REPRESENTATIVE GENE THERRIAULT,
provided a brief overview of the legislation. He reiterated
comments made by Co-Chair Therriault. He commented that the
scope of HB 144, previous legislation had been too broad,
which was a part of the problem, as regulatory services were
attempted to be defined as services that could be charged
for. Mr. Tibbles pointed out that HB 361 would provide a
more focused group of regulatory services. The intent has
been to establish a model which will work on those services.
Mr. Tibbles pointed out three provisions contained within HB
361 addressing the fee structure:
? The bill would require each department to
establish fixed fees;
? The bill would allow a permittee to negotiate fees
on complicated situations with each department;
and
? Should negotiations fall short, the fees for
service would be based on the actual time and
expense.
Mr. Tibbles continued that the bill does require that
agencies establish a uniform accounting system. The bill
provides an avenue for appeal if the permittee believes that
the invoice is not based on the actual direct costs.
Additionally, the bill will provide an avenue for industry
to petition the departments for modifications or additions
to the list of fixed fees.
Representative Phillips referenced "fixed fees" and asked if
a citizen would be able to appeal that concern. Mr. Tibbles
explained that there was a provision contained in the
legislation which allows for fixed fees to be adopted in
regulation. Representative Phillips inquired if the citizen
would know that ahead of time. Co-Chair Therriault replied
that it would go through a normal regulatory process and
would allow for public comment.
In regards to the "fixed fee" process, Representative
Phillips asked if there was a time frame for how long an
agency could take to issue a permit. Mr. Tibbles responded
that for a service, the applicant would not experience a set
deadline. He added that there are guidelines for the fixed
fees and that the amount can not exceed $250 dollars unless
it represents the average actual direct costs incurred.
Representative J. Davies commented that would be an area of
accountability, and recommended that it be discussed during
the missions and measures overview. Co-Chair Therriault
agreed that area could be negotiable. Representative
Phillips interjected that only the fixed fee portion should
be limited so that the Department be required to respond
within a specified time.
Vice Chair Bunde commented that "timeliness" could be
encouraged by a decreased fee. Representative J. Davies
voiced caution creating an unreasonable time frame. He
thought it would be better for the Legislature to monitor
it.
ROBERT STILES, SENIOR VICE PRESIDENT, EXECUTIVE COMMITTEE,
RESOURCE DEVELOPMENT CORPORATION (RDC), ANCHORAGE,
(TESTIFIED VIA TELECONFERNCED), testified in support of the
proposed legislation. The legislation would result in
creating accountable and predictable results in terms of
costs for regulatory services. He stressed that the bill has
accomplished that. For those services that are simple and
straightforward, the departments should establish a fixed
fee.
Mr. Stiles noted that there are some circumstances with more
complex conditions regarding the permit scope. In that
situation, it can be difficult to determine fees. Mr. Stiles
reported that usually the department should use a time and
expense base. He suggested that if the fixed fee were $250
dollars or less, the agency would not have to make a showing
of the relationship between the fee and the cost of
processing the fee.
Mr. Stiles encouraged Committee members to move the bill.
He suggested that the bill would be a good "start" in the
right direction and that there are recommendations that fit
to work the "kinks" out of the current system.
KEN FREEMAN, EXECUTIVE DIRECTOR, RESOURCE DEVELOPMENT
COUNCIL (RDC), ANCHORAGE, expressed strong support of the
bill and urged that it move from Committee.
Mr. Freeman noted that RDC is a statewide, member-funded,
non-profit trade association. The organization's mission is
to grow Alaska's economy through the responsible development
of the State's natural resources. RDC's membership includes
individuals and leading companies from all of Alaska's
industries such as mining, oil & gas, fisheries, timber and
tourism. RDC also represents all thirteen Regional Native
corporations, organized labor, industry support companies
and several local communities.
