Legislature(1999 - 2000)

03/29/2000 03:15 PM Senate RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
              SENATE RESOURCES COMMITTEE                                                                                        
                    March 29, 2000                                                                                              
                      3:15 P.M.                                                                                                 
MEMBERS PRESENT                                                                                                                 
Senator Rick Halford, Chairman                                                                                                  
Senator Robin Taylor, Vice Chairman                                                                                             
Senator Pete Kelly                                                                                                              
Senator Jerry Mackie                                                                                                            
Senator Lyda Green                                                                                                              
Senator Sean Parnell                                                                                                            
Senator Georgianna Lincoln                                                                                                      
MEMBERS ABSENT                                                                                                                  
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                              
Commercial Fisheries Entry Commission - Mr. Ed Dersham and Mr.                                                                  
           Larry Engel                                                                                                          
Oil and Gas Conservation Commission - Mr. Daniel Seamount                                                                       
Board of Fisheries - Ms. Marlene Johnson                                                                                        
SENATE BILL NO. 283                                                                                                             
"An Act relating to the accounting for and appropriations of state                                                              
land disposal program revenue; and providing for an effective                                                                   
     -MOVED CSSB 283(RES) OUT OF COMMITTEE                                                                                      
SENATE BILL NO. 124                                                                                                             
"An Act relating to electronic application for and issuance of                                                                  
licenses, permits, and tags issued by the Department of Fish and                                                                
Game; to violations regarding a license, permit, or tag applied for                                                             
or issued electronically; and providing for an effective date."                                                                 
     -HEARD AND HELD                                                                                                            
SENATE BILL NO. 296                                                                                                             
"An Act relating to charges for state services; requiring that fees                                                             
levied by resource agencies for designated regulatory services be                                                               
based on the actual and reasonable direct cost of providing the                                                                 
services, except in the case of certain negotiated or fixed fees;                                                               
relating to negotiated and fixed fees of resource agencies;                                                                     
relating to invoices for designated regulatory services;                                                                        
establishing a petition process regarding fees charged by resource                                                              
agencies for regulatory services; and providing for an effective                                                                
     -MOVED CSSB 296(RES) OUT OF COMMITTEE                                                                                      
SENATE BILL NO. 38                                                                                                              
"An Act relating to certain audits regarding oil and gas royalty                                                                
and net profits and to audits regarding costs relating to                                                                       
exploration incentive credits and oil and gas exploration licenses;                                                             
and providing for an effective date."                                                                                           
     -MOVED SB 38 OUT OF COMMITTEE                                                                                              
SENATE JOINT RESOLUTION NO. 31                                                                                                  
Relating to subsistence activities of urban Alaska Natives under                                                                
the Alaska National Interest Lands Conservation Act.                                                                            
     -MOVED SJR 31 OUT OF COMMITTEE                                                                                             
HOUSE BILL NO. 114                                                                                                              
"An Act repealing the prohibition against the taking of antlerless                                                              
     -HEARD AND HELD                                                                                                            
PREVIOUS SENATE COMMITTEE ACTION                                                                                                
SB 283 -  See Resources minutes dated 3/27/00.                                                                                  
SB 296 - No previous action to record.                                                                                          
SB 38 -  See Resources minutes dated 3/27/00.                                                                                   
SJR 31 - No previous action to record.                                                                                          
HB 114 - No previous action to record.                                                                                          
WITNESS REGISTER                                                                                                                
Ms. Carol Carroll, Director                                                                                                     
Department of Natural Resources                                                                                                 
Division of Support Services                                                                                                    
400 Willoughby Ave., 5th Floor                                                                                                  
Juneau, AK 99501                                                                                                                
POSITION STATEMENT:  Supported SB 283.                                                                                          
Mr. Geron Bruce, Legislative Liaison                                                                                            
Department of Fish and Game                                                                                                     
P.O. Box 25526                                                                                                                  
Juneau, AK 99802                                                                                                                
POSITION STATEMENT:  Supported SB 124.                                                                                          
Ms. Janice Adair, Director                                                                                                      
Division of Environmental Health                                                                                                
Department of Environmental Conservation                                                                                        
555 Cordova Street                                                                                                              
Anchorage, AK 99501                                                                                                             
POSITION STATEMENT:  Commented on SB 296.                                                                                       
Ms. Charlotte MacCay, Senior Administrator                                                                                      
Environmental Affairs                                                                                                           
