Legislature(2013 - 2014)SENATE FINANCE 532

04/03/2013 09:00 AM Senate FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 18 BUDGET: CAPITAL TELECONFERENCED
Heard & Held
+ HB 77 LAND USE/DISP/EXCHANGES; WATER RIGHTS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                       April 3, 2013                                                                                            
                         9:09 a.m.                                                                                              
                                                                                                                                
9:09:51 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Meyer called the Senate Finance Committee meeting                                                                      
to order at 9:09 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Kevin Meyer, Co-Chair                                                                                                   
Senator Anna Fairclough, Vice-Chair                                                                                             
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Suzanne  Armstrong,  Staff,   Senator  Kevin  Meyer;  Daniel                                                                    
Sullivan,  Commissioner,  Department of  Natural  Resources;                                                                    
Cora Campbell,  Commissioner, Department  of Fish  and Game;                                                                    
Wynn  Menefee, Deputy  Director, Division  of Mining,  Land,                                                                    
and  Water,  Department  of Natural  Resources;  Ed  Fogels,                                                                    
Deputy Commissioner, Department of Natural Resources.                                                                           
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 18     BUDGET: CAPITAL                                                                                                       
                                                                                                                                
          SB 18 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
CSHB 77(RES)                                                                                                                    
          LAND USE/DISP/EXCHANGES; WATER RIGHTS                                                                                 
                                                                                                                                
          CSHB 77(RES) was HEARD and HELD in committee for                                                                      
          further consideration.                                                                                                
                                                                                                                                
SENATE BILL NO. 18                                                                                                            
                                                                                                                                
     "An  Act   making  appropriations,   including  capital                                                                    
     appropriations   and   other   appropriations;   making                                                                    
     appropriations to  capitalize funds; and  providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
9:11:13 AM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly  MOVED  to   ADOPT  the  proposed  committee                                                                    
substitute  for  SB  18,  Work  Draft  28-GS1798\O  (Martin,                                                                    
4/2/13).                                                                                                                        
                                                                                                                                
Co-Chair Meyer OBJECTED for discussion.                                                                                         
                                                                                                                                
SUZANNE  ARMSTRONG, STAFF,  SENATOR  KEVIN MEYER,  discussed                                                                    
the changes  in the  work draft. She  stated that  Section 1                                                                    
contained  FY  14 capital  projects  and  grants. Section  1                                                                    
included  the  FY  14  agency  budget  requests,  grants  to                                                                    
municipalities, grants  to named  recipients, and  grants to                                                                    
unincorporated  communities. She  explained  that Section  1                                                                    
totaled  $702.889  million  in  unrestricted  general  funds                                                                    
(UGF), $124.622  million in designated general  funds (DGF),                                                                    
$55.180  in  other  state funds,  and  $923.431  in  federal                                                                    
receipts. The total  request in Section 1  was $1.8 billion.                                                                    
She announced that  Sections 2 and 3 were  fund source roll-                                                                    
ups,  which   detailed  agency  and  fund   source  for  the                                                                    
appropriations made in Section 1.                                                                                               
                                                                                                                                
Co-Chair  Meyer  queried  the  page  number.  Ms.  Armstrong                                                                    
replied that Section 1 began on page 2.                                                                                         
                                                                                                                                
9:14:12 AM                                                                                                                    
                                                                                                                                
Ms.  Armstrong stated  that Section  2 was  the fund  source                                                                    
roll-up,  and Section  3  was the  fund  source roll-up  for                                                                    
Section 1.  She explained that  Section 2 began on  page 64,                                                                    
and Section  3 began on  page 68.  She looked at  Section 4,                                                                    
which  began  on  page  70,  and  stated  that  it  was  the                                                                    
supplemental capital appropriations for  July 1, 2012 ending                                                                    
June  30,  2013. She  stated  that  Section 4  totaled  $137                                                                    
million including $114 million of  UGF, $22 million of other                                                                    
state  funds,  and  approximately   $1  million  in  federal                                                                    
receipts.  She  stated  that the  fund  source  roll-up  for                                                                    
Section 4 was  on page 72 and 73, which  were Sections 5 and                                                                    
6. Section 7  began on page 74, which  were the supplemental                                                                    
operating appropriations  for July  1, 2012 ending  June 30,                                                                    
2013. She stated  that Section 7 was a  reduction of $16.591                                                                    
million in  total funds; of  which $14.955 million  was UGF,                                                                    
$578,000 was  DGF, $1.1 million  was other state  funds, and                                                                    
$64,800  was federal  receipts. Sections  8 and  9 were  the                                                                    
fund source roll-ups for Section  7. Section 8 began on page                                                                    
80  and Section  9  began  on page  82.  She explained  that                                                                    
Section 10  was the  language section,  which began  on page                                                                    
83. Section  10 included items  from the FY  03 supplemental                                                                    
capital.  The total  for the  supplemental capital  language                                                                    
section was $59.5 million in  total funds; with $57.5 in UGF                                                                    
and $2 million other state  funds. He furthered that Section                                                                    
10 also  included FY 13 supplemental  operating expenditures                                                                    
that totaled  a reduction of  $59.9 million in  UGF. Section                                                                    
10  also  included  the   fund  capitalization  found  under                                                                    
Section   20  on   page  87   line  26.   She  stated   that                                                                    
approximately  $25 million  would be  applied to  the Alaska                                                                    
Gasline  Inducement   Act  (AGIA)  reimbursement   fund;  $2                                                                    
million  into  the  Emerging Energy  Technology  fund;  $3.4                                                                    
million into  the Disaster Relief  Fund; $10 million  into a                                                                    
Knik Arm  Bridge and Toll  Authority (KABATA)  reserve fund;                                                                    
and $618,000 to  the small municipal school  fund, which was                                                                    
contingent on the  passage of a bill that  opened a criteria                                                                    
and renames the fund.                                                                                                           
                                                                                                                                
Ms.  Armstrong looked  at  Section 21,  which  was the  fund                                                                    
transfer section that  began on page 88, line  6. She stated                                                                    
that  the  NPRA  impact  grant program  was  established  in                                                                    
Section 23,  and listed the  projects beginning on  page 88.                                                                    
The  section also  included reappropriations  that had  been                                                                    
requested  by the  administration  for  state agencies,  and                                                                    
reappropriations  that were  requested  by legislators.  She                                                                    
stated that  Section 43 provided  a lapse extension  for the                                                                    
Alaska  Arctic  Policy  Commission  to June  30,  2014.  She                                                                    
stated that Section 14  established the contingency language                                                                    
for  appropriations  that  were  contingent  on  passage  of                                                                    
legislation. She explained that  Sections 48 through 51 were                                                                    
the effective date clauses.                                                                                                     
                                                                                                                                
9:19:11 AM                                                                                                                    
                                                                                                                                
Co-Chair   Meyer   pointed  out   that   the   bill  was   a                                                                    
significantly  smaller capital  budget  than  what had  been                                                                    
over recent years. He stressed  that there was an attempt to                                                                    
maintain  the guidelines  to  maintain  the current  assets,                                                                    
finish some  of the  phased projects,  and look  for various                                                                    
needed projects in various regions throughout the state.                                                                        
                                                                                                                                
Senator Bishop thanked Ms. Armstrong for her work.                                                                              
                                                                                                                                
Senator  Olson  asked what  time  the  amendments should  be                                                                    
submitted.  Co-Chair  Meyer   replied  that  the  amendments                                                                    
should be submitted the current day by 6:00 p.m.                                                                                
                                                                                                                                
Co-Chair  Meyer  noted that  the  total  capital budget  was                                                                    
approximately  $2  billion,  and  remarked  that  there  was                                                                    
approximately  $1   million  reduced  from   the  governor's                                                                    
proposed  budget. He  pointed out  that the  previous year's                                                                    
budget was  $2.9 billion with  a bond of  approximately $450                                                                    
million. Ms.  Armstrong added that the  committee substitute                                                                    
had $1.8 billion  in total funds, with a  reduction from the                                                                    
governor's proposed budget of $108 million.                                                                                     
                                                                                                                                
SB  18  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
9:24:48 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:25:54 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
CS FOR HOUSE BILL NO. 77(RES)                                                                                                 
                                                                                                                                