Mr. Freeman advised that in January 1999, RDC was tasked
with building an industry-wide consensus on legislation
designed to deal with State agency permit fees. Sealaska
Corporation had taken an earlier lead on the issue with a
draft bill known as the "Permittee Bill of Rights." The
concepts articulated in the "Permittee Bill of Rights"
served as the starting point for the RDC work group's
subsequent discussions.
Mr. Freeman noted that while industry recognizes its
responsibility to pay for the services it receives, the
issue of allocating program costs between the public and the
regulated community remains unresolved. He commented that
RDC applauds the Legislature for its past involvement in the
issue.
Mr. Freeman advised that from January through July 1999, the
group worked to develop consensus points regarding State
agency permit fees and to draft legislation based on the
consensus. Throughout the development stage, the fees group
worked closely with Commissioner Brown and Barbara Frank of
the Department of Environmental Conservation.
Mr. Freeman pointed out that HB 361 would accomplish several
important objectives.
? It requires the resource agencies to establish a
schedule of fixed fees for relatively simple and
repetitive regulatory activities. Those fees must
be based on the actual and reasonable direct cost
of providing the service and cannot include
additional charges such as program overhead. That
change is important for two reasons, as it would
provide the regulated community with more
predictability in determining the costs to permit
an activity. Additionally, it would ensure the
person requiring a designated regulatory service
would only pay for the costs associated directly
with providing that service.
? Recognizing that not all services provided by the
resource agencies lend themselves to fixed fees,
the bill directs the resource agencies to enter
into negotiations with any person requiring a
service to determine the costs of the complex or
controversial permitting activities. In the event
that negotiations are unsuccessful, the bill would
require the agency to bill on a strict time and
expenses basis for the work.
? The bill would provide the regulated community
with flexibility through a petition process.
Petitions may be used to request that the agency
supplement its schedule of fixed fees, they may be
used to create a fixed fee for an activity
specific to a distinct economic sector, and they
may be used to request a single project fee for an
activity requiring multiple permits.
? The bill would require that any resource agency
providing a designated regulatory service
establish a uniform accounting system capable of
producing an auditable invoice. Services billed on
a time and expenses basis will require monthly
invoices. Some negotiated fees would also
incorporate the use of invoices.
? The bill is written to encompass all of the
resource agencies, Department of Natural
Resources, Department of Fish and Game, and
Department of Environmental Conservation.
Currently, the only programs included in the bill,
fall under Department of Environmental
Conservation. At this time, Department of Fish and
Game does not have fee-charging authority and the
Department of Natural Resources has already
accomplished much of the work required by HB 361.
Also, the bill does not grant any new fee-charging
power, rather it restructures the manner in which
fees can be constructed and billed.
In conclusion, Mr. Freeman stressed the positive working
relationship the group has had with both the Legislature and
Department of Environmental Conservation. He added that the
legislation is an appropriate step toward fulfilling
Alaska's promise on "being open and ready for business".
Co-Chair Therriault requested further clarification of the
"petition process". Mr. Freeman explained that element
exists for future activities involving fixed fees. The
petition process allows industry to ask the agency to put
together a specific "fixed fee".
TADD OWEN, PROJECT COORDINATOR, RESOURCE DEVELOPMENT COUNCIL
(RDC), ANCHORAGE, added that possibilities exist once the
bill has passed that could be beneficial for the regulating
committee to supplement the list of fixed fees. He pointed
out that an example of such activity would be that on the
North Slope.
Co-Chair Therriault asked if the petition process could
"kick off" the regulatory process, at which time, the
Department could add another fee to the list. Mr. Owen
explained that it was the intent to allow the regulatory
committee to approach the Department with a request for
supplemental fixed fees. The Department would have the
authority to make that change.
Representative Phillips asked if it was the intent of the
committee that when applying for a specific permit, that the
qualifiers granted a fixed fee would be able to purchase the
permit at that time. Mr. Freeman replied that the process
should be fast. There is no language in the bill that
specifically addresses the timeline issue.
