04/15/2005 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB164 | |
| HB19 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 19 | TELECONFERENCED | |
| *+ | SB 164 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
April 15, 2005
3:37 p.m.
MEMBERS PRESENT
Senator Thomas Wagoner, Chair
Senator Ralph Seekins, Vice Chair
Senator Ben Stevens
Senator Fred Dyson
Senator Bert Stedman
Senator Kim Elton
Senator Gretchen Guess
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 164
"An Act relating to the salmon product development tax credit;
providing for an effective date by amending an effective date in
sec. 7, ch. 57, SLA 2003; and providing for an effective date."
MOVED SB 164 OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 19(FIN)
"An Act relating to pesticides and broadcast chemicals; and
providing for an effective date."
MOVED CSHB 19(FIN) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 164
SHORT TITLE: SALMON PRODUCT DEVELOPMENT TAX CREDIT
SPONSOR(s): SENATOR(s) STEDMAN
04/06/05 (S) READ THE FIRST TIME - REFERRALS
04/06/05 (S) RES, FIN
04/15/05 (S) RES AT 3:30 PM BUTROVICH 205
BILL: HB 19
SHORT TITLE: PESTICIDE & BROADCAST CHEMICALS
SPONSOR(s): REPRESENTATIVE(s) MEYER
01/10/05 (H) PREFILE RELEASED 12/30/04
01/10/05 (H) READ THE FIRST TIME - REFERRALS
01/10/05 (H) RES, FIN
02/23/05 (H) RES AT 1:00 PM CAPITOL 124
02/23/05 (H) Heard & Held
02/23/05 (H) MINUTE(RES)
02/28/05 (H) RES AT 1:00 PM CAPITOL 124
02/28/05 (H) Moved CSHB 19(RES) Out of Committee
02/28/05 (H) MINUTE(RES)
03/01/05 (H) RES RPT CS(RES) 5DP 4NR
03/01/05 (H) DP: SEATON, ELKINS, LEDOUX, CRAWFORD,
RAMRAS;
03/01/05 (H) NR: OLSON, KAPSNER, GATTO, SAMUELS
03/15/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/15/05 (H) Heard & Held
03/15/05 (H) MINUTE(FIN)
03/17/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/17/05 (H) Moved CSHB 19(FIN) Out of Committee
03/17/05 (H) MINUTE(FIN)
03/18/05 (H) FIN RPT CS(FIN) 4DP 1DNP 5NR
03/18/05 (H) DP: FOSTER, WEYHRAUCH, CROFT, MEYER;
03/18/05 (H) DNP: HOLM;
03/18/05 (H) NR: HAWKER, STOLTZE, MOSES, KELLY,
CHENAULT
03/23/05 (H) TRANSMITTED TO (S)
03/23/05 (H) VERSION: CSHB 19(FIN)
03/24/05 (S) READ THE FIRST TIME - REFERRALS
03/24/05 (S) RES, FIN
04/15/05 (S) RES AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
TIM BARRY
Staff to Senator Stedman
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on SB 164 for sponsor.
SENATOR BERT STEDMAN
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of SB 164.
CHUCK HARLAMERT, Tax Division
Department of Revenue
PO Box 110400
Juneau, AK 99811-0400
POSITION STATEMENT: Commented on SB 164.
DUNCAN FIELDS, Vice President
Kodiak Salmon Packers
Kodiak AK
POSITION STATEMENT: Supported SB 164.
STEPHANIE MADSEN, Vice President
Pacific Seafood Processors Association
222 Seward Street, Ste. 200
Juneau AK 99801
POSITION STATEMENT: Supported SB 164.
KRIS NORRIS
Government Affairs
Icicle Seafoods
POSITION STATEMENT: Supported SB 164.
REED STOOPS
Ocean Beauty Seafoods
Juneau AK
POSITION STATEMENT: Supported SB 164.
REPRESENTATIVE KEVIN MEYER
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 19.
MIKE PAWLOWSKI
Staff to Representative Meyer
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on HB 19.
KRISTIN RYAN, Director
Division of Environmental Health
Department of Environmental Conservation
410 Willoughby
Juneau, AK 99801-1795
POSITION STATEMENT: Commented on HB 19.
AL VEZEY
Fairbanks AK
POSITION STATEMENT: Commented on HB 19.
KEN PERRY
Perry Paratex Pied Piper
Alaska Pesticide Applicators Group
National Pest Management Association
Responsible Industry For A Sound Environment
Anchorage AK
POSITION STATEMENT: Opposed HB 19.