     "An  Act relating  to the  Alaska  Land Act,  including                                                                    
     certain authorizations, contracts,  leases, permits, or                                                                    
     other disposals of state  land, resources, property, or                                                                    
     interests;  relating to  authorization for  the use  of                                                                    
     state land  by general permit; relating  to exchange of                                                                    
     state   land;  relating   to  procedures   for  certain                                                                    
     administrative     appeals     and     requests     for                                                                    
     reconsideration   to   the  commissioner   of   natural                                                                    
     resources; relating  to the Alaska  Water Use  Act; and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
9:26:54 AM                                                                                                                    
                                                                                                                                
DANIEL   SULLIVAN,  COMMISSIONER,   DEPARTMENT  OF   NATURAL                                                                    
RESOURCES (DNR), introduced himself.                                                                                            
                                                                                                                                
CORA  CAMPBELL, COMMISSIONER,  DEPARTMENT OF  FISH AND  GAME                                                                    
(DFG), introduced herself.                                                                                                      
                                                                                                                                
WYNN  MENEFEE, DEPUTY  DIRECTOR, DIVISION  OF MINING,  LAND,                                                                    
AND  WATER,  DEPARTMENT  OF  NATURAL  RESOURCES,  introduced                                                                    
himself.                                                                                                                        
                                                                                                                                
Commissioner  Sullivan  stated  that there  was  a  previous                                                                    
presentation on the efforts that  the state had undertook to                                                                    
make  the  permitting  system more  timely,  efficient,  and                                                                    
certain; and HB 77 was focused  on those goals. He felt that                                                                    
the permitting  reform and modernization was  important, and                                                                    
would  maintain  the  highest  environmental  standards.  He                                                                    
specifically  pointed out  that  the bill  would uphold  the                                                                    
highest standards specifically related  to the protection of                                                                    
fish.  He  furthered that  the  goal  of broader  permitting                                                                    
reform  and modernization  was a  goal  that benefitted  all                                                                    
Alaskans  across various  groups  and  individuals. He  felt                                                                    
that DNR  had a  substantial backlog  of permits,  with some                                                                    
extending years backwards. He felt  that the backlog was not                                                                    
helpful with  regard to  efficiencies, employment,  and many                                                                    
other  permit   relating  factors.   He  pointed   out  that                                                                    
permitting  reform   was  a   bipartisan  effort   that  was                                                                    
occurring  in various  other states,  and remarked  that the                                                                    
bill  would make  certain  changes that  would  result in  a                                                                    
cumulative  effect  to serve  the  public  better with  more                                                                    
timely and  cost effective decisions.  He stated that  HB 77                                                                    
was a continuation  of the effort that began  the year prior                                                                    
with  HB  361.   He  remarked  that  HB   361  had  smaller,                                                                    
incremental  changes that  provided an  important cumulative                                                                    
effect. He  stated that DNR  experts had conducted  a review                                                                    
of the  permitting system  to ensure  that it  was efficient                                                                    
for applicants. He explained that  the permitting reform had                                                                    
utilized input from the communities.  He stressed that HB 77                                                                    
reflected the DNR internal review and public input.                                                                             
                                                                                                                                
9:31:41 AM                                                                                                                    
                                                                                                                                
Commissioner  Sullivan highlighted  the areas  of importance                                                                    
that he  felt the committee  would find relevant.  He looked                                                                    
at the  issue of general  permit activity. He  remarked that                                                                    
the  bill   would  give   the  DNR   commissioner  statutory                                                                    
authority to  issue general  permits on  certain activities.                                                                    
He explained that general permits  were often issued, so the                                                                    
bill  would provide  clear  authority  from the  legislature                                                                    
written  in statute.  He stated  that land  exchange matters                                                                    
were  often  issues that  could  take  years to  permit.  He                                                                    
stressed that  it was important for  land exchange processes                                                                    
to run more efficiently. He  stressed that the land exchange                                                                    
permitting issues  had historically taken years  to resolve.                                                                    
He pointed out  that HB 77 focused on  more flexibility with                                                                    
regard  to land  exchanges.  He further  pointed out  appeal                                                                    
issues. He  stated that HB  77 sought to reform  the appeals                                                                    
and   administrative    review   process    by   encouraging                                                                    
participants to  be involved in  the process  throughout the                                                                    
appeal  and administrative  review  process.  It would  also                                                                    
tighten  the eligibility  standards  for  those appeals.  He                                                                    
pointed out that  the statute would focus  on amending water                                                                    
reservation  statutes  to  have the  application  for  water                                                                    
reservations  apply   to  federal  or  state   agencies,  or                                                                    
political subdivisions  of the  state. He remarked  that the                                                                    
water reservation  aspect was the most  controversial aspect                                                                    
of the bill. He referred to  a letter that he had written to                                                                    
Representative Edgmon  that outlined some of  the components                                                                    
of the water reservation aspects of HB 77 (copy on file).                                                                       
                                                                                                                                
9:35:28 AM                                                                                                                    
                                                                                                                                
Commissioner Sullivan stated that  there were three types of                                                                    
water   authorizations.   He   explained  that   the   water                                                                    
reservation,  which  was the  only  focus  in the  bill.  He                                                                    
stated that the  water reservation set a  specific amount of                                                                    
water to be retained in a  water body to ensure whether that                                                                    
water  is  used to  maintain  healthy  fish populations,  or                                                                    
water reservations  could be used for  other public purposes                                                                    
such  as navigability,  recreation,  or  water quality.  The                                                                    
other two types  of water authorizations that  were not part                                                                    
of  the bill  were  temporary water  use  permits and  water                                                                    
rights. With  regard to the  amendments suggested in  HB 77,                                                                    
it only  affects the statutory responsibilities  of DNR with                                                                    
regard to water reservations. He  stressed that the bill did                                                                    
not  change any  provision relating  to DFG's  authority. He                                                                    
stated that the goal of  the proposed change, with regard to                                                                    
water reservations, was  not to stop the  placement of water                                                                    
reservations  on Alaskan  water  bodies or  to diminish  the                                                                    
protection of  fish habitat. Rather,  the goal of HB  77 was                                                                    
to ensure  that water reservations  were issued to  and held                                                                    
in  perpetuity  by public  agencies  for  the protection  of                                                                    
public resources. He  remarked that HB 77  would not prevent                                                                    
private organizations, individuals,  or tribes from pursuing                                                                    
waters reservations;  rather it  would require them  to work                                                                    
with a  public entity to  submit the application to  DNR. He                                                                    
remarked  that  DFG  already had  an  extensive  process  of                                                                    
working  with the  groups. He  emphasized that  DNR and  DFG                                                                    
were very  focused on the  water reservation  issue, because                                                                    
of the  support from  the legislature  to reduce  the permit                                                                    
backlog.                                                                                                                        
                                                                                                                                
9:39:11 AM                                                                                                                    
                                                                                                                                
Commissioner  Campbell  explained  that   her  goal  was  to                                                                    
provide information about  the role that DFG  played and its                                                                    
permitting authority  specifically regarding water  use. She                                                                    
also  stated that  she would  discuss the  process that  DFG                                                                    
used  to partner  with  nongovernmental  agencies that  were                                                                    
interested  in securing  water reservations.  She reiterated                                                                    
that HB 77  amended the DNR statutes in a  very specific and                                                                    
limited  way.   That  is  to   limit  the   application  for                                                                    
reservations  of water  for maintaining  in stream  flows to                                                                    
federal or state agencies, or  political subdivisions of the                                                                    
state.  She stressed  that  the bill  did  not affect  DFG's                                                                    
title 16 responsibilities and  authorities. She also pointed                                                                    
out  that HB  77 did  not affect  the role  of DFG  in DNR's                                                                    
water  permitting  decisions.  She explained  that  DFG  was                                                                    
guided by  title 16 to  protect fish resources.  Under DFG's                                                                    
authority,  it  required a  fish  habitat  permit for  water                                                                    
removal from  fish bearing waters  to ensure that  there was                                                                    
water  for  fish  passage  and  proper  protection  of  fish                                                                    
habitat.  She  explained that  DNR  statutes  that were  not                                                                    
affected  by the  bill  required  DNR to  work  with DFG  to                                                                    
evaluate  the impacts  to fish  and their  habitat when  DNR                                                                    
issued any type of water  authorization. She stated that DFG                                                                    
reviewed every proposed activity  that involved taking water                                                                    
to  determine  if  the activity  was  located  within  fish-                                                                    
bearing  waters.  The  review  was  conducted  in  order  to                                                                    
determine if the  activity allowed for free  passage of fish                                                                    
and  proper protection  of fish  habitat. She  stressed that                                                                    
DNR placed  the restrictions and conditions  on water rights                                                                    
after DFG had conducted its review.                                                                                             
                                                                                                                                