Representative G. Davis questioned if this program was
currently working well for Department of Natural Resources.
Mr. Freeman replied that for the most part, the fixed fee
concept has been working for that Department. He added that
it is anticipated that the fixed fee process will provide a
good template for Department of Environmental Conservation.
CHARLOTTE MACCAY, SENIOR ADMINISTRATOR, COUNCIL OF
PRODUCERS, ANCHORAGE, (TESTIFIED VIA ELECONFERENCE),
testified that the Council of Alaska Producers (the Council)
is an association representing companies involved in
exploration, development and active operation of hard rock
mines in Alaska.
The Council shares the concerns slated in the recent
"Minerals Commission Report" regarding companies inability
to acquire environmental permits in a consistent,
expeditious fashion. She agreed that industry does have a
responsibility to fund a substantial portion of the
environmental permitting program. The Council supports HB
361 as a vehicle to enable the Department of Environmental
Conservation to collect permitting fees in a structured,
accountable and equitable manner.
Ms. MacCay pointed out that RDC has been actively involved
in the drafting of the proposed legislation. She indicated
that the bill has provided a means for fair and accountable
invoicing to the applicant. The bill would incorporate and
encourage fixed fees representing predictable funding for
the applicants as welt as decreased administrative and
accounting costs to the agencies.
Ms. MacCay advised that the bill would also provide for
negotiated fee agreements when projects involve complex
permit components or extra review and evaluation. Ms. MacCay
stated that HB 361 would provide a strong framework for
assessing fees in support of environmental permitting.
Ms. MacCay noted that permit fees alone cannot adequately
fund the State's permitting programs, nor can they provide
program continuity throughout the "boom and bust"
fluctuations associated with resource development. HB 361
cannot be adopted in isolation. She stressed that the bill
does need to pass, and that industry needs to continue its
financial support of the environmental permitting programs.
Ms. MacCay recommended that the Legislature, the
Administration, and the public must acknowledge that when
industry experiences a decline, the funding could dry up.
She emphasized that the agency cannot attract or maintain
qualified and experienced personnel in jobs that offer no
stability.
The Council proposes the following actions for the
maintenance of environmental permitting programs in Alaska.
? Industry must pay its fair portion of permitting
costs as regulated under HB 361.
? The Legislature must provide consistent year to
year funding to support a core group of
experienced permitting managers.
? The Administration must aggressively search for
and find means to accommodate the use of third
party contractors who will work under the core
managers to provide permit development support on
an as needed basis.
Ms. MacCay concluded that the Council believes that we all
can work together to provide a responsible and reliable
environmental permitting plan for the State of Alaska,
ensuring protection of the environment and a sound economic
future.
Representative Grussendorf asked if Ms. MacCay was speaking
in support of the Department of Environmental Conservation
continuing to provide for the permitting. Ms. MacCay
replied that fees need to be paid and supported, however,
that alone is not adequate and that the Legislature needs to
continue to provide funding for the core work of permitting.
CHARLIE BODDY, VICE PRESIDENT, GOVERNMENTAL RELATIONS,
USIBELLI COAL MINE, FAIRBANKS, (TESTIFIED VIA
TELECONFERENCED), spoke in support for HB 361. He stated
that in the State resource industry, there is an expectation
that there is a "level playing field" and that those rules
apply to all endeavors. Mr. Boddy suggested that HB 361
would create a catalyst for a fairer fee approach.
In conclusion, Mr. Boddy responded to Representative
Phillips comment regarding the fixed fee permit. He
explained that he understood the fixed fee permit process
would allow for the industry represented to complete the
necessary work and would then be able to leave with a permit
in hand. He hoped that this goal could be reached.
Representative J. Davies advised that Subsection C indicates
the possibility that permits could be larger than that. He
suggested that type permit could be more complicated and
could take a longer turn-around. Mr. Boddy agreed, but
noted that most permits are easy to issue.