Cominco Alaska                                                                                                                  
1133 W 15 th Ave.                                                                                                               
Anchorage, AK 99501                                                                                                             
POSITION STATEMENT:  Supported SB 296.                                                                                          
Mr. Ken Freeman, Executive Director                                                                                             
Resource Development Council                                                                                                    
121 W. Fireweed Lane #250                                                                                                       
Anchorage, AK 99503                                                                                                             
POSITION STATEMENT:  Supported SB 296.                                                                                          
Mr. Mike Tibbles, Aide                                                                                                          
Representative Gene Therriault                                                                                                  
State Capitol Bldg.                                                                                                             
Juneau, AK 99811                                                                                                                
POSITION STATEMENT:  Commented on SB 296.                                                                                       
Mr. Ed Grasser, Aide                                                                                                            
Representative Beverly Masek                                                                                                    
State Capitol Bldg.                                                                                                             
Juneau, AK 99811                                                                                                                
POSITION STATEMENT:  Commented on HB 114.                                                                                       
Mr. Matt Robus, Deputy Director                                                                                                 
Division of Wildlife Conservation                                                                                               
Department of Natural Resources                                                                                                 
P.O. Box 25526                                                                                                                  
Juneau, AK 99802                                                                                                                
POSITION STATEMENT: Supported HB 114.                                                                                           
ACTION NARRATIVE                                                                                                                
TAPE 00-15, SIDE A                                                                                                              
Number 001                                                                                                                      
CHAIRMAN HALFORD called the Senate Resources Committee meeting to                                                               
order at 3:15 and announced that they would take up the                                                                         
confirmation hearings.                                                                                                          
MR. ED DERSHAM, Board of Fisheries, said he had already done a                                                                  
three-year term on the Board.  He has become very familiar with the                                                             
Board process and fishery issues.  He looks forward to working for                                                              
another three years.                                                                                                            
CHAIRMAN HALFORD noted the committee didn't have any questions and                                                              
thanked him for his service.                                                                                                    
MR. LARRY ENGEL, Board of Fisheries, said he came from a commercial                                                             
fishing family and reviewed his professional history.                                                                           
SENATOR TAYLOR thanked both Mr. Engel and Mr. Dersham and said he                                                               
appreciated the committee system that they have adopted to work                                                                 
under.  He wished them well.                                                                                                    
SENATOR GREEN thanked Mr. Engel for changing his mind to come back                                                              
and serve on the Board of Fisheries.                                                                                            
SENATOR TAYLOR moved to send the standard letter of non-objection                                                               
forward.  There were no objections.                                                                                             
CHAIRMAN HALFORD announced a hearing for the Commercial Fisheries                                                               
Entry Commission.                                                                                                               
MS. MARLENE JOHNSON said she had been on the Commission for three                                                               
years and three months and she enjoys the work.                                                                                 
CHAIRMAN HALFORD thanked her for her years of service.                                                                          
SENATOR TAYLOR moved to send the standard letter of non-objection.                                                              
There were no objections.                                                                                                       
CHAIRMAN HALFORD announced the hearing for the Oil and Gas                                                                      
Conservation Commission.                                                                                                        
Number 497                                                                                                                      
MR. DANIEL SEAMOUNT said he has been filling in as a commissioner                                                               
for the last five weeks and finds the job very exciting and                                                                     
fulfilling. He reviewed his resume'.                                                                                            
SENATOR TAYLOR asked if he had a position on the Governor's compact                                                             
with BP.                                                                                                                        
MR. SEAMOUNT answered no.                                                                                                       
SENATOR TAYLOR moved to forward the standard letter of non                                                                      
objections to the Senate.  There were no objections.                                                                            
            SB 283-NAT RES.REVENUE: FISH/TIMBER/LAND                                                                            
CHAIRMAN HALFORD announced SB 283 to be up for consideration.                                                                   
SENATOR TAYLOR moved to adopt the committee substitute.  There were                                                             
no objections and it was so ordered.                                                                                            
CHAIRMAN HALFORD noted that it created three new categories of                                                                  
designated program receipts and is pretty self explanatory.  In the                                                             
process it reinstates and keeps the shore-fishery leases going.                                                                 
SENATOR TAYLOR moved to pass CSSB 283(RES) from committee with                                                                  
individual recommendations.                                                                                                     
SENATOR LINCOLN asked if there was any objection from the                                                                       
Department or from the Administration.                                                                                          
MS. CAROL CARROLL, Department of Natural Resources, said they do                                                                
not object to the title changes at all.  For the timber receipts,                                                               
the only concern they have is they hope not to raise the                                                                        
expectation of folks that this will fund timber sales, because the                                                              
money coming in to this account is not really enough to fund the                                                                
program.  If that expectation is there, they might not get the NCIP                                                             
receipts to have future timber sales.                                                                                           
SENATOR LINCOLN withdrew her objection and the bill passed from                                                                 
committee with individual recommendations.                                                                                      
          SB 124-FISH & GAME LICENSING BY ELECTRONICS                                                                           
CHAIRMAN HALFORD announced SB 124 to be up for consideration.                                                                   
MR. GERON BRUCE, Department of Fish and Game, said the bill enables                                                             
the ADF&G with the concurrence of the Department of Public Safety                                                               
to set up an electronic licensing system using either the Internet                                                              
or something like an 800 phone number which would allow people to                                                               
purchase and directly be licensed at the time of purchasing.   They                                                             
would be issued a "smart number" which would have some information                                                              
that would be correlated to some personal identification                                                                        
information like date of birth, eye color, etc.                                                                                 
They expect that most licenses would still be sold through the                                                                  
current system of private vendors issuing a paper license.  This                                                                
would just add convenience for some people.  They would also have                                                               
to carry a photo i.d. in the field which you are not required to do                                                             
with a paper license.                                                                                                           
CHAIRMAN HALFORD asked if this applied to the king salmon stamp or                                                              
the State duck stamp.                                                                                                           
MR. BRUCE replied yes, that is their intention.  Eventually, they                                                               
would like to bring as many of their licenses, tags, and stamps, as                                                             
possible on line.                                                                                                               
CHAIRMAN HALFORD asked how an enforcement officer on the Noatak                                                                 
would know whether someone has a sheet tag.                                                                                     
Number 974                                                                                                                      
MR. BRUCE explained if you had a sheet tag, you would be issued a                                                               
number at the time of purchase that would be equivalent to a                                                                    
license.  It would be coded in such a way that a public safety                                                                  
officer would be able to have references to tell whether it had the                                                             
proper coding required for the particular hunt.                                                                                 
SENATOR GREEN said that a vendor came to her with the problem of                                                                
someone getting a media license and then coming to his place to get                                                             
all the rest of the documentation.  He would not be able to collect                                                             
a fee.                                                                                                                          
MR. BRUCE replied that the situation under electronic licensing                                                                 
would not be different than it would be under current licensing.                                                                
That is, if someone were to purchase a hunting license from one                                                                 
vendor and then decide they wanted to pick up a tag from another.                                                               
He didn't think it was a significant concern; it wouldn't take                                                                  
revenue away from the vendor.  He is providing a service that he                                                                
doesn't have to.  Usually the reason a vendor sells licenses is                                                                 
because it draws people into their store where they can sell them                                                               
merchandise or other services.                                                                                                  
SENATOR GREEN asked on what item the bulk of money is made.                                                                     
CHAIRMAN HALFORD answered "non-resident tags."                                                                                  
SENATOR GREEN asked what the fee was for the license.                                                                           
MR. BRUCE answered that he thought it was $85 for a hunting license                                                             
for a non-resident.  He thought a vendor got a percentage - about                                                               
5% and additional compensation later in the form of a flat amount                                                               
or a flat amount per license if it's over the minimum amount.                                                                   
SENATOR TAYLOR asked how they are going to do all of the stamps and                                                             
licenses electronically since there are so many and the stamps come                                                             
out later in the spring.                                                                                                        
MR. BRUCE replied when you purchase the state stamp, you don't need                                                             
an additional federal stamp.                                                                                                    
SENATOR TAYLOR said, "Oh yeah, you do.  It's called a federal duck                                                              
stamp."  There are two different stamps; one of them you buy at the                                                             
U.S. Post Office and the other is from the State.  He asked how a                                                               
guide or charter boat captain would be able to verify licensure.                                                                
MR. BRUCE said he didn't know and would find out for him.  There                                                                
would have to be a picture i.d. which would be linked to the smart                                                              
number so it would indicate the license you held was actually                                                                   
issued to the individual that the picture i.d. indicates you are.                                                               
SENATOR TAYLOR asked how they get a verification of signature.                                                                  
MR. BRUCE replied, similar to other kinds of electronic commerce,                                                               
when you purchase it, you would assent to the statement that the                                                                
information you have provided is accurate and truthful.  There                                                                  
would be an enforceable mechanism.  A vendor would have a list of                                                               
the codes. The Department anticipates contracting with a private                                                                
party to do an 800 number and possibly the Internet licensing,                                                                  
itself.  He explained how simple the number system would be.                                                                    
CHAIRMAN HALFORD was concerned that the number would be simple                                                                  
enough for someone to figure out.                                                                                               
MR. BRUCE said there would be 10 numbers and what some of them                                                                  
signify would be known to everyone, but some numbers would be known                                                             
only to Public Safety.                                                                                                          
CHAIRMAN HALFORD said he didn't think there were enough votes to                                                                
move SB 124 right now and held it.                                                                                              
            SJR 31-SUBSISTENCE FOR URBAN AK NATIVES                                                                             
CHAIRMAN HALFORD announced SJR 31 to be up for consideration.                                                                   
SENATOR WARD, sponsor, explained that in 1970, Shim Pete (80 years                                                              
old) signed up for land claims in Red Shirt Lake, what is now                                                                   
considered urban  Alaska.  Senator Ward told him they were going to                                                             
get land, money, and subsistence rights protected.  Apparently, he                                                              
misunderstood.  Congress meant that subsistence would be for those                                                              
people who lived in the right zip code and not for the other                                                                    
people.  He is asking the Alaska Legislature to ask Congress to                                                                 
clarify whether it truly intended to deny Alaska natives residing                                                               
in urban areas of Alaska the opportunity to engage in subsistence                                                               
activities on the same basis as rural Alaskan residents when it                                                                 
passed the land bill.                                                                                                           
CHAIRMAN HALFORD noted that there wasn't a quorum and he would hold                                                             
the bill.                                                                                                                       
                 SB 296-FEES FOR STATE SERVICE                                                                                  
CHAIRMAN HALFORD announced SB 296 to be up for consideration.                                                                   
MR. MIKE TIBBLES, Aide to Representative Therriault, said he has                                                                
the companion bill in the House. He said this bill establishes                                                                  
three categories of services, a standard designated regulatory                                                                  
service, a designated regulatory service, and regulatory services.                                                              
They are each applied differently in the bill.                                                                                  
The standard designated regulatory services are services that they                                                              
believe are not complex.  The bill mandates that DEC fix as many of                                                             
them as possible.  That fixed fee would be based upon the average                                                               
actual reasonable and direct cost in providing the service.                                                                     
The bill also provides for negotiated agreements between DEC and                                                                
the industry.  There is no mandatory provision that they reach                                                                  
agreement, but it provides that if the permittee requests                                                                       
negotiation, DEC at least make the attempt.  If negotiations are                                                                
unsuccessful, billing would fall back to time and expense which is                                                              
actual and reasonable direct costs of providing the service.                                                                    
Additionally, the bill establishes a process for petitioning the                                                                
agency or agencies involved. If you desire a single project fee, a                                                              
permittee can petition DGC to come up with a single fee.  There is                                                              
also a provision regarding invoicing which they require on a                                                                    
monthly basis.  There is a provision for the industry to petition                                                               
a resource agency to adopt additional fixed fees if they believe                                                                
they have a category of services that would be suitable for a fixed                                                             
fee.  This perhaps is a repetitive permit that is used on an annual                                                             
basis or every four years.                                                                                                      
The designated regulatory services that are used in this bill are                                                               
limited to water, waste water, and solid waste.                                                                                 
CHAIRMAN HALFORD asked regarding page 8, section 3, where line 14                                                               
deletes "not including travel" as a basis of fees.  The laundry                                                                 
list includes all the agriculture inspections, food, drugs,                                                                     
cosmetics, public accommodation.  That looks like a broad list                                                                  
that's outside of the interests of the advocates of this                                                                        
legislation.  And yet by taking out the exclusion on travel their                                                               
fees may be increasing.  He asked if that was a necessary part of                                                               
this bill.                                                                                                                      
MR. TIBBLES responded that they are opening the possibility that                                                                
additional services under AS 44.46.025(a) may see an increase in                                                                
their fees for travel.  It wouldn't be every single program.  Some                                                              
of them don't even charge.  For drugs and cosmetics there's no fee.                                                             
Some individuals in the industry felt they should be able to pay                                                                
for travel.  There were concerns from small operators that they                                                                 
were going to be "killed" by the travel.                                                                                        
CHAIRMAN HALFORD said this was not a service that the owner of a                                                                
small bed and breakfast in a rural area with expensive travel                                                                   
particularly wants.  He asked if that section was essential for the                                                             
MR. TIBBLES replied that language was added in this section for                                                                 
consistency.  The goal of this bill is to establish a model for                                                                 
particular programs - water, waste water, and solid waste.  This                                                                
provision is outside the model they are attempting to build.                                                                    
SENATOR TAYLOR said his concern was that by adding more words to                                                                
the statute they are trying to get a handle on these folks and                                                                  
still you are leaving the fox in charge of the hen house.  You                                                                  
still have the agency telling you what is a reasonable time.                                                                    
TAPE 00-15, SIDE B                                                                                                              
MS. JANICE ADAIR, Director, Division of Environmental Health, said                                                              
that all issues they agreed upon are reflected in SB 296, but there                                                             
are few issues remaining that she hopes are minor that they will be                                                             
meeting with the RDC on.  Their overriding concern with this                                                                    
legislation is that it doesn't answer the policy question of how                                                                
the cost of state services should be divided between the users of                                                               
those services and the public.  They believe the State desperately                                                              
needs a rational basis for apportioning costs to State programs in                                                              
setting fees.  There has never been a holistic debate on how the                                                                
cost of government services should be apportioned.  They believe                                                                
equity must be a cornerstone of any allocation of costs.  To the                                                                
extent there are inequities, there should be some rational basis.                                                               
While this bill may result in an equitable distribution of costs                                                                
for those programs and users covered by it, not all the programs                                                                
within DEC for which fees are charged are included in it.  In some                                                              
cases, some of the smallest and least profitable businesses                                                                     
permitted by DEC are not covered by this bill.  That remains a                                                                  
significant concern to them.                                                                                                    
CHAIRMAN HALFORD said it sounded like she said it's unfair not to                                                               
charge those who can't afford to pay.                                                                                           
MS. ADAIR responded that they believe this bill is equitable for                                                                
the people it covers; it should be equally equitable for those who                                                              
aren't covered by it.                                                                                                           
Number 2270                                                                                                                     
SENATOR TAYLOR noted that last year the legislature did an                                                                      
unallocated cut across the board and her department chose where to                                                              
take it.  She took out the food inspectors and then told the press                                                              
how dangerous it was to go to restaurants because the legislature                                                               
had cut them.  They, then increased fees (by $1.1 million)to all                                                                
the people who were out there and were licensed that had anything                                                               
to do with food preparation.  He thought they made a profit for the                                                             
Department of $700,000 - $800,000.                                                                                              
MS. ADAIR responded that there were two cuts; one was an                                                                        
unallocated reduction of $340,000 and that was taken in the Water                                                               
Quality Program.  Another cut was taken specific to the Food Safety                                                             
and Sanitation Component of $339,000.  That was a reduction to that                                                             
component and was made by the Conference Committee.  In addition,                                                               
another $548,000 was switched from general funds to general fund                                                                
program receipts in Seafood Safety and Sanitation component.  They                                                              
increased fees by $548,000.  So their fee authority totals $1.5                                                                 
million. Prior to that it was about $1 million.  That is if every                                                               
single person pays.                                                                                                             
SENATOR TAYLOR said it still looked like they are raising more fees                                                             
than the amount of their cuts.                                                                                                  
MS. ADAIR responded that they had raised their fees to the level                                                                
necessary to bring in the amount in their budget that is authorized                                                             
as general fund program receipts which is $1,530,000.  Their                                                                    
analysis shows that they will actually under-collect, because not                                                               
every single person paid.                                                                                                       
SENATOR TAYLOR asked if they didn't have flat fees 10 or 15 years                                                               
MS. ADAIR recollected when fees were first established for this                                                                 
program, there was a flat $50 fee for some time.  This program is                                                               
general funded; there are very little federal dollars and those are                                                             
contract dollars to hire people to go out and do inspections.                                                                   
SENATOR TAYLOR asked if some of the choices made within the                                                                     
department as to the level of interest or risk.                                                                                 
MS. ADAIR answered that the number of positions any agency has to                                                               
be authorized; the total amount of fees they are authorized to                                                                  
collect has to also be authorized.  How they allocate those costs                                                               
amongst the permittees is part of the regulatory process.  They                                                                 
make a proposal to the public; they mail out to areas that are                                                                  
going to be affected and work with them to the maximum extent they                                                              
CHAIRMAN HALFORD asked how the section worked if you're an employer                                                             
of less than 20 in the category of fees that are going to be                                                                    
Number 1900                                                                                                                     
MS. ADAIR said that was the definition of direct deposit fee and is                                                             
on page 7, line 5.  This is an amendment made in House Finance.  It                                                             
was explained that there may be placer miners out in remote areas                                                               
of the state, people would call up and complain about them and DEC                                                              
would have to out numerous times to follow up on essentially                                                                    
specious complaints.  The maker of the amendment does not want the                                                              
businesses to have to pay for that travel.  They agree with the                                                                 
goal and don't charge people the inspection fee for a complaint                                                                 
that turns out to be invalid.  People do that to their competitors.                                                             
However, the language in the bill doesn't read that way and the way                                                             
they think it will work is to have two separate flat fees - one for                                                             
businesses with 20 or more employees and one for businesses with                                                                
less than 20.  They haven't figured out yet how they will know how                                                              
many employees a business has.  It's somewhat problematic the way                                                               
it is written.                                                                                                                  
SENATOR TAYLOR said he was troubled that there was an incentive                                                                 
within the Department to do more inspections, because the revenues                                                              
upon which it is based will depend upon the level of inspection.                                                                
He wouldn't want to go into a court where the judge's salary                                                                    
depended upon whether or not he was convicted.                                                                                  
MS. ADAIR said in this case, the bill is premised on the Department                                                             
having as many flat fees as possible.  A permittee would pay a flat                                                             
fee annually and that fee would be the same whether they were                                                                   
inspected once or five times.                                                                                                   
Number 1774                                                                                                                     
MS. CHARLOTTE MACCAY, Senior Administrator, Environmental Affairs,                                                              
Cominco Alaska, and Vice President, Producers Council, said as Red                                                              
Dog Operations they have paid hundreds of thousands of dollars in                                                               
fees to DEC.  They supported this bill so there are some side bars                                                              
and structures, some consistencies and accountability for the fees                                                              
they have paid.  There has been very little of that in the past.                                                                
Regarding the travel, they have often gone into legal uncertainties                                                             
to be able to request to pay DEC to travel up to see the operation                                                              
before they attempt to regulate it - as well as legal obstacles to                                                              
being able to pay to get everyone to Seattle and coordinate with                                                                
the federal agencies.  They can't pay to bring EPA up here.                                                                     
Having the travel in the bill is so they have clear ability to do                                                               
so.  They feel that other solutions could help protect the small                                                                
operators from having it imposed on them unwillingly.  They have                                                                
viewed this bill as part of a multi-faceted solution.                                                                           
MS. MACCAY said that industry has a responsibility to pay for some                                                              
of the permitting; but they also feel the need to pay for a core                                                                
management within those permitting functions that is experienced,                                                               
seasoned, and also knows their authority and when not to bow to                                                                 
EPA's authority.  Third party consultants and new inexperienced                                                                 
people do not have that confidence to do so.  Third party                                                                       
consultants do need to be brought in for the permitting staffing                                                                
for the technical work and the general permit writing.                                                                          
Number 1585                                                                                                                     
MR. KEN FREEMAN, Executive Director, Resource Development Counsel                                                               
(RDC), said their work group had worked over the last 13 months to                                                              
develop a permit fee structure based upon two underlying principles                                                             
- predictability and accountability.  He stressed the productive                                                                
working relationship their group has developed with both the                                                                    
legislature and the administration on this bill.  He said he could                                                              
address Senator Taylor's concerns one of which was the agencies                                                                 
ability to determine reasonable and direct costs.  There are a                                                                  
couple of protections within the bill that give industry comfort.                                                               
First, fixed fees will go through a regulatory process and the                                                                  
public has the to test the reasonable question.  Page 6, line 18                                                                
has the definition of direct costs.  Those things which will not be                                                             
allowed to be in direct costs include the cost of salaries of                                                                   
administrative support and supervisory personnel who are not                                                                    
directly engaged in providing a service, other budgeted overhead                                                                
expenses, interagency charges that would not meet the requirements                                                              
if those charges were incurred or invoiced by the agency providing                                                              
the designated regulatory service.                                                                                              
Secondly, if negotiated permit activity doesn't come together for                                                               
the permittee and the agency, time and expense invoices can be                                                                  
appealed to OMB, an opportunity for an additional check for the                                                                 
Thirdly, negotiated contracts as written in the bill are contracts                                                              
(page 3, line 12).                                                                                                              
SENATOR MACKIE said he first became aware of the need for this bill                                                             
last year. He asked him what the concerns of the agencies were and                                                              
what had been done to accommodate them.                                                                                         
MR. FREEMAN said RDC met for over a year and Mr. Jon Tillinghast                                                                
helped them craft the initial draft which was given to DEC.  They                                                               
reviewed it with some changes which were incorporated.  That                                                                    
exchange before the legislative process happened three or four                                                                  
times.  When they got to the Finance Committee, agency staff had                                                                
all been giving them input on a daily basis.                                                                                    
SENATOR MACKIE asked if he was satisfied that they had accommodated                                                             
90% of agency concerns with DNR.                                                                                                
MR. FREEMAN replied that all of DNR's concerns were taken care of.                                                              
DEC's original fiscal note was within the millions of dollars and                                                               
at this point in time it's down to $0.                                                                                          
MR. FREEMAN said with regard to Senator Taylor's concern about                                                                  
giving DEC the discretion to come up with what is reasonable and                                                                
direct costs, that there are several clauses that give comfort.                                                                 
First is the establishment of fixed fees.  The second is if there                                                               
is a dispute on time and expense invoices, it can first be appealed                                                             
within the agency.  If you still have a dispute, particularly with                                                              
regard to direct and reasonable cost, you can appeal to OMB.  The                                                               
objective there was to appeal to an entity outside of DEC.  A third                                                             
item is on page 3, line 12 where their intent was to have the                                                                   
negotiated agreements actually be contracts.                                                                                    
Number 466                                                                                                                      
SENATOR TAYLOR said he had gone over interport cost differential                                                                
with DNR where he wrote it into law and foolishly believed someone                                                              
would try to enforce it.  Our boats continued to not be worked on                                                               
in Alaska because he didn't have listed specifically what interport                                                             
cost differential would be.  He didn't think he had to tell them to                                                             
include cost of travel.  What they did to diminish the cost of                                                                  
interport differential is to put nothing down or they would bid the                                                             
contracts out with the differential being figured off of Seattle,                                                               
Washington, because that's where they would end the run.                                                                        
MR. FREEMAN said there was a lot of discussion about this issue.                                                                
He didn't think they had accomplished all the goals of the members                                                              
in the legislation, but he thought they had something they could                                                                
all support.                                                                                                                    
MR. STEVEN DAUGHERTY, Department of Law, said they had resolved                                                                 
most of the legal issues that had existed with the original version                                                             
of this bill.  They have worked to give the departments adequate                                                                
regulatory authority so they could adopt regulations to implement                                                               
the bills.  There are still some significant costs for the                                                                      
Department of Law under reimbursable service agreements will be                                                                 
from contracts that will have to be reviewed according to statute.                                                              
Another cost is increased regulation lawsuits and appeals generated                                                             
out of what is a reasonable and direct cost.                                                                                    
SENATOR MACKIE asked him to explain the fiscal note.  He asked if                                                               
it is was for the review of contracts and wasn't that what DOL is                                                               
being paid to do right now or do they have to hire new people.                                                                  
MR. DAUGHERTY answered that they are operating beyond capacity                                                                  
right now, particularly in the natural resources area.  In order to                                                             
take on new functions, they have to either drop work that is                                                                    
currently being done or hire new employees.                                                                                     
SENATOR MACKIE said he didn't know money was an issue with the                                                                  
Department of Law.                                                                                                              
MR. DAUGHERTY responded that particularly in the environmental                                                                  
arena they worked largely on reimbursable service agreements from                                                               
the agencies and not on general funds.  If they don't get the money                                                             
from DEC for the services, basically the Department of Law can't                                                                
provide them.  They have some environmental general funds, but they                                                             
are quite limited.  In the first two years, the costs are                                                                       
approximately $74,000.  After that they would have a quarter of an                                                              
attorney primarily for contract review and review of regulations.                                                               
CHAIRMAN HALFORD asked if there was any legal problem with the                                                                  
provision that doesn't apply travel to employers of less than 20.                                                               
MR. DAUGHERTY answered that he didn't see a real legal problem.                                                                 
The number of regulations is increasing, but they could argue that                                                              
equal protection isn't applicable, because they aren't similarly                                                                
situated.  There would also be some problems with defining what is                                                              
20 employees. That can be resolved through court action or                                                                      
Number 466                                                                                                                      
SENATOR TAYLOR asked about the reimbursable fee agreements that are                                                             
contracts and if there was anything in the fiscal note about the                                                                
times when the State makes a mistake and gets sued under the                                                                    
MR. DAUGHERTY answered that he didn't think that was taken into                                                                 
consideration since it was a normal risk of doing businesses.  They                                                             
don't normally put that in a fiscal note unless they are certain                                                                
they will incur the expenses.                                                                                                   
SENATOR TAYLOR asked if they had thought about the constitutional                                                               
aspect of this and the legislature's power of appropriation.                                                                    
MR. DAUGHERTY said they hadn't looked at that particular question,                                                              
but he didn't believe that was a problem because DEC will always be                                                             
operating off its appropriation from a previous year.  They will                                                                
just be using the reimbursable service agreements to collect the                                                                
fees to collect the money that was already authorized by the                                                                    
SENATOR TAYLOR said then the legislature's power of appropriation                                                               
merely becomes a rubber stamp each year annually to grant to the                                                                
Department a certain level of authorization to use receipts                                                                     
sufficient to allow these arrangements to move forward.                                                                         
MR. DAUGHERTY said he saw his point - with a multi-year contract                                                                
that could be a problem.  Normally that's not the case.  Permitting                                                             
is usually a year and, at most, two.  On-going projects are not                                                                 
covered by this bill.                                                                                                           
SENATOR TAYLOR said he was concerned about the overall pattern of                                                               
agencies working out a fee arrangement with the people they                                                                     
MR. DAUGHERTY said he would suggest adding the standard language                                                                
"subject to appropriation" to the contracts to deal with his                                                                    
concern.  On the policy issue of fees being set by the legislature,                                                             
that is an issue DEC is concerned with.  He thought Ms. Adair                                                                   
should answer that question.                                                                                                    
TAPE 00-16, SIDE A                                                                                                              
Number 001                                                                                                                      
MR. DAUGHERTY said they try to avoid any violation of the                                                                       
Constitution and believe that appropriations go through the                                                                     
legislature and that program receipts do not violate the                                                                        
Constitution just from the fact that they are being raised because                                                              
they are still subject to appropriation by the legislature.                                                                     
CHAIRMAN HALFORD said on line 14 he wanted to put back "not                                                                     
including travel" so they're not passing something that's going to                                                              
add to the rate base for all the little guys.                                                                                   
SENATOR MACKIE said his only concern was what effect it has in                                                                  
terms of the consensus building approach that's been taken.                                                                     
CHAIRMAN HALFORD said the reason he mentioned it is because this is                                                             
an area that's not in the group that's working on it.  His goal is                                                              
to not change the provisions as it applies to the inspections of                                                                
others than this working group.                                                                                                 
MR. TIBBLES pointed out, if they remove the deletion and put back                                                               
in the prohibition to charge travel they will take out DEC's                                                                    
ability to charge travel in all cases.  That's including the                                                                    
designated regulatory services.                                                                                                 
CHAIRMAN HALFORD asked how to do it so they didn't include their                                                                
friends in CHAR, etc.                                                                                                           
SENATOR MACKIE said he understands what he wants to do and supports                                                             
that, but wondered what the overall effect was to non-RDC                                                                       
industries as well.                                                                                                             
Number 372                                                                                                                      
CHAIRMAN HALFORD said if RDC and their group is willing to accept                                                               
travel because of the other things they gain in this process and                                                                
the side boards they get on the whole process, that's fine.  This                                                               
part of the bill (page 7, line 5) goes back to an existing statute                                                              
that was an exemption and applied to everybody else.  Conceptually,                                                             
he wanted to delete "not including travel" for any of the services                                                              
that are part of the RDC package. If it is agreeable to have a                                                                  
conceptual amendment that deletes number one in whatever way the                                                                
legal department says to do it, that's clear enough so that                                                                     
everyone knows what they are doing.                                                                                             
MR. TIBBLES suggested adding "However travel may be charged for                                                                 
designated regulatory services under AS 37.10.058.  They have a                                                                 
specific definition of what a designated regulatory service is in                                                               
this bill.  It only includes water, waste water, and solid waste.                                                               
SENATOR MACKIE asked if all the industry would fall within that                                                                 
category anyway.                                                                                                                
MR. TIBBLES said that was correct.                                                                                              
CHAIRMAN HALFORD asked if they would go back to the original                                                                    
language of not including travel and add that phrase.                                                                           
MR. TIBBLES said that was right.                                                                                                
SENATOR TAYLOR said this was still going to include anyone out                                                                  
there who has a trailer court with a water or sewer system hooked                                                               
up to it.  By making this change, people who have been sending in                                                               
water samples will now have to pay the cost of travel for some DEC                                                              
inspector to come out.  He asked if the 20 employee exemption would                                                             
keep them from being involved.                                                                                                  
CHAIRMAN HALFORD explained that the 20 employee exemption was a                                                                 
blanket exemption for everyone.                                                                                                 
MR. TIBBLES said that was correct.                                                                                              
SENATOR TAYLOR moved Mr. Tibble's amendment.  There were no                                                                     
objections and it was so ordered.                                                                                               
SENATOR TAYLOR moved to pass CSSB 296 from committee with the                                                                   
accompanying fiscal note with individual recommendations.  There                                                                
were no objections and it was so ordered.                                                                                       
                    SB  38-OIL & GAS AUDITS                                                                                     
CHAIRMAN HALFORD announced SB 38 to be up for consideration.                                                                    
SENATOR KELLY moved SB 38 from committee with accompanying fiscal                                                               
notes.  There were no objections and it was so ordered.                                                                         
            SJR 31-SUBSISTENCE FOR URBAN AK NATIVES                                                                             
CHAIRMAN HALFORD announced SJR 31 to be up for consideration.                                                                   
SENATOR TAYLOