Legislature(2019 - 2020)SENATE FINANCE 532

03/28/2019 09:00 AM FINANCE

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Audio Topic
09:01:32 AM Start
09:02:53 AM SB54
09:04:11 AM Presentation: Department of Natural Resources: Permitting, Leases, and Land Conveyances.
10:36:40 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Department of Natural Resources: TELECONFERENCED
Permitting Leases & Land Conveyances
+ Bills Previously Heard/Scheduled: TELECONFERENCED
Moved SB 54 Out of Committee
                 SENATE FINANCE COMMITTEE                                                                                       
                      March 28, 2019                                                                                            
                         9:01 a.m.                                                                                              
9:01:32 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Stedman called the Senate Finance Committee                                                                            
meeting to order at 9:01 a.m.                                                                                                   
MEMBERS PRESENT                                                                                                               
Senator Natasha von Imhof, Co-Chair                                                                                             
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Click Bishop                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Peter Micciche                                                                                                          
Senator Donny Olson                                                                                                             
Senator Mike Shower                                                                                                             
Senator Bill Wielechowski                                                                                                       
Senator David Wilson                                                                                                            
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Senator Cathy  Giessel; Brent Goodrum,  Deputy Commissioner,                                                                    
Department   of  Natural   Resources;   Kris  Hess,   Deputy                                                                    
Director, Division of Mining,  Land and Water, Department of                                                                    
Natural Resources.                                                                                                              
PRESENT VIA TELECONFERENCE                                                                                                    
Jeff Bruno, Office of Project Management and Permitting,                                                                        
Department of Natural Resources.                                                                                                
SB 54     ALASKA RAILROAD CORP. LAND TRANSFERS                                                                                  
          SB 54 was REPORTED out of committee with a "do                                                                        
          pass" recommendation and with one previously                                                                          
          published fiscal note: FN 1(CED).                                                                                     
          PRESENTATION: DEPARTMENT OF NATURAL RESOURCES:                                                                        
         PERMITTING, LEASES, AND LAND CONVEYANCES.                                                                              
Co-Chair Stedman discussed housekeeping.                                                                                        
SENATE BILL NO. 54                                                                                                            
     "An Act approving the transfer of certain Alaska                                                                           
     Railroad Corporation land; and providing for an                                                                            
     effective date."                                                                                                           
9:02:53 AM                                                                                                                    
Senator Bishop MOVED  to report SB 54 out  of Committee with                                                                    
individual  recommendations  and   the  accompanying  fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
SB  54  was REPORTED  out  of  committee  with a  "do  pass"                                                                    
recommendation  and  with  one previously  published  fiscal                                                                    
note: FN 1(CED).                                                                                                                
^PRESENTATION: DEPARTMENT OF  NATURAL RESOURCES: PERMITTING,                                                                  
LEASES, AND LAND CONVEYANCES.                                                                                                 
9:04:11 AM                                                                                                                    
BRENT  GOODRUM, DEPUTY  COMMISSIONER, DEPARTMENT  OF NATURAL                                                                    
RESOURCES,  discussed the  presentation "Permitting,  Leases                                                                    
and Land Conveyance" (copy on file).                                                                                            
9:05:19 AM                                                                                                                    
Mr. Goodrum turned to Slide  2, "Road Map", which listed the                                                                    
order  of   the  topics  that   would  be  covered   in  the                                                                    
     I. Historical Backdrop                                                                                                     
     II. Where We Are today                                                                                                     
     III. Unified Permit Front                                                                                                  
     IV. DNR Interagency Coordination                                                                                           
     V. Municipal Entitlement Land Conveyances                                                                                  
9:05:54 AM                                                                                                                    
Mr. Goodrum showed slide 3, "ROAD MAP":                                                                                         
     I. Historical Backdrop                                                                                                     
Mr. Goodrum  referenced Slide 4,  "Anatomy of  a Large-Scale                                                                    
Development Project":                                                                                                           
     ?Most often  have statewide  or strong  regional impact                                                                    
     with  regards to  infrastructure,  economic growth  and                                                                    
     ?Generally require long term  leases or dedicated legal                                                                    
     access  such as  easements in  order to  obtain project                                                                    
     ?Often shorter-term land use  permits are necessary for                                                                    
     ?Material  sales  need  to be  timely  for  development                                                                    
     ?Water authorizations are  critical for development and                                                                    
     long-term operation                                                                                                        
Mr.   Goodrum   specified   that  the   timeline   for   the                                                                    
presentation  began   in  May  2011,  when   he  joined  the                                                                    
department and began  to work on the  permitting backlog. He                                                                    
relayed  that these  authorization  types  formed the  major                                                                    
muscle  movements   that  enabled   large  projects   to  be                                                                    
developed. He  shared that most of  the authorizations under                                                                    
discussion were primarily focused  on general state land. He                                                                    
explained  that  the state  owned  and  managed 100  million                                                                    
acres  of  uplands,  and  60   million  acres  of  tide  and                                                                    
submerged land.                                                                                                                 
9:08:38 AM                                                                                                                    
Mr.  Goodrum  spoke  to Slide  5,  "The  Challenge:  Address                                                                    
Permitting Deficiencies," which showed  a bar graph entitled                                                                    
'Permit  Backlog.' In  late 2010  and early  2011, following                                                                    
the election  of Governor Sean  Parnell, there was  a  great                                                                    
awakening   in determining  that there  was an  issue within                                                                    
the  DNR  permitting  process.  He  said  that  the  primary                                                                    
evidence  was  the  ever-growing backlog  of  authorizations                                                                    
building up within  the department. He pointed  to the slide                                                                    
and noted  that in FY  06 there were 2106  authorizations in                                                                    
backlog, which had increased to 2658 by 2011.                                                                                   
9:09:41 AM                                                                                                                    
Senator Wielechowski asked for a definition of "backlog."                                                                       
Mr.  Goodrum stated  that a  backlog in  the context  of the                                                                    
slide  pertained   to  all   the  applications   before  the                                                                    
department  regarding the  5  authorization types:  permits,                                                                    
leases,  easements, material  sale  applications, and  water                                                                    
authorizations.  He  furthered  that  within  water  rights,                                                                    
there  were  traditional  water  rights  and  instream  flow                                                                    
reservations.  He concluded  that  that backlog  constituted                                                                    