JON TILLINGHAST, ATTORNEY, SEALASKA CORPORATION, JUNEAU,
testified in support of HB 361. He commented that Sealaska
Corporation appreciates the opportunity to add its support
to the legislation. On behalf of the 18,000 Alaska Native
shareholders, Sealaska engages in an array of economic
activity that is in nearly constant need of a variety of
environmental permits. Sealaska is asked to pay fees for all
the permits, making them a front-line stakeholder in the
debate.
Mr. Tillinghast pointed out that Sealaska has worked hard
with RDC in the private sector and with the Department of
Environmental Conservation to develop a policy towards
regulatory fees that both:
? Provides a system of checks and balances; and
? Equitably shares the burden of regulation between
the public and private sectors.
Co-Chair Therriault asked about the language on Page 5,
Lines 27-28. Mr. Tillinghast responded that verbiage
represents final agency action. He believed that if a
person felt strongly enough, they would be able to take DEC
to court over it. The Department of Environmental
Conservation is under mandatory, statutory duty to make that
a standard regulatory service.
Representative J. Davies asked in the intent of creating the
bill was the fiscal impact of developing the regulatory
process. Mr. Tillinghast replied that had been addressed
"in passing". He believed that these were not complicated
regulations. He did not know if the Department had included
any funding for that in the fiscal note.
(TAPE CHANGE HFC 00 - 37, Side 2)
Representative G. Davis asked for an example of a simple
permit. Mr. Tillinghast commented that permitting for solid
waste facilities called mono-fills that contain only a
single kind of waste is frequent and simple. That
permitting could be provided with a standard condition fixed
fee. Representative G. Davis inquired the length of time
such a permit would be issued for. Mr. Tillinghast did not
know.
Mr. Tillinghast commented that there are two extremes in the
debate, neither of which Sealaska supports. On the one hand,
some maintain that the private sector brought environmental
regulations upon itself, and should resultantly pay its
entire cost. The other argues that environmental regulation
is not done for the private sector, but rather to the
private sector, and exists for public policy reasons for
which the benefited public ought to pay the full cost.
Mr. Tillinghast commented that the reality lies somewhere in
between. He believed that the middle ground would be HB
361. The legislation assures that the applicant would
shoulder the direct cost of individual permit processing,
while overhead and general administrative costs would be
charged to the public at large. The legislation would split
the tab. It would require the overall administration of
environmental regulations to compete with other programs for
public funding. But at the same time, it will guarantee that
the cost of government will not incrementally increase
because of requirements.
Mr. Tillinghast added that the bill would introduce a
concept that is nearly universal in the private sector, time
and expense invoicing. When a company is billed for a
service, even a regulatory service, it has a right to know
what it is being charged for. Disclosure, moreover,
encourages efficiency in those who render the invoice,
because it will be possible to assess whether the amount
charged was reasonable.
Mr. Tillinghast stated that the legislation provides
Department of Environmental Conservation with flexibility in
the billing practices. The Department of Environmental
Conservation can negotiate a fee. As a practical matter,
that option is likely to be used only in complex or unusual
permitting situations. Conversely, Mr. Tillinghast doubted
that it would be used to lower fees beyond those otherwise
chargeable under the bill, because the Department would say
"no".
Mr. Tillinghast stressed that the bill does not require the
Department of Environmental Conservation to engage in
prolonged negotiations, and it does not require the agency
to reach an agreement with the applicant. Additionally, the
department is authorized to establish fixed fees for more
routine permits, avoiding the time and expense of invoicing
and cost tracking.
Mr. Tillinghast pointed out that HB 361 is important because
our "tightening fiscal environment" has created increased
pressure to "misappropriate" the regulatory fee concept. It
then becomes "taxation" in disguise. He stated that was
"bad policy and bad law".
