Legislature(2001 - 2002)
05/02/2001 09:43 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
May 02, 2001
9:43 AM
TAPES
SFC-01 # 92, Side A
SFC 01 # 92, Side B
CALL TO ORDER
Co-Chair Pete Kelly convened the meeting at approximately 9:43 AM.
PRESENT
Senator Dave Donley, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Jerry Ward, Vice Chair
Senator Loren Leman
Senator Gary Wilken
Senator Alan Austerman
Senator Lyman Hoffman
Senator Donald Olson
Also Attending:
BOB LOEFFLER, Director, Division of Mining, Land and Water,
Department of Natural Resources; CAREN ROBINSON, Chair, Mental
Health Trust Authority; JEFF JESSEE, Executive Director, Mental
Health Trust Authority, Department of Revenue; RANDALL BURNS, CEO,
Alaska Psychiatric Institute; NELSON PAGE, Trustee, Mental Health
Trust Authority
Attending via Teleconference:
From Glennallen: SY NEELEY; Off Net location: HARVEY BASKIN; From
Barrow: BILL TEGOSEAK
SUMMARY INFORMATION
SB 139-STATE WATER USE
The Department of Natural Resources presented testimony to the
Committee. A committee substitute was adopted, and the bill was
held in Committee.
HB 76-NEW FACILITIES FOR API
The Mental Health Trust Authority presented testimony to the
Committee. The bill was held in Committee.
HB 242-TRS & PERS REEMPLOY & MED BENEFITS; COLA
Scheduled but not heard.
HB 204-STUDENT LOANS/COMN. ON POSTSECONDARY ED.
Scheduled but not heard.
SENATE BILL NO. 139
"An Act relating to fees for certain uses of state water and
the accounting and appropriation of those fees; relating to
authorizations for the temporary use of state water; making
other amendments to the Alaska Water Use Act; and providing
for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
BOB LOEFFLER, Director, Division of Mining, Land and Water,
Department of Natural Resources, informed this bill is part of a
two-part solution to solve the problem of providing water to
industries and citizens in the state. He stressed the state has
been unable to keep up with water right permits that allow for the
withdrawal of significant water quantities from a source. He
detailed the number of backlog requests for permits and the
ramifications of the backlog. He said this bill addresses the
permitting problem, which is causing the backlog.
Mr. Loeffler specified that the first of the two components of this
bill provides for three things: allows the Department to do
business faster and more efficient by way of streamlined
regulations; provides more funding for the process; and allows the
Department to establish a fee process that charges for the
reasonable direct costs of providing the service.
Mr. Loeffler explained that the second component of the bill
reestablishes the temporary water use program by establishing
explicit statutory authorization.
Mr. Loeffler informed that this program has been "reasonably non-
controversial, except in the North Slope region," has been in
existence for twenty years, and has "performed well for Alaskans
and in protecting the resources." He said that the language of this
bill clarifies portions of the program that have been open to
"judicial interpretation" because of the lack of explicit statutory
authorization.
Co-Chair Kelly asked for further explanation on the second
component of the bill.
Mr. Loeffler reiterated that this bill would provide explicit
statutory authorization. He informed that the Department provides
temporary water rights permits for such things as the water roads
in the North Slope. He said that numerous permits in the North
Slope region have been appealed and taken to court by entities such
as Green Peace and other plaintiffs. He announced to the Committee
the Department lost a portion of one decision last year that
provided some additional procedures that the Department did not
think were necessary, and in fact, threatened exploration on the
North Slope by "almost costing the state a year of exploration." He
stressed this bill provides explicit statutory authorization for
the temporary use of water; not a property right or irrevocable
permit for the use of water. He said that this explicit statutory
authorization is consistent with how the Department has been
administering the program for twenty years.
Senator Hoffman asked how this bill would apply to an individual in
a rural area who wants to drill a well.
Mr. Loeffler replied that the bill provides for the charging of
reasonable direct costs of services, and because there is "very
little competition for use of water in rural areas," the cost is
relatively small. He said this bill encourages the Department to
not lump someone in rural areas in with oil companies. The current
cost would be $50 to individuals, and that "cost would probably go
up but not very much."
Co-Chair Kelly asked where in the bill the limitations on costs are
addressed.