VARSHA MATHRANI
Environmental Health Coordinator
Alaska's Community Action on Toxics
POSITION STATEMENT: Supported HB 19.
ALAN COLTER
Anchorage AK
POSITION STATEMENT: Supported HB 19.
SHABA KURTS
Alaska Pacific University
Tok AK
POSITION STATEMENT: Supported HB 19.
COLIN QUENHEARST
Alaska Pacific University (APU) student
Anchorage AK
POSITION STATEMENT: Supported HB 19.
JILL DONALDSON
Alaska Pacific University student
Anchorage AK
POSITION STATEMENT: Supported HB 19.
ACTION NARRATIVE
CHAIR THOMAS WAGONER called the Senate Resources Standing
Committee meeting to order at 3:37:47 PM. Present were Senators
Stedman, Seekins, Dyson, Guess, Elton and Chair Wagoner.
SB 164-SALMON PRODUCT DEVELOPMENT TAX CREDIT
CHAIR THOMAS WAGONER announced SB 164 to be up for
consideration.
TIM BARRY, staff to Senator Stedman, read the sponsor statement.
SB 164 extends the deadline for salmon processors in Alaska to
receive a salmon product development tax credit. Under the
state's current law, processors can claim the credit only for
property first placed into service by the end of this calendar
year. This bill would give processors three additional years,
until December 31, 2008, to claim the credit.
This legislation also clarifies what types of items are eligible
for the tax credit to more effectively achieve the legislature's
goal of encouraging Alaska seafood processors to develop
innovative value-added salmon products.
He recalled that the legislature passed legislation allowing
processors to claim a tax credit on new equipment they purchased
to add value to salmon-using innovative processing techniques.
The bill, HB 90, that became this law had been proposed by the
Joint Legislative Salmon Industry Task Force and was part of an
effort by Alaska's elected leaders and the fishing industry to
create incentives for the industry to take investment risks and
produce new salmon products and it has worked. This legislation
was drafted in consultation with the Tax Division of the
Department of Revenue.
3:40:45 PM
SENATOR BERT STEDMAN, sponsor of SB 164, said the intent came
from the Joint Legislative Salmon Industry Task Force and was
intended to move industry away from the canned market and into
other value-added markets.
3:41:45 PM
SENATOR BEN STEVENS joined the committee.
3:42:16 PM
SENATOR STEDMAN explained:
Again, we're trying to stimulate the industry for jobs
and value creation.... It takes a while for the
industry to respond and the tax credit being 50
percent to go against their fisheries tax - sometimes
they may have a carry forward and the carry-forward
will last up to three years.
3:43:55 PM
CHAIR WAGONER asked if insulated fish totes and ice machines
were covered under the exemption.
SENATOR STEDMAN said he thought those were excluded.
3:44:40 PM
SENATOR RALPH SEEKINS asked how much the tax credits amount to
each year.
SENATOR STEDMAN replied that credits totaled $1.5 million in
each of the three years 2006 through 2008.
3:46:12 PM
SENATOR GUESS asked when the task force first made this
recommendation, was it their intent to revisit the issue in
three-year extensions or was it just a one-time shot.
SENATOR STEDMAN replied that he didn't recall.
3:47:52 PM
SENATOR BEN STEVENS said recalled that the task force wanted to
give the industry a period of time to make the decision to
invest and wanted to give them an extended period of time to
recoup the credit. It also did not want the credit to be open-
ended and wanted to reassess it.
3:50:16 PM
SENATOR SEEKINS asked which fisheries were benefiting from the
credit.
CHUCK HARLAMERT, Tax Division, Department of Revenue, said that
this credit is limited to salmon processing.
3:51:57 PM
SENATOR STEDMAN said he thought it would be more concentrated in
places where fish are delivered.
3:52:50 PM
CHAIR WAGONER asked if there is a pre-approval process.
MR. HARLAMERT replied that there is no pre-approval process.
Processors file a claim form for this credit with their tax
returns.
Part of the reason for the additional language in the
bill is because of a lack of a pre-approval process
and a 50 percent credit rate. Some taxpayers can
easily read the statute too optimistically - perhaps a
little too broadly... particularly if they have
borrowed heavily to invest. Unknowingly, they may be
accruing 11 percent interest.
He said the new element discussed by the Salmon Task Force was
the exclusion of canneries, but the remainder of this bill adds
clarifications to try to prevent the process of folks claiming
and not paying their tax and ending up with liabilities they
weren't aware of.
CHAIR WAGONER said he would feel much more comfortable with pre-
approval for the credit and asked if the department had a list
of what is approvable.
MR. HARLAMERT replied that this statute doesn't have a list of
qualifying equipment, but requires it to be processing equipment
as opposed to supporting equipment for transportation or
storage. It also requires that the predominant product of that
equipment be a value-added salmon product. He said the more
sophisticated taxpayers have called the department to validate
whether their plans fell within the credit or not and, "Any
taxpayer is welcome to do that."
3:57:00 PM
SENATOR ELTON asked if the net effect of the immediate effective
date would be an immediate limitation to the kinds of equipment
that could be used for the tax credit.
MR. HARLAMERT replied no. The additional language basically
fleshes out and makes clearer what is meant. There is one new
condition in the clarifying language - it prohibits a credit for
canning equipment.
3:58:56 PM
DUNCAN FIELDS, Vice President, Kodiak Salmon Packers, liked the
tax credit, but thought it needs to include onshore ice
machines. He explained that his is a single-plant salmon
processor and it is struggling to survive through the downturn
in the salmon industry. He was able to take advantage of the tax
credit and appreciated the legislature's support of the industry
that is trying to rapidly move toward the value-added processes.
As a small processor, he has to take smaller steps than the
larger folks in the industry.
MR. FIELDS related that last year he borrowed a fillet line to
see how it would work before actually investing in one and the
first thing he realized is that it takes a huge amount of ice to
move the fillets, because the salmon has to relax for 24 to 48
hours before running it through the line.
You have a whole series of totes and all the ice. I
would say it takes probably twice as much ice to run
fish through the filleter. So, ice machines, ice
equipment, it seems would be an important component to
encouraging the industry, particularly the processors
like us to move forward towards value-added. Perhaps
it's included in the language - again I would defer to
help from the Department of Revenue, but I would think
something in that top line on page 2 on processing,
packaging, cooling or product finishing function would
make it explicit and give me a little higher comfort
level.
4:01:39 PM
He supported the idea of not supporting old technology, but was
concerned about losing opportunities if new technology like pop-
tops and can-type containers were excluded as traditional
processing equipment.
STEPHANIE MADSEN, Vice President, Pacific Seafood Processors
Association, said she represents salmon and whitefish processors
from around the state and supported SB 164. She related how the
credit is working for her members saying one member invested
about $500,000 this year, which represents about two new fillet
lines and two other members have fully utilized their 50 percent
tax credit.
I believe that's a demonstration that the program is
working. So, we would appreciate the extension. I
think one of the reasons that the request for the
extension is because it was difficult for the
processors to get up to speed and to get those
investments immediately....
4:06:06 PM
She recommended not completely eliminating canned salmon
products from being available for the tax credit. While she
understands their not wanting to replace the current equipment,
canned salmon would always have role in many of the fisheries
and there is a strong canned salmon market for sockeye and pink
salmon.
It depends on the volume and when the timing of that
run comes. That will kind of move you toward the
importance of canned. We do support examination or
possibility of use for these tax credits to move us
towards value-added canned salmon and that is the pop-
top.... Exactly what does that mean? Well, you have to
get a new seamer, because it's a different top. And,
as you know, the canned salmon and the seaming is very
critical.... There would probably have to be
modifications to the tracking line that sends the tops
down to the main machine as well as modification to
the retort system. Because of the different top,
you're going to have to insure that that retort system
is compatible with the new can. So, that's the need
for equipment as far as the use for pop-tops....
One other thought for consideration is the exclusion
of used equipment. Certainly we don't want shenanigans
as far as one company selling used equipment to
another, but in the food business there are many
opportunities to bring used equipment to the state
that are used either by other food industries or by
other non-salmon producers. For example, the fillet
machines that are used in salmon are also the same
Baader machines that are used in the whitefish
industry. So, there is a possibility that getting used
equipment will not only save the processor money, but
it will save the state some money from the tax credit
perspective. If you pay less for that equipment, your
tax credit is going to be limited or less, but the
benefit is the same.
4:08:53 PM
SENATOR STEDMAN said those two suggestion were explored with the
Department of Revenue, but it was decided that the intent is to
help the industry move beyond cans and used equipment and he did
not think they were stimulating the status quo by doing that.
If a company wants to stay there, that's okay.
