Legislature(2003 - 2004)

03/17/2004 03:20 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         March 17, 2004                                                                                         
                           3:20 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Tom Anderson, Chair                                                                                              
Representative Carl Gatto, Vice Chair                                                                                           
Representative Nancy Dahlstrom                                                                                                  
Representative Bob Lynn                                                                                                         
Representative Norman Rokeberg                                                                                                  
Representative Harry Crawford                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative David Guttenberg                                                                                                 
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 489                                                                                                              
"An Act relating  to the administration of  the Alaska Vocational                                                               
Technical Center; and providing for an effective date."                                                                         
                                                                                                                                
     - MOVED HB 489 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 515                                                                                                              
"An Act relating  to the regulation of municipal  water and sewer                                                               
utilities  not   in  competition  with  other   water  and  sewer                                                               
utilities."                                                                                                                     
                                                                                                                                
     - MOVED HB 515 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 402                                                                                                              
"An  Act relating  to  fees for  the  inspection of  recreational                                                               
devices, for  certificates of fitness  for electrical  wiring and                                                               
plumbing, for filing voluntary flexible  work hour plans, and for                                                               
licenses  for boiler  operators; and  providing for  an effective                                                               
date."                                                                                                                          
                                                                                                                                
     - MOVED CSHB 402(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 452                                                                                                              
"An Act  relating to  licensing and  regulation of  sport fishing                                                               
services  operators  and fishing  guides;  and  providing for  an                                                               
effective date."                                                                                                                
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 489                                                                                                                  
SHORT TITLE: AVTEC ADMINISTRATION                                                                                               
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
02/16/04       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/16/04       (H)       L&C, FIN                                                                                               
03/17/04       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
                                                                                                                                
BILL: HB 515                                                                                                                  
SHORT TITLE: MUNICIPAL WATER AND SEWER UTILITIES                                                                                
SPONSOR(S): LABOR & COMMERCE                                                                                                    
                                                                                                                                
02/18/04       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/18/04       (H)       CRA, L&C                                                                                               
03/04/04       (H)       CRA RPT 1DP 4NR                                                                                        
03/04/04       (H)       DP: ANDERSON; NR: KOTT, SAMUELS,                                                                       
03/04/04       (H)       WOLF, MORGAN                                                                                           
03/04/04       (H)       CRA AT 8:00 AM CAPITOL 124                                                                             
03/04/04       (H)       Moved Out of Committee                                                                                 
03/04/04       (H)       MINUTE(CRA)                                                                                            
03/17/04       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
                                                                                                                                
BILL: HB 402                                                                                                                  
SHORT TITLE: LABOR & WORKFORCE DEVELOPMENT FEES                                                                                 
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/28/04       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/28/04       (H)       L&C, FIN                                                                                               
02/25/04       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
02/25/04       (H)       Heard & Held                                                                                           
02/25/04       (H)       MINUTE(L&C)                                                                                            
03/17/04       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
                                                                                                                                
BILL: HB 452                                                                                                                  
SHORT TITLE: GUIDED SPORT FISHING                                                                                               
SPONSOR(S): REPRESENTATIVE(S) HEINZE                                                                                            
                                                                                                                                
02/16/04       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/16/04       (H)       L&C, JUD, FIN                                                                                          
03/17/04       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
GREG O'CLARAY, Commissioner                                                                                                     
Department of Labor & Workforce Development                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 489.                                                                                          
                                                                                                                                
MARK PREMO, General Manager                                                                                                     
Anchorage Water and Wastewater Utility (AWWU)                                                                                   
Municipality of Anchorage                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 515.                                                                            
                                                                                                                                
MARK K. JOHNSON, Commissioner, Chair                                                                                            
Regulatory Commission of Alaska (RCA)                                                                                           
Department of Community & Economic Development                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided information on regulation,                                                                        
answered questions, and said he sees HB 515 as a fundamental                                                                    
policy change.                                                                                                                  
                                                                                                                                
ROBERT LOHR                                                                                                                     
Office of Management and Budget                                                                                                 
Municipality of Anchorage                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 515.                                                                            
                                                                                                                                
GREY MITCHELL, Director                                                                                                         
Division of Labor Standards & Safety                                                                                            
Department of Labor & Workforce Development                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented an informational chart and                                                                       
answered questions about HB 402.                                                                                                
                                                                                                                                
MIKE NOTAR, Assistant Business Manager                                                                                          
Local 1547                                                                                                                      
International Brotherhood of Electrical Workers (IBEW)                                                                          
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 402 with the                                                                    
proviso that the resulting fees be deposited into the Building                                                                  
Safety Account.                                                                                                                 
                                                                                                                                
CLAIRE MORTON, Owner                                                                                                            
Golden Wheel Amusements                                                                                                         
Chugiak, Alaska                                                                                                                 
POSITION STATEMENT:  Expressed concerns about HB 402.                                                                           
                                                                                                                                
STEVE BOYD, Manager                                                                                                             
National Electrical Contractors Association                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 402.                                                                            
                                                                                                                                
REPRESENTATIVE CHERYLL HEINZE                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified as sponsor of HB 452.                                                                            
                                                                                                                                
JON BITTNER, Staff                                                                                                              
to Representative Cheryll Heinze                                                                                                
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented a short statement on the fiscal                                                                  
note for HB 452 and answered questions on behalf of the sponsor.                                                                
                                                                                                                                
KELLY HEPLER, Director                                                                                                          
Division of Sport Fish                                                                                                          
Alaska Department of Fish & Game                                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified that his department strongly                                                                     
supports HB 452.                                                                                                                
                                                                                                                                
GEORGE PATTERSON, Owner                                                                                                         
"Catchalot" Charters                                                                                                            
Ninilchik, Alaska                                                                                                               
POSITION STATEMENT:  Testified on HB 452.                                                                                       
                                                                                                                                
DALE BONDURANT                                                                                                                  
Soldotna, Alaska                                                                                                                
POSITION STATEMENT:  Testified on HB 452.                                                                                       
                                                                                                                                
JOEL HANSON                                                                                                                     
The Boat Company                                                                                                                
Sitka, Alaska                                                                                                                   
POSITION STATEMENT:  Requested that the committee hold HB 452                                                                   
until substantial revisions occur; cited areas of concern.                                                                      
                                                                                                                                
ROBERT WARD                                                                                                                     
Homer Charter Association                                                                                                       
Anchor Point/Homer, Alaska                                                                                                      
POSITION STATEMENT:  Testified in support of HB 452, except that                                                                
the $500 fee for a first-time penalty is too large.                                                                             
                                                                                                                                
TIM EVERS                                                                                                                       
Deep Creek Charter Boat Association                                                                                             
Ninilchik, Alaska                                                                                                               
POSITION  STATEMENT:    Testified  in  support  of  HB  452,  but                                                               
expressed concerns.                                                                                                             
                                                                                                                                
MARK HEM, Owner                                                                                                                 
Hem Charters                                                                                                                    
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 452.                                                                         
                                                                                                                                
ALAN LeMASTER, Owner                                                                                                            
Copper River Salmon Charters;                                                                                                   
Secretary, Klutina River Association                                                                                            
Gakona, Alaska                                                                                                                  
POSITION   STATEMENT:     Testified   that   the  Klutina   River                                                               
Association doesn't support HB 452 in its present form.                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 04-27, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
CHAIR TOM ANDERSON  called the House Labor  and Commerce Standing                                                             
Committee  meeting  to  order  at   3:20  p.m.    Representatives                                                               
Anderson, Gatto, Dahlstrom, and Lynn  were present at the call to                                                               
order.   Representatives  Rokeberg  and Crawford  arrived as  the                                                               
meeting was in progress.                                                                                                        
                                                                                                                                
HB 489-AVTEC ADMINISTRATION                                                                                                   
                                                                                                                                
CHAIR ANDERSON announced  that the first order  of business would                                                               
be HOUSE BILL NO. 489, "An  Act relating to the administration of                                                               
the  Alaska Vocational  Technical  Center; and  providing for  an                                                               
effective date."                                                                                                                
                                                                                                                                
Number 0114                                                                                                                     
                                                                                                                                
GREG  O'CLARAY, Commissioner,  Department  of  Labor &  Workforce                                                               
Development   (DLWD),  explained   that   last   year's  SB   192                                                               
transferred  the  Alaska  Vocational Technical  Education  Center                                                               
(AVTEC)  in Seward  from the  Department of  Education and  Early                                                               
Development to DLWD.   It was recently  discovered, however, that                                                               
the legislation  didn't incorporate statutory authority  for DLWD                                                               
to  set student  tuition and  fees.   Thus HB  489 corrects  that                                                               
oversight.                                                                                                                      
                                                                                                                                
Number 0191                                                                                                                     
                                                                                                                                
REPRESENTATIVE DAHLSTROM moved to report  HB 489 out of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  HB 489 was reported  from the                                                               
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                
HB 515-MUNICIPAL WATER AND SEWER UTILITIES                                                                                    
                                                                                                                                
CHAIR ANDERSON  announced that the  next order of  business would                                                               
be HOUSE  BILL NO.  515, "An  Act relating  to the  regulation of                                                               
municipal  water  and sewer  utilities  not  in competition  with                                                               
other water and sewer utilities."                                                                                               
                                                                                                                                
Number 0268                                                                                                                     
                                                                                                                                
CHAIR ANDERSON  introduced HB  515 on behalf  of the  House Labor                                                               
and Commerce  Standing Committee, sponsor.   He said  it's fairly                                                               
straightforward as it exempts the  Anchorage Water and Wastewater                                                               
Utility (AWWU)  from regulation by  the Regulatory  Commission of                                                               
Alaska  (RCA).   He  explained that  no  other municipally  owned                                                               
water or  wastewater utility  is regulated by  the RCA,  save the                                                               
City  of  Pelican,  which  requested   regulation  of  its  water                                                               
utility.   He said the  Municipality of Anchorage  (MOA) believes                                                               
current   RCA   regulation   processes  are   cumbersome,   slow,                                                               
expensive, and unresponsive to local  needs.  Therefore, he said,                                                               
Mayor  Begich   and  the  MOA   assembly  believe   the  proposal                                                               
encompassed in  HB 515 would  be more efficient and  positive for                                                               
the ratepayers.  Chair Anderson explained:                                                                                      
                                                                                                                                
     Ratepayers  in Anchorage  are required  to pay  for the                                                                    
     expense  of RCA  regulatory process  as a  surcharge on                                                                    
     every  bill.   That means  our constituents  are paying                                                                    
     this  every  month,  and  that's  whether  or  not  the                                                                    
     utility has a case pending.  ... A good example is from                                                                    
     1993 until  2003, AWWU never  had a rate  increase from                                                                    
     the  RCA   or  the  APUC,  the   former  Alaska  Public                                                                    
     Utilities Commission.  ... The ratepayers still  had to                                                                    
     pay the regulatory assessment on every bill. ...                                                                           
                                                                                                                                
     In  2004, AWWU  ratepayers are  projected to  pay about                                                                    
     $500,000  ... to  the RCA  to cover  the costs  of this                                                                    
     regulation.   The greatest  costs appear  to be  in the                                                                    
     form  of regulatory  delay in  obtaining approval  of a                                                                    
     requested change.   The  [MOA] is  directly accountable                                                                    
     to  ratepayers served  by the  utilities, and  they are                                                                    
     the   voters,   obviously.     The   municipality   has                                                                    
     experienced    successfully    regulating    enterprise                                                                    
     activities; that's the reason  they want it under their                                                                    
     purview.  Examples  of this are the  Port of Anchorage,                                                                    
     solid waste  services, and,  of course,  Merrill Field.                                                                    
     All of those  are financially sound and,  I think, they                                                                    
     provide first-class consumer and customer service.                                                                         
                                                                                                                                
     The municipal public hearings are  held on any proposed                                                                    
     rate increase,  and the public is  really involved with                                                                    
     the hearing  process.  Under  this format,  rather than                                                                    
     RCA,  it's  amenable to  easier  access,  going to  the                                                                    
     [municipality]  versus  going  to  the  RCA  and  those                                                                    
     fairly complicated meetings.                                                                                               
                                                                                                                                
Number 0493                                                                                                                     
                                                                                                                                
CHAIR ANDERSON read from page 2, lines 5-8, which states:                                                                       
                                                                                                                                
               (B)  a water utility owned by a political                                                                    
     subdivision  that   does  not  directly   compete  with                                                                
     another water utility; or                                                                                              
               (C)  a sewer utility owned by a political                                                                    
     subdivision  that   does  not  directly   compete  with                                                                
     another sewer utility.                                                                                                 
                                                                                                                              
He noted that subparagraphs (B) and  (C) would be exempt from RCA                                                               
regulation under this proposed bill.                                                                                            
                                                                                                                                
Number 0533                                                                                                                     
                                                                                                                                
MARK  PREMO,  General  Manager, Anchorage  Water  and  Wastewater                                                               
Utility, testified in support of  HB 515, which would exempt AWWU                                                               
from economic  regulation by  the RCA  and place  it in  the same                                                               
status  as every  other municipally  owned  water and  wastewater                                                               
utility  in Alaska  except one.   Providing  background, he  said                                                               
AWWU  consists  of  two  separate   utilities,  both  subject  to                                                               
economic  and service  area regulations  by the  RCA.   The water                                                               
utility,  a   former  municipal  utility,  has   been  under  RCA                                                               
regulation since  inception of  the [former] APUC  in 1970.   The                                                               
Anchorage  sewer  utility  was  formerly  owned  by  the  Greater                                                               
Anchorage  Area Borough,  and was  voluntarily  submitted to  the                                                               
APUC for regulation in 1971.  He continued:                                                                                     
                                                                                                                                
     An  umbrella  organization,  AWWU was  formed  in  1975                                                                    
     following  the  unification   of  the  Municipality  of                                                                    
     Anchorage.    The  Municipality of  Anchorage  in  1991                                                                    
     petitioned  the  then-APUC  to   exempt  AWWU  and  its                                                                    
     electrical  utility  from  regulation.    The  decision                                                                    
     split  evenly by  a  vote  of 2-2  on  the question  of                                                                    
     exempting the electric utility and AWWU.                                                                                   
                                                                                                                                
     The  opinion   by  the  commissioners   opposing  self-                                                                    
     regulation  cited  competition  by  the  municipality's                                                                    
     electric   utility/cell   phone  utility   with   other                                                                    
     utilities as the primary reason  why AWWU should remain                                                                    
     regulated  by the  state.    No commissioner  suggested                                                                    
     then, or has since  suggested, that competition between                                                                    
     water  and wastewater  utilities  was  present, nor  is                                                                    
     there any competition there today.                                                                                         
                                                                                                                                
     There are a number of  small, private, class D (indisc.                                                                    
     -  coughing) water  systems in  Anchorage that  are not                                                                    
     publicly owned  and which do not  receive regular water                                                                    
     service from  AWWU.  Ten  are certificated by  the RCA.                                                                    
     Seven of  those are also economically  regulated by the                                                                    
     RCA,  and  the  other  three  appear  to  be  community                                                                    
     systems  run  as  cooperatives, therefore  exempt  from                                                                    
     economic regulation.  House Bill  515 does not apply to                                                                    
     any  of these  small  systems, since  none is  publicly                                                                    
     owned with public oversight.                                                                                               
                                                                                                                                
Number 0691                                                                                                                     
                                                                                                                                
MR. PREMO continued:                                                                                                            
                                                                                                                                
     Why   does  the   Municipality   of  Anchorage   desire                                                                    
     exemption  from  RCA  regulation?     The  current  RCA                                                                    
     regulations  and  procedures  are slow  and  expensive.                                                                    
     From  1993  to  2003,   AWWU  never  requested  a  rate                                                                    
     increase, yet  AWWU ratepayers have  paid approximately                                                                    
     2.8 million [dollars in]  regulatory assessments to the                                                                    
     RCA during this  period as part of  every monthly bill,                                                                    
     and  are projected  to pay  just short  of $500,000  in                                                                    
     2004 to cover the cost of regulation.                                                                                      
                                                                                                                                
     One of  the two supporting  documents I sent  to Juneau                                                                    
     two  weeks ago,  at  the time  of  local regulation  of                                                                    
     municipal water  and wastewater utilities,  [has] dates                                                                    
     listed  incorrectly with  regards to  the timeframe  in                                                                    
     which  AWWU had  no rate  increases.   It  has 1993  to                                                                    
     2004.   It should be corrected  to be 1993 to  2003, as                                                                    
     the chair correctly stated.                                                                                                
                                                                                                                                
Number 0755                                                                                                                     
                                                                                                                                
MR. PREMO continued:                                                                                                            
                                                                                                                                
     During the  last decade there  were a number  of minor,                                                                    
     relatively  simple  procedural  tariff  filings  during                                                                    
     this period of time for  action, such as minor service-                                                                    
     area  adjustments and  tariff-rule  changes.   However,                                                                    
     the greater  cost to AWWU  and its customers is  in the                                                                    
     form of  the cost  of preparing filings  and regulatory                                                                    
     lag.   History shows  that local regulation  is faster,                                                                    
     less structured, and more economical.                                                                                      
                                                                                                                                
     Current    RCA   regulations    and   procedures    are                                                                    
     nonresponsive  to  local  need,  which  is  our  second                                                                    
     point.    The  RCA  process was  designed  for  private                                                                    
     utilities   and  is   not   entirely  appropriate   for                                                                    
     municipal  utilities.     The   RCA  process   is  very                                                                    
     structured.   The  municipality is  more responsive  to                                                                    
     local  needs   and  is  directly  accountable   to  the                                                                    
     ratepayers who  are served by  these utilities.   These                                                                    
     customers  are also  municipal  voters.   Hearings  are                                                                    
     held by the municipality in all rate matters.                                                                              
                                                                                                                                
     I ask  for the committee's  support on House  Bill 515.                                                                    
     Self-regulation  has  worked   effectively  across  the                                                                    
     nation  and   in  other  Alaskan  communities   and  in                                                                    
     Anchorage.   Actually, Anchorage has regulated  some of                                                                    
     its  own public  utilities  for many  years, many  more                                                                    
     years, in  fact, than the state  regulators.  Anchorage                                                                    
     has a  proven record and has  effectively regulated the                                                                    
     Port   of  Anchorage,   Merrill   Field,  Solid   Waste                                                                    
     Services;  all are  financially strong,  high reputable                                                                    
     enterprises that provide excellent customer service.                                                                       
                                                                                                                                
Number 0834                                                                                                                     
                                                                                                                                
MR. PREMO continued:                                                                                                            
                                                                                                                                
     AWWU   has  provided   its  customers   with  excellent                                                                    
     service, low,  stable rates, and  sound finances.   For                                                                    
     more than  a decade, ratepayers have  benefited from no                                                                    
     rate  increases  as  AWWU  has  reduced  positions  and                                                                    
     expenses by  leveraging technology,  improving business                                                                    
     processes, while  at the same time  increasing spending                                                                    
     on system  repairs and rehabilitation, all  without the                                                                    
     direction and assistance from RCA.                                                                                         
                                                                                                                                
     Over the years,  the mayor and the  assembly made sound                                                                    
     decisions  in   their  oversight  of  AWWU   and  other                                                                    
     municipally  owned   utilities.    Most   recently,  in                                                                    
     January of  2004, AWWU filed  for water  and wastewater                                                                    
     increases  to be  effective in  2004 and  2005.   These                                                                    
     rate increases  are for increased  payments in  lieu of                                                                    
     taxes,  operating expenses,  and debt-service  costs of                                                                    
     facilities  constructed  in  prior  years.    Effective                                                                    
     February  23,  2004,  the   RCA  granted  AWWU  interim                                                                    
     refundable rate  increases.  I expect  the RCA approval                                                                    
     to make these rates permanent  in the fourth quarter of                                                                    
     2004.                                                                                                                      
                                                                                                                                
     The  Municipality of  Anchorage and  the administration                                                                    
     support  the  establishment  of a  strong,  independent                                                                    
     board to oversee and regulate AWWU in lieu of the RCA.                                                                     
     In  conclusion, with  the passage  of  House Bill  515,                                                                    
     municipal  regulation  of  AWWU will  balance  consumer                                                                    
     protection with ... financial  soundness, and AWWU will                                                                    
     continue to  operate on  a sound  business basis.   The                                                                    
     RCA  would still  continue to  regulate AWWU  water and                                                                    
     wastewater certificated service areas.                                                                                     
                                                                                                                                
Number 0940                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO  asked  for  clarification  about  MOA  and                                                               
Pelican as the only two entities currently under RCA regulation.                                                                
                                                                                                                                
MR. PREMO replied  that this was correct with  regard to publicly                                                               
owned water and wastewater utilities.                                                                                           
                                                                                                                                
REPRESENTATIVE  GATTO wondered  if Pelican  would have  to pay  a                                                               
higher cost because of an exemption to the MOA.                                                                                 
                                                                                                                                
MR. PREMO  deferred to  Mark Johnson,  commissioner and  chair of                                                               
RCA.                                                                                                                            
                                                                                                                                
REPRESENTATIVE  ROKEBERG  asked Mr.  Premo  to  explain the  AWWU                                                               
billing process.                                                                                                                
                                                                                                                                
MR. PREMO replied  that it's done on an independent  line item so                                                               
the customer can identify the charge.   The present rate is 0.867                                                               
percent for  both the  water and the  wastewater, since  they are                                                               
billed  separately.   He said  the interim  increases granted  on                                                               
February 23, 2004, were 13.61  percent for water and 8.06 percent                                                               
for wastewater.  He explained that  AWWU pays $500,000 a year for                                                               
regulatory compliance  to file tariff charges;  this increase was                                                               
the first  granted since 1992 and,  in fact, in 2001  there was a                                                               
lowering   of  the   rate  for   wastewater   of  2.75   percent.                                                               
Emphasizing that  the $500,000 passed on  to the RCA was  for the                                                               
RCA to  conduct its work,  he noted  that AWWU must  also prepare                                                               
cases that go to the RCA  commission; these costs are in addition                                                               
to the $500,000 and are incorporated into the RCA charge.                                                                       
                                                                                                                                
Number 1221                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  asked what effect  HB 515 would  have on                                                               
the recently  granted interim rate  increases, and if  AWWU would                                                               
have to conduct hearings to establish permanent rate increases.                                                                 
                                                                                                                                
MR. PREMO responded  that the rate increases before  the RCA have                                                               
undergone the public process and  been passed by local ordinance.                                                               
He  recommended  keeping these  increases  in  place because  the                                                               
long-range financial plan had included this income.                                                                             
                                                                                                                                
REPRESENTATIVE ROKEBERG  asked for the anticipated  amount of the                                                               
net revenue  increase resulting from the  February 2004 increases                                                               
for water and wastewater.                                                                                                       
                                                                                                                                
MR. PREMO  replied that in  2004 the interim  refundable increase                                                               
would  result  in  $5.9  million   and,  when  the  rates  become                                                               
permanently established,  the AWWU has projected  a collection of                                                               
$6.1 million over a 12-month period.                                                                                            
                                                                                                                                
Number 1382                                                                                                                     
                                                                                                                                
CHAIR ANDERSON suggested this has  nothing to do with the current                                                               
rate increase.                                                                                                                  
                                                                                                                                
MR. PREMO  agreed and  noted that  this bill has  to do  with the                                                               
internal  financial  workings of  the  utility  and keeping  them                                                               
economically healthy.                                                                                                           
                                                                                                                                
REPRESENTATIVE  GATTO asked  Mr. Premo  to think  of it  from the                                                               
point of view of a ratepayer in Anchorage.  He said:                                                                            
                                                                                                                                
     There  is  an  interim   rate  increase  for  about  $6                                                                    
     million;  it's before  the  RCA.   Before  the RCA  can                                                                    
     determine, you come to the  legislature and get the RCA                                                                    
     out  of  the process,  and  the  rate increase  becomes                                                                    
     permanent because  there is no other  entity to control                                                                    
     it.   Therefore, the  ratepayer looks  at us  and says,                                                                    
     "Well, you couldn't  do it through the RCA,  so you got                                                                    
     legislation to do it."  Am I correct?                                                                                      
                                                                                                                                
MR. PREMO replied:                                                                                                              
                                                                                                                                
     I  don't think  you're totally  correct, Representative                                                                    
     Gatto, in the  fact that, when we file  a rate increase                                                                    
     the process is  a two-step process.   I'm sure Chairman                                                                    
     Johnson [of  the RCA] can  speak to  it.  We  filed the                                                                    
     rate  increase in  January.  ....  There's a  permanent                                                                    
     part  of the  rate  increase  they'll make  permanently                                                                    
     effective based  on RCA's ruling,  but in  addition, at                                                                    
     that point in  time, we asked for what  we call interim                                                                    
     rates.      Those   interim   rates   are   established                                                                    
     approximately 45  days on with  the commission.   Those                                                                    
     interim  rates  have  been  granted;  we're  collecting                                                                    
     those interim rates today, already.                                                                                        
                                                                                                                                
     When  the  commission  finally  rules,  I  expect,  the                                                                    
     fourth quarter  of this year,  ... those  interim rates                                                                    
     will be made permanent.   There may be some adjustments                                                                    
     in what  the actual rate  structure is, within  a point                                                                    
     and a  half, a point,  would be my expectations  at the                                                                    
     most.    Should we  have  been  overcollecting, in  the                                                                    
     RCA's viewpoint,  in this point in  time, we'd actually                                                                    
     have refundable.   That's why  we say  they're interim,                                                                    
     refundable rates.  So, in  essence, the RCA has already                                                                    
     approved the interim request, sir.                                                                                         
                                                                                                                                
Number 1438                                                                                                                     
                                                                                                                                
CHAIR ANDERSON  commented that RCA  is cumbersome  and expensive,                                                               
that  AWWU wants  to  join  the large  majority  of entities  not                                                               
regulated  by  RCA,  and, while  he  appreciated  Mark  Johnson's                                                               
chairmanship  of RCA,  AWWU wanted  to  make it  easier and  less                                                               
expensive for  its customers through  local control of  water and                                                               
wastewater  utilities.   He said,  "It's more  of a  payment that                                                               
isn't necessary,  because you're not  using them as  a regulatory                                                               
body, because there hasn't been the need."                                                                                      
                                                                                                                                
MR. PREMO agreed and stated:                                                                                                    
                                                                                                                                
     We believe  we'd be much  speedier with respect  to our                                                                    
     own regulatory  process that  we would  set up  here in                                                                    
     Anchorage  to overview  the utility,  which would  be a                                                                    
     very  strong   board-type  of   overview.     We  think                                                                    
     depoliticizing any decisions is  important.  We need to                                                                    
     make  sure there's  long-term health  stability of  the                                                                    
     utility,  and,  obviously,  we  need  to  be  customer-                                                                    
     responsive in  the fact that  we'd be over  the purview                                                                    
     of the local assembly, with  the local assembly being -                                                                    
     they're  voters  -  also being  ratepayers,  much  more                                                                    
     responsive,  nominally  in  the  decrease  of  the  RCA                                                                    
     surcharge,  but, more  importantly, in  the interaction                                                                    
     and  the cost  of  interaction with  the  RCA ...  and,                                                                    
     ultimately, the  speed with which we  could conduct our                                                                    
     business internally.                                                                                                       
                                                                                                                                
Number 1588                                                                                                                     
                                                                                                                                
REPRESENTATIVE LYNN asked what difference  HB 515 would make to a                                                               
homeowner's pocketbook.                                                                                                         
                                                                                                                                
MR. PREMO said he couldn't answer  directly, but AWWU had a long-                                                               
range financial  plan and he  anticipated a decrease in  the cost                                                               
of regulation to the overall  utility; this decrease would affect                                                               
the  cost to  the ratepayer.   He  said local  control creates  a                                                               
higher level of accountability because  the voters can make their                                                               
wishes known.  He said:                                                                                                         
                                                                                                                                
     Right  now,  quite  candidly,  I see  it  as  just  the                                                                    
     opposite.  What  you have ... is a  situation where you                                                                    
     have local control  in the fact that  any rate increase                                                                    
     goes  through the  assembly  through  an ordinance  and                                                                    
     public hearing  process.  However, how  many times have                                                                    
     I  seen  a local  assembly  member  stand up  and  say,                                                                    
     "Well,  you know,  this is  going to  be looked  at and                                                                    
     approved  by the  RCA before  it becomes  implemented."                                                                    
     So they, in  essence, are saying, "Yes,  we've done our                                                                    
     job, but  really the RCA  is accountable."   Well, now,                                                                    
     what  we're  doing  is  we're  transferring  that  back                                                                    
     around   and  making   those  local   officials  really                                                                    
     accountable for their actions.                                                                                             
                                                                                                                                
REPRESENTATIVE  LYNN said,  "I guess  that  answers my  question.                                                               
The potential for  the future is, there's going to  be less money                                                               
out  of  pocket  for  the individual  user  of  these  utilities.                                                               
That's what I wanted to hear.  That's the odds are."                                                                            
                                                                                                                                
Number 1711                                                                                                                     
                                                                                                                                
MARK K.  JOHNSON, Commissioner,  Chair, Regulatory  Commission of                                                               
Alaska  (RCA), Department  of Community  & Economic  Development,                                                               
testified  that   a  fundamental   policy  call  is   before  the                                                               
legislature as  whether municipal  self-regulation of a  water or                                                               
sewer utility is the appropriate way to proceed.  He said:                                                                      
                                                                                                                                
     In  general,  we  believe   that  the  regulatory  cost                                                                    
     charges   that   have  been   paid   to   RCA  by   the                                                                    
     municipality, by  AWWU, have  been overstated  in their                                                                    
     decisional document.   That was  the document  that was                                                                    
     placed  in front  of the  assembly. ...  Fundamentally,                                                                    
     from the  RCA's perspective,  ... we believe  that AWWU                                                                    
     is a pretty well-run  utility.  Nonetheless, we believe                                                                    
     there  are some  inherent problems  in the  local self-                                                                    
     regulation. ...                                                                                                            
                                                                                                                                
MR.  JOHNSON pointed  out the  significant benefits  to consumers                                                               
from RCA  jurisdiction over the  years.  The primary  benefit has                                                               
been relative  rate stability  over an  extended period  of time.                                                               
Although it  is likely attributable  in part to  wise management,                                                               
he said certainly  declining interest rates had a lot  to do with                                                               
it, in addition  to significant consumer benefits  when a utility                                                               
that  sets rates  knows it  is  subject to  RCA jurisdiction  and                                                               
review.  He continued:                                                                                                          
                                                                                                                                
     We  suggest  that  what  you   have  before  you  is  a                                                                    
     fundamental  alteration of  that framework.   We  don't                                                                    
     believe  that  the  benefits  are  as  clear  as  maybe                                                                    
     stated.  For example, it  should not be overlooked that                                                                    
     the  municipality,  ... if  they  intend  to stand  for                                                                    
     self-regulation   through  a   board,  ...   will  have                                                                    
     significant  expenses  in  setting up  that  board  and                                                                    
     staffing it. ...                                                                                                           
                                                                                                                                
     What  is  clear  is  that if  this  legislation  passes                                                                    
     today,  rates could  be set  by the  Anchorage Assembly                                                                    
     with the adoption of a  municipal ordinance.  As noted,                                                                    
     that is not a difficult  process.  There's no question,                                                                    
     at  least in  my  view,  that without  the  RCA in  the                                                                    
     picture,  the  degree  of   scrutiny  that  those  rate                                                                    
     decisions might  be exposed  to might  be substantially                                                                    
     reduced.  I say it's  a municipal ordinance process; it                                                                    
     could be introduced and heard  before the assembly in a                                                                    
     very, very short  period of time.  And  we believe that                                                                    
     it would probably  usher in an era  of rate instability                                                                    
     that would not at all be beneficial to the consumer.                                                                       
                                                                                                                                
Number 1891                                                                                                                     
                                                                                                                                
MR. JOHNSON continued:                                                                                                          
                                                                                                                                
     The  additional  thing  that   I  would  call  to  your                                                                    
     attention is  the history of self-regulation  is really                                                                    
     not all  that clear. ...   In Fairbanks, the  water and                                                                    
     sewer  utility  used  to  be   owned  and  run  by  the                                                                    
     municipality.   The experience in  Fairbanks was  not a                                                                    
     positive one. ...  Staff informs me that,  in fact, the                                                                    
     public was  very much urging  that the  municipality no                                                                    
     longer run  that utility  and turn  it over  to private                                                                    
     hands.  And that utility today rests in private hands.                                                                     
                                                                                                                                