what was  before the  department in 2011  that needed  to be                                                                    
9:10:51 AM                                                                                                                    
Mr. Goodrum discussed Slide 6, "2011 Permit Backlog Plan":                                                                      
     ?Submitted to the House Finance  Subcommittee on 22 Feb                                                                    
         It is  now  our highest  priority  to address  this                                                                    
     (permit backlog) problem."                                                                                                 
     ?Goal: "To  timely process all incoming  land and water                                                                    
     use applications, and to eliminate the backlog."                                                                           
     ?Comprehensive, multi-facetted  approach to eliminating                                                                    
     the backlog and preventing its re-occurrence                                                                               
9:11:28 AM                                                                                                                    
Mr. Goodrum  looked at  Slide 7,  "2011 Permit  Backlog Plan                                                                    
     ?Increase the  number of fully funded  positions (in FY                                                                    
     2011  (26)  DMLW  positions  were  required  to  remain                                                                    
     vacant due to funding shortages)                                                                                           
     ?Conduct   comprehensive  review   of  the   Division's                                                                    
     permitting processes.  Find  and implement changes that                                                                    
     increase permitting efficiencies.  Evaluate:                                                                               
          o Organizational changes                                                                                              
          o Statutes, regulations and procedures for                                                                            
          o Appeals process                                                                                                     
          o Regulatory relationship between the state,                                                                          
          federal and local governments                                                                                         
          o Contracting with private sector                                                                                     
     ?Drive and leverage the Unified Permit project effort                                                                      
     ?Analyze,     categorize    and     prioritize    those                                                                    
     authorizations  within the  backlog (Priority  is given                                                                    
     to  those applications/projects  that provide  the most                                                                    
     benefit to the highest number of Alaskans)                                                                                 
Mr.  Goodrum   relayed  and  example   of  a   project  that                                                                    
highlighted   the   backlog   problem  involving   a   large                                                                    
telecommunications  project  in  Interior Alaska.  He  noted                                                                    
that working  in the interior  meant finite field  season in                                                                    
which things could  be accomplished. He said  that every day                                                                    
that   people  and   equipment  sat   idle  was   costly  to                                                                    
developers.   This  project   had   been   a  catalyst   for                                                                    
Commissioner  Sullivan to  improve permit  turnaround within                                                                    
the division.                                                                                                                   
9:13:41 AM                                                                                                                    
Mr.  Goodrum  considered   Slide  8,  "Statewide  Permitting                                                                    
     Objective:  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.                                                                                                           
     ?Improve  agencies'  internal permitting  structure  to                                                                    
     create a more efficient, timely, and certain process                                                                       
     ?Enhance    coordination    within   different    state                                                                    
     departments   and    with   different    entities   and                                                                    
     stakeholders throughout the state                                                                                          
     ?Seek  input  from  the  public  about  the  permitting                                                                    
     process including  input from  municipalities, industry                                                                    
     and non-governmental organizations                                                                                         
     ?Improve  coordination   between  the  state   and  the                                                                    
     federal  governmentfederal   permitting issues  have  a                                                                    
     strong influence on state projects                                                                                         
     ?Anticipate and plan for permitting  the next phases of                                                                    
     resource development                                                                                                       
Mr. Goodrum  said that risk  and uncertainty were  lethal to                                                                    
investment.  He  stated  that the  department  continued  to                                                                    
evaluate  each bullet  point. He  said that  evaluations and                                                                    
conversations were ongoing.                                                                                                     
9:14:46 AM                                                                                                                    
Mr. Goodrum showed Slide 9, "Legislative Assistance":                                                                           
     The  Legislature  took  decisive action  to  assist  in                                                                    
     addressing  DNR permitting  challenges  with the  long-                                                                    
     term  goal of  reducing permit  backlog and  preventing                                                                    
     backlog from reoccurring:                                                                                                  
     1)People (capacity)                                                                                                        
     2)Legislative packages                                                                                                     
     3)Supporting innovative processes                                                                                          
     ?HB 361 Omnibus Bill - 2012                                                                                                
          o New material site designation process                                                                               
          o Priority changes related to leasing and                                                                             
          disposal programs                                                                                                     
          o Solicitation of interest for leases, if no                                                                          
          interest directly to negotiated lease                                                                                 
     ?HB 274 Land Exchange Bill 2017                                                                                            
          o 2-year lease extensions                                                                                             
Mr.  Goodrum  said  that  HB 361  gave  the  department  the                                                                    
ability to issue  a decision one time  that delineated where                                                                    
a material site was, and  how much material was there. Then,                                                                    
every time  there was a  subsequent request for  material to                                                                    
be  extracted, the  decision had  already  been made,  which                                                                    
streamlined  operations.  He  said that  changes  to  leases                                                                    
included the opportunity to extend  or renew. He stated that                                                                    
the  legislature  invested in  the  division  by adding  the                                                                    
fully funded  26 positions  and added  12 positions  in 2012                                                                    
that had been  one-time increments. He furthered  that in FY                                                                    
13, those positions  were incorporated into the  base of the                                                                    
division, as  well as  adding another  $1 million  to reduce                                                                    
the vacancy rate within the division.                                                                                           
9:18:07 AM                                                                                                                    
Co-Chair Stedman recounted that  in 2011, there were several                                                                    
members that had  been on the committee and  had worked with                                                                    
DNR  to address  the significant  authorization backlog.  He                                                                    
thought  it  was  notable  that   the  backlog  was  slowing                                                                    
development in  the state. He  felt that the history  of the                                                                    
issue was important.                                                                                                            
9:19:41 AM                                                                                                                    
Mr.  Goodrum  noted  that  aquatic   farm  leases  were  not                                                                    
captured in  previous legislation for extension  or renewal.                                                                    
He said that future slides would highlight that issue.                                                                          
9:20:09 AM                                                                                                                    
Mr. Goodrum displayed Slide 10, "Road Map":                                                                                     
     II. Where We Are Today                                                                                                     
9:20:18 AM                                                                                                                    
Mr.  Goodrum  showed  Slide  11,   "DMLW  Active  Case  File                                                                    
Overview,"  which  showed a  pie  chart.  He explained  that                                                                    
there  were 77,534  active  authorizations,  managed by  200                                                                    
personnel    400 casefiles per individual  employee. He said                                                                    
that  the  largest portion  of  the  authorizations was  the                                                                    
36,800 in  mining claims. He  relayed that 11.1  percent, or                                                                    
8,622  were  land  sale  authorizations;  23.9  percent,  or                                                                    
18,500 were in water  rights authorizations; 13.1, or 10,152                                                                    
were other,  and easements comprised  4.4 percent,  0r 3,400                                                                    
of the authorizations.                                                                                                          
9:22:10 AM                                                                                                                    
Mr.  Goodrum turned  to  Slide 12,  "DMLW  Active Case  File                                                                    
Overview," which showed a bar  graph of active case files in                                                                    
DMLW Management. He  said that the information  was the same                                                                    
as on Slide 11, depicted in another way.                                                                                        
9:22:35 AM                                                                                                                    
Mr. Goodrum  referenced Slide 13, "Current  backlog Status,"                                                                    
which showed a  bar graph. He pointed out the  high point in                                                                    
FY 11, when  there were 2,658 authorizations  in backlog. He                                                                    
said that  the backlog numbers  dropped quickly due  to  low                                                                    
hanging fruit   that was  identified and  addressed quickly.                                                                    
He said  that by 2016 the  backlog had been reduced  to 938.                                                                    
He added that there were  authorizations in the backlog that                                                                    
would take the  anticipated time to process;  work was being                                                                    
done to refine  the capture. He attested that  50 percent of                                                                    
the  number  for each  year  was  likely within  its  normal                                                                    
timeframe anticipated  for processing.  He stated  that part                                                                    
of the backlog  calculation had to do with  water rights. He                                                                    
explained  that traditional  water rights  were a   first in                                                                    
time,  first in  right   appropriations  date. He  furthered                                                                    
that a  substantially complete application was  date stamped                                                                    
upon  being received,  no one  filing after  you could  bump                                                                    
your place  in line.  Not captured  within the  backlog were                                                                    
temporary  water  use   authorizations,  which  were  issued                                                                    
timely by the division.                                                                                                         
9:26:15 AM                                                                                                                    
Senator Wielechowski was  curious about how long  it took to                                                                    
file an authorization.  He asked if Mr. Goodrum  had data on                                                                    
how long it took to process an application.                                                                                     
Mr.  Goodrum had  general timelines.  Permits and  materials                                                                    
sales, within 90  days; leases and easements,  18 months; he                                                                    
said  that  the  department  would work  to  provide  actual                                                                    
timelines. He  stated that the  department lacked  the tools                                                                    
to capture  the iterative back and  forth between applicants                                                                    
and   the   department   concerning   additional   necessary                                                                    
information.  He  said  that the  department  did  not  have                                                                    
enough staff to  remind applicants of the  lack of requested                                                                    
information that could be holding up the process.                                                                               
Co-Chair  Stedman  asked  Mr.  Goodrum  to  provide  further                                                                    
detail  to  the  committee.  He   asked  about  water  right                                                                    
authorization  for smaller,   mom  and  pop  operations.  He                                                                    
asked when  water rights should  be filed for  small, remote                                                                    
9:28:18 AM                                                                                                                    
Mr. Goodrum encouraged  people to file as  soon as possible.                                                                    
He   reminded  the   committee   that  once   there  was   a                                                                    
substantially complete application,  an applicant would have                                                                    
a date-stamped  priority. He qualified that  larger projects                                                                    
with significant  economic potential  to the state  could be                                                                    
moved to the  front of the cue, displacing  the smaller, mom                                                                    
and pop authorizations.                                                                                                         
Co-Chair  Stedman said  that most  people recognized  that a                                                                    
water  supply  to   a  remote  private  cabin   was  not  as                                                                    
significant  as some  bigger statewide  vial interests.   He                                                                    
asked what size water  requirement threshold required a date                                                                    
Mr. Goodrum believed the threshold was 500 gallons per day.                                                                     
Senator  Bishop  clarified  that  the  threshold  was  5,000                                                                    
gallons per day.                                                                                                                
Mr.  Goodrum encouraged  people to  converse with  the Water                                                                    
Section  to  determine water  needs.  If  the threshold  was                                                                    
below  5,000  gallons per  day,  an  authorization would  be                                                                    
unnecessary. He added that to  ensure that water rights were                                                                    
protected over  time it would be  smart to reach out  to the                                                                    
Water Section for more information.                                                                                             
9:31:50 AM                                                                                                                    
Co-Chair  Stedman interpreted  that if  a family  would most                                                                    
likely not  use 5,000 gallons  per day, filing would  not be                                                                    
Mr.  Goodrum  stated   that  if  a  person   was  below  the                                                                    
threshold,  a   water  certificate  was  not   required.  He                                                                    
reiterated that  people should reach  out the  Water Section                                                                    
with any questions.                                                                                                             
9:32:44 AM                                                                                                                    
Senator Bishop  clarified that on  a water  application, use                                                                    
of 5,000 gallons and above would require public comment.                                                                        
Co-Chair Stedman appreciated the clarification.                                                                                 
Senator Bishop agreed.                                                                                                          
9:33:53 AM                                                                                                                    
Mr. Goodrum continued to discuss  Slide 13, noting that from                                                                    
2011 to  2018, there  had been a  61.8 percent  reduction in                                                                    
the backlog.  He shared that the  number had crept up  a bit                                                                    
since  FY 15,  due to  the loss  of 13  permanent, full-time                                                                    
positions. He  said that the department  faced challenges in                                                                    
the  area of  recruitment  and retention  of highly  skilled                                                                    
professionals. He said that a  stable and predictable fiscal                                                                    
plan would help  with hiring. He shared  that the department                                                                    
needed  to educate  applicants that  the department  did not                                                                    
have the staff available to remind them of the necessary                                                                        
additional information needed to advance authorizations.                                                                        
9:35:38 AM                                                                                                                    
Mr. Goodrum showed Slide 14, "Applications and Issuances":                                                                      
     ?Since  2015 DMLW  has  been trying  to  catch up  with                                                                    
     increasing   application   volumes,  with   highest   %                                                                    
     increase in  lease applications  (162%). Over  the same                                                                    
     time  period  number   of  authorizations  issued  also                                                                    
     increased,    with    highest   increase    in    lease                                                                    
     authorizations (79%).                                                                                                      
      Material  Sales  follow construction  industry  cycles                                                                    
     and have seen 10% decline in application volume.                                                                           
Mr. Goodrum looked at the four data tables:                                                                                     
     • Between years 2011-2013 and 2015-2018, there  was a                                                                      
        12 percent increase in in Permits applications                                                                          
     • Between years 2011-2013 and 2015-2018, there was a 3                                                                     
        percent decrease in Permits authorizations issued.                                                                      
     • Between years 2011-2013 and 2015-2018, there  was a                                                                      
        162 percent increase in Leases applications                                                                             
     • Between years 2011-2013 and 2015-2018, there  was a                                                                      
        79 percent increase in Leases authorizations issued.                                                                    
     • Between years 2011-2013 and 2015-2018, there  was a                                                                      
        37 percent increase in Easements applications                                                                           
     • Between years 2011-2013 and 2015-2018, there was an                                                                      
        8 percent increase in Easements authorizations                                                                          
     • Between years 2011-2013 and 2015-2018, there  was a                                                                      
        10 percent decrease in Material Sales applications                                                                      
     • Between years 2011-2013 and 2015-2018, there was a 2                                                                     
        percent increase in Material Sales authorizations                                                                       
9:38:42 AM                                                                                                                    
Senator Bishop asked about the  increase in Leases. He asked                                                                    
if the number was broken out  by types of lease. He wondered                                                                    
if  the increase  was from  the mining  community converting                                                                    
from claim payments to a Lease option.                                                                                          
Mr. Goodrum did  not have the information  handy but offered                                                                    
to follow up with the committee.                                                                                                
Co-Chair  Stedman  asked  Mr. Goodrum  to  consider  whether                                                                    
there was any significance  to older structures that crossed                                                                    
property lines.  He thought  it could  be a  subcomponent to                                                                    
the Lease  increases. He was curious  about commercial lease                                                                    
structures  versus leases  that  were  residential, or  non-                                                                    
economic drivers.                                                                                                               
9:40:56 AM                                                                                                                    
Senator Shower  asked whether buyers were  still required to                                                                    
file  yearly paperwork  and how  access to  technology might                                                                    
limit filing.  He wondered if the  department had considered                                                                    
a two-year reporting requirement.                                                                                               
Mr. Goodrum  stated that the  department looked for  ways to                                                                    
make   it  easier   for  individuals   to  submit   required                                                                    
paperwork.  He  said   that  current  requirements  included                                                                    
annual  affidavits  for  labor. He  stated  that  multi-year                                                                    
authorizations  could be  issued,  up to  5  years, but  the                                                                    
department had not looked at  mining requirements updated on                                                                    
an  extended   timeframe.  He  said   that  most   of  DNRs                                                                     
regulatory  enforcement dealt  with reclamation  activities,                                                                    
the provisions of  which were in statute, and  which was the                                                                    
majority  of  DNRs   enforcement and  education  process  in                                                                    
working with the mining community.                                                                                              
Senator  Shower asked  if the  department  were to  consider                                                                    
two-year reporting  for workload requirements, for  both the                                                                    
state and miners,  could it be handled by  the department or                                                                    
would it require legislative action.                                                                                            
Mr.  Goodrum thought  that since  some requirements  were in                                                                    
statute, legislative action would be required.                                                                                  
9:44:48 AM                                                                                                                    
Senator Bishop  was curious about  the 10  percent reduction                                                                    
in Material Sales.                                                                                                              
Mr.  Goodrum hypothesized  that the  in previous  four years                                                                    
there had  been a  more constrained  budget. He  stated that                                                                    
DOT  was  one of  the  primary  purchasers of  material.  He                                                                    
thought decreased  activity by that department  was a factor                                                                    
in the drop in sales.                                                                                                           
9:45:55 AM                                                                                                                    
Co-Chair Stedman  recalled that there was  a change, several                                                                    
years ago, that  dealt with the requirement  for royalty and                                                                    
permit payments for smaller rock pits.                                                                                          
Mr. Goodrum offered to provide the information later.                                                                           
Co-Chair Stedman recalled that the  issue had be dealt with,                                                                    
as the state had subsurface ownership.                                                                                          
9:46:35 AM                                                                                                                    
Mr. Goodrum spoke to Slide  15, "Current Land Applications,"                                                                    
which  showed a  pie chart  giving  a snapshot  of land  use                                                                    
applications received  and completed. He pointed  out the 41                                                                    
percent of the pie chart  that represented 257 Easements; 22                                                                    
percent represented 130 Permits;  18 percent represented 114                                                                    
Land  Leases;  14 percent  represented  87  Other Leases;  6                                                                    
percent represented 38 Land Sales.                                                                                              
9:47:34 AM                                                                                                                    
Co-Chair  Stedman expressed  concern  about  DNR land  sales                                                                    
around  the state  and waterfront  setbacks. He  asked about                                                                    
setbacks  for valuable  waterfront properties.  He suggested                                                                    
that as  the setback increased  from the front, the  vale of                                                                    
the  waterfront   decreased.  He  noticed   that  waterfront                                                                    
setbacks  were not  uniform around  the  state. He  recalled                                                                    
that Southern  Southeast Alaska had  a 100-foot  setback. He                                                                    
thought that the diminished  waterfront value would decrease                                                                    
state  coffers  for  land  sales.  He  queried  differential                                                                    
setbacks  and why  the state  would  have 100-foot  setbacks                                                                    
that  resulted  in diminished  land  value  upon resale.  He                                                                    
expressed concern that Easements often lacked definition.                                                                       
9:50:11 AM                                                                                                                    
Mr. Goodrum agreed that there  were occasions when the local                                                                    
platting authority  had additional desires for  setbacks. He                                                                    
said  that DNR  worked closely  with DFG  on the  matter. He                                                                    
agreed to gather more information on the issue.                                                                                 
Co-Chair  Stedman pointed  out to  the committee  that there                                                                    
was  a difference  between organized  and unorganized  areas                                                                    
concerning  platting  authority.   He  noted  that  platting                                                                    
authority included a public process  for easements, and that                                                                    
the  DNR requirements  exceeded local  platting requirements                                                                    
in any  of the  communities he  represented. He  was worried                                                                    
about the value of waterfront property.                                                                                         
9:51:31 AM                                                                                                                    
Mr. Goodrum  discussed Slide  16, "Aquatic  Farming Leases,"                                                                    
which showed  a line graph entitled   Aquatic Farmsite Lease                                                                    
Applications   Received  2010-2019.    He  thought   aquatic                                                                    
farming  was  an  exciting and  expanding  industry  in  the                                                                    
state.  He  recalled  that  the  Walker  Administration  had                                                                    
created   an  Alaska   Maricultural  Taskforce,   which  had                                                                    
resulted in increased interest and applications.                                                                                
9:52:35 AM                                                                                                                    
Senator Wilson  asked for  a brief  overview of  the aquatic                                                                    
farming industry.                                                                                                               
Mr.  Goodrum  stated that  the  Mariculture  Task Force  was                                                                    
created  in  2016.  He stated  that  the  industry  included                                                                    
oysters, shellfish,  sea cucumbers,  kelp, and  other things                                                                    
that could  be grown  in the tidelands  and beyond.  He said                                                                    
that  the  desire  had  been  to  create  an  industry  that                                                                    
generated revenue of  $100 million by 2040. He  spoke of the                                                                    
Maricultural  Revolving Loan  fund.  He  explained that  the                                                                    
state had over  30,000 miles of coastland. He  said that the                                                                    
industry maintained increased growth and interest.                                                                              
9:54:35 AM                                                                                                                    
Mr.  Goodrum  looked  at Slide  17,  "Aquatic  Farm  Leasing                                                                    
     ? All aquatic farm leases are handled by DMLW's                                                                            
     Southcentral Regional Land Office in Anchorage (1                                                                          
     full-time adjudicator manages this program statewide)                                                                      
     ? Current Adjudication Process                                                                                             
          o 12  to 24 months  to go through the  DNR leasing                                                                    
          o Application  received and jointly  reviewed with                                                                    
          DF&G for completeness (~90 days)                                                                                      
         o 20-day agency notice and review period                                                                               
          o Preliminary Decision (PD) is written (~30 days)                                                                     
          o PD 30-day public notice and review period                                                                           
          o  Final Finding  and Decision  (FFD) written  and                                                                    
          issued (~30 days)                                                                                                     
          o 20-day appeal period                                                                                                
          o  Final administrative  order  and decision  goes                                                                    
          into effect 31 days after the FFD is issued                                                                           
          o Decision  and proposed  lease sent  to applicant                                                                    
          for  execution  and requirement  for  deliverables                                                                    
          from lessee                                                                                                           
          o  Once deliverables  (annual lease  fee, bonding,                                                                    
          and insurance  requirements) are met the  lease is                                                                    
     ? DMLW currently working on streamlining this process                                                                      
     so that lease adjudication process is 9 to 12 months                                                                       
9:55:19 AM                                                                                                                    
Mr. Goodrum considered Slide 18, "Status of Current Aquatic                                                                     
Farm Lease Applications":                                                                                                       
   • 36 new applications from 2017 (17), 2018 (16), and                                                                         
     2019 (3) currently in various stages in the                                                                                
     adjudication process                                                                                                       
          o Average  adjudication time is 120  hours, equals                                                                    
          3 work weeks and 2 days per                                                                                           
          o 2017 Applications Status                                                                                            
               ? 8 completed the adjudication process,                                                                          
               either issued or lease sent for signature                                                                        
               ? 6 files still in the adjudication process                                                                      
               ? 3 files closed                                                                                                 
          o 2018 Application Status                                                                                             
               ? 2 files closed per the applicant                                                                               
               ? DNR & DF&G have reviewed the remaining 14                                                                      
               applications for completeness                                                                                    
          o 2019 Application Status                                                                                             
               ? Application period open from January 1                                                                         
               April 30                                                                                                         
               ? 3 applications received thus far, and                                                                          
               those applications have been reviewed by                                                                         
               DNR & DF&G for completeness                                                                                      
   • 23 Renewal applications currently in various stages in                                                                     
     the adjudication process                                                                                                   
          o Renewals currently follow same processes as new                                                                     
          o Average adjudication time is 80 hours, equals 2                                                                     
          weeks and a day per application                                                                                       
9:56:34 AM                                                                                                                    
Co-Chair Stedman  understood that  the scale of  the acreage                                                                    
related to  the permitting was substantially  increasing. He                                                                    
thought aquatic farming was an up and coming industry.                                                                          
Mr. Goodrum believed  some of the increase in  the scale had                                                                    
to do  with the addition  of kelp farms, which  ran hundreds                                                                    
of  acres.  He  agreed  to provide  further  information  on                                                                    
changing acreage sizes.                                                                                                         
9:58:16 AM                                                                                                                    
Senator Wilson  asked who  handled the  adjudication process                                                                    
and what were the average costs of the leases.                                                                                  
Mr. Goodrum stated  that there was one  singular manager for                                                                    
the   maricultural  industry,   located  in   Anchorage.  He                                                                    
deferred  the  question  of  cost  to  Kris  Hess  from  the                                                                    
Division of Mining, Land, and Water.                                                                                            
KRIS  HESS, DEPUTY  DIRECTOR, DIVISION  OF MINING,  LAND AND                                                                    
WATER,  DEPARTMENT OF  NATURAL  RESOURCES,  shared that  the                                                                    
application fees  for aquatic farm leases  were dependent on                                                                    
acreage. The application  fee for a site that  was one acre,                                                                    
or less, was  $600; a site greater than 1  acre, but no more                                                                    
than  3 acres,  the fee  was $1,200.  She said  that if  the                                                                    
application was  going to be  greater than 3 acres,  the fee                                                                    
would be $2,000.  She related that there was  a fee schedule                                                                    
for annual  fees on the  departments  website. A  lease site                                                                    
that was up to 30 acres in  size had an annual rental fee of                                                                    
$450 for the first acre,  $125 for each additional acre. She                                                                    
reminded the  committee that the fee  schedule was available                                                                    
online. She offered to provide the numbers in writing.                                                                          
10:02:37 AM                                                                                                                   
Senator  Micciche   wondered  whether  the   department  was                                                                    
working   in  conjunction   with  Department   of  Commerce,                                                                    
Community and  Economic Development (DCCED)  on highlighting                                                                    
for the public the industrys potential.                                                                                         
10:04:10 AM                                                                                                                   
Co-Chair von  Imhof thought that the  department should work                                                                    
in conjunction with DCCED to  determine who was applying for                                                                    
the  loans,  how  the  applications  were  progressing,  and                                                                    
whether  there was  a  backlog. She  queried  the degree  in                                                                    
which the  department was working with  DCCED concerning the                                                                    
loans for the industry.                                                                                                         
Mr. Goodrum stated  he would ensure that  going forward that                                                                    
the  departments  communicated  with each  other  concerning                                                                    
maricultural loan applications.                                                                                                 
10:05:32 AM                                                                                                                   
Senator Wilson asked whether another  agency could help with                                                                    
the backlog.                                                                                                                    
Mr.  Goodrum  stated  that  the  authority  to  process  the                                                                    
authorizations  resided   within  DNR.   He  was   sure  the                                                                    
department could handle the workload.                                                                                           
10:06:21 AM                                                                                                                   
Senator  Wielechowski  asked   whether  DF&G  had  expressed                                                                    
opposition over the expansion of  aquatic farms. He wondered                                                                    
about impacts to Alaska Native stock.                                                                                           
Co-Chair Stedman  thought that the question  could be better                                                                    
answered in a resource committee meeting.                                                                                       
10:07:09 AM                                                                                                                   
Mr. Goodrum showed Slide 19, "Road Map":                                                                                        
     III. Unified Permit Effort                                                                                                 
Mr. Goodrum  displayed Slide 20,  "Unified Permit  Goals and                                                                    
     ?Shorten and make consistent cycle times for                                                                               
     ?Build internal systems that directly support DNR                                                                          
     ?Better internal and external transparency into                                                                            
Mr. Goodrum  looked at  the flow chart  on the  slide, which                                                                    
detailed the  departments  progress from FY  2002 through FY                                                                    
2021.  He noted  that the  electronic case  file system  had                                                                    
helped  with electronic  scanning  of historical  documents,                                                                    
which provided  a better understanding of  previously issued                                                                    
authorizations  and created  better consistency  between the                                                                    
Northern, South Central, and Southeast  regions. He said the                                                                    
system had  added to the  defensibility of  the departments                                                                     
10:10:07 AM                                                                                                                   
Co-Chair  Stedman  recalled  that  the  committee  had  been                                                                    
shocked at the backlog of  authorizations; and the impact on                                                                    
the ability to run a resource state.                                                                                            
10:10:46 AM                                                                                                                   
Senator Shower understood that part  of the problem had been                                                                    
differenced between  the regions in the  area of consistency                                                                    
across the  state. He asked  how much progress  the division                                                                    
had made,  and wondered  about the coordination  between DNR                                                                    
and DF&G.  He asked  whether the  department reached  out to                                                                    
DF&G before approving applications.                                                                                             
Mr. Goodrum  estimated that on a  scale of zero to  100, the                                                                    
backlog  was approximately  78.5  percent  updated. He  said                                                                    
that  communication between  regional  offices had  improved                                                                    
greatly.  He stated  that  coordination between  departments                                                                    
would be highlighted in future slides.                                                                                          
10:12:35 AM                                                                                                                   
Mr. Goodrum showed Slide 21,  "Unified Permit Systems Needed                                                                    
To Meet Goals":                                                                                                                 
     ?Understand that change is hard                                                                                            
     ?Make work visible                                                                                                         
     ?Rely on good data and research                                                                                            
     ?Enable business users to fully participate                                                                                
Mr. Goodrum  spoke to the  Venn diagram on the  slide, which                                                                    
addressed:    reporting,  content management,  and  business                                                                    
process   management.  He   relayed   that  the   department                                                                    
currently  used  Dot  Net,  which  was  a  Microsoft  Office                                                                    
produce that  allowed greater coordination. He  spoke of the                                                                    
suite   of  capabilities   available  to   adjudicators  and                                                                    
managers to meet goals.                                                                                                         
10:14:07 AM                                                                                                                   
Mr.  Goodrum  turned to  Slide  22,  "Realized Value  of  UP                                                                    
     Unified Permit Project:                                                                                                    
          Less Rework                                                                                                           
          Less Variation                                                                                                        
          Improved Visibility                                                                                                   
          Fewer Errors                                                                                                          
          Fewer Systems                                                                                                         
          Smoother Handoffs                                                                                                     
10:14:50 AM                                                                                                                   
Mr. Goodrum referenced Slide 23, "Road Map":                                                                                    
     IV. DNR Interagency coordination                                                                                           
Mr.  Goodrum  referenced  Senator  Shower's  question  about                                                                    
coordination with other agencies.  He shared that the Office                                                                    
of  Project Management  and Permitting  provided support  to                                                                    
coordinate activities between departments.                                                                                      
10:15:26 AM                                                                                                                   
JEFF  BRUNO, OFFICE  OF PROJECT  MANAGEMENT AND  PERMITTING,                                                                    
DEPARTMENT  OF   NATURAL  RESOURCES   (via  teleconference),                                                                    
addressed  Slide  24,  "  Office  of  Project  Management  &                                                                    
     Mission:  Coordinates  multi-agency regulatory  reviews                                                                  
     and  authorizations,   while  collaboratively  engaging                                                                    
     federal  agencies  on  land  use  planning  and  policy                                                                    
     initiatives  to   maintain  and  enhance   the  state's                                                                    
     economy,  quality of  life, and  maximize the  value of                                                                    
     Alaska's vast natural resources.                                                                                           
      The Office  of Project Management &  Permitting (OPMP)                                                                  
     supports private industry,  regulators, and the general                                                                    
     public  by  implementing  one-stop  shop,  multi-agency                                                                    
     permit coordination  to secure  consistent, defensible,                                                                    
     transparent, and timely permit decisions.                                                                                  
      This model is  unique to Alaska and offers  a level of                                                                    
     assurance to companies investing  in Alaska that permit                                                                    
     reviews are robust and transparent.                                                                                        
Mr.  Bruno  discussed the function of the  Office of Project                                                                    
Management and  Permitting (OPMP). He said  that the program                                                                    
was voluntary; project proponents  signed into the model and                                                                    
agreed  to   reimburse  state  agencies  for   all  services                                                                    
rendered on  a project.  In exchange for  reimbursement, the                                                                    
proponent received  a more transparent, robust,  and heavily                                                                    
coordinated   project.  He   said   that  OPMP   efficiently                                                                    
coordinated  projects  by using  established  relationships,                                                                    
communication   protocols    with   state    agencies,   and                                                                    
coordination  with federal  agencies.  He  shared that  each                                                                    
project was  assigned a project coordinator  responsible for                                                                    
setting up timelines  and permitting schedules, coordinating                                                                    
the   states     involvement   on   federal    reviews   and                                                                    
authorizations, identifying which data  gaps had the longest                                                                    
lead  time, and  establishing  regularly scheduled  meetings                                                                    
for  project overviews  and  permit  specific meetings  when                                                                    
appropriate.  The  project coordinator  tracked  information                                                                    
between the applicant and the  agencies to consistently meet                                                                    
project timelines and schedules.                                                                                                
10:18:37 AM                                                                                                                   
Mr. Bruno spoke to Slide 25, "Agency Coordination":                                                                             
? Key coordinated agencies include but not limited to:                                                                          
     o   State:   Department   Environmental   Conservation,                                                                  
     Department  of Fish  and  Game,  Department of  Natural                                                                    
     Resources,  Department  of  Transportation  and  Public                                                                    
     Facilities, Department of Health and Social Services                                                                       
     o  Federal: Bureau  of  Land Management,  Environmental                                                                  
     Protection Agency, US Army Corps  of Engineers, US Fish                                                                    
     and Wildlife Service, Parks Service                                                                                        
?   Coordinated  federal   review,  State   permitting,  and                                                                    
regulatory compliance for major projects including:                                                                             
     o Oil & Gas: Nanushuk Project, Greater Moose's Tooth,                                                                    
     Willow Master Development Plan, Liberty, Alaska Stand                                                                      
     Alone Pipeline, AKLNG, and Point Thomson                                                                                   
     o  Mining:  Donlin  Gold, Pebble,  Red  Dog,  Anarraaq-                                                                  
     Aktiguruq, Fort  Knox, Greens Creek,  Kensington, Pogo,                                                                    
     Palmer Project,  Nixon Fork, Livengood, and  the Ambler                                                                    
     Mining District Industrial Access Project                                                                                  
Mr. Bruno  shared that the  OPMP model had  proven effective                                                                    
regardless  of  project  type  or size.  He  said  that  the                                                                    
coordinated  effort freed  up adjudicators,  and those  that                                                                    
issue  permits  to  spend  more  time  writing  permits.  He                                                                    
furthered   that  the   program   offered  more   consistent                                                                    
communication  between all  involved  parties, reduction  in                                                                    
duplicated efforts,  better information sharing, and  a more                                                                    
transparent  process. Ultimately,  permit and  authorization                                                                    
decisions were made in a more efficient a timely manner.                                                                        
10:20:24 AM                                                                                                                   
Senator Wilson about the average  timeline for large oil and                                                                    
gas and mining projects.                                                                                                        
Co-Chair  Stedman  asked  for  the  current  and  historical                                                                    
Mr. Bruno estimated  that currently and oil  and gas project                                                                    
could take  5 to  6 years  to work  through the  process. He                                                                    
said that  mining projects can  take longer, 10 to  15 years                                                                    
for some.                                                                                                                       
Co-Chair Stedman  understood that the OPMP  program had been                                                                    
Mr. Bruno answered in the affirmative.                                                                                          
10:21:48 AM                                                                                                                   
Senator Shower  hypothesized that  those with more  money to                                                                    
spend would experience and expedited process under OPMP.                                                                        
Co-Chair Stedman asked for Mr.  Goodrum to expand on why the                                                                    
program was created.                                                                                                            
Mr. Goodrum stated that some  of the most important projects                                                                    
to the  state dealt with  the production  of oil and  gas or                                                                    
mining. Ventures  of the sort were  complicated and involved                                                                    
multiple  agencies  as  well as  state,  federal  and  local                                                                    
governments.  He believed  that such  projects required  the                                                                    
coordination  offered  by  the   program.  He  reminded  the                                                                    
committee that  the program was  voluntary, and  the service                                                                    
was available to  all. He thought that  the service provided                                                                    
by the program was critical to the state.                                                                                       
10:24:59 AM                                                                                                                   
Senator  Shower thought  the way  the program  was presented                                                                    
seemed to  indicate that the  process would be  expedited if                                                                    
money  were paid.  He  expressed concern  that  it could  be                                                                    
considered a two-tiered system.                                                                                                 
Co-Chair  Stedman recalled  that similar  concerns had  been                                                                    
expressed  when the  system had  been first  implemented. He                                                                    
said  that  the legislature  had  examined  the backlog  and                                                                    
budgetary constraints  and had  worked to develop  a balance                                                                    
to smooth  out the  permit process.  He said  that attention                                                                    
was   consistently  paid   to  parity   and  that   resource                                                                    
extraction permits were not bound  up in bureaucratic  mumbo                                                                    
10:26:54 AM                                                                                                                   
Senator Bishop commented  that DNR did an  excellent job for                                                                    
small miners. He offered to  speak to Senator Shower off the                                                                    
10:27:18 AM                                                                                                                   
Mr. Goodrum showed Slide 26, "Road Map":                                                                                        
     V. Municipal Entitlement Land Conveyances                                                                                  
Mr.  Goodrum advanced  to slide  27, "Municipal  Entitlement                                                                    
Land Conveyances":                                                                                                              
     ? There are two ways for a municipality (city or                                                                           
     borough) to receive land entitlement provided in                                                                           
          o A calculation of eligible state land within the                                                                     
         municipal boundary under AS 29.65.030; or                                                                              
          o Based on an amount established by the                                                                               
          Legislature in AS 29.65.010.                                                                                          
Mr. Goodrum stated  that at the inception  of a municipality                                                                    
or  borough,   the  state  works  with   the  newly  created                                                                    
government   entity   to  convey   vacant,   unappropriated,                                                                    
unreserved land so  that the local government  can create an                                                                    
economic  base.  Newly  formed Municipalities  and  boroughs                                                                    
receive  land  entitlement in  two  ways:  under statute  or                                                                    
legislative designation.                                                                                                        
10:28:46 AM                                                                                                                   
Mr.  Goodrum  considered  Slide 28,  "Municipal  Entitlement                                                                    
      ?  Historically, calculation  of entitlement  is based                                                                    
     on 10% of vacant, unappropriated,                                                                                          
     unreserved (VUU)  general grant  state land  within the                                                                    
     municipal boundary.                                                                                                        
        Statute was  amended in  1978, when  eleven existing                                                                    
     boroughs were listed at AS                                                                                                 
     29.65.010(a),  with  entitlement acreage  amounts  that                                                                    
     were previously established                                                                                                
     based on the 10% VUU formula.                                                                                              
     ? North  Slope Borough  was added  to the  list because                                                                    
     the entitlement previously                                                                                                 
     granted   to  the   borough  was   forfeited,  so   the                                                                    
     Legislature reestablished it at AS                                                                                         
        Boroughs  subsequently  added  to  the  list  at  AS                                                                    
     29.65.010  are  located   in  Southeast  Alaska,  where                                                                    
     available  state  land  is limited  compared  to  other                                                                    
     areas  of  the state,  so  these  communities sought  a                                                                    
     legislative  remedy   to  enlarge   their  entitlements                                                                    
     beyond the 10% VUU granted to all other boroughs.                                                                          
     ?  For  newly   incorporated  municipalities  under  AS                                                                    
     29.65.030, DMLW has two years  and six months from date                                                                    
     of incorporation to  determine entitlement. Only cities                                                                    
     may request  expedited determination within  six months                                                                    
     of incorporation.                                                                                                          
Co-Chair   Stedman  asked   how   to   speed  up   municipal                                                                    
entitlement determinations.                                                                                                     
Mr.   Goodrum  stated   that  the   municipal  and   borough                                                                    
entitlements were a challenge to  expedite. He said that the                                                                    
best  way  to  expedite  the  process  would  include  clear                                                                    
communication  between the  state  and  the municipality  or                                                                    
borough. He shared  that there were 3  personnel that worked                                                                    
this particular issue.                                                                                                          
Co-Chair  Stedman had  heard feedback  that the  process had                                                                    
been slow.                                                                                                                      
Mr.  Goodrum encouraged  local governments  to work  closely                                                                    
with the  Municipal Entitlement Section within  the Division                                                                    
of Land and  Water. He said that questions  could be brought                                                                    
to DNR for resolution.                                                                                                          
10:31:32 AM                                                                                                                   
Senator  Shower thought  the DF&G  Division  of Habitat  was                                                                    
proposed to be eliminated.                                                                                                      
Mr. Goodrum replied that he was not aware of the issue.                                                                         
10:32:23 AM                                                                                                                   
Mr. Goodrum showed Slide 29, "Questions."                                                                                       
Senator  Micciche  worried  about the  impression  that  the                                                                    
project management capabilities of  the department were more                                                                    
readily available based on wealth.  He asked for information                                                                    
about the  types of companies  that used both  the expedited                                                                    
and un-expedited services.                                                                                                      
Co-Chair   Stedman  asked   for  Mr.   Goodrum  to   provide                                                                    
information  to the  committee on  how  often the  expedited                                                                    
versus un-expedited  services were  used. He  disagreed that                                                                    
the presentation had given an impression either way.                                                                            
Mr. Goodrum agreed to provide the information later.                                                                            
Co-Chair  Stedman hoped  that that  the backlog  issue would                                                                    
continue to improve.                                                                                                            
Co-Chair Stedman discussed housekeeping.                                                                                        
10:36:40 AM                                                                                                                   
The meeting was adjourned at 10:36 a.m.                                                                                         

Document Name Date/Time Subjects
032819 Backlog Update Memo 2-28-2019 Final.pdf SFIN 3/28/2019 9:00:00 AM
DNR Permitting
032819 Permitting Large Projects in Alaska-2018.pdf SFIN 3/28/2019 9:00:00 AM
DNR Permitting
032819 MunicipalEntitlementSummary28Feb2019.pdf SFIN 3/28/2019 9:00:00 AM
DNR Permitting
032819 Backlog report Jan 2014.pdf SFIN 3/28/2019 9:00:00 AM
DNR Permitting
032819 Permit Example - AquatiC Farming.pdf SFIN 3/28/2019 9:00:00 AM
DNR Permitting
032819 Permit Example - OG exploration.pdf SFIN 3/28/2019 9:00:00 AM
DNR Permitting
032819 DNR SENFIN Presentation FINAL.pdf SFIN 3/28/2019 9:00:00 AM
DNR Permitting