Mr. Loeffler informed that the limitations on cost are found in
Section 1 (b), Section 3, and Section 4. He informed that Section 1
(b) details what costs are allowed when determining a reasonable
cost of service. He said that the process clearly defines what the
authorization is for determining fees using this methodology.
Senator Hoffman asked how long it would take to bring the backlog
of permit applications current under the new system.
Mr. Loeffler responded that the Department has committed to new
performance measures that specify a "typical new water rights
permit would be issued within sixty days; a typical temporary water
use permit within fifty days; and the backlog would be eliminated
within four or five years." He clarified that much of the backlog
is comprised of amendments and transfers that are not "time
critical." He continued that a permit of "critical matter" would be
addressed accordingly.
Senator Austerman noted several references to "withdrawals less
than significant" in the bill, and asked if the definition of that
term is in Regulation, and what the term meant.
Mr. Loeffler explained the current regulation specifies any entity
that withdraws 500 gallons of water a day must apply for a permit.
He continued that the Department proposes to streamline the program
by changing this regulation by allowing for two thresholds for the
permits: one would define "significant" as the use of 5,000 gallons
a day for anadromous streams and up to 50,000 gallons a day for
groundwater or non-anadromous streams; the other would be "less
than significant" meaning 500 to 5,000 gallons of water a day.
Mr. Loeffler clarified that in the "withdrawals less than
significant" scenario, the permit "would just get agency review,"
and only if the agency finds there is "the potential for
environmental problems would a full adjudication be administered."
He stressed this would streamline the operation, and while everyone
would have to apply for a permit in order to ensure the protection
of anadromous fish streams, the process would help concentrate the
staff on those permits that are critical.
Senator Leman moved to adopt the committee substitute 22-GS1087\J,
Cook/Luckhaupt as a working draft.
There being no objection, the working draft was ADOPTED.
AT EASE 10:55 AM/11:00 AM
Senator Leman noted the committee substitute contains three
changes: in Section 1 (a) language relating to unnecessary findings
was deleted to reflect more appropriate language for the purposes
of the legislation; a wording change of "policy of the state" to
"policy of the "legislature;" and page 3, lines 11-13 were
rewritten to "clearly state what the Department has done regarding
issuance of irrevocable permits."
Co-Chair Donley asked for clarification on whether fiscal note #2
replaces fiscal note #1.
Mr. Loeffler responded yes.
Co-Chair Donley asked Mr. Loeffler to clarify the differences
between the two fiscal notes.
Mr. Loeffler informed that fiscal note # 1 contains a permitted
water rights royalty fee system based on a sliding scale. He shared
that significant objections were raised to that fee structure and
the Senate Resources Committee changed the fee structure to
"reasonable direct costs." He advised that revenue generated from
the sliding scale fee structure would have been greater than that
generated from the reasonable direct costs structure, and the
Department Expected Water Resources Income account reflects that
difference.
Mr. Loeffler continued that fiscal note #2 reflects the deletion of
any FY 02 funding request as the House of Representatives and the
Senate funded the Department with $300,000 general funds.
Co-Chair Donley asked why there is a five-person increase for FY 02
included in fiscal note #2 if the money is already in the budget.
Mr. Loeffler noted that is an error in fiscal note #2.
Mr. Loeffler informed that the Department currently receives
$135,800 in general fund program receipts consistent with the
intent of this bill. He continued that these program receipts
increase, in two years, to $320,000 reflecting the increase in fees
based on the reasonable direct costs fee structure. He said the
$300,000 general funds increment reduces to $115,000 once the
reasonable direct costs fee structure is in place. In FY 07, Mr.
Loeffler noted, the backlog of permits would be finished and
several positions that were needed to address the backlog would be
eliminated. He summarized that the Department is funded in FY O2 by
general funds, FY 03 is a transition year, FY 04 through FY 06
would be combinations of general funds and program receipts, and in
FY 07, when the backlog of permits is brought current, general
funds would not be necessary as the program would be totally funded
with program receipts.
Senator Green informed that numerous people in the state,
especially those in the agriculture business, have concerns with
the often costly process of arranging for water access while not
knowing if their permit for water would be granted. She questioned
if water and resource conservation district offices around the
state that have received federal funds, could assist people in
those districts get their permits in order.
Mr. Loeffler replied that any help of this sort would be
appreciated. He also informed that the Department would be
establishing on-line permit applications in the future.
Mr. Loeffler said the soil and water conservation district offices
could not be the regulator, but could help people with the
permitting information needed by the Department, thereby, helping
the entire system be more efficient.
Senator Green asked to clarify if the term "regulator" meant the
agency that issued the permit.
Mr. Loeffler replied that was correct.
Senator Green asked if there was an advisory role the water and
soil conservation agencies could serve in advising the Department
that a permit was in order.
Mr. Loeffler responded it would be helpful to have information from
the water and soil conservation agencies indicating that a permit
was in order.
Senator Green asked if there was anything needed in this
legislation to help further the relationship between the Department
and the water and soil conservation agencies.
Mr. Loeffler replied that he did not think anything needed to be
addressed in the Legislation; that the Committee's encouragement
was enough.
Senator Green said the Committee could present an amendment if the
Department felt it necessary to further the interaction between the
Department and the water and soil agencies.
Co-Chair Kelly asked for clarification as to whether the groups
Senator Green referred to are federal or state agencies.
Mr. Loeffler responded that they are actually local district
groups.
Co-Chair Kelly mentioned that in the regulatory permitting process
there is a comment area through which various groups could
participate as part of the process.
Mr. Loeffler responded that yes, in the permitting process for
water rights, there is a comment area.
Co-Chair Kelly concluded that this comment area would be the area
through which these agencies "would naturally emerge as someone who
would be involved in the process."
Senator Green asked if these local district groups had been
included in the development of this legislation.
Mr. Loeffler replied that the Department had been in contact with
various agricultural groups in some the water conservation
districts but not specifically the district groups.
Senator Wilken voiced general support of the bill, but inquired how
the word "temporary" is defined as detailed on page 4, lines 3
through 9, "Section 6, 46.15.155 Authorization for temporary use of
water (a). Notwithstanding any contrary provision of this chapter,
the commissioner may authorize the temporary use of a significant
amount of water, as determined by the department by regulation, for
a period of time not to exceed five consecutive years, if the water
applied for has not been appropriated in accordance with this
chapter. The commissioner may extent an authorization under this
section for one additional term of five consecutive years."
Senator Wilken stated this language implies a permit could be
issued for five years, and unless there has been a disregard for
the water use application, there is an automatic renewal, making
this temporary permit a ten-year permit. He voiced that some people
could decipher this as a permanent permit. He asked Mr. Loeffler to
explain the basis of the five-year permit and the five-year
extension, and whether it should be longer or shorter. He also
inquired about the history behind the verbiage on page 4,
subsection (f) lines 25 through 27 "The commissioner may impose
reasonable conditions or limitations on an authorization for
temporary use of water to protect the water rights of other persons
or to protect fish and wildlife habitat, public health, or other
public interests."
Mr. Loeffler responded that a five-year temporary permit with a
possible five-year extension has been an established authorization
of the Department for approximately twenty years. He continued that
this does not necessarily mean it is the correct approach, but that
it does address the need for the Department to be able to issue
"permits for the duration of construction." He informed that of the
200 permits that are currently in effect, only three or four
involve a construction timeframe of longer than five years.
He commented that if the Committee wished to delete the five-year
extension clause, it would not negatively affect the program. He
reiterated that the intent of the temporary permit is to be
temporary.
Mr. Loeffler said that subsection (f) is supported by the
Department in the following manner: where habitat resources are a
concern, the application is reviewed with the Department of Fish
and Game and the issues are addressed; if a road construction job
is in a neighborhood, such things as the construction start times
would be addressed. He stressed that the Department is very aware
of protecting resources.
AT EASE 10:15 AM/10:15 AM
Senator Hoffman asked how this bill addressed water usage by
miners.
Mr. Loeffler answered that miners are one of the major consumers of
both water rights and temporary water use permits. He stated this
bill would allow the Department to provide miners a better level of
service.
Co-Chair Kelly informed that public testimony would now be taken.
SY NEELEY, testified via teleconference from Glennallen and noted
he was looking at the working draft and some other backup material
and wished to clarify that this bill only deals with temporary
water use, as some of the earlier backup material referenced
private water wells.
Mr. Loeffler responded that this bill only deals with temporary
water use, however the fee portion would apply to all water usage.
The re-authorizing statute applies to temporary water usage only,
he stated.
Mr. Neeley asked for clarification that the Department would be
charging a fee based on the gallons of water used for a private
home.