9:42:57 AM                                                                                                                    
                                                                                                                                
Commissioner Campbell  stressed that the  existing processes                                                                    
and protections would  not be affected by the  passage of HB
77. She  reiterated that the  statutory requirement  for DNR                                                                    
to work  with DFG  would remain in  place; and  DFG separate                                                                    
permitting  authority under  title 16  would remain  intact.                                                                    
She  remarked that  a  water reservation  was  not the  only                                                                    
method to  ensure protection of  fish and fish  habitat. She                                                                    
stated  that  both  DNR  and DFG  had  a  responsibility  to                                                                    
protect  fish   habitat  through  the   permitting  process,                                                                    
regardless  of whether  a reservation  was in  place on  any                                                                    
particular stream.                                                                                                              
                                                                                                                                
Commissioner  Sullivan stated  that he  would be  willing to                                                                    
answer any questions from the committee.                                                                                        
                                                                                                                                
Senator Bishop  surmised that  there were  two parts  to the                                                                    
water reservation  aspect of  the bill.  One related  to DNR                                                                    
and one  related to DFG. He  queried what might happen  if a                                                                    
tribal entity came to DFG  to obtain a water reservation. He                                                                    
assumed  that  DFG  would  assist  the  entity  with  stream                                                                    
gauging,  water flow  rates,  and  the application  process.                                                                    
Commissioner Campbell  replied in the affirmative,  and that                                                                    
DFG would assist  in the data gathering in  order to further                                                                    
apply at DNR.                                                                                                                   
                                                                                                                                
9:46:29 AM                                                                                                                    
                                                                                                                                
Senator  Olson  remarked  that   the  permitting  issue  was                                                                    
frustrating  to  the private  sector.  He  wondered how  DNR                                                                    
planned to ensure  that the safeguards were  in place, while                                                                    
streamlining the  permitting process.  Commissioner Sullivan                                                                    
replied that bill's  purpose was to ensure  that the backlog                                                                    
of  applications  was dealt  with  in  a timely  manner.  He                                                                    
stressed  that  the  bill's  intent  was  to  balancing  the                                                                    
protection of the public and  protection of the environment.                                                                    
He  pointed out  that there  were many  aspects of  the bill                                                                    
that may  not seem like  significant changes to  the current                                                                    
system, but  incrementally the changes would  result in more                                                                    
efficiency. He furthered that the  safety issue that Senator                                                                    
Olson had referred  to was a great lesson to  the state, and                                                                    
stressed  that the  federal government's  permitting was  an                                                                    
issue as well.                                                                                                                  
                                                                                                                                
9:51:11 AM                                                                                                                    
                                                                                                                                
Senator  Olson   surmised  that  there  were   currently  33                                                                    
entities that  were approved  by DNR.  Commissioner Sullivan                                                                    
replied that  there were 33  water reservations in  the past                                                                    
three years, and most of those were to DFG.                                                                                     
                                                                                                                                
Senator  Olson deduced  that the  majority of  the 33  water                                                                    
reservations  went  to  another  department  in  the  state.                                                                    
Commissioner  Sullivan responded  that the  majority of  the                                                                    
water reservations went to DFG  for fish habitat protection.                                                                    
He furthered  that DNR  had been  working hard  to alleviate                                                                    
the  backlog, which  allowed for  the administering  of more                                                                    
permits.                                                                                                                        
                                                                                                                                
Senator  Olson  commended the  DNR  for  their work  on  the                                                                    
backlog of applications.                                                                                                        
                                                                                                                                
Co-Chair  Meyer wondered  if the  biggest concern  about the                                                                    
bill  was that  it did  not adequately  protect fish  in the                                                                    
streams  and  waters.  Commissioner  Sullivan  replied  that                                                                    
there was a lot in the  bill that was not controversial, but                                                                    
that  the  debate  had  focused  on  the  water  reservation                                                                    
aspect.                                                                                                                         
                                                                                                                                
Co-Chair  Meyer  wondered  if Commissioner  Campbell  agreed                                                                    
with  Commissioner Sullivan.  Commissioner Campbell  replied                                                                    
in the affirmative.                                                                                                             
                                                                                                                                
Senator Olson  noted that the  controversy was over  who was                                                                    
included and who was excluded  from applying for the permit.                                                                    
Commission  Sullivan  replied  that  the  water  reservation                                                                    
controversy  was   related  to  who  could   apply  for  the                                                                    
reservation.                                                                                                                    
                                                                                                                                
Vice-Chair Fairclough  queried how Alaska compared  to other                                                                    
states   regarding   its   allowance   for   water   rights.                                                                    
Commissioner  Sullivan believed  that  Alaska  was the  only                                                                    
state that did not currently do what the bill proposed.                                                                         
                                                                                                                                
9:56:53 AM                                                                                                                    
                                                                                                                                
ED  FOGELS,  DEPUTY   COMMISSIONER,  DEPARTMENT  OF  NATURAL                                                                    
RESOURCES,  stated  that the  bill  was  part of  a  broader                                                                    
effort. He discussed the Sectional Analysis (copy on file).                                                                     
                                                                                                                                
     Section 1 adds a new  subsection (c) to AS 38.05.020 to                                                                    
     allow the  Commissioner the ability to  issue a general                                                                    
     permit for  activity on state  land if the  activity is                                                                    
     unlikely to result in  significant and irreparable harm                                                                    
     to state land or resources  except for land covered in:                                                                    
     fish and  game habitats (AS 16.20),  the Alaska Surface                                                                    
     Coal  Mining Control  and Reclamation  Act (AS  27.21),                                                                    
     forest resources (AS 41.17)  and parks and recreational                                                                    
     facilities (AS 41.21).                                                                                                     
                                                                                                                                
     Section  2  removes  the reference  to  the  additional                                                                    
     requirement  that  the  director  of  the  division  of                                                                    
     Mining,  Land  and  Water   shall  consult  with  other                                                                    
     departments during  the negotiation of a  land exchange                                                                    
     (AS  38.50.090),  as  this   provision  is  deleted  in                                                                    
     Section 43 of  the bill. This provision  is replaced in                                                                    
     Section 22  with the addition of  language referring to                                                                    
     decision  and  review   procedures  established  in  AS                                                                    
     38.05.035(e).                                                                                                              
                                                                                                                                
     Section  3 allows  the director  to execute  a contract                                                                    
     for the sale, lease, or  other disposable of land or an                                                                    
     interest in  land without commissioner approval  if the                                                                    
     annual rental is not greater  than $10,000 (rather than                                                                    
     $5,000). This section also  clarifies that the director                                                                    
     of  DMLW   may  provide  a  preliminary   written  best                                                                    
     interest finding and public notice  for non-oil and gas                                                                    
     related land disposals.                                                                                                    
                                                                                                                                
     Section  4   clarifies  that  only  a   person  who  is                                                                    
     substantially  and   adversely  affected  by   a  final                                                                    
     written  best interest  finding  related  to the  sale,                                                                    
     lease,  or disposal  of land  may  appeal a  director's                                                                    
     decision.  It also  adds that  the  applicant may  also                                                                    
     appeal the decision.                                                                                                       
                                                                                                                                
     Section 5 clarifies  that it is considered  a denial if                                                                    
     the  Commissioner  does  not   act  on  a  request  for                                                                    
     reconsideration  30 days  after issuance  of the  final                                                                    
     written finding.                                                                                                           
                                                                                                                                
     Section 6 states in an  administrative appeal to court,                                                                    
     a  court can  only deal  with points  presented to  the                                                                    
     commissioner   in    the   appeal   or    request   for                                                                    
     reconsideration.                                                                                                           
                                                                                                                                
     Sections 7 through  9 amend statutes to  allow land and                                                                    
     property  sales  to  be purchased  by  contract  or  by                                                                    
     payment  in  full up-front.  Sections  8  and 9  remove                                                                    
     references to  AS 38.05.065(b) related to  sale of land                                                                    
     by  lottery, which  is repealed  in Section  43 as  the                                                                    
     newly created Section 7 now includes all land sales.                                                                       
                                                                                                                                
     Section 10  adds a new  subsection (f) to  AS 38.05.070                                                                    
     that  allows a  one-time extension  by the  director of                                                                    
     DMLW for  a period of up  to two years for  an existing                                                                    
     land lease if  in the best interest of  the state. This                                                                    
     section  allows  leases  to remain  active  while  DMLW                                                                    
     adjudicates a request to renew  the lease, a request to                                                                    
     purchase  the  leased  land under  a  preference  right                                                                    
     under  AS  38.05.102  or  where  the  lessee  plans  to                                                                    
     substantially change  the operation to the  point where                                                                    
     a  new  best  interest  finding and  decision  must  be                                                                    
     issued under AS 38.05.035(e).                                                                                              
                                                                                                                                
     Section  11  amends  AS 38.05.075(a)  so  that  only  a                                                                    
     bidder who  is substantially and adversely  affected by                                                                    
     the issuance of a determination  of highest bidder in a                                                                    
     lease   sale   may  appeal   for   a   review  of   the                                                                    
     determination.                                                                                                             
                                                                                                                                
     Section 12 amends  language related to prequalification                                                                    
     of bidders  for a  lease to  make the  time constraints                                                                    
     more easily understood.                                                                                                    
                                                                                                                                
     Section  13  amends  AS 38.05.075(h)  so  that  only  a                                                                    
     person  substantially  and  adversely affected  by  the                                                                    
     department's  prequalification decision  may appeal  or                                                                    
     request reconsideration no later  than 5 days after the                                                                    
     decision is released.                                                                                                      
                                                                                                                                
     Section   14   clarifies   that   only   an   applicant                                                                    
     substantially   and    adversely   affected    by   the                                                                    
     department's decision  related to leases  for fisheries                                                                    
     development  may appeal  or request  reconsideration no                                                                    
     later than 20  days after the decision  is issued. This                                                                    
     section  also   clarifies  that  appeals  to   DNR  and                                                                    
     superior  court   would  now  be  addressed   under  AS                                                                    
     44.37.01  and therefore  the sentence  providing appeal                                                                    
     to superior court is deleted.                                                                                              
                                                                                                                                
     Section  15 and  16 relate  to aquatic  farming leases.                                                                    
     Section 15  removes the reference to  lease renewals as                                                                    
     Section 16  adds a new subsection  related specifically                                                                    
     to renewal  of aquatic  farm leases. Section  16 allows                                                                    
     the director of  DMLW to issue a  one-time renewal, for                                                                    
     a  period  of  up  to  ten years  in  duration,  of  an                                                                    
     existing aquatic farm  lease if it is  determined to be                                                                    
     in  the best  interest of  the state.  Section 16  also                                                                    
     provides  that the  director  may  extend aquatic  farm                                                                    
     leases for up to two  years while a renewal application                                                                    
     is pending  or where the lessee  plans to substantially                                                                    
     change the  purpose or operation  of an  existing lease                                                                    
     such  that a  new  best interest  finding and  decision                                                                    
     must be issued under AS 38.05.035(e).                                                                                      
                                                                                                                                
     Section  17   amends  AS  38.05.185(a)  to   allow  the                                                                    
     director  of   DMLW  to  make  a   preliminary  written                                                                    
     decision  for a  mineral  order  or leasehold  location                                                                    
     order  regarding   availability  of  land   to  mineral                                                                    
     leasing or  entry. This conforms to  amendments made in                                                                    
     Section 19.                                                                                                                
                                                                                                                                
     Section  18   amends  AS  38.05.300(a)  to   allow  the                                                                    
     director  of   DMLW  to  make  a   preliminary  written                                                                    
     decision     regarding     the    classification     or                                                                    
     reclassification  of  state   land.  This  conforms  to                                                                    
     amendments made in Section 19.                                                                                             
                                                                                                                                
     Section  19   amends  the  public  notice   statute  AS                                                                    
     38.05.945(a)  to  include  public  notice  for  various                                                                    
     preliminary   decisions  or   final   decisions  if   a                                                                    
     preliminary  decision  is   not  issued.  This  section                                                                    
     clarifies  that   all  mineral  orders   and  leasehold                                                                    
     location   orders   are   subject  to   public   notice                                                                    
     requirements of AS 38.05.945,  not just mineral closing                                                                    
     orders.                                                                                                                    
                                                                                                                                
     Section  20 clarifies  the definition  of "state  land"                                                                    
     includes  shoreland and  tideland in  AS 38.05.965(21).                                                                    
     Previous definition included "shore" and "tide."                                                                           
                                                                                                                                
     Section 21  adds a definition  to include  that "public                                                                    
     auction" includes  a public oral  outcry auction  and a                                                                    
     public online auction.                                                                                                     
                                                                                                                                
     Sections 22  through 27 give  DMLW more  flexibility in                                                                    
     its  authority to  exchange land  or  interest in  land                                                                    
     when it is  in the best interest of  the State. Section                                                                    
     22  is modeled  after AS  29.65.090 which  provides for                                                                    
     exchanges between DNR  and boroughs and municipalities.                                                                    
     Subsequent sections make conforming amendments.                                                                            
                                                                                                                                
     Section  28   revises  the   statute  to   exclude  the                                                                    
     requirements  of  AS  38.05.305(e) for  alterations  of                                                                    
     platted boundaries if all owners  approve and no public                                                                    
     easements or rights-of-way are affected.                                                                                   
                                                                                                                                
     Sections  29 through  33 amend  statutes to  allow only                                                                    
     either an  applicant or a  person who  is substantially                                                                    
     and  adversely  affected,  rather  than  aggrieved,  to                                                                    
     appeal  or request  reconsideration  of DNR  decisions.                                                                    
     Section  29  clarifies  when  the  requirements  of  AS                                                                    
     44.37.011 is  applicable. Section  32 clarifies  that a                                                                    
     person has 20 calendar days  after the issuance date of                                                                    
     a final department decision in  which to file an appeal                                                                    
     or  request for  reconsideration. Section  33 adds  new                                                                    
     subsections  to define  what it  means to  be adversely                                                                    
     affected  and outlines  additional requirements  in the                                                                    
     DNR administrative appeal process.                                                                                         
                                                                                                                                
     Section   34  would   allow  people   to  carry   small                                                                    
     quantities  of  water  from   one  hydrologic  unit  to                                                                    
     another without violating the law.                                                                                         
                                                                                                                                
     Sections  35 through  37 make  minor wording  revisions                                                                    
     related to  water statutes  that preserve  the original                                                                    
     intent of the statute.                                                                                                     
                                                                                                                                
     Sections  38  and  39  continue  the  changes  made  to                                                                    
     statutes  related to  appeals  including a  requirement                                                                    
     that  a person  be "adversely  affected" as  defined in                                                                    
     Section 39  in order to  appeal a decision  regarding a                                                                    
     proposed  sale  or  application  for  appropriation  or                                                                    
     removal of water.                                                                                                          
                                                                                                                                
     Sections 40 and 41  amend water reservation statutes to                                                                    
     limit  the application  for  reservations  of water  to                                                                    
     federal or state agencies,  or political subdivision of                                                                    
     the state. Section 41 removes  the requirement that the                                                                    
     commissioner review all reservations  of water at least                                                                    
     once   every   ten   years  and   provides   that   the                                                                    
     commissioner may  review reservations  of water  at any                                                                    
     time.                                                                                                                      
                                                                                                                                
     Section 42  amends AS 46.15.155(a) to  clarify that the                                                                    
     commissioner may issue one or  more new temporary water                                                                    
     use permits for the same project.                                                                                          
                                                                                                                                