Mr. Tillinghast noted that HB 361 was purposefully drafted
so that it could serve as a template for other agencies, if
and when they are authorized to charge significant
regulatory fees. It is therefore meant as a statement of
policy and not a commentary on any particular State agency.
Representative J. Davies asked for Mr. Tillinghast to
reiterate how the fees must relate only to the service and
then how the overhead would be raised through the general
fund. Mr. Tillinghast noted that there are interesting
federal case laws striking down agency fees that have
attempted to capture overhead and administrative costs.
Co-Chair Therriault referenced the Department of Law fiscal
note and that Department's need to appeal to the Office of
Management and Budget (OMB). Mr. Tillinghast disagreed that
the either DEC or OMB would have the authority to write
regulations to keep appeals under control. He stated that
the only time the OMB review process would cost the public
money is if the applicant wins and the State loses. Unless
the Department of Law presumes that the Department of
Environmental Conservation is going to lose a lot of
appeals, it should not cost much money.
Co-Chair Therriault asked if the Department currently has
statutory authority to establish regulations to appeal the
process and if the language contained in Subsection c was
all that was required for that directive. Mr. Tillinghast
noted that most agencies are given whatever authority
necessary to write regulations to carry out all functions.
STEVEN DAUGHERTY, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF
LAW, focused his comments on the potential legal problems
identified by the Department of Law in the legislation. He
spoke to the anticipated costs to the Department of Law. He
indicated that HB 361 would require a lot of regulations.
There is the possibility that it would increase current
regulations by 500 pages, as it would change costs and fees
as well as the number of people petitioning for new
regulations. Additionally, the Department sees potential
for litigation. Mr. Daugherty noted whenever a bill is
submitted, there exists a tremendous need for program
review. He warned that the legislation would not be cost
effective, as there will be many litigants not represented
by Council.
Co-Chair Therriault asked if being responsible for picking
up the costs could deter that. Mr. Daughtery acknowledged
that was a possibility, however, he noted that rarely do
people anticipate the possibility of loosing. Co-Chair
Therriault asked about the litigation expense incurred
during the public process comment period. Mr. Daugherty
replied that most litigation would not result from the
regulations but rather through the billing requirements and
the appeal decisions.
Mr. Daugherty identified the Department of Law's specific
areas of concern.
? The definition of the "actual and reasonable
direct costs" would be difficult to determine.
? The negotiation of contractual reimbursable
service agreements and the provision that would
make them enforceable contracts. In the past,
they were "gentlemen's agreements". He noted that
the contract should be either a standard contract
or otherwise the Department would be responsible
to review them individually.
Representative J. Davies asked Mr. Daugherty to identify the
site under which the Department anticipates problems. Mr.
Daugherty pointed out that the language "actual and
reasonable direct costs" occurs throughout the legislation
and is defined on Page 6, Item #1. He acknowledged that
language has specific problems which he would address later
in his testimony.
? Provisions requiring Department of Environmental
Conservation to adopt industry and geographically
specific regulations establishing fixed fees. He
noted that would create high costs.
? Billing procedure requires sufficient detail to
determine if the time and the cost is a reasonable
direct cost. That information is very important
in the first year and it would lead to litigation
during that time.
? Any provision requiring appeals to the Office of
Management and Budget (OMB). The legislation
fails to incorporate procedures for OMB to adopt
regulations to establish appeal procedures. Mr.
Daugherty pointed out that under current law, the
normal process for appealing a contract dispute
would be to go through Administrative Services.
There already exist statutes for going through
that agency.
? The provision regarding regulatory services is too
broad. He stated that the way the language is
currently written in the bill, it could include
any regulatory service provided by an agency. He
surmised that agencies would not be given
sufficient discretion. There could be potential
for unintended consequences in requiring the
agency to adopt regulations.
? Voiced concern with the definition of the "actual
and reasonable costs". Specific concerns are with
the exclusion of interagency charges, Page 6, Line
13. That language does not allow covering for
costs not directly related to Department of
Environmental Conservation. If an agency needed
advice, they would be under pressure to go to a
third party contractor to provide it. The
Department expects an increase in requests for
outside Council.
? Highlighted Page 6, Section (G). Mr. Daugherty
noted that the Department foresaw a lot of
litigation resulting from that language. It will
be very expensive litigation, as they will have to
hire private firms to determine what the
background of the employees is as well as the
duties and education. Additionally, there might
not be any analogous services in the private
sector.
Mr. Daugherty noted these are potential problems for
increased personnel action in grievance situations resulting
from the above-mentioned provision. He pointed out that the
costs are not listed in the fiscal notes, as they are
speculative.
Representative Grussendorf asked if the Department's fiscal
note reflected the concerns listed in Mr. Daugherty's
testimony. Mr. Daugherty recommended that the concerns
should be addressed throughout the bill. He acknowledged
that the fiscal note was conservative and that if the bill
was not cleaned up, the costs would be higher.
Representative Phillips asked if the Department of Law had
been part of the working group. Mr. Daugherty replied that
they had not been.
Mr. Duagherty, referenced the definition of "standard
designated services", Page 8, Lines 9-11 and commented that
the examples were too broad and should not all be included.
Additionally, the Department views the petition process as
unnecessary. People already have that opportunity. Co-
Chair Therriault asked if the language "shall" adopt was the
differentiating factor. Mr. Daugherty agreed that was the
only difference, as the bill "would" require the agency to
adopt the provision. Under the Administrative Procedures
Act (APA), it would have to be determined whether to put it
out to public notice. It would need to be scheduled within
thirty days, although, the actual hearing could be three
months down the line.
Representative Grussendorf pointed out that there has not
been a fiscal note included for OMB for the work they would
be responsible for handling. Mr. Daugherty commented that
he did not know the contract provisions, but had reviewed
the regulations, and that the Department of Law believes
that the existing statutes and regulations would be
available for that type of dispute.
Representative Grussendorf asked if OMB had submitted a
fiscal note. Co-Chair Therriault responded that a separate
fiscal note from OMB had not been submitted.
CAROL CARROLL, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF NATURAL RESOURCES, spoke to the
Department of Natural Resource fee process. Most of the
fees for the Department are based on use of some type of
State asset. Most of these fees require not only an
application fee but also a renting type fee. There are some
regulatory fees such as the joint pipeline office.
Co-Chair Therriault commented that the legislation is
somewhat restricted to DEC fees. Ms. Carroll voiced concern
that the Department of Natural Resources is not "swept into"
the legislation.
Ms. Carroll spoke to the fixed fee process. She stated that
most of the fixed fees received by the Department of Natural
Resources are under $250 dollars and are based on some kind
of use for State land. She emphasized that the Department
wants to be sure that when the State land is rented, that it
is recognized that it is not a regulatory fee associated
with it.
Co-Chair Therriault asked what would happen if someone
thought the fee was too high. Ms. Carroll stated that people
could currently petition to have the regulations changed.
Co-Chair Therriault asked if the fees had ever been
challenged. Ms. Carroll did not know. She noted that Mr.
LeFebvre was on line to answer questions of that sort.
Ms. Carroll concluded that in the mining section, public
notice makes for a more successful permitting process. She
stated that to exclude public notice would not be a good
idea.
Co-Chair Therriault reiterated his questions if Department's
fixed fees had ever been challenged or appealed.
RICHARD LEFEBVRE, DEPUTY DIRECTOR, DIVISION OF MINING, LAND
AND WATER, DEPARTMENT OF NATURAL RESOURCES, replied that
sometimes there are complaints but rarely challenges on the
fees.
Representative J. Davies asked if the Department of Natural
Resources fixed fees included agency charges. Ms. Carroll
stated that they do when the permit is large.
(TAPE CHANGE 00 - 38, Side 1).
Mr. LeFebvre added that when negotiating the agreement for
reimbursable costs, interagency costs would be included in
the reimbursement agreement.
JANICE ADAIR, DIRECTOR, DIVISION OF ENVIRONMENTAL HEALTH,
DEPARTMENT OF ENVIRONMENTAL CONSERVATION, noted that she had
been involved in establishing of fees for the Department for
many years. Ms. Adair recalled the policy debate of how
much users should pay versus how much the public should pay
for providing the services covered by the fee bill at the
time. She stressed that it is not fun for the Department to
create a fee structure. Ms. Adair pointed out that setting
fees was an encouragement established by the Legislature.
The general fund authority was replaced with the use of
program receipts. The Department agrees that it is
important to have the policy debate. The theory was that
fees should allow industry to respond to growth in State
services.
Ms. Adair acknowledged that RDC has been willing to work
with the Department. She voiced concerns that HB 361 takes
certain groups and provides certain benefits for certain
programs. She suggested that another way to deal with the
concern would be to provide a bill that establishes the
principles that the Department would follow in establishing
fees, and then a Board to assist in establishing those fees.
Another idea could be based on a straight percentage. She
commented that the current bill has many problems and that
some of them could be fixed. The bill does change how the
fees are currently calculated. The Department of
Environmental Conservation has mostly flat fees. The two
programs that do not have flat fees are solid waste and the
water quality permits.
Ms. Adair noted that there has not been concern raised
before in how the Department establishes their flat fees.
At this time, the Department determines the needs and checks
those people expected to be involved with a plan review.
Then the Department establishes an average salary by adding
up all the salaries, multiplying that by the number of hours
worked in a year, which then provides an average hourly
rate. That number is multiplied by the number of hours it
is estimated to do the work. That then is the fee proposed
and generally adopted. She stated that system works well
for establishing flat fees. Ms. Adair advised that hourly
fees are used in solid waste as the Department could not
find a good way to do flat fees. She agreed that this was
controversial.
Ms. Adair advised that the way in which the bill is written,
rather than basing fees on estimated costs, the fees would
be based on actual and reasonable direct costs. That is
different from what is currently done. That language is
tied to the individual person and the individual project.
She noted that she did not know how to create a flat fee
given that information. She asked if what was intended was
an estimated flat fee based upon the people expected to be
involved. Ms. Adair stressed that information would be a
critical distinction for the Department.
Ms. Adair advised that the bill would establish in statute,
three types of regulatory services.
? Designated regulatory services;
? Standard designated regulatory services; and
? Regulatory services.
Ms. Adair pointed out that the last service could pull DNR
into a fee structure. The regulatory service is defined as
"services provided by a resource agency". A resource agency
is defined as the Department of Natural Resources,
Department of Environmental Conservation and the Department
of Fish and Game.
Ms. Adair continued, the flat fees have been characterized
as being for simple, routine projects. It is not clear from
the way that the bill is drafted that only those more
complex projects default to negotiated agreement. She
agreed that was "fixable" language.
All the regulations that have fees have a "kill" process
established in the regulations. The first appeal goes to
the director of the division; the second level goes to the
commissioner for final agency action. She noted that she
has personally written off several thousand dollars in
billings to permittees in the file for the solid waste
applicants. She reiterated that the current system works
well. The appeal procedure sets up a group of engineers
from another program or division to advise on technical
matters.
Ms. Adair spoke to the petitions to adopt regulations.
There is a traditional policy in the Administrative
Procedures Act that allows any person to petition any agency
to adopt or amend an appeal. The Department is required to
address it within 30 days. She stated that she had received
a petition to change regulations. She reiterated that the
legislation adds another procedure to the work of the
Division. There are concerns regarding this matter, which
seems to discount the public process. Ms. Adair emphasized
that would be of concern to the Department.
Ms. Adair stated that the definition of "actual and
reasonable" costs would establish a "flat fee". The
Department does not include interagency costs in their flat
fees.
Ms. Adair voiced concern with ending the public notice
provision being charged back to the permittee. She advised
that Section (G) is of great concern to the Department. She
pointed out that DEC is a training ground for many new
employees. The Department of Environmental Conservation
hires many young people and then trains them. She stressed
that this is a management concern rather than a fee issue
and that it would be inappropriate to be in statute.
Representative G. Davis agreed with that. He thought that
the job descriptions of Levels I, II, III, & IV could help
address that concern. He noted that an experienced
technician should be the one who signs off on the projects.
Ms. Adair agreed that would be equaled out as the salaries
were averaged. They seek to find the average. The Division
of Personnel establishes the issue of whether or not a
person is capable of doing the job for each job class and is
not always related to their prior work experience.
Representative Williams asked if DEC had been part of the
working group on the project. Ms. Adair replied that DEC
had been and that some of the concerns had been addressed.
Ms. Adair concluded her testimony regarding "cluttering" of
DEC regulations. She thought that there could be a better
way to get to the "end" intention rather than through the
regulatory process.
Representative Grussendorf observed that DEC has not been a
favorite in the budget process over the past few years. He
noted that the Legislative body has dictated that the
Department comes up with program receipts. The proposed
legislation would cause them to loose $4 million dollars in
program receipts. He warned that the legislation would be
difficult for the Department to implement.
PAMELA LABOLLE, PRESIDENT, ALASKA STATE CHAMBER OF COMMERCE,
JUNEAU, spoke in support of the legislation. She stated
that it would present a more user friendly regulatory
environment with predictability, standardization and
stability. She noted that customers expect a fair and
justifiable fee for business. The proposed legislation
provides for a measurable cost. Ms. LaBolle concluded that
the fees must not become a form of taxation.
Mr. Tillinghast countered earlier testimony regarding OMB's
needing regulatory authority. He stated that would require
adding a sentence to the bill. In terms of substituting the
Administrative Services procedures for OMB, he commented
that would be a formal and time-consuming process. In order
to save money, the State would not want to route the appeal
to Administrative Services and then have a formal hearing
with lawyers. He noted that there are no provisions in
the Administrative Services regulations for charging the
petitioner for the full cost of the proceeding.
Mr. Tillinghast commented that a number of complaints voiced
at by DEC at this meeting were new ones. One of the
previous complaints was the "unqualified employee exclusion
to direct costs" which is now Subsection "G". He stated
that this will be a policy decision which needs to be
addressed by the Finance Committee. He added that there is
a petition procedure under the APA for writing regulations.
It is meaningless if there is no remedy. The agency can
turn it down for any reason. The way to avoid any
litigation would be to make the standard meaningless.
Mr. Tillinghast spoke to the "interagency charge exclusion".
He commented that if the agency charge meets the standards
as the bill imposes on the DEC standards, there would be no
problems to include them.
Mr. Tillinghast noted the comment made by Ms. Adair that
"the petition process does not allow the public to be
heard". He disagreed with that, stating that the bill
creates a standard. There is no unlawful delegation in the
Legislature creating a standard which the agency has to
meet. He pointed out that the public would be commenting on
whether that class of permits is or is not a standard
designated regulatory service. He presumed that the agency
would listen to those comments carefully. He added with
respect to "charging public notice back to applicant", the
bill allows for public notice to be charged to the
applicant. The only such charges that are excluded are the
ones that are not required by law. It should be the
Legislature's job to determine which permits are important
enough to require the expense and time of public notice. If
the agency decides to go beyond what the agency has been
appropriated, they should then cover those costs.
Co-Chair Therriault noted his intent to work on the bill
with the RDC group and the Department of Environmental
Conservation to address these concerns. He noted that HB
361 would be HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 3:50 P.M.
H.F.C. 20 2/22/00
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