Mr. Loeffler responded that for private home water use, the
Department would only charge an application fee plus the
established $50 annual fee.
Co-Chair Kelly reiterated a private home annual fee would be $50
and there is not a fee based on gallons. He also informed that an
application fee was applicable.
Mr. Neeley asked how much the application fee would be.
Mr. Loeffler responded that it is now $50 and would be going up
marginally to between $50 and $100.
Mr. Neeley inquired about the fee structure on commercial wells
used by public entities such as homeowners' associations and towns.
Co-Chair Kelly replied that the same fees would apply.
Mr. Neeley asked if the gallon usage costs would apply to these
types of water uses.
Co-Chair Kelly replied that the costs for towns and homeowners'
associations did not include a gallon usage fee.
Mr. Neeley summarized there would be a $50 annual fee "plus
whatever is determined to be the application fee." Mr. Neeley
stated this verbal exchange "has cleared up" the questions he had
about the bill.
HARVEY BASKIN, dairy farmer, testified via teleconference off-net
from Wasilla that the drought conditions of the past three years
that have affected Wasilla and Delta are a critical issue. He
informed that four farmers in the Wasilla area are each investing
$100,000 to upgrade to pivot irrigation systems, and that he had to
purchase $35,000 of hay to feed his cows this year.
Mr. Baskin stressed there is "no way that a small farmer can invest
that kind of money without a guaranteed certificate of water
appropriation." He stated that a temporary permit is "absolutely
nothing but trouble ahead for a person who is investing in a pivot
irrigation system because if the temporary permit expires in five
years, the investment made in that system has not had time to pay
for itself." He expressed support for the bill and commended Mr.
Loeffler and his staff at the Department of Natural Resources for
attempting to get the issue of water rights "cleared up."
BILL TEGOSEAK, Interim Executive Director of Inupiat Community of
the Arctic Slope (ICAS), testified via teleconference from Barrow
and expressed concern regarding the proposed bill. He stated that
"subsistence is a way of life in rural Alaska," and "the health of
our environment and the prudent use of resources such as water" has
"significant bearing on the health and continuing existence of
other natural resources" the Rural people depend on for "livelihood
and cultural preservation." He informed that the prior week, the
Committee received written comment from ICAS, "a federally
recognized regional tribal government" in opposition to SB 139 as
it relates to temporary water use permits. [Copy on file]
Mr. Tegoseak restated the ICAS concerns about SB 139 and SB 185
particularly as they relate to the issuance of temporary water use
permits. He warned this bill represents "the continuation of the
Department of Natural Resources' "illegal practice of giving
billions of gallons of North Slope water resources away with no
public notice, no tribal consultation, no scientific analysis, and
no access to traditional knowledge about the water bodies from
which the water is being taken." He voiced that the criteria to
"protect fish and wildlife habitat, public health, or other values
are specifically not applied to temporary water use permits." He
stated he is concerned that the issuance of temporary water use
permits under provisions of SB 139 will exempt all such permits
from public notice, and that the Department of Natural Resources'
current permitting practice and this bill are "contrary to the
water management policy interests" as established in the North
Slope Water Management Policy.
Mr. Tegoseak detailed the need for SB 139 to more thoroughly
address a better analysis of the "water withdrawal impacts on
subsistence resources in the region."
Mr. Loeffler replied the North Slope Borough has the opportunity to
require public notice through the coastal zone program, and stated
that the requirement of giving public notice does not apply to
temporary water use permits because they have a limited impact on
resources. He informed that the Department of Natural Resources
issued public notice for eleven permits this year and did not
receive any comments from any communities or tribes.
Mr. Loeffler commented that he would investigate the status of the
North Slope Water Management Policy but commented that he was sure
it had been revoked. He shared that the average water withdrawal on
the North Slope is approximately one billion gallons, and while
this may seem like a large amount, it is a relatively small
percentage of the sources.
Co-Chair Kelly ordered the bill HELD in Committee.
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 76(FIN)
"An Act providing for and relating to the issuance of
certificates of participation to finance construction of a new
facility to be known as the Alaska Psychiatric Institute;
giving notice of and approving the entry into and the issuance
of certificates of participation in a lease-purchase agreement
for construction of a new facility to be known as the Alaska
Psychiatric Institute; giving notice of the intent and
approval to retain investment income from pertinent
appropriations to be applied to the cost of construction of a
new facility to be known as the Alaska Psychiatric Institute;
relating to the construction of a facility to be known as the
Alaska Psychiatric Institute; and providing for an effective
date."
This was the first hearing for this bill in the Senate Finance
Committee.
CAREN ROBINSON, Chair, Mental Health Trust Authority, informed
the Committee that the Trust has been working on this project for
many years.
JEFF JESSEE, Executive Director, Mental Health Trust Authority,
Department of Revenue, addressed the concern that the proposed size
of the Alaska Psychiatric Institute (API) is "too small." He stated
that in 1983, API housed 200 people, and now it averages less than
70 people because of statewide efforts to develop community-based
services. He stressed that this approach can and should continue
and that "privatizing health care at the local level of service and
providing available short-term, inpatient services throughout the
state is good public policy." He informed that the Trust does not
want to build a bigger hospital, and that twenty of the beds in the
new facility are designated because other options are not currently
available in Anchorage as they are in other communities. He
informed that Anchorage does not have these alternative services
because API has been in operation in Anchorage.
SFC 01 # 92, Side B 10:35 AM
Mr. Jessee shared that the Trust has a joint agreement with
Providence Hospital, the University of Alaska, and the Department
of Health and Social Services whereby the Trust would be making
land available in Anchorage with the understanding that services
such as "designated evaluation and treatment will be provided in
the private sector." He continued that other areas of the state,
such as Mat-Su, Kenai, and Kodiak, could also consider privatizing
some health care services and serve people closer to home through
use of the private sector.
Mr. Jessee addressed concerns regarding a proposed road through
this parcel that was "put in abeyance" until the Municipality of
Anchorage and the Trust determined the location of the new API
facility. Mr. Jessee commented that the Trust has no position on
whether a road is constructed on the parcel or not. He continued
that the plans to construct the new API facility between the
current building and the hill should go forward regardless of the
outcome of a more involved public process regarding whether the
area's transportation needs require a road. He stressed that the
Trust is only concerned that there is road access to the site. He
said the road issue requires a lot more public process and a lot
"more deliberation by the Municipality."
Ms. Robinson voiced support for the establishment of new community
services and the size of the new API building, contrary to recent
testimony of a consumer group before the Committee that did not
support construction of a new building.
NELSON PAGE, Trustee, Mental Health Trust Authority, noted that the
bill before the Committee is the keystone of an agreement that was
reached between the Municipality of Anchorage, the Department of
Health and Social Services, University of Alaska, Providence
Hospital, API and the Mental Health Trust Authority. He stressed
that it appears that all parties are in agreement on this "core
issue about the importance of their existence and their future." He
urged support of the bill.
RANDALL BURNS, CEO, Alaska Psychiatric Institute, stated that the
replacement of the current API building is important because the
"facility is forty years old; fire and life safety systems are worn
out; it is permeated with asbestos; it doesn't meet seismic codes;
and was never designed as a psychiatric hospital." He noted that as
recently as March of this year, a survey was done that determined
it would cost $75 to $81 million to replace the current building on
its present site, and the request in this bill for a new API
facility is a total cost of construction of $41.7 million. He
commented that it is much more economical to build a new facility
than to demolish and renovate the existing one.
Mr. Burns stressed that the agreement between these groups has had
the following results: enabled the size of the facility to be
reduced resulting in significant cost savings; to be constructed
using a design-build approach; has eliminated the cost of
demolition at this time; and the new API building will be a multi-
story building on eight acres instead of single story building on
16 acres thereby providing additional land availability for
exchanges with Providence Hospital or the University of Alaska.
Mr. Burns explained that the demolition was isolated from the costs
of the new building project because the Department would be seeking
federal funds for that purpose before the Department requested any
expenditure of general funds.
Mr. Burns detailed the requested expenditure components in the bill
and asked for the Committee's support.
Co-Chair Kelly stated the bill would be HELD in Committee.
Senator Wilken asked the Department to supply the Committee with a
five to ten year occupancy projection for the new API facility.
Senator Ward requested the Department to provide the Committee an
engineering study on the remaining lifespan of the existing
building and what the remodeling costs would be on extending that
lifespan.
RECESSED TO THE CALL OF THE CHAIR 11:45 AM/3:43 PM
ADJOURNMENT
Co-Chair Pete Kelly adjourned the meeting at 03:43 PM
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