     I suggest that the transitional  process ... may not be                                                                    
     quite as clear  as some would suggest to you.   We have                                                                    
     a process  that's very well established;  we adjudicate                                                                    
     these  matters, usage  of a  written  record; when  ...                                                                    
     commissioners  we  hear  a   variety  of  matters  from                                                                    
     multiple utility groups.  The  process is very familiar                                                                    
     to those  that participate in it.  ... The municipality                                                                    
     would have to establish  something comparable and, as I                                                                    
     suggested, nothing of that  nature has been established                                                                    
     by the municipality so far.                                                                                                
                                                                                                                                
     We believe that the RCA  is particularly well suited to                                                                    
     deal  with the  problems  which are  inherent in  self-                                                                    
     regulation  by a  municipality.   One  of those  issues                                                                    
     relates  to the  reasonableness and  the collection  of                                                                    
     payments in lieu  of taxes.  In the case  of AWWU, that                                                                    
     takes the  form of the MUSA  [Municipal Utility Service                                                                    
     Assessment] and  other payments.   Of course,  you have                                                                    
     self-regulation, as you have  a municipal assembly that                                                                    
     on the  one hand  has an  appetite for  spending money,                                                                    
     and yet they would also  be placed into the category of                                                                    
     setting the rates.  I  suggest that there's an inherent                                                                    
     conflict  in  that approach.  ...  We  view this  as  a                                                                    
     fundamental policy call in front of the legislature.                                                                       
                                                                                                                                
Number 2024                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO observed that the fiscal note indicated RCA                                                                
staff would be reduced by two positions, saving $258,000.  He                                                                   
asked if this was accurate.                                                                                                     
                                                                                                                                
MR. JOHNSON replied  that a full year's  reduction would actually                                                               
be $345,000;  there wasn't a  direct match between  two positions                                                               
and the $345,000.  He said  he hadn't yet broken out the proposed                                                               
reductions  among  the various  operating-expenditure  categories                                                               
listed on the fiscal note.                                                                                                      
                                                                                                                                
REPRESENTATIVE GATTO asked  if Pelican would be  forced to assume                                                               
a higher  RCA cost as a  result of RCA's losing  the revenue from                                                               
AWWU.                                                                                                                           
                                                                                                                                
MR. JOHNSON  replied that  the impact on  Pelican would  be quite                                                               
small.                                                                                                                          
                                                                                                                                
Number 2099                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG asked  if  the  refundable interim  rate                                                               
increase would not apply if AWWU assumed authority.                                                                             
                                                                                                                                
MR. JOHNSON  replied that it  would depend on the  effective date                                                               
of the legislation  and on whether the  Anchorage assembly wanted                                                               
to make the rate increase permanent.                                                                                            
                                                                                                                                
REPRESENTATIVE  ROKEBERG offered  his  belief  that the  attorney                                                               
general's office staffs an office  in the RCA that represents the                                                               
public's concerns  about rate matters.   He asked, if  there were                                                               
going to  be a hearing on  rates, whether this office  would take                                                               
up the case, as a rule.                                                                                                         
                                                                                                                                
Number 2167                                                                                                                     
                                                                                                                                
MR.  JOHNSON  replied  that  the   attorney  general  or  his/her                                                               
designee  would make  that  decision.   He  mentioned audits  and                                                               
investigations  and that  the  attorney  general participates  in                                                               
this kind of  a case, but said there was  no scheduled hearing at                                                               
this time.                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG  asked if there is  a six-month timeframe                                                               
in which  RCA has  to take up  this matter or  it would  become a                                                               
permanent rate increase.                                                                                                        
                                                                                                                                
MR.  JOHNSON affirmed  that, saying  he preferred  to comment  no                                                               
further on this current rate case.                                                                                              
                                                                                                                                
Number 2234                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG noted  that  RCA is  supposed  to be  an                                                               
independent body  acting outside  the purview  of politics  so it                                                               
can  give fair,  reasonable,  and just  hearings  on tariffs  and                                                               
dockets.  He also noted that  an office of public advocacy exists                                                               
within  RCA,  and  said  the  purpose is  to  have  a  regulatory                                                               
authority   rather   than   self-regulation  on   the   part   of                                                               
politicians.                                                                                                                    
                                                                                                                                
MR.  JOHNSON  replied  that  he thought,  in  every  state,  that                                                               
publicly elected  officials determined  the extent to  which they                                                               
wanted self-regulation  by entities  that have other  due process                                                               
procedures in place.   He noted that the  Anchorage assembly acts                                                               
pursuant  to public  notice and  provides  opportunities for  the                                                               
public to  participate in  its process;  he reiterated  that this                                                               
issue is a  fundamental policy call of the legislature.   He said                                                               
regulation could  come from RCA  or the legislature  could choose                                                               
to  establish  a  different process  to  permit  municipal  self-                                                               
regulation.                                                                                                                     
                                                                                                                                
CHAIR ANDERSON  suggested losing $500,000 from  AWWU could result                                                               
in RCA's losing positions.                                                                                                      
                                                                                                                                
MR. JOHNSON replied  that RCA could increase cost  charges on the                                                               
remaining utilities it regulates or  could reduce its budget.  He                                                               
said he believes  the responsible thing to do would  be to reduce                                                               
RCA's budget.                                                                                                                   
                                                                                                                                
CHAIR ANDERSON asked if he agreed  that Mr. Premo could reduce or                                                               
stabilize rates  as a  result of  not having  to pay  $500,000 to                                                               
RCA.                                                                                                                            
                                                                                                                                
MR.  JOHNSON acknowledged  that  as a  possibility,  but said  he                                                               
didn't  believe the  committee could  predict with  any certainty                                                               
whether the  reductions would be  passed on to  ratepayers, since                                                               
the  outcome  would   be  out  of  the  hands  of   RCA  and  the                                                               
legislature,  and   into  the  hands   of  the   Municipality  of                                                               
Anchorage.                                                                                                                      
                                                                                                                                
Number 2341                                                                                                                     
                                                                                                                                
ROBERT  LOHR, Office  of Management  and Budget,  Municipality of                                                               
Anchorage, stated support for HB 515 and said:                                                                                  
                                                                                                                                
     I do  have three comments.   First, as the  chairman of                                                                    
     the  RCA has  indicated, this  is a  fundamental policy                                                                    
     call   for  the   legislature.      But  actually   the                                                                    
     legislature has made the policy  call, and that is that                                                                    
     municipally owned utilities  are exempt from regulation                                                                    
     by the  RCA, with very limited  exceptions.  Currently,                                                                    
     as  has   been  indicated   by  Mr.  Premo   and  other                                                                    
     testimony,   the   only  publicly   owned   water-sewer                                                                    
     utilities that are currently regulated  by the RCA with                                                                    
     respect to rates, services, and  practices are AWWU and                                                                    
     the City of  Pelican.  In the latter  case, Pelican has                                                                    
     asked to  be economically regulated by  the commission.                                                                    
     So this  policy call's  been made, and  this bill  is a                                                                    
     small adjustment to  that policy to make  it clear that                                                                    
     AWWU  can  qualify  for the  same  treatment  as  other                                                                    
     publicly owned water and sewer utilities have.                                                                             
                                                                                                                                
TAPE 04-27, SIDE B                                                                                                            
Number 2397                                                                                                                     
                                                                                                                                
MR. LOHR continued:                                                                                                             
                                                                                                                                
     I  worked   with  the  regulatory  commission   or  its                                                                    
     predecessor, the  APUC, for  nine or  ten years,  and I                                                                    
     was there  when the regulatory cost  charge was created                                                                    
     ...  in  1992.     So  I'm  very   familiar  with  that                                                                    
     mechanism.    But  with   respect  to  ratemaking,  the                                                                    
     process that will be followed  in the future by AWWU is                                                                    
     extremely  similar   to  that   that  is   followed  in                                                                    
     preparing a rate case for  the RCA; namely, the revenue                                                                    
     requirement  is established,  and that's  based on  the                                                                    
     cost of  operating the  utility.   It is  a rate-based,                                                                    
     rate-of-return model  that is  very familiar to  all of                                                                    
     those involved with public utilities.                                                                                      
                                                                                                                                
     That  process would  not change.   The  cost-of-service                                                                    
     study  to  allocate  those  costs  among  the  customer                                                                    
     classes  properly would  not change.   And,  third, nor                                                                    
     would  the rate  redesign  phase, where  the costs  are                                                                    
     adjusted  to match  those  costs  of providing  service                                                                    
     such  that  the cost  causer  becomes  the cost  payer.                                                                    
     Those  techniques are  well known.   They  are industry                                                                    
     standards, and they would be  followed under AWWU, as a                                                                    
     self-regulated utility.   I am  sure that the  board of                                                                    
     directors of AWWU will insist on it.                                                                                       
                                                                                                                                
Number 2329                                                                                                                     
                                                                                                                                
MR. LOHR continued:                                                                                                             
                                                                                                                                
     As   Mr.   Premo's    already   indicated,   there   is                                                                    
     accountability  in the  fact that  the  voters and  the                                                                    
     ratepayers are  one and  the same.   And the  mayor and                                                                    
     the assembly  would continue  to be  fully accountable.                                                                    
     I would make  just one note:  the assembly  has not, in                                                                    
     fact,  approved the  rates.   What  they  have done  is                                                                    
     approved  the filing  of the  rate case  with the  RCA.                                                                    
     The permanent rate decision would remain.                                                                                  
                                                                                                                                
     The  third comment  I'd  like to  make  is that  recent                                                                    
     legislative audits have asked  the commission, the RCA,                                                                    
     to  focus  on  small  ... water  and  sewer  utilities,                                                                    
     because there are  65 utilities out there  that are not                                                                    
     certified, which the  commission is aware of.   I would                                                                    
     respectfully suggest that this would  be a good area of                                                                    
     attention.    I  know  that   the  commission  has,  in                                                                    
     response  to   the  legislative  audit,   adopted  some                                                                    
     regulations  to  relax  the certification  process  for                                                                    
     those utilities.  But, to  date, I believe many of them                                                                    
     remain uncertified.                                                                                                        
                                                                                                                                
Number 2271                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG  asked about  the  status  of the  small                                                               
water utilities.  He said in  his area of Anchorage, for example,                                                               
there are  a number of  class "a,"  "b," and "c"  designations by                                                               
the Department  of Environmental  Conservation (DEC).   He asked,                                                               
"Those small co-op or neighborhood-type  water utilities that are                                                               
privately owned in the main, are they regulated by the RCA now?"                                                                
                                                                                                                                
MR. JOHNSON  replied that, in  fairness, he  is still new  at his                                                               
job and  learning a lot.   He said in  general, as it  relates to                                                               
the small water  and sewage utilities, there are  a larger number                                                               
than  65,  and   the  RCA  has  made  efforts   to  provide  some                                                               
rudimentary  form of  regulation to  them.   He said  the primary                                                               
regulatory  framework at  this  time is  through  DEC, which  has                                                               
various classes, although he didn't  know how those classes would                                                               
relate  to  RCA's  proposed  limited   certification.    He  said                                                               
although RCA is  moving into that area of  regulation, it remains                                                               
to be seen how it intends to pay for those efforts.                                                                             
                                                                                                                                
Number 2206                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG  said  in Anchorage  there  are  several                                                               
hundreds  of these  type  of  water systems.    He  asked if  the                                                               
municipal water  service competes with these  small private water                                                               
systems.                                                                                                                        
                                                                                                                                
MR. PREMO responded:                                                                                                            
                                                                                                                                
     We  need  to  kind  of  differentiate  the  classes  of                                                                    
     utilities.  ...   Regarding  how  the   RCA  classifies                                                                    
     utilities,  which is  on a  very  class description,  a                                                                    
     class "a"  would be one  like the  [AWWU].  We  have $1                                                                    
     million or greater [of] revenue,  all the way down to a                                                                    
     class  "d," which  is less  than  $250,000 of  revenue.                                                                    
     There are 11 of those  utilities within Anchorage.  All                                                                    
     but AWWU  are rated  as a class  "d" system,  less than                                                                    
     $250,000 in revenue annually.   Of those, all but three                                                                    
     are  economically  regulated,  and they  are  privately                                                                    
     owned.                                                                                                                     
                                                                                                                                
     There are  three that  are not  economically regulated,                                                                    
     but they are  run, in essence, as a  cooperative.  They                                                                    
     are  outside of  regulation.   The other  thing that  I                                                                    
     think you  are speaking  to is that  there are  also an                                                                    
     additional 90 water systems  within the Municipality of                                                                    
     Anchorage  that report  to  the DEC  as  a small  water                                                                    
     utility.   I think that's  what you were  referring to.                                                                    
     So, that might give you a basis for the number.                                                                            
                                                                                                                                
Number 2107                                                                                                                     
                                                                                                                                
REPRESENTATIVE DAHLSTROM noted that she  was from Eagle River and                                                               
that her  community had been  discussing secession from  the MOA.                                                               
She asked Mr. Johnson what the  changes being discussed in HB 515                                                               
would be if Eagle River did secede.                                                                                             
                                                                                                                                
MR. JOHNSON  replied that  he thought parts  of Eagle  River were                                                               
served  by AWWU.   He  noted  a broader  question:   What is  the                                                               
ownership interest  in the utility?   He said people who  live in                                                               
the  Chugiak area,  for  example,  live in  the  MOA, but  aren't                                                               
served  by AWWU;  they still  have an  ownership interest  in the                                                               
utility.   He  said it's  an extremely  complex question,  and it                                                               
would  depend on  the terms  of the  separation of  Chugiak/Eagle                                                               
River from the MOA.                                                                                                             
                                                                                                                                
Number 2011                                                                                                                     
                                                                                                                                
MR.  LOHR  added, "I  believe  that  the  RCA would  retain  full                                                               
authority over  certificates.  That  is, service  territories and                                                               
their boundaries would continue to  be regulated by the RCA, even                                                               
if this bill was adopted and enacted."                                                                                          
                                                                                                                                
REPRESENTATIVE GATTO asked  Mr. Johnson if the RCA  was likely to                                                               
approve the two increases requested by AWWU.                                                                                    
                                                                                                                                
MR. JOHNSON declined to comment.                                                                                                
                                                                                                                                
CHAIR ANDERSON  said he thought  this bill was for  the consumer;                                                               
that rates  would be  lowered or stabilized;  and that,  from the                                                               
perspective  of the  Anchorage legislators,  the consumers  would                                                               
save money and still get efficient service.                                                                                     
                                                                                                                                
Number 1930                                                                                                                     
                                                                                                                                
CHAIR  ANDERSON moved  to report  HB  515 out  of committee  with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There  being no  objection, HB  515 was  reported from  the House                                                               
Labor and Commerce Standing Committee.                                                                                          
                                                                                                                                
HB 402-LABOR & WORKFORCE DEVELOPMENT FEES                                                                                     
                                                                                                                                
CHAIR ANDERSON  announced that the  next order of  business would                                                               
be  HOUSE  BILL  NO.  402,  "An Act  relating  to  fees  for  the                                                               
inspection of  recreational devices, for certificates  of fitness                                                               
for  electrical   wiring  and  plumbing,  for   filing  voluntary                                                               
flexible work hour plans, and  for licenses for boiler operators;                                                               
and providing for  an effective date."  [HB 402  was sponsored by                                                               
the House Rules Standing Committee by request of the governor.]                                                                 
                                                                                                                                
Number 1853                                                                                                                     
                                                                                                                                
GREY MITCHELL,  Director, Division  of Labor Standards  & Safety,                                                               
Department  of  Labor  &   Workforce  Development,  presented  an                                                               
informational   flowchart  that   detailed  the   collection  and                                                               
expenditure of  state fees  for recreational  device inspections,                                                               
boiler   operator  licensing   fees,   electrician  and   plumber                                                               
certificate  of fitness  fees,  and flex-plan  filing  fees.   He                                                               
testified:                                                                                                                      
                                                                                                                                
     The  recreational device  inspection fees  are paid  by                                                                    
     the operators  of these  recreational devices.   People                                                                    
     who  are operating  ski  lifts or  a  go-cart ride  ...                                                                    
     would be  required to  pay a fee  for the  inspector to                                                                    
     check  that  ride  out.    Those  fees  would  then  be                                                                    
     deposited  into  the  building  safety  account  [BSA],                                                                    
     which  is   a  subaccount  in  the   general  fund  ...                                                                    
     legislatively   earmarked   to  fund   the   mechanical                                                                    
     inspection program.  ... The  legislature then  gives a                                                                    
     certain   amount  of   authority   to  the   Mechanical                                                                    
     Inspection   Program   to   spend  the   money   that's                                                                    
     collected. ... The funding would  be used for inspector                                                                    
     certification and  the cost  of travel  associated with                                                                    
     getting these certifications. ...                                                                                          
                                                                                                                                
     The   second  section   deals   with  boiler   operator                                                                    
     licenses.    And  we  are   proposing  a  fee  for  the                                                                    
     licensing of  boiler operators.   At the time  of their                                                                    
     application they would  pay a $200 fee,  which would be                                                                    
     good  for three  years.   The funds  for those  license                                                                    
     fees  would, again,  be  deposited  into this  building                                                                    
     safety account,  which is used  to fund  the Mechanical                                                                    
     Inspection   Program,   subject  to   the   legislative                                                                    
     authority  that is  established by  you.   That funding                                                                    
     amount would be  used for the program  costs, which are                                                                    
     involved   with  reviewing   the  credentials   of  the                                                                    
     applicants, testing the applicants  when they apply for                                                                    
     a license,  issuing the  licenses, and  maintaining the                                                                    
     records on those license holders.                                                                                          
                                                                                                                                
Number 1722                                                                                                                     
                                                                                                                                
MR. MITCHELL continued:                                                                                                         
                                                                                                                                
     Section 3  deals with certificate-of-fitness  fees that                                                                    
     are  paid   by  plumbers  and  electricians   who  hold                                                                    
     certificate of fitness cards or  licenses.  At the time                                                                    
     of their  application for that license,  they would pay                                                                    
     a fee for  the license.  Currently, they do  pay a fee,                                                                    
     and  our proposal  is simply  to increase  that fee  to                                                                    
     cover our  existing costs  and increase  one electrical                                                                    
     inspector position.   The funds that  are collected for                                                                    
     those certificate-of-fitness  fees, again, go  into the                                                                    
     building  safety account,  which is  then used  to fund                                                                    
     the Mechanical Inspection Program. ...                                                                                     
                                                                                                                                
     The  last  one:  ...  flex-plan filing  fees  would  be                                                                    
     charged to an employer at  the time that they apply for                                                                    
     flexible  work hour  plan, which  is an  exemption from                                                                    
     overtime  that basically  allows  employees  to work  a                                                                    
     four 10-hour day schedule instead  of the normal 8-hour                                                                    
     standard  that applies  for overtime  in Alaska.   Then                                                                    
     again,  these funds  would just  be deposited  into the                                                                    
     general fund,  so they  aren't program  specific funds.                                                                    
     This is more of a revenue-generating proposal.                                                                             
                                                                                                                                
Number 1648                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO asked if the BSA is the same account for                                                                   
all four of the sections on the flowchart or whether each                                                                       
section is a subaccount of the BSA.                                                                                             
                                                                                                                                
MR. MITCHELL replied that the first three sections are all in                                                                   
the BSA, and the last section's fees go into the general fund.                                                                  
                                                                                                                                
REPRESENTATIVE  GATTO  asked  if  this bill  requires  that  each                                                               
recreational-device  inspector travel  to  California or  Florida                                                               
for  training  or  if  one individual  could  get  the  necessary                                                               
training, return to Alaska, and train other inspectors.                                                                         
                                                                                                                                
MR.  MITCHELL replied,  "The cost  would really  only be  for our                                                               
inspectors to  go to certification  training in  those locations.                                                               
Then they would come back  and, with their knowledge, inspect the                                                               
devices for these operators."                                                                                                   
                                                                                                                                
Number 1584                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD  asked how long  it would take to  add an                                                               
additional electrical inspector after the fees were raised.                                                                     
                                                                                                                                
MR. MITCHELL said  there are two positions being held:   one is a                                                               
new position,  not in  the governor's budget,  and would  only be                                                               
created when  HB 402 passes; the  other is being held  because of                                                               
current insufficient  funding in the BSA.   He hoped to  fill the                                                               
second position  first and believed  there would be  enough funds                                                               
at the beginning of the fiscal year if HB 402 passed.                                                                           
                                                                                                                                
REPRESENTATIVE CRAWFORD stated his  intent to increase the number                                                               
of electrical  inspectors and wondered how  the legislature could                                                               
accomplish this goal.                                                                                                           
                                                                                                                                
MR. MITCHELL said he couldn't  commit to filling the new position                                                               
immediately  because the  program is  funded from  collected fees                                                               
and the distribution process for these fees is complex.                                                                         
                                                                                                                                
REPRESENTATIVE  CRAWFORD reiterated  that  electricians agree  to                                                               
pay  extra fees  so  there are  adequate  inspections; he  sought                                                               
assurance that these fees would go for the inspector positions.                                                                 
                                                                                                                                
MR. MITCHELL replied:                                                                                                           
                                                                                                                                
     The plan  is to  increase by two  positions.   So we're                                                                    
     going  to  fill  a  vacancy and  then  we're  adding  a                                                                    
     position with  this legislation,  and we would  fill it                                                                    
     if  we  had  the  revenue  available to  do  it.    Our                                                                    
     projections  show  that  we will.    So  if  everything                                                                    
     aligns, then we're going to  fill this position shortly                                                                    
     after the start of the fiscal year.                                                                                        
                                                                                                                                
REPRESENTATIVE  GATTO called  attention to  page 2,  lines 19-20,                                                               
"Nothing in  this section creates  a dedicated fund  or dedicates                                                               
the money in  the account for a specific purpose."   He expressed                                                               
concern that the fees could be used for some other purpose.                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  clarified that  this language  exists to                                                               
avoid   constitutional   conflicts   because   of   the   [state]                                                               
constitutional prohibition  on dedicated funding.   He said, "You                                                               
want to try  and direct it here,  but you have got  to express in                                                               
the statute that it is not dedicated."                                                                                          
                                                                                                                                
MR.  MITCHELL said  the BSA  statute, AS 44.31.025,  contains the                                                               
authority to deposit in and charge against the BSA.                                                                             
                                                                                                                                
Number 1307                                                                                                                     
                                                                                                                                
MIKE   NOTAR,    Assistant   Business   Manager,    Local   1547,                                                               
International   Brotherhood   of   Electrical   Workers   (IBEW),                                                               
testified:                                                                                                                      
                                                                                                                                
     I'm here  to speak  to the  proposed increasing  of the                                                                    
     fees charged  for electrician certificates  of fitness.                                                                    
     Journeymen  electricians and  apprentices, in  order to                                                                    
     perform electrical  work in the  state of  Alaska, must                                                                    
     qualify  for,   test  for,   obtain,  and   possess  an                                                                    
     electrical certificate  of fitness  or license.   Also,                                                                    
     electrical  contractors performing  work  in our  state                                                                    
     are  required  to test  for  and  obtain an  electrical                                                                    
     administrator's   license.      For   the   committee's                                                                    
     information,   certificate-of-fitness  holders   cannot                                                                    
     perform electrical  work unless they are  employed by a                                                                    
     licensed electrical contractor.                                                                                            
                                                                                                                                
     We  are  here  to  speak in  support  of  the  proposed                                                                    
     statute  change if  the revenues  collected are  placed                                                                    
     into  the building  safety account  and will  allow the                                                                    
     Department of Labor &  Workforce Development to enforce                                                                    
     certificate-of-fitness    requirements   and    perform                                                                    
     inspections.   At the  present time,  there is  but one                                                                    
     electrical   inspector  statewide   to  enforce   these                                                                    
     requirements and  do inspections.   As a  result, these                                                                    
     things  are  not  being  done to  the  extent  that  we                                                                    
     believe they should be.                                                                                                    
                                                                                                                                
     We   believe  that   a  certificate   of  fitness   for                                                                    
     electricians has societal value,  both in protection of                                                                    
     life  and property,  when the  integrity of  electrical                                                                    
     installations is  inspected and required to  conform to                                                                    
     the minimum standards allowed by  law in our state.  We                                                                    
     also believe that, from  an enforcement standpoint, the                                                                    
     public   interest   is   well   served   by   requiring                                                                    
     electricians   and   apprentices   to   be   qualified,                                                                    
     licensed, adequately trained,  and continually educated                                                                    
     in the  national electrical code,  which is  adopted in                                                                    
     statute, which further protects life and property.                                                                         
                                                                                                                                
     The Department of Labor  & Workforce [Development] also                                                                    
     through  these  inspections  and enforcement,  has  the                                                                    
     ability   to  enforce   the  electrical   administrator                                                                    
     requirements,  thus  assuring   the  public  that  both                                                                    
     qualified  contractors   and  electrical   workers  are                                                                    
     responsible  for  the  work being  performed  and  that                                                                    
     standards that assure public safety are being met.                                                                         
                                                                                                                                
Number 1212                                                                                                                     
                                                                                                                                
MR. NOTAR continued:                                                                                                            
                                                                                                                                
     Another point  that I don't believe  has been mentioned                                                                    
     is  that  other  states -  specifically  Oregon,  South                                                                    
     Dakota,   North   Dakota,  Utah,   Nebraska,   Wyoming,                                                                    
     Washington, Idaho,  Montana, Minnesota,  Colorado, and,                                                                    
     most    recently,   California    -   have    licensing                                                                    
     requirements  for electricians.   The  State of  Alaska                                                                    
     reciprocates  licensing  with   each  of  these  states                                                                    
     except for  California at  present, to  the best  of my                                                                    
     knowledge.   What this  means is  that if  work becomes                                                                    
     slow in  certain areas  or states,  or if  work becomes                                                                    
     overly plentiful  in another  area or state  that lacks                                                                    
     an  adequate electrical  workforce, this  reciprocation                                                                    
     of  licensing allows  portability, both  for the  areas                                                                    
     and the electrical workers that  may need it.  Although                                                                    
     the fee  increase does not affect  these relationships,                                                                    
     I felt it was good information for the committee.                                                                          
                                                                                                                                
Number 1129                                                                                                                     
                                                                                                                                
CHAIR ANDERSON asked for clarification on Mr. Notar's position                                                                  
on HB 402.                                                                                                                      
                                                                                                                                
MR. NOTAR replied: "We are supportive of the increase to our                                                                    
licensing fees if it, in fact, will go into the building safety                                                                 
account.  And I understand that there is not a dedication."                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG asked whether it was Mr. Notar's                                                                        
testimony that the certified electricians should be paying for                                                                  
building inspectors,  rather than  having real  estate developers                                                               
or building owners pay for them.                                                                                                
                                                                                                                                
MR. NOTAR replied no.  He  said these inspectors have the ability                                                               
to  inspect for  the integrity  of the  work, but  also have  the                                                               
ability to enforce licensure of contractors.                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG characterized  the certificate of fitness                                                               
as  a "tax  on workers"  and  asked Mr.  Notar if  there was  any                                                               
controversy  among the  membership  of the  IBEW  with regard  to                                                               
paying a fee for this certificate.                                                                                              
                                                                                                                                
MR. NOTAR replied:                                                                                                              
                                                                                                                                
     I don't believe I could  represent to this committee or                                                                    
     anyone else  that all  my members  are always  happy at                                                                    
     any one time regarding any issue.   I would have to say                                                                    
     that,  yes,  they  are generally  supportive  of  this.                                                                    
     There is some controversy  regarding the certificate of                                                                    
     fitness.   Probably  the major  controversy is  what is                                                                    
     spurring me  to provide this testimony  today, that is,                                                                    
     why would  we pay the  fee if there is  not enforcement                                                                    
     or inspection being done.                                                                                                  
                                                                                                                                
Number 0950                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG expressed concern  that the Department of                                                               
Labor   &  Workforce   Development  planned   to  hire   building                                                               
inspectors with funds from the BSA.   He said he felt these costs                                                               
should be  borne by the  developers, the building owners,  or the                                                               
state agencies that hire inspectors, rather than the workers.                                                                   
                                                                                                                                
MR. NOTAR stated:                                                                                                               
                                                                                                                                
     To be very  candid, we have been paying  these fees for                                                                    
     30 years.  We feel they  are beneficial not only to our                                                                    
     members.   We feel  they are  beneficial to  the public                                                                    
     safety, the  public good.   Our members and  others are                                                                    
     generally comfortable  in the licensing fees,  and they                                                                    
     don't feel that they are exorbitant.                                                                                       
                                                                                                                                
Number 0796                                                                                                                     
                                                                                                                                
CLAIRE  MORTON, Owner,  Golden Wheel  Amusements, testified  that                                                               
her  company annually  hires  nationally certified,  professional                                                               
inspectors  from outside  to inspect  her recreational  equipment                                                               
and provide  safety training  to her  employees.   She questioned                                                               
the  prudence  of  the  $200-per-ride  inspection  fee  when  she                                                               
already pays  for an  outside firm  to do  the inspections.   She                                                               
questioned the  liability of the state  and suggested third-party                                                               
inspection might be more prudent.                                                                                               
                                                                                                                                
Number 0550                                                                                                                     
                                                                                                                                
STEVE    BOYD,   Manager,    National   Electrical    Contractors                                                               
Association,   noting  that   he  is   a  licensed   electrician,                                                               
testified:                                                                                                                      
                                                                                                                                
     On behalf of myself  as a certificate-of-fitness holder                                                                    
     and on  behalf of  the National  Electrical Contractors                                                                    
     Association,  I'd like  to go  on record  as supporting                                                                    
     this fee increase.  Recognizing  the challenges that we                                                                    
     all  face, we  feel  that the  increase is  reasonable,                                                                    
     given the  length of time  since the last  increase and                                                                    
     the necessary work that has to be done.                                                                                    
                                                                                                                                
     The  building  safety   account  would  ensure  funding                                                                    
     certificates of fitness and  inspections of the covered                                                                    
     work.   These programs  are beneficial to  the industry                                                                    
     and the general  public.  They help  ensure an adequate                                                                    
     level  of  compliance  of public  safety.    For  these                                                                    
     reasons,  we  support  the program  and  the  necessary                                                                    
     increase in fees.                                                                                                          
                                                                                                                                
Number 0446                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG asked Mr.  Mitchell if the current system                                                               
of   inspections  allows   for  third-party   certified,  outside                                                               
inspectors.                                                                                                                     
                                                                                                                                
MR. MITCHELL  replied that  the Division  of Labor  Standards and                                                               
Safety  has worked  with third-party  inspectors at  Golden Wheel                                                               
Amusements for  a number  of years.   He stated,  "The amusement-                                                               
ride inspections  that are done  by out of state  inspectors that                                                               
would come in,  or certified inspectors, which are  done with our                                                               
people, could be exempt from the  fee.  After all, our inspectors                                                               
would not do the inspection."                                                                                                   
                                                                                                                                
REPRESENTATIVE  ROKEBERG noted  that a  company with  10 machines                                                               
would  pay  $2,000  to  the  state in  addition  to  the  outside                                                               
inspector.                                                                                                                      
                                                                                                                                
MR.  MITCHELL   responded  that   if  the  inspector   doing  the                                                               
inspection was from his division, that would be true.                                                                           
                                                                                                                                
REPRESENTATIVE ROKEBERG  asked whether Mr. Mitchell  would accept                                                               
a  certified  outside inspector  approved  by  the Department  of                                                               
Labor &  Workforce Development doing  the inspection  and waiving                                                               
the fee.                                                                                                                        
                                                                                                                                
MR. MITCHELL said that's what  the department is currently doing;                                                               
however, it is not in regulation.                                                                                               
                                                                                                                                
REPRESENTATIVE ROKEBERG asked if the  statute could be amended to                                                               
include the  approved use of  certified, outside inspectors.   He                                                               
also asked  how much it costs  to process a one-page  request for                                                               
voluntary flextime work plan at this time.                                                                                      
                                                                                                                                
MR.  MITCHELL replied  that there  is no  fee at  this time,  but                                                               
acknowledged  that some  flex plans  are complicated  and require                                                               
more time to process than others.                                                                                               
                                                                                                                                
REPRESENTATIVE CRAWFORD  asked for the primary  reason underlying                                                               
the $100 fee for a flex plan in the proposed legislation.                                                                       
                                                                                                                                
MR. MITCHELL said it generates fee revenue.                                                                                     
                                                                                                                                
TAPE 04-28, SIDE A                                                                                                            
Number 0008                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  moved to  adopt Conceptual  Amendment 1,                                                               
to add  a subsection (d)  to Section  1 that says  the department                                                               
will  waive  any  fees  for  approved  and  nationally  certified                                                               
inspections for the  devices under this section.   There being no                                                               
objection, it was so ordered.                                                                                                   
                                                                                                                                
Number 0079                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  moved to adopt Amendment  2, labeled 23-                                                               
GH2111\A.1, Bannister, 2/27/04, which read:                                                                                     
                                                                                                                                
     Page 1, line 2:                                                                                                            
          Delete "for filing voluntary flexible work hour                                                                     
          plans,"                                                                                                             
                                                                                                                                
     Page 2, lines 6 - 9:                                                                                                       
          Delete all material.                                                                                                  
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
CHAIR ANDERSON objected for purposes of discussion.                                                                             
                                                                                                                                
REPRESENTATIVE ROKEBERG  explained that for the  title for filing                                                               
voluntary  flexible work  hours, page  2, lines  6-9, Section  4,                                                               
this just  deletes the $100  fee for  filing for a  flexible work                                                               
hour plan.                                                                                                                      
                                                                                                                                
CHAIR ANDERSON asked for a  "thumbs up" if the department agreed.                                                               
He then remarked, "OK, there's a thumbs up for the record."                                                                     
                                                                                                                                
Number 0165                                                                                                                     
                                                                                                                                
CHAIR ANDERSON  removed his objection.   He announced  that there                                                               
being no other objection, Amendment 2 was adopted.                                                                              
                                                                                                                                
Number 0178                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO moved  to report HB 402, as  amended, out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.   There  being  no  objection, CSHB  402(L&C)  was                                                               
reported from the House Labor and Commerce Standing Committee.                                                                  
                                                                                                                                
HB 452-GUIDED SPORT FISHING                                                                                                   
                                                                                                                                
CHAIR ANDERSON announced  that the final order  of business would                                                               
be  HOUSE  BILL  NO.  452,  "An Act  relating  to  licensing  and                                                               
regulation  of  sport  fishing  services  operators  and  fishing                                                               
guides; and providing for an effective  date."  [In packets was a                                                               
proposed committee substitute, Version D.]                                                                                      
                                                                                                                                
Number 0250                                                                                                                     
                                                                                                                                
REPRESENTATIVE CHERYLL HEINZE,  Alaska State Legislature, sponsor                                                               
of HB  452, began by  crediting the  Alaska Department of  Fish &                                                               
Game (ADF&G)  with helping to craft  a good bill.   She explained                                                               
that  previously she'd  owned a  fishing and  guiding lodge  near                                                               
Lake  Creek  that employed  five  guides.   Currently,  the  only                                                               
information  provided to  ADF&G  is garnered  from sport  fishing                                                               
registrations, which  have no information  regarding catch.   She                                                               
said  fishing guides increased from  3,800 in 1998 up to 4,559 in                                                               
2003.   The  percentage of  nonresident fishing  guides has  been                                                               
increasing  as  well,  and the  average  percentage  of  resident                                                               
guides from 1998 to 2003 was 72 percent.  She told members:                                                                     
                                                                                                                                
     This bill established  mandatory reporting requirements                                                                    
     for all sport fishing  businesses and sets license fees                                                                    
     that cover  the cost of  the licensing program.   House                                                                    
     Bill  452  deals with  two  major  needs in  the  sport                                                                    
     fishing  guide  industry:    first   is  the  need  for                                                                    
     increased  information  gathering.    This  bill  would                                                                    
     provide the  Department of Fish and  Game comprehensive                                                                    
     information on the number of  fish caught, the location                                                                    
     of the catch, and number of boats used.                                                                                    
                                                                                                                                
     This  information   tool  helps  the   department  make                                                                    
     informed decisions  that will help protect  fish stocks                                                                    
     and their  habitats, and to maximize  their current and                                                                    
     future  yields.    This benefits  not  just  the  sport                                                                    
     fishing industry, but also ensures  that we fulfill our                                                                    
     constitutional mandate to  manage Alaska's resources to                                                                    
     their maximum sustained yield.                                                                                             
                                                                                                                                
Number 0404                                                                                                                     
                                                                                                                                
REPRESENTATIVE HEINZE continued:                                                                                                
                                                                                                                                
     The  second   part  of  the   bill  is  the   need  for                                                                    
     standardized  consumer safety.    By mandating  minimum                                                                    
     requirements  for sport  fishing guides  and operators,                                                                    
     such  as Red  Cross  first-aid  training and  liability                                                                    
     insurance, we  can be sure  that guides are  trained in                                                                    
     the  event  of  an  emergency and  that  consumers  are                                                                    
     covered under their insurance.                                                                                             
                                                                                                                                
     Thirdly,  consumer   confidence  is  improved   by  the                                                                    
     guarantee  of   certain  standards,   protections,  and                                                                    
     training  that their  guides and  operators will  have.                                                                    
     The sport fishing industry is  an important and driving                                                                    
     factor in Alaska's economy.   No one believes that more                                                                    
     than  I  do.    Such  a  vital  industry  needs  to  be                                                                    
     protected  and supported  in order  to  ensure that  it                                                                    
     remains that way.                                                                                                          
                                                                                                                                
Number 0463                                                                                                                     
                                                                                                                                
JON  BITTNER,  Staff  to Representative  Cheryll  Heinze,  Alaska                                                               
State Legislature, addressed the fees,  noting that there are two                                                               
separate  categories of  license proposed.   One  is for  a sport                                                               
guide operator,  a $100 fee,  and one  is an actual  sport guide.                                                               
If someone wants  both the guide and the  operator licenses, it's                                                               
still a flat  $100 fee; they aren't "stackable."   Discussing the                                                               
fiscal note from the Division of Sport Fish, he said:                                                                           
                                                                                                                                
     The total  operating expenditures for fiscal  year 2005                                                                    
     that would be incurred by  the increase of work brought                                                                    
     on by the extra reporting  that the division would have                                                                    
     to do is  roughly $345,000.  The revenue  brought in by                                                                    
     the fees from the  two separate categories of licensing                                                                    
     would  be  $355,000.    So  this  is  not  an  unfunded                                                                    
     mandate.                                                                                                                   
                                                                                                                                
MR.  BITTNER  concluded  there'll  be adequate  funding  for  the                                                               
increase in jobs, four full-time  employees and one part-time, as                                                               
well as the increase in  equipment needed to handle the increased                                                               
work.                                                                                                                           
                                                                                                                                
Number 0638                                                                                                                     
                                                                                                                                
JIM  PRESTON, Owner,  Big Jim's  Charters, a  fishing and  sight-                                                               
seeing operation that  operates out of Auke Bay,  began by saying                                                               
he wasn't certain Representative  Heinze had offered the proposed                                                               
CS.                                                                                                                             
                                                                                                                                
Number 0700                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO  moved  to  adopt  the  proposed  committee                                                               
substitute (CS),  Version 23-LS1619\D,  Utermohle, 2/27/04,  as a                                                               
work draft.   There being no objection, Version D  was before the                                                               
committee.                                                                                                                      
                                                                                                                                
MR. PRESTON continued:                                                                                                          
                                                                                                                                
     That  version  came  as  a  result  of  many  operators                                                                    
     throughout   the  state   making  comments.   ...  They                                                                    
     responded  ... favorably.    This  legislation is  very                                                                    
     similar  to legislation  that was  here  in the  1990s;                                                                    
     [then-Representative  Alan   Austerman]  had  presented                                                                    
     this.   It actually  passed the House;  it had  gone to                                                                    
     the Senate  and, unfortunately, it died  in the Senate.                                                                    
     As a result of that,  ... regulations were implemented,                                                                    
     which basically are what we're living under now.                                                                           
                                                                                                                                
     For  saltwater guides,  the  regulations  that we  live                                                                    
     under is basically what  this committee substitute bill                                                                    
     is  about, that  is, that  we  have to  register as  an                                                                    
     operator, we  have to register  as a guide, we  have to                                                                    
     make reports through the logbooks.  ...  The difference                                                                    
     is that we are not  required by the regulations to have                                                                    
     an  insurance policy,  nor are  we required  to have  a                                                                    
     first-aid card  by the  state.   Of course,  anyone who                                                                    
     does operate  knows that the  Coast Guard  does require                                                                    
     that we have the first-aid certification.                                                                                  
                                                                                                                                
     For   many   years,   many  of   us   have   tried   to                                                                    
     professionalize our  industry.  It is  an industry that                                                                    
     is one of  the bright spots, I believe,  in the Alaskan                                                                    
     economy, and it  brings an awful lot of  money in here.                                                                    
     When we  go to the  Board of [Fisheries] and  argue our                                                                    
     case ... in  terms of allocation issues,  we keep being                                                                    
     told  the  same thing  over  and  over:   Go  back  and                                                                    
     regulate  yourselves.    Some   of  you  have  sat  and                                                                    
     listened to some of us  talk about moratoriums; some of                                                                    
     you have sat and listened  to us talk about other kinds                                                                    
     of issues.                                                                                                                 
                                                                                                                                
Number 0831                                                                                                                     
                                                                                                                                
MR. PRESTON continued:                                                                                                          
                                                                                                                                
     Not all,  but many, many operators  are very supportive                                                                    
     of  the committee  substitute for  this  as a  definite                                                                    
     step in  the right direction for  being self-regulated.                                                                    
     It would  do many things.   It would, for once  and for                                                                    
     all, list us  formally as a sport fishing  entity.  The                                                                    
     issue of  commercial fishing versus sport  fishing will                                                                    
     go  away with  this.    We'll be  licensed  as a  sport                                                                    
     fishing  entity, as  charter  operators,  as a  service                                                                    
     provider to  sport fishermen.   To me,  that in  and of                                                                    
     itself is worth  the $100 fee that I would  have to pay                                                                    
     as a combined operator and provider.                                                                                       
                                                                                                                                
REPRESENTATIVE GATTO  asked why  Mr. Preston  wasn't in  favor of                                                               
the original bill.                                                                                                              
                                                                                                                                
MR. PRESTON  said the number-one  objection was to  divulging the                                                               
confidential  lists of  clients and  their license  numbers.   He                                                               
said  there were  inconsistencies with  sport fishing  clubs, and                                                               
subsistence and  personal use fishing  versus sport  fishing, and                                                               
that these ambiguities were removed from [Version D].                                                                           
                                                                                                                                
Number 1084                                                                                                                     
                                                                                                                                
KELLY   HEPLER,  Director,   Division  of   Sport  Fish,   Alaska                                                               
Department of Fish  & Game, introduced deputy  director Rob Bentz                                                               
and  said they'd  listen  and  be available  for  questions.   He                                                               
informed  members  that  his department  strongly  supports  this                                                               
bill.                                                                                                                           
                                                                                                                                
Number 1150                                                                                                                     
                                                                                                                                
GEORGE PATTERSON, Owner, "Catchalot" Charters, testified as                                                                     
follows:                                                                                                                        
                                                                                                                                
     I completely  agree with  the bill  that Representative                                                                    
     Heinze has here.   I do have one concern  on the fee of                                                                    
     $100.  I  believe that you need a  nonresident fee such                                                                    
     as the  commercial fishing  crew have.   In  Alaska the                                                                    
     fee is $60  for resident and $180  for nonresident, and                                                                    
     I do believe  that the nonresident should  pay more for                                                                    
     their fishing fee.                                                                                                         
                                                                                                                                
     Another  ... item  I have  is:   How are  you going  to                                                                    
     enforce  this?   The public  safety, the  park rangers,                                                                    
     the  troopers, [and  the Alaska  Department of]  Fish &                                                                    
     Game are stretched to the limit right now. ...                                                                             
                                                                                                                                
     I would address this  to Representative Rokeberg there.                                                                    
     I  do believe  that  the sport  fishing license  should                                                                    
     have some real  meaning to it. ... It should  be set up                                                                    
     like  our real  estate  license here  in  the state  of                                                                    
     Alaska where  new folks going  into the  sports fishery                                                                    
     need to pass a test [at]  a certain level and some sort                                                                    
     of  a  continued education  where  they  ... get  their                                                                    
     Coast  Guard safety,  [and  the  Alaska Department  of]                                                                    
     Fish & Game can give regulation courses.                                                                                   
                                                                                                                                
Number 1320                                                                                                                     
                                                                                                                                
DALE BONDURANT,  Soldotna, said it  appears HB 452 is  an attempt                                                               
to  place  the  commercial  fishing   industry  within  the  same                                                               
constitutional protection  as the  sports fish  guiding industry.                                                               
However, he  finds that  the two industries  have been  proven by                                                               
the  Alaska  Supreme  Court  to  have  nothing  in  common.    He                                                               
indicated a court opinion said the following:                                                                                   
                                                                                                                                
     Admittedly,   there  is   a   difference  between   the                                                                    
     commercial  fisherman and  the professional  guide.   A                                                                    
     commercial fisherman takes his  catch before selling it                                                                    
     to  others  for  consumption  while a  guide  does  not                                                                    
     actually take  game or fish,  a privilege  reserved for                                                                    
     the  client.     We  view  this   as  an  insignificant                                                                    
     distinction that  does not remove the  (indisc.) guides                                                                    
     from the protection  under the common use  clause.  The                                                                    
     work  of a  guide is  so  closely tied  to the  initial                                                                    
     taker that there is  no meaningful basis distinguishing                                                                    
     between the  rights of the  taker under the  common use                                                                    
     clause.                                                                                                                    
                                                                                                                                
MR.  BONDURANT said  this clause  is contained  in Article  VIII,                                                               
Section 3  [of the state  constitution], Common Use,  which says,                                                               
"Wherever occurring  in their natural state,  fish, wildlife, and                                                               
waters  are  reserved  to  the  people  for  common  use."    Mr.                                                               
Bondurant concluded:                                                                                                            
                                                                                                                                
     I've  seen  all  this argument  about  "the  commercial                                                                    
     fishing commission would submit  their problems and the                                                                    
     guides would submit theirs."   I figured then that they                                                                    
     were in the wrong field to  that system.  I also oppose                                                                    
     any  additional fee  for nonresident  fishermen.   They                                                                    
     had  this   problem  with  commercial  fishing   and  I                                                                    
     understand that  Alaska's going  to have  to eventually                                                                    
     pay  $3   million  because   they  were   charging  the                                                                    
     commercial fishing people nonresident  license.  So I'm                                                                    
     against that.  This is  a common property and resource,                                                                    
     and I think it's open for everybody.                                                                                       
                                                                                                                                
Number 1562                                                                                                                     
                                                                                                                                
JOEL HANSON, The  Boat Company, noted that this company  is a 25-                                                               
year-old Alaska  corporation that operates  educational charters,                                                               
sightseeing and shore excursions, and  sport fishing.  He pointed                                                               
out  that four  categories of  concern  with this  bill had  been                                                               
outlined  in written  testimony he'd  provided.   [Those concerns                                                               
related  to new  licenses  and fees  without  new privileges  and                                                               
benefits;  the  "chain  of  guilt"  that  creates  liability  for                                                               
fishing  violations  committed  by  a  client;  the  unreasonable                                                               
burden to  "physically possess"  paperwork; and  the unreasonable                                                               
burden to uphold unreasonable recording requirements.]                                                                          
                                                                                                                                
Number 1687                                                                                                                     
                                                                                                                                
ROBERT  WARD,  Homer  Charter  Association,  concurred  with  the                                                               
testimony of Mr. Preston and said:                                                                                              
                                                                                                                                
     There  are two  of us  here representing  80 people  in                                                                    
     total. ... We would like  to see some adjustment on the                                                                    
     first  fine, the  first-offense  penalty.   At $500  it                                                                    
     seems like it's a little  bit too (indisc.).  We're not                                                                    
     dealing  with  a  resource  here;  we're  dealing  with                                                                    
     paperwork, strictly  administration.  Other  than that,                                                                    
     we  feel  that   we  can  support  the   bill  as  it's                                                                    
     substituted.                                                                                                               
                                                                                                                                
Number 1725                                                                                                                     
                                                                                                                                
TIM EVERS,  Deep Creek Charter  Boat Association,  testified that                                                               
he was in  accord with the previous testimony of  Mr. Preston and                                                               
Mr.  Ward.   He said  he  felt the  $500 fine  was excessive  and                                                               
should be reduced  to $200.  He also said  many of his membership                                                               
want the  fees for nonresidents  in the industry raised  over and                                                               
above those of the resident guides.                                                                                             
                                                                                                                                
Number 1785                                                                                                                     
                                                                                                                                
MARK HEM,  Owner, Hem Charters,  informed members that  he didn't                                                               
support  HB 452  because he  felt the  added burden  of fees  and                                                               
paperwork was excessive to operators.   He said he didn't believe                                                               
the  information  contained  in   the  required  paperwork  would                                                               
necessarily aid in  management or protection of  the fishery, and                                                               
he  expressed  concern about  this  bill's  giving the  Board  of                                                               
Fisheries additional authority.                                                                                                 
                                                                                                                                
CHAIR ANDERSON asked whether Mr. Hem had Version D.                                                                             
                                                                                                                                
MR. HEM  replied that he'd  just received  a copy and  hadn't had                                                               
time to look at it closely.                                                                                                     
                                                                                                                                
CHAIR ANDERSON asked  whether Mr. Hem could hold  off and testify                                                               
at the next hearing.                                                                                                            
                                                                                                                                
MR. HEM agreed to testify again.                                                                                                
                                                                                                                                
Number 1905                                                                                                                     
                                                                                                                                
ALAN LeMASTER,  Owner, Copper  River Salmon  Charters; Secretary,                                                               
Klutina River Association in the Copper Valley, testified:                                                                      
                                                                                                                                
     Last  Monday  the  Klutina   River  Association  had  a                                                                    
     lengthy discussion on HB 452  at our regular membership                                                                    
     meeting.    As  you  might  imagine,  the  concern  was                                                                    
     significant.  The objections were  many and the fear by                                                                    
     some is  that it will  only foster more  state control,                                                                    
     higher  costs,  greater  workload, with  little  or  no                                                                    
     return to those of us that are required to apply.                                                                          
                                                                                                                                
     Many of our members  expressed an understanding for the                                                                    
     reasons of the  ADF&G and have little  objection to the                                                                    
     support  of the  spirit of  the bill.   Most,  however,                                                                    
     expressed a fear that it  opens the door to the state's                                                                    
     ability to  scrutinize our books, thus  leaving us open                                                                    
     to  criticism,  regulation,   penalties,  fines,  fees,                                                                    
     burdensome control by the state.                                                                                           
                                                                                                                                
     Most  of the  objections  expressed  by the  membership                                                                    
     concern   an  inordinate   amount  of   record  keeping                                                                    
     required  and  fears  that   the  persons  outside  the                                                                    
     ADF&G's  "need  to  know" would  pirate  much  of  that                                                                    
     information, placing our businesses in jeopardy.                                                                           
                                                                                                                                
CHAIR ANDERSON asked if Mr. LeMaster was referring to Version D.                                                                
                                                                                                                                
MR. LeMASTER affirmed that and continued:                                                                                       
                                                                                                                                
     Additionally, the  fees suggested are only  a beginning                                                                    
     point.   Our fear  is that  all too  often we  see fees                                                                    
     like these  escalate to much  higher numbers in  only a                                                                    
     few short  years as the  costs to maintain  the program                                                                    
     increases.   A case in  point:  the DEC  [Department of                                                                    
     Environmental  Conservation] passed  regulations a  few                                                                    
     years  ago   that  required  user   fees  of   $50  for                                                                    
     inspections of  food establishments.  Now  that fee has                                                                    
     expanded to  $150 and, in  my case, they  are assessing                                                                    
     two  or  three different  fees  for  the same  business                                                                    
     because   we  have   little   differences  within   our                                                                    
     business.   So,  over  the years  the inspections  have                                                                    
     been   reduced  and,   in   some  cases,   discontinued                                                                    
     altogether,  and yet  the fees  go  up.   We call  that                                                                    
     double taxation.   In principle [that]  will, without a                                                                    
     doubt, happen  with the sports fishing  industry as the                                                                    
     agencies  learn  that  the  maintenance  costs  of  the                                                                    
     program  are  significant,  rather than  [those]  being                                                                    
     suggested in your fiscal notes.                                                                                            
                                                                                                                                
Number 2032                                                                                                                     
                                                                                                                                
MR. LeMASTER continued:                                                                                                         
                                                                                                                                
     Right now,  in order  for me  to put  my people  on the                                                                    
     rivers up  here in the Copper  Valley, I have to  buy a                                                                    
     business  license, a  Coast Guard  license;  I have  to                                                                    
     have  fishing  permits;  I  have  to  have  a  driver's                                                                    
     license; I  have to  have insurance; I  have to  have a                                                                    
     fishing  license and  a king  stamp; I  have to  have a                                                                    
     permit at  the local  store down  here; and  the guides                                                                    
     have to  have a  letter that shows  that they  work for                                                                    
     me.                                                                                                                        
                                                                                                                                
     There's about 10  or 12 things they have to  have.  And                                                                    
     after you compile all of  this information, ... what do                                                                    
     you  do about  the people  that aren't  being guided  -                                                                    
     which in our case in this  valley are at least as many,                                                                    
     if not  twice as  many, people as  are being  guided on                                                                    
     our rivers.   You're getting no  information from them,                                                                    
     so how  valid can all  of this information be  that you                                                                    
     compile, when  it's only a significantly  small portion                                                                    
     of  the total  amount that  you need  in order  to make                                                                    
     good decisions?   So  with that,  we as  an association                                                                    
     took a vote,  and it did not pass to  support this bill                                                                    
     at this time.                                                                                                              
                                                                                                                                
CHAIR ANDERSON announced that HB 452 would be held over,                                                                        
allowing for additional testimony.                                                                                              
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
5:35 p.m.                                                                                                                       

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