MS. MADSEN reiterated and emphasized that canned salmon is
becoming more consumer-friendly and is used globally and
clarified that used equipment would be used for value-added
business, not recycling.
4:12:12 PM
CHAIR WAGONER said the issue is that a business will lease a new
machine and bring it to Alaska. If they like it, they might
negotiate a purchase and he asked if that type of transaction
would be disallowed under this legislation.
MR. HARLAMERT replied that technically it would be considered a
used product and would not be able to be purchased under this
statute. He suggested that the business could negotiate a lease-
purchase contract and then back out of it as opposed to just
leasing it first.
SENATOR SEEKINS agreed with Ms. Madsen that used equipment has
its place with value-added businesses and asked if there was a
mechanism to transfer credits to a downstream purchaser of
equipment.
MR. HARLAMERT replied no.
SENATOR SEEKINS said that would make it difficult for him to
take the risk and therefore he thought it would be
counterproductive to their goal saying:
If there was a perfectly useable system or piece of
equipment in the state that could bring some other
processor toward the goal that you're trying to get to
that you would preclude it from being allowed in the
program.
He said that a lease purchase agreement is just a conditional
sales agreement. Very few of them give someone the option to be
able to determine later on whether or not they want to buy it
and then for tax purposes call it a lease at the beginning and
later on turn it in to a straight line depreciation.
MR. HARLAMERT responded that it was not his place to elaborate
on legislative intent here. He clarified that the federal tax
credit was at no time allowed for used property. He explained:
It is a fact with credits especially when you get in
the range of 50 percent that they are highly subject
to abuse. And, normally, if you have a credit, you're
trying to stimulate something that does not have its
own economic justification. You're trying to tip the
scales to establish that economic justification, but
recognizing that in doing that the economic
justification of doing something else is always there.
If the credit is written too loosely to allow the
taxpayer to get the same credit for something just a
little off your target, that's what's going to happen.
And so, it's generally a good idea to err on the side
of caution with credits and be more narrow than you'd
like to be if you want to be the most effective in
achieving your goal. That's just a general
observation.
SENATOR SEEKINS still thought the credit was too restrictive and
he thought it was an impediment to the goal of the bill.
4:19:01 PM
CHAIR WAGONER gave him an example of a guy who paid over $80,000
for a pinball machine that wound up not working and another guy
who bought a reconditioned one that worked three times better
than the one that was brand new. "That's why I brought this up
in the first place for discussion. These are some of the things
you run into in processing equipment.
4:19:41 PM
SENATOR STEDMAN clarified if a person purchases a piece of
equipment that does qualify, you don't have to file for the tax
credit if you don't want to. He would entertain discussion about
pop-tops, although he didn't want to stimulate the canned
market.
SENATOR ELTON said it was something to think about, but he also
didn't want to give tax credits to produce the same old product
packaged in the same old way. Maybe the canned issue could be
dealt with by using a term of art saying this tax credit is not
available for the same old same old.
4:23:08 PM
KRIS NORRIS, Government Affairs, Icicle Seafoods, supported SB
164. She said Icicle Seafoods purchases and processes a wide
variety of seafood throughout Alaska. She explained that in 2003
Icicle used the salmon product development tax credit to
purchase equipment to make new products with salmon roe (Ikura)
- that prevented oxidation and bacterial growth from happening
prolonging shelf life. In 2004, it used the salmon utilization
tax credit to install new equipment that was more
technologically advanced in their salmon meal plant in Seward.
As a direct result of that upgrade, Icicle has been able to run
a lot more pounds of salmon through their facility and with few
exceptions can utilize 100 percent of an entire salmon including
the guts.
Icicle Seafoods made saleable products from salmon parts that
normally would have been part of the waste stream - a huge
improvement. They have also improved the quality of the products
they are producing, most notably the oil. New technology allows
them to extract a lot more of the water and grit. It is now
being used as a supplement for cattle feed and animal treats.
The other thing it has allowed them to do is to be a lot more
aggressive in purchasing of salmon. It's opened up opportunities
that weren't there before.
"So, when we can be more aggressive, there's a lot of
beneficiaries - our fleet, our employees are getting
more work, we're buying more fish, so there's more
taxes generated. That kicks back to the City of Seward
and certainly to the state of Alaska.... I feel like
the incentives that were provided to us from the State
of Alaska really helped us with economic development
that had some spin offs beyond just our own
company.... I also want to say that the Department of
Revenue has been good to work with.... We certainly
run our ideas past Mr. Harlamert before we proceed
with them to make sure that it is a project that is
going to be eligible for a tax credit.... In our
business the margins are pretty small and in some
years there aren't any....
MS. NORRIS said Icicle Seafoods is very interested in having the
opportunity to have some tax credits applied for additional meal
and oil plants. Its new technology in the Seward plant has only
operated one year and management is convinced it will have even
better results this year because they know a lot more about the
equipment and are considering investing more money into some of
their other locations. She said, "If it hadn't of been for the
tax incentive provided by the state, we probably wouldn't have
made that investment...." and thought the spin offs would be
very big.
4:28:41 PM
SENATOR SEEKINS asked how she felt about a tax credit pre-
purchase approval system with the Department of Revenue.
MS. NORRIS replied that has been her practice - to call the
Department of Revenue first to make sure their idea would fly
with them. She was told no about her pop-top idea. "It kept us
from doing the project."
4:29:48 PM
SENATOR SEEKINS asked if she had been able to get approval for a
pop-top system, would it have meant incremental business or just
a transfer in what they do.
MS. NORRIS replied that she thought it would bring in new
customers.
4:30:27 PM
REED STOOPS, Ocean Beauty Seafoods, supported SB 164. Ocean
Beauty is one of the larger salmon producers in Alaska and the
tax credit program was the determining factor in its purchasing
new equipment for its Excursion Inlet (in Southeast) and Alatak
plants (in Kodiak). It increased the number of employees in both
plants, expanded the number of fish they purchased and extended
the season at both ends. All this enabled them to find a market
for lower-value fish products.
SENATOR STEDMAN asked under what circumstances Ocean Beauty
purchased their plant at Excursion Inlet.
MR. STOOPS explained that Ward Cove decided to close all of its
seafood plants in Southeast and Bristol Bay and at that point
there was a risk of there being no major processor in this part
of Southeast to buy salmon. The governor and some other business
people who were dependent on that business looked for seafood
processors who could take Ward Cove's place. Ocean Beauty agreed
to buy the Excursion Inlet and Alatak plants. A lot of the
employees were hired back and then Ocean Beauty focused on
updating the equipment. Last year, because of the tax credit,
they purchased some new equipment and now they want to purchase
more equipment of the same nature or expand the number of plants
that have the value-added capability.
4:33:12 PM
He said, "This legislation means the difference between doing
more in Alaska rather than just doing the same thing on a
continuing basis."
4:35:23 PM
SENATOR STEDMAN put forth a conceptual amendment to include
conversion or installation of pop-tops in language that excludes
all cans.
SENATOR ELTON thanked the sponsor for that amendment and said he
is comfortable with him offering it in the Finance Committee
where he has a seat.
4:37:02 PM
SENATOR BEN STEVENS asked Ms. Norris if Icicle Seafoods is going
to invest in another plant.
MS. NORRIS replied affirmatively. While she understood there
were abuses of that particular credit, she thought an argument
could be made that including those kinds of operations directly
helped Icicle add value to guts, viscera, frames, carcasses and
skins that would normally not have been utilized.
SENATOR BEN STEVENS recalled that the evolution of the
utilization actually came from trying to help a situation the
Department of Environmental Conservation (DEC) had with
discharge issues. He asked Mr. Stoops if that plant installed
utilization equipment as well.
REED STOOPS replied yes that they put in new equipment for full
utilization.
SENATOR BEN STEVENS asked the department how much money was used
to purchase new utilization-of-waste equipment versus the other
portion of the bill that caused them problems.
4:41:06 PM
MR. HARLAMERT said he couldn't disclose the exact amount of the
credit, but a majority of the waste credit went for utilization-
of-waste property. But, that was not true in 2003 when it was
almost nil. In 2004, more than half of all the credit claimed
for waste was investment in property to utilize salmon waste and
to create products from it.
4:42:49 PM
SENATOR STEDMAN moved to pass SB 164 from committee with
individual recommendations and attached fiscal notes. There were
no objections and it was so ordered.
4:43:19 PM At ease 4:45:34 PM
CSHB 19(FIN)-PESTICIDE & BROADCAST CHEMICALS
CHAIR THOMAS WAGONER announced CSHB 19(FIN) to be up for
consideration.
REPRESENTATIVE KEVIN MEYER said he was looking for a way to
eliminate the state general fund obligation to the State
Pesticide Program, which is required by federal law. He also
wanted to provide reasonable protections for public health for
when pesticides are used throughout the state.
The way the program works, the Environmental Protection Agency
(EPA) approves a pesticide for sale in the United States and
then each state has to register the pesticide for sale within
the state. The state agency in this case is the Department of
Environmental Conservation (DEC). It is responsible for
registering the pesticides and inspecting and enforcing the
requirements that EPA puts on the handling and distribution of
these chemicals. In Alaska, the program has been paid for with
general funds, but in other states the program is paid for by
the chemical manufacturers in the form of a fee they pay to the
state.
When he first contacted the chemical manufacturers, they were
not surprised nor did they resist being charged a fee for
chemicals that they sell in Alaska. The only thing they
requested is that the state doesn't try to fill its fiscal gap
on their backs. The department suggested a fee of $85 that is
set up on a sliding basis so that chemicals that are used
infrequently would be charged less. This fee would make Alaska
th
the 11 cheapest in the country.
REPRESENTATIVE MEYER explained that when pesticides are used in
a public place this bill requires that they be applied by a
certified applicator. The intent is to target areas where people
go in masses and shouldn't have to worry about a recent
spraying. The other requirement is that the spraying is noticed
something like a "Wet Paint" sign.
4:50:46 PM
SENATOR GUESS asked if public schools were included in the
definition of public place.
REPRESENTATIVE MEYER replied yes; it includes schools and
universities.
SENATOR GUESS asked if it includes Alaska Native Hospital, but
not Providence Hospital.
REPRESENTATIVE MEYER responded that he thought she was right.
MIKE PAWLOWSKI, staff to Representative Meyer, said he knew
Providence and Alaska Regional Hospitals would not be included
in this. He said they worked on the definition closely with the
DEC.
KRISTIN RYAN, Director, Division of Environmental Health,
Department of Environmental Conservation (DEC), said the
definition is specific in the proposed legislation, but she
would have to look at other statutes regarding a definition for
"government office." She hadn't considered government hospitals
and since even the Native hospitals are technically run by
consortiums, she didn't know if they would be considered a state
building. She thought they would be considered federal
government buildings. "But, I think our intent here was to cover
state government buildings."
4:54:01 PM
SENATOR GUESS said if the intent is state buildings, that
wouldn't include schools.
MS. RYAN responded that schools are covered by existing
regulations that already require public notice.
SENATOR GUESS asked if government-funded programs not in a
government facility, like Headstart, are covered.
MS. RYAN interpreted that to not be included. She didn't think
the department had the authority to require the federal
government to post warnings in their buildings. She would check
on that.
SENATOR GUESS asked her to check on requirements for
municipalities and local government buildings as well.
4:55:18 PM
SENATOR SEEKINS asked if licensing of pesticide applicators
included spray bottles or people on page 3, line 6.
MS. RYAN replied people.
SENATOR SEEKINS said he looked at AS 46.03.320(b) and it says
the department may provide, by regulation, for the licensing of
private applicators and asked about public applicators. "Would
they have to have the same standards as a private applicator?"
MS. RYAN replied that is existing statute and she could do a
temporary waiver for people who couldn't get to the course, but
needed to do an emergency application. The department has
interpreted the statutes to require commercial applicators to be
certified. That means you have to take a test and go through a
course that teaches you how to apply the chemicals safely.
It's against federal law to ever apply a chemical
against the label. The label is the law with
pesticides. So, a private applicator is held to that
just as much as a commercial applicator. Everyone is
supposed to follow the label.
4:57:02 PM
SENATOR SEEKINS asked if a Department of Transportation and
Public Facilities (DOTPF) employee spraying down a highway would
be subject to licensing and have to pass the same examination.
MS. RYAN replied:
There's a few things that impact state applications.
For one thing, our regulations currently require them
to get a permit. We don't require permits for every
type of application; we only require a permit for
aerial spraying - for spraying over lakes like a fish
kill by Fish and Game or if you apply it to state
lands. So, DOT and the Railroad have to come to us for
permits and if you're familiar with the history at
all, that's never been successful. They have applied
and not been able to achieve the permit due to public
reaction.
So, through the permit process, we would require them
to make sure they use certified applicators otherwise
they aren't using chemicals on state land without a
permit.
4:58:26 PM
SENATOR SEEKINS said:
I've always thought that what was good for the goose
was good for the gander and if we were protecting
public health and safety and we felt that it was
necessary to certify and license this group, then we
ought to certify and license all people that do that,
not as just a matter of fairness, but a matter of
public safety. I'm just trying to see if there are any
loopholes for people to jump through here if we pass
this legislation based on their status or their
employment.
MS. RYAN replied that a stipulation of getting permits would be
certification. The department wants the pesticides applied
correctly. Commercial applicators are defined in regulations as
people who make money doing this.
4:59:19 PM
SENATOR SEEKINS asked how many fees would be in the $120 range
in reference to language about reasonable fees on page 3, line
4.
MS. RYAN replied that it's for simplification of accounting. She
didn't expect to have a fee for different products. There would
be a waiver from the fee if the product hadn't been used before
in Alaska, if research is being done on it or if it's
experimental.
Based on the money we need to generate to support the
program, the people left paying the fee would either
pay $85, assuming 40 percent don't pay the fee, or if
90 percent pay the fee, it would only be a $55 fee
across the board.
5:00:50 PM
AL VEZEY, Fairbanks, urged the committee to proceed with
caution. Pesticides is an extremely complex subject. It includes
wood preservatives, herbicides and numerous other specialty
products that improve people's lives. He used the removal of
brush from highways so drivers can see moose as an example. He
said the state has never successfully permitted a pesticide
application on state land as required by state law. "We need to
be careful before we take these products away from the public."
5:04:50 PM
He said that a majority of registered applicators are public
employees who are trying to do their jobs in a responsible
manner. They currently pay a fee of $25 to the federal
Agricultural Cooperative Extension Service, a division of the
Department of Agriculture. He encouraged the committee to
develop that relationship further because he thought the federal
government would be able to do more if the state showed more
support for the program that they are already doing in the state
of Alaska.
He said the people paying the fee would by and large be public
employees and would probably be reimbursed for it by the agency
they work for. Then the state would be put back in the position
of being asked to fund additional expenses due to having to
register with the state. He asked the committee to compare the
cost to the public and the harms it would inadvertently cause.
MR. VEZEY asked if they are going to require the owner of a
large public housing project to go through a registration and
public notice process before they implement a program to control
rats and mice.
Individual apartment owners don't have a chance in the
world of managing a rodent problem in a multi-family
building. It has to be done on a broad scope basis.
Looking at the regulations, we don't really know what
will come out of it. Is it going to encourage public
safety and public health or just simply discourage the
use of pesticide in the consequent deterioration the
quality of the environment that we all live in?
5:08:18 PM
KEN PERRY, Perry Paratex Pied Piper, said he also represents the
Alaska Pesticide Applicators Group, the National Pest Management
Association and a group called the Responsible Industry For A
Sound Environment. He praised the DEC and its pesticide
division, but said while it is sorely under-funded and severely
criticized, it has shown remarkable ability in overseeing
pesticide usage and the current registration program.
He said the bill is well-intentioned, but seriously flawed.
It holds no reasonable benefit to the people of our
state. I urge you to consider carefully testimony you
have and will be hearing sponsored by the tax-free
outside supported special interest groups. Please do
not forget that these are the same people who are
holding not just our small Alaska businesses, but our
major business interests, such as ANWR and the gas
pipeline. It is, therefore, no surprise that they are
now attacking chemical manufacturers whose billions of
dollars of research have produced safe and effective
products that tens of thousands of your constituents
have chosen to purchase over the years - items such as
mosquito repellant they put on their bodies or use
around their homes and lodges, the flea and tic
collars they put on their pets, disinfectants they use
to clean their homes and keep their spas and hot tubs
safe, the paints they use on their boats, the wood
preservatives they use to protect their structures and
the agricultural products that our farmers in Delta
and the Mat-Su use to need to have available to eek
out their livings....
MR. PERRY said this is an anti-business bill and not passing it
would send a large message to a large number of major companies
that Alaska is business friendly, not just a playground for
extremists.
5:13:39 PM
VARSHA MATHRANI, Environmental Health Coordinator, Alaska's
Community Action on Toxics, asked the committee to consider the
long-term affects of their actions. Children are particularly
sensitive to negative health effects from exposures to toxic
chemicals. Children play closer to the ground with lots of hand
to mouth behavior; and their bodies and organs are growing and
developing. Many pesticides are known to be associated with
adverse effects on the developing brain and nervous system of
children. She strongly supported HB 19.
ALAN COLTER, Anchorage resident, related how a good friend of
his died two years ago due to pesticide use in landscaping. They
worked together and used chemicals indiscriminately based on
what their boss told them. She died a long slow painful death.
He said that many of the chemicals used by the public are very
toxic, especially to children and older people. He supported HB
19 that would promote their responsible use.
5:20:26 PM
SHABA KURTS, Alaska Pacific University student, asked how the
public is supposed to know what is dangerous and what is not. He
trusts that the people who apply them will do it to the best of
their knowledge, but he felt there should be more regulation,
especially when it comes to something that could be dangerous to
the public health.
5:22:14 PM
COLIN QUENHEARST, Anchorage, supported HB 19. It is valuable for
all Alaska residents because it gives them the right to know
when pesticides are sprayed so that they can choose to avoid
dangerous substances. It is valuable particularly for children
as it pertains to marking of playgrounds where pesticides are
used.
5:23:50 PM
JILL DONALDSON, Alaska Pacific University student, supported HB
19. She has an Associates Degree in Environmental Technology,
which includes 30 hours of training with pesticide application,
regulation and uses under DEC and the New York State law. This
has shown her how potentially dangerous pesticides and broadcast
chemicals can be. The state of Alaska can learn what has worked
well and what has not worked well in other states.
One main concern is that certified applicators hold the majority
of responsibility and burdens that are associated with pesticide
regulations. However, they agree that proper pesticide
application and the necessary precautions associated with
application go hand in hand with ideal business tactics. She
supported the licensing of all pesticide applicators not only
for the safety of the individual, but for the safety of all
Alaskan residents.
She said it is also important to realize that the average
American may be exposed to more hazardous chemicals through
household applications rather than industrial applications.
"That's why public education is a key factor when controlling
the use of pesticides and broadcast chemicals."
5:26:10 PM
MS. RYAN commented that the committee heard a mix of comments
today and that her division receives complaints on pesticides
frequently. It is probably the things she spends the most time
on and yet it's probably the smallest program in her division.
The four staff in the pesticide program use federal
funds; we have primacy for pesticides similar to what
we're trying to do with NPDES and we use those federal
funds to inspect places that sell pesticides or
commercial applicators that use them and make sure
they are doing them right. That's what we do.
This bill would add a few more responsibilities. We
would be looking now at public notice in certain areas
and we'd be expanding the certification requirements.
And also, then, it gets rid of the general fund that's
used to support the program. It's the match with the
federal funds...I think, $49,000 is just straight
general fund to the program.
She didn't want people to be restricted from using new products
and expected to waive many fees because of that.
Certification to me is the real key. People that know
what they're doing is what's going to make the
difference. With all toxins, the dose is the poison.
Even salt and caffeine are toxic at certain levels.
5:29:08 PM
SENATOR SEEKINS asked what keeps someone from bringing in an
unregistered pesticide.
MS. RYAN replied that that happens all the time and that's what
the division's four inspectors look for when they are out in
green houses or Fred Meyers. They are making sure that the
chemicals for sale on the shelves are registered by EPA and the
state. When unregistered chemicals are found, the store is told
they can't sell it here and they are issued a stop-sale order.
Stores comply easily, because they can return the products to
the manufacturer for a refund and there is no penalty at this
time.
SENATOR SEEKINS asked if an applicator can bring a pesticide in
from Washington and apply it with no penalty.
MS. RYAN replied that it would be illegal and the department can
issue a notice of violation and while the pesticide program does
not have administrative penalty or civil fine authority, she
related that the Attorney General's office was able to do a
sting a couple of years ago.
SENATOR GUESS asked who is responsible for the public
notification for spraying in a public place under HB 19.
MS. RYAN replied that the statute leaves that up to the
department to determine through regulation. She assumed that the
responsibility for signage would be on the applicator.
5:32:27 PM
SENATOR GUESS asked if there is a penalty in regulation for not
giving public notice.
MS. RYAN replied that it would be a violation of the regulation
and the division issues a notice of violation.
5:33:23 PM
CHAIR WAGONER asked who does the training.
MS. RYAN replied that her staff has a good working relationship
with the Cooperative Extension Service, but with this bill there
would be an increased demand for training and she has proposed
creating a training CD for use by remote communities and people
who couldn't get to her office easily.
5:34:37 PM
SENATOR GUESS asked DEC and the sponsor to get back to her on
the definitions of government office and public facility to
clarify the record.
5:35:00 PM
SENATOR SEEKINS moved CSHB19 (FIN) from committee with
individual recommendations and attached fiscal note. There were
no objections and it was so ordered.
There being no further business to come before the committee,
Chair Wagoner adjourned the meeting at 5:35:37 PM.
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