     Section  43 repeals  certain  statutes  that have  been                                                                    
     modified  in other  sections of  this  bill related  to                                                                    
     land   sale  contracts,   land  exchanges,   and  water                                                                    
     reservations.                                                                                                              
                                                                                                                                
     Section  44  provides  one  year  for  applicants  with                                                                    
     pending   applications  who   do  not   meet  the   new                                                                    
     qualifications  established in  Section  40 to  request                                                                    
     the  commissioner  of  DNR to  transfer  their  pending                                                                    
     applications  to  an entity  of  their  choice that  is                                                                    
     authorized to reserve water. If,  within two years, the                                                                    
     entity notifies the Department that  it will not pursue                                                                    
     the  reservation  or  does   not  indicate  whether  it                                                                    
     intends to pursue the same  or smaller reservation, DNR                                                                    
     will  return  the  application   fee  to  the  original                                                                    
     applicant.  If the  entity pursues  the reservation  of                                                                    
     water,  DNR  will consider  the  application  and if  a                                                                    
     certificate of water is issued,  the priority date will                                                                    
     be retained.                                                                                                               
                                                                                                                                
     Section 45  allows the Department to  adopt regulations                                                                    
     necessary  to implement  changes to  take effect  after                                                                    
     July 1, 2013.                                                                                                              
                                                                                                                                
     Section 46 instructs the Revisor  to change the heading                                                                    
     of AS 44.37.011.                                                                                                           
                                                                                                                                
     Section 47 establishes an  immediate effective date for                                                                    
     Section 45.                                                                                                                
                                                                                                                                
     Section  48 establishes  an effective  date of  July 1,                                                                    
     2013 for the remainder of the act.                                                                                         
                                                                                                                                
Mr. Menefee looked at the briefing paper. He felt that a                                                                        
briefing paper would cover more points of the bill.                                                                             
                                                                                                                                
10:01:46 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:03:13 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Mr. Menefee explained the document "CS HB 77 (RES): Land                                                                        
Disposals/ Exchanges; Water Rights Briefing Paper; for the                                                                      
Senate Finance Committee; March 13, 2013" (copy on file):                                                                       
                                                                                                                                
     In 2010, the  Governor of Alaska and  the Department of                                                                    
     Natural Resources  (DNR) embarked  on an  initiative to                                                                    
     improve the  State of Alaska's permitting  processes in                                                                    
     order  to  advance  the  public  interest  by  ensuring                                                                    
     projects  are permitted  in a  timely, predictable  and                                                                    
     efficient manner while safeguarding the environment.                                                                       
                                                                                                                                
     During  the  2012  Legislative  session,  the  Governor                                                                    
     introduced HB 361, which  included the highest priority                                                                    
     changes related  to leasing and disposal  programs that                                                                    
     would  help   reduce  the  permitting  burden   on  the                                                                    
     applicant  and free  more  time for  staff  to work  on                                                                    
     processing applications.  The Division of  Mining, Land                                                                    
     and  Water  (DMLW)  in DNR  has  identified  additional                                                                    
     statutory   changes   that    would   help   streamline                                                                    
     permitting  requirements  for  the public  to  use  and                                                                    
     enjoy Alaska's land and resources.                                                                                         
                                                                                                                                
     The  bill   would  accomplish  the   following  primary                                                                    
     objectives:                                                                                                                
                                                                                                                                
     1)  Gives  the  Commissioner  the ability  to  issue  a                                                                    
     general  permit  for  activity on  state  land  if  the                                                                    
     activity  is  unlikely  to result  in  significant  and                                                                    
     irreparable harm  to state land or  resources. (Section                                                                    
     1)                                                                                                                         
                                                                                                                                
          - Standardizes the permitting  of certain types of                                                                    
          activities on  state land so  that the  agency may                                                                    
          issue   individual  permits   for  that   activity                                                                    
          without being  required to adjudicate  each permit                                                                    
          separately.                                                                                                           
                                                                                                                                
          -  Although there  is  arguably  the authority  in                                                                    
          statute  to   do  general   permits,  it   is  not                                                                    
          explicitly called out.                                                                                                
                                                                                                                                
          - As part of  the Governor's Permitting Efficiency                                                                    
          Initiative, the  department will be  doing general                                                                    
          permits  for  certain  activities  that  can  have                                                                    
          standardized authorizations.                                                                                          
                                                                                                                                
     2) Give the Division  more flexibility in its authority                                                                    
     to exchange  land or  interests in land  when it  is in                                                                    
     the best interest  of the State. (Sections  22, 23, 24,                                                                    
     25, 27 and 43)                                                                                                             
                                                                                                                                
          - Enables  DNR to  resolve land  management issues                                                                    
          with other entities, such  as a government agency,                                                                    
          a native  corporation or other organization,  on a                                                                    
          timelier basis.                                                                                                       
                                                                                                                                
          -  Currently,  the  process for  a  land  exchange                                                                    
          takes years to occur  and is rarely successful due                                                                    
          to  the complexity  of  the  current process,  the                                                                    
          long lead  times to complete  some of  the current                                                                    
          statutory   requirements,    and   unique   timing                                                                    
          requirements  involving  public noticing,  survey,                                                                    
          and   appraisal.  Continuation   of  the   current                                                                    
          approach will result  in unresolved land ownership                                                                    
          patterns  and the  inability  to  make state  land                                                                    
          patterns more efficient.                                                                                              
                                                                                                                                
          - Existing statutes (AS  29.65.090) include a land                                                                    
          exchange  provision between  DNR and  boroughs and                                                                    
          municipalities, which  takes only months  and have                                                                    
          always been successful. This  change in statute is                                                                    
          patterned after this approach.                                                                                        
                                                                                                                                
     3) Amend statutes to allow all land and property sales                                                                     
     to be purchased by contract instead of by payment in                                                                       
     full up-front. (Sections 7, 8 and 9)                                                                                       
                                                                                                                                
          -  Currently,   DMLW  issues  contracts   for  any                                                                    
          customer requesting financing  for any purchase of                                                                    
          state  land;  however,   this  practice  could  be                                                                    
          subject to a legal  challenge because the law only                                                                    
          mentions  sales  at   auction.  If  successful,  a                                                                    
          challenge  would force  DMLW to  require all  land                                                                    
          purchases,  except for  those  by  auction, to  be                                                                    
          paid in full at the  time of purchase, which would                                                                    
          significantly  lower  land  sales as  most  people                                                                    
          would  be unable  to fully  finance  the cost  up-                                                                    
          front. An estimated one-third of  all land sold is                                                                    
          by auction.  This puts  two-thirds of  the state's                                                                    
          sales  at risk  if  the state  cannot finance  the                                                                    
          purchase. The  monetary loss is estimated  at over                                                                    
          $2 million a year.                                                                                                    
                                                                                                                                
          - This revision clarifies  DMLW's ability to issue                                                                    
          installment  contracts or  accept payment  in full                                                                    
          up-front to a majority  of land sales sold through                                                                    
          preference  right  cases;  Public  and  Charitable                                                                    
          cases;  Initial  Over-the-Counter Sales;  Over-the                                                                    
          Counter sales; and Remote Recreation Cabin Sites.                                                                     
                                                                                                                                
     4) Allow the  director of the Division  of Mining, Land                                                                    
     and Water  to extend, one-time,  for a period of  up to                                                                    
     two years  in duration,  an existing land  or tidelands                                                                    
     lease if  it is determined  to be in the  best interest                                                                    
     of the state. (Sections 10 and 16)                                                                                         
                                                                                                                                
          -  Allows leases  to remain  active for  two years                                                                    
          while DMLW  adjudicates a request to  purchase the                                                                    
          leased  land under  a  preference  right under  AS                                                                    
          38.05.102   or   where   the   lessee   plans   to                                                                    
          substantially  change the  operation to  the point                                                                    
          where  a new  best interest  finding and  decision                                                                    
          must be issued under AS 38.05.035(e).                                                                                 
                                                                                                                                
          -  Preserves   the  lessee's  rights   from  being                                                                    
          extinguished while  the state is  actively working                                                                    
          to  issue  a  new  lease or  move  to  a  purchase                                                                    
          contract.                                                                                                             
                                                                                                                                
          - This statute change  covers both regular leasing                                                                    
          (e.g. shoreland, tideland,  or submerged land) and                                                                    
          aquatic farm and hatchery site leases.                                                                                
                                                                                                                                
     5) Allow the  director of the Division  of Mining, Land                                                                    
     and Water  to renew,  one-time, for a  period of  up to                                                                    
     ten years  in duration, an existing  aquatic farm lease                                                                    
     if it is  determined to be in the best  interest of the                                                                    
     state. (Sections 15 and 16)                                                                                                
                                                                                                                                
          - Allows  leases to be  renewed for up  to another                                                                    
          ten years if the  lease operations remain the same                                                                    
          and  the  lessee  is in  good  standing  with  the                                                                    
          state.                                                                                                                
                                                                                                                                
          -  Preserves   the  lessee's  rights   from  being                                                                    
          extinguished at the end of  the lease and provides                                                                    
          the department with the  flexibility to maintain a                                                                    
          productive  aquatic  farm  in  place  rather  than                                                                    
          having to offer a  new lease through a competitive                                                                    
          process.                                                                                                              
                                                                                                                                
10:08:41 AM                                                                                                                   
                                                                                                                                
Mr. Menefee looked at point 6:                                                                                                  
                                                                                                                                
     6) Clarify that the commissioner may issue one or more                                                                     
     new temporary water use permits for the same project.                                                                      
     (Section 42)                                                                                                               
                                                                                                                                
          - Under  current statutes,  a Temporary  Water Use                                                                    
          Authorization  (TWUP)  permit  may  be  authorized                                                                    
          "…for  a  period  of  time   not  to  exceed  five                                                                    
          consecutive years…"                                                                                                   
                                                                                                                                
          -   The  proposed   change   would  clarify   that                                                                    
          successive Temporary Water  Use Authorizations may                                                                    
          be  applied for,  adjudicated and  issued for  the                                                                    
          same project.                                                                                                         
                                                                                                                                
          -  TWUPs  are  not  permanent  water  rights.  The                                                                    
          division may  change or  revoke TWUP  as necessary                                                                    
          to  protect  water  right holders  or  the  public                                                                    
          interest,   and   TWUPs   are   mainly   used   by                                                                    
          exploration  projects  and  construction  projects                                                                    
          that are  not conducive to permanent  water rights                                                                    
          because  the water  use is  of a  temporary nature                                                                    
          and because  water sources, water uses,  water use                                                                    
          quantities  and  water  use  locations  frequently                                                                    
          change.                                                                                                               
                                                                                                                                
Senator  Hoffman  wondered  if   the  provision  would  give                                                                    
individuals  temporary  water   authorization.  Mr.  Menefee                                                                    
responded that  the provision did not  change anything about                                                                    
who could apply for  temporary use authorizations, therefore                                                                    
anyone could apply for a temporary use authorization.                                                                           
                                                                                                                                
Senator  Bishop surmised  that the  APMA was  only good  for                                                                    
five years,  because the  temporary water  use authorization                                                                    
was only good for five years.   Mr. Menefee replied that his                                                                    
question was one aspect of the issue.                                                                                           
                                                                                                                                
Senator Hoffman  wondered there  was a  process by  with the                                                                    
temporary water  authorization could become  more permanent.                                                                    
Mr. Menefee  responded that there  were two  different types                                                                    
of  authorizations: temporary  water use  authorizations and                                                                    
water  rights. He  stressed  that  both authorizations  were                                                                    
independent   from  each   other.   He   stressed  that   an                                                                    
application for a temporary water  use authorization gave no                                                                    
long term vested interest or long term priority right.                                                                          
                                                                                                                                
Senator  Hoffman  wondered what  would  happen  if a  person                                                                    
applied for  a permanent  water permit,  that might  usurp a                                                                    
temporary  water  use  permit.   Mr.  Menefee  replied  that                                                                    
temporary  water use  authorizations were  subject to  other                                                                    
appropriators.                                                                                                                  
                                                                                                                                
10:13:27 AM                                                                                                                   
                                                                                                                                
Mr. Menefee highlighted point 7:                                                                                                
                                                                                                                                
     7)  Amend  water  reservation  statutes  to  limit  the                                                                    
     application  for  reservations   of  water  related  to                                                                    
     maintaining instream flow to  federal or state agencies                                                                    
     or political  subdivisions of the state  and reduce the                                                                    
     mandate to  re-evaluate water reservations  (Section 40                                                                    
     and 41)                                                                                                                    
                                                                                                                                
          -This revision  would prevent  non-agency entities                                                                    
          from being  able to apply  for the  reservation of                                                                    
          water;  this  does  not   affect  holders  of,  or                                                                    
          applicants for,  standard water  rights, temporary                                                                    
          water use permits or water removals                                                                                   
                                                                                                                                
          -A  "person" was  added to  the  statute to  allow                                                                    
          miners   to  apply   for  and   receive  a   water                                                                    
          reservation   for  sanitary   and  water   quality                                                                    
          purposes;  usually associated  with mixing  zones.                                                                    
          However,  no applications  for these  reservations                                                                    
          have ever  been filed. Mining interests  can still                                                                    
          receive  TWUPs or  water rights  for sanitary  and                                                                    
          water quality purposes from the department                                                                            
                                                                                                                                
          -No other state allows  private persons to reserve                                                                    
          and hold reservations to public water;                                                                                
                                                                                                                                
          -The  removal  of  the   word  "person"  does  not                                                                    
          preclude  an   organization  or   individual  from                                                                    
          working  with  a  municipal government,  state  or                                                                    
          federal agency,  so that the agency  can apply for                                                                    
          a  reservation. In  this  manner, the  appropriate                                                                    
          policy level  review and criteria for  each agency                                                                    
          or  governmental  entity  are used.  In  addition,                                                                    
          these  agencies  will  be  able  to  identify  the                                                                    
          funding and technical  expertise needed to perfect                                                                    
          these applications                                                                                                    
                                                                                                                                
          -As  of   December  31,   2012,  there   were  371                                                                    
          applications    pending    for   instream    water                                                                    
          reservations.  Out of  those, 35  are applications                                                                    
          that  have  been applied  for  by  a person  (non-                                                                    
          agency).  Within  one  year, if  requested  by  an                                                                    
          applicant who  is no  longer authorized  to apply,                                                                    
          DNR  shall  transfer  pending applications  to  an                                                                    
          entity identified by a state,  Federal agency or a                                                                    
          political  subdivision of  the state.  If, within,                                                                    
          two  years, DNR  does not  receive notice  that an                                                                    
          entity  intends  to  pursue the  same  or  smaller                                                                    
          reservation, then the application  and fee will be                                                                    
          returned   to  the   original   applicant.  If   a                                                                    
          certificate   of   reservation  is   issued,   the                                                                    
          certificate will  carry the  priority date  of the                                                                    
          original application.                                                                                                 
                                                                                                                                
          -Of   the  61   issued   certificates  for   Water                                                                    
          Reservations,   all  are   issued  to   government                                                                    
          entities  (DNR, ADF&G,  and BLM).  No certificates                                                                    
          for Water  Reservations have  ever been  issued to                                                                    
          "persons" in the state of Alaska.                                                                                     
                                                                                                                                
          -  The  commissioner   is  currently  required  to                                                                    
          review all  reservations of water every  ten years                                                                    
          to  determine whether  the  statutory purpose  for                                                                    
          which the  reservation was  issued still  apply to                                                                    
          the reservations.  Due to  the number  of existing                                                                    
          and   future   reservations,   and   the   limited                                                                    
          resources  available to  the  department, this  is                                                                    
          beyond the capacity of the department.                                                                                
                                                                                                                                
Senator  Olson wondered  how many  permits were  affected in                                                                    
order  to revise  a business  plan, because  of the  current                                                                    
bill. Mr.  Menefee responded  that once  a person  obtains a                                                                    
certificate  for   a  water  right,  it   was  a  perpetuity                                                                    
authorization  for the  water right.  Therefore, nothing  in                                                                    
the  bill would  change the  perpetuity right.  He furthered                                                                    
that temporary water use  authorizations were different from                                                                    
water rights,  because it  was written  in statute  that any                                                                    
other  authorization would  not diminish  the current  water                                                                    
right.                                                                                                                          
                                                                                                                                
Senator  Olson  surmised  that  individuals  who  had  water                                                                    
rights for small  personal use would not be  affected by the                                                                    
bill. Mr.  Menefee replied that if  the individuals obtained                                                                    
the   authorization  that   was  required   by  law,   those                                                                    
individuals' water rights would not be affected.                                                                                
                                                                                                                                
10:19:50 AM                                                                                                                   
                                                                                                                                
Senator Olson noted that the  state regulated all water, but                                                                    
wondered  about the  creeks that  dry up  during the  summer                                                                    
time.  Mr. Menefee  responded that  all water  appropriation                                                                    
for  beneficial,   regardless  of  whether  it   is  from  a                                                                    
temporary  or full-time  stream was  required. He  furthered                                                                    
that  there was  a balance  of significant  amount of  water                                                                    
written in regulation.                                                                                                          
                                                                                                                                
Senator Olson wondered if the  water rights also referred to                                                                    
subterranean rivers  and wells.  Mr. Menefee replied  in the                                                                    
affirmative. Mr.  Fogels furthered that DFG  would work with                                                                    
DNR  to  be sure  that  the  fish habitats  were  protected,                                                                    
regardless of the size of the water body.                                                                                       
                                                                                                                                
Mr.  Menefee  explained  that there  was  a  habitat  permit                                                                    
required,  if  the individual  wanted  a  use permit  for  a                                                                    
fluctuating water body.                                                                                                         
                                                                                                                                
Senator  Bishop wondered  if the  water  right permits  that                                                                    
were used  by one business  could drive another  business to                                                                    
go  under.   Mr.  Menefee  responded  that Senator  Bishop's                                                                    
concern could  occur, if  one business  had a  temporary use                                                                    
permit and  the other business  had a permanent  water right                                                                    
permit. He furthered that there  was an eight-point decision                                                                    
that DNR was required to perform.  One of the points was the                                                                    
effect of the  loss of alternative uses of  water that might                                                                    
be made within a reasonable amount of time.                                                                                     
                                                                                                                                
10:24:07 AM                                                                                                                   
                                                                                                                                
Co-Chair  Kelly  understood that  the  water  in Alaska  was                                                                    
reserved for fish  and game in the  Alaska constitution. Mr.                                                                    
Menefee  responded  that  the water  was  reserved  for  the                                                                    
people for public use. The  reservation referred to the fish                                                                    
that  were  referred to  the  people,  and the  constitution                                                                    
clarified that fish could not  be impounded for personal use                                                                    
through a water  right. He furthered that the  fish were for                                                                    
the public.                                                                                                                     
                                                                                                                                
Co-Chair Kelly  surmised that the streams  were reserved for                                                                    
public uses,  with the  first priority  being the  fish. Mr.                                                                    
Menefee responded  in the contrary,  and clarified  that the                                                                    
constitution  did   not  say  that  the   highest  and  most                                                                    
important use was fish.                                                                                                         
                                                                                                                                
Co-Chair   Kelly   looked   at   the   commentary   on   the                                                                    
constitution, which  stated that an appropriation  of water,                                                                    
except for  public water supply,  shall be limited  to state                                                                    
purposes  and subject  to  preferences  of beneficial  uses,                                                                    
concurrent  or otherwise  as prescribed  by the  legislature                                                                    
and to  the general reservation  of fish and wildlife.   Mr.                                                                    
Menefee  stated that  the fish  were  for the  public, so  a                                                                    
water  reservation could  not be  used to  impound fish  for                                                                    
personal use.                                                                                                                   
                                                                                                                                
Co-Chair Kelly  understood that the  water was  reserved for                                                                    
public use, and  the fish were protected  by reservation, so                                                                    
the use  was limited by  the ability  for fish to  thrive in                                                                    
the stream.  Mr. Menefee responded  that the  reservation in                                                                    
the constitution was different  than the application for the                                                                    
reservation. He  stressed that the constitution  stated that                                                                    
the waters were  reserved for the public use,  but the state                                                                    
was required to determine how it is appropriated.                                                                               
                                                                                                                                
Co-Chair  Kelly remarked  that water  was  reserved for  the                                                                    
fish. He surmised  that if someone wanted to  use the stream                                                                    
that someone  had the right  to use  the stream, on  a first                                                                    
come first  serve basis,  for beneficial  use, to  the point                                                                    
that it  does not  encroach on  the general  reservation for                                                                    
fish. Mr. Menefee responded in the negative.                                                                                    
                                                                                                                                
10:29:20 AM                                                                                                                   
                                                                                                                                
Mr. Menefee explained that the  laws gave provision that say                                                                    
there could be  another priority over fish, if it  is in the                                                                    
state's best interest.                                                                                                          
                                                                                                                                
Co-Chair  Kelly  surmised  that there  was  a  state's  best                                                                    
interest and a general reservation  of fish and wildlife. He                                                                    
furthered  that  the next  interest  was  water rights.  Mr.                                                                    
Fogels  stated   that  the  reservation  issues   was  DNR's                                                                    
assignment, the  constitution reserves the water  for use by                                                                    
the  public. He  stressed that  DNR made  the appropriations                                                                    
and determinations.                                                                                                             
                                                                                                                                
Co-Chair  Kelly stressed  that the  reservation was  for the                                                                    
best interest of  the state, and was  generally reserved for                                                                    
fish  and wildlife.  Mr. Menefee  agreed, and  explained DNR                                                                    
must make an interest decision  of whether to appropriate or                                                                    
whether to reserve.                                                                                                             
                                                                                                                                
Senator  Dunleavy stated  that he  would wait  to offer  his                                                                    
question.                                                                                                                       
                                                                                                                                
Senator  Hoffman  queried  examples of  when  a  reservation                                                                    
could be  issued that  did not pertain  to fish,  but rather                                                                    
the best interest  of the state. Mr.  Menefee responded that                                                                    
the  statutory construction  stated that  DNR must  consider                                                                    
the fish and  wildlife habitat, but it did not  say that DNR                                                                    
was mandated to put it as a priority.                                                                                           
                                                                                                                                
Co-Chair  Kelly  wondered if  the  use  of  a stream  was  a                                                                    
reservation or a  right. Mr. Menefee responded  that the use                                                                    
of a stream  was a "right." He furthered  that a reservation                                                                    
was  a  form  of  a  "water  right."  He  explained  that  a                                                                    
reservation  was to  keep the  water  in place  and a  water                                                                    
right was to  take the water out. Mr.  Fogels furthered that                                                                    
DFG could  apply for  a water reservation  to keep  the base                                                                    
level for even a small number of fish.                                                                                          
                                                                                                                                
10:35:28 AM                                                                                                                   
                                                                                                                                
Senator Bishop stressed that DFG  and DNR were each required                                                                    
to sign  off on  the reservation and  water right.  That was                                                                    
the main issue.                                                                                                                 
                                                                                                                                
Senator  Olson   stressed  that  there  was   a  complicated                                                                    
situation  with   the  federal  government   protecting  the                                                                    
natives.  He  felt  that  the bill  made  the  process  more                                                                    
complicated,  because there  were  resources  that were  not                                                                    
under state management. If DNR  had power over the water, he                                                                    
wondered  if the  resources still  belonged to  the natives.                                                                    
Mr.  Fogel  explained that  the  intent  of the  bill  would                                                                    
ensure that the reservation was held for the public.                                                                            
                                                                                                                                
10:37:05 AM                                                                                                                   
                                                                                                                                
Senator  Olson stated  that the  federal government  did not                                                                    
look  at the  resources that  way, especially  pertaining to                                                                    
subsistence for the natives. Mr.  Fogels did not have enough                                                                    
information to comment on Senator Olson's concerns.                                                                             
                                                                                                                                
Co-Chair Kelly stated that the  constitution did not protect                                                                    
subsistence  rights  for  only  natives,  but  it  protected                                                                    
subsistence rights for all Alaskans.                                                                                            
                                                                                                                                
Senator Dunleavy remarked  that there was no  mention of the                                                                    
federal  government, so  he  wondered if  there  would be  a                                                                    
layer  of  the  federal government  permitting  process.  He                                                                    
pointed out  that there could  even be an issue  when moving                                                                    
water around on private  property. Mr. Fogels responded that                                                                    
the  bill would  not affect  the federal  permitting regimes                                                                    
such  as  wetlands  processes.  He said  that  there  was  a                                                                    
separate  bill  that  dealt   with  the  federal  permitting                                                                    
process.                                                                                                                        
                                                                                                                                
Senator  Dunleavy surmised  that if  both bills  passed, the                                                                    
overall permitting  process would be much  more streamlined.                                                                    
Mr. Fogels  responded that the  bills would  make permitting                                                                    
much more efficient.                                                                                                            
                                                                                                                                
10:40:11 AM                                                                                                                   
                                                                                                                                
Senator  Dunleavy wondered  who  the  individual would  deal                                                                    
with  if  both  bills  passed   the  state  or  the  federal                                                                    
government.  Mr.  Fogels  responded that  streams  would  be                                                                    
dealt with  through the state,  and wetlands would  be dealt                                                                    
with through the federal government.                                                                                            
                                                                                                                                
                                                                                                                                
Senator  Hoffman  noted something  in  point  number 7,  and                                                                    
noted that  there was the  addition of a miner's  ability to                                                                    
apply for a water right. He  furthered that there was also a                                                                    
removal  of   the  word,  "person."  He   wondered  how  the                                                                    
legislation would  be reserved primarily for  the people. He                                                                    
specifically wondered  why the word, "person",  was removed.                                                                    
Mr.  Menefee responded  the "person"  referred to  who could                                                                    
apply for a water reservation.  He explained that it did not                                                                    
prevent  the state  from  reserving to  the  benefit of  all                                                                    
people.                                                                                                                         
                                                                                                                                
Senator Hoffman wondered if the  bill applied to individuals                                                                    
who  build wells  on their  personal  property. Mr.  Menefee                                                                    
replied that when  someone drills a well,  they were dealing                                                                    
with water rights, so they would not be affected.                                                                               
                                                                                                                                
Senator Olson  looked at Section 40,  dealing with political                                                                    
subdivisions  of the  state.  He wondered  if  that was  the                                                                    
transition  language. Mr.  Menefee replied  that he  thought                                                                    
the  transition language  was in  Section  44. He  explained                                                                    
that Section 40  was where the word "person"  was removed as                                                                    
an applicant.                                                                                                                   
                                                                                                                                
Senator  Olson  wondered  if  the  state  considered  tribal                                                                    
governments  as  one  of  the  political  subdivisions.  Mr.                                                                    
Menefee responded in the negative.                                                                                              
                                                                                                                                
Senator Olson asked  if communities who did  not have access                                                                    
to state or federal government  offices, and only had access                                                                    
to  tribal offices  would  be excluded  from  the bill.  Mr.                                                                    
Menefee responded  that the  bill did  not make  a statement                                                                    
regarding  whether  the  tribal  office  could  represent  a                                                                    
people.  He  furthered  that  the  tribal  government  could                                                                    
collect data and apply for a reservation.                                                                                       
                                                                                                                                
10:45:27 AM                                                                                                                   
                                                                                                                                
Senator   Olson  felt   that   the   circuitous  route   was                                                                    
cumbersome, so the small communities  were excluded from the                                                                    
bill. Mr. Fogels responded that  DNR would work closely with                                                                    
tribal  organizations,  should  they  come  forward  with  a                                                                    
proposal   for  a   reservation.   He   stressed  that   the                                                                    
reservation was a public resource,  held by a public entity,                                                                    
with   a    definitive   geographic   boundary    that   had                                                                    
representation for all Alaskans within that area.                                                                               
                                                                                                                                
Senator  Olson expressed  concern,  because  Alaska was  the                                                                    
only  state with  this kind  of system.  He felt  that other                                                                    
states recognized  political subdivisions,  and worked  on a                                                                    
government to  government relationship. He felt  that tribal                                                                    
entities  were put  at  a disadvantage  with  the bill.  Mr.                                                                    
Fogels responded  that DNR was working  towards streamlining                                                                    
in stream flow  reservations. He stressed that  DNR had done                                                                    
more  in   the  three  years   prior  than  had   ever  been                                                                    
accomplished since  statehood. He  pledged to work  with any                                                                    
entity with good reason to apply for a reservation.                                                                             
                                                                                                                                
Senator Olson wondered if DNR  would be opposed to amendment                                                                    
that took out  the word "person" and added  the word "tribal                                                                    
organization" to the  bill. Mr. Fogels replied  that DNR did                                                                    
not  believe that  it would  be a  workable solution  to add                                                                    
tribes to the list.                                                                                                             
                                                                                                                                
Senator   Olson  surmised   that  DNR   would  oppose   that                                                                    
amendment. Mr.  Fogels responded that  he could not  take an                                                                    
official  position.   He  furthered   that  DNR   would  not                                                                    
recommend that amendment.                                                                                                       
                                                                                                                                
Senator Olson  felt that the bill  did not go far  enough to                                                                    
rectify  the  situation  for the  communities  that  had  no                                                                    
federal or state agencies.                                                                                                      
                                                                                                                                
CSHB 77(RES)  was HEARD  and HELD  in committee  for further                                                                    
consideration                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
10:50:16 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:50 a.m.                                                                                         
                                                                                                                                

Document Name Date/Time Subjects
CSHB77(RES) - Briefing Paper.pdf SFIN 4/3/2013 9:00:00 AM
HB 77
CSHB77(RES) - DNR Responses to HRES 2.7.13.pdf SFIN 4/3/2013 9:00:00 AM
HB 77
CSHB77(RES) - IFR All Reservation Applications.pdf SFIN 4/3/2013 9:00:00 AM
HB 77
CSHB77(RES) - IFR Application Qty by applicant.pdf SFIN 4/3/2013 9:00:00 AM
HB 77
CSHB77(RES) - IFR Person Applications final.pdf SFIN 4/3/2013 9:00:00 AM
HB 77
CSHB77(RES) - IFR Reservations Granted final.pdf SFIN 4/3/2013 9:00:00 AM
HB 77
CSHB77(RES) - Letter to Rep. Edgmon re water reservations.pdf SFIN 4/3/2013 9:00:00 AM
HB 77
CSHB77(RES) - Letters of Opposition.pdf SFIN 4/3/2013 9:00:00 AM
HB 77
CSHB77(RES) - Letters of Support.pdf SFIN 4/3/2013 9:00:00 AM
HB 77
CSHB77(RES) - Non-Governmental water reservation applications.pdf SFIN 4/3/2013 9:00:00 AM
HB 77
CSHB77(RES) - Sectional Analysis.pdf SFIN 4/3/2013 9:00:00 AM
HB 77
CSHB77(RES) - Summary of Changes.pdf SFIN 4/3/2013 9:00:00 AM
HB 77
CSHB77(RES) - Water Briefing Paper.pdf SFIN 4/3/2013 9:00:00 AM
HB 77
HB 77 SE take on the Alaska Association of Soil and Water Conservation Districts.msg SFIN 4/3/2013 9:00:00 AM
HB 77
FW HB 77 Testimony.msg SFIN 4/3/2013 9:00:00 AM
HB 77
HB 77 Constitutional Convention Proposal.pdf SFIN 4/3/2013 9:00:00 AM
HB 77
HB 77 FW Please oppose Schaad.msg SFIN 4/3/2013 9:00:00 AM
HB 77
HB 77 Public Testimony - Martin.msg SFIN 4/3/2013 9:00:00 AM
HB 77
CS SB 18 Verson O 041313.pdf SFIN 4/3/2013 9:00:00 AM
SB 18
SB 18 IMPORTANT -UAA Engineering Building.msg SFIN 4/3/2013 9:00:00 AM
SB 18
SB 18 Alaska Rural Communication System Funding.msg SFIN 4/3/2013 9:00:00 AM
SB 18
SB 18 Johnson Retirement Liability.pdf SFIN 4/3/2013 9:00:00 AM
SB 18
SB 18 Letter - Wrentmore.msg SFIN 4/3/2013 9:00:00 AM
SB 18
SB 18 Support Letter - Russo.msg SFIN 4/3/2013 9:00:00 AM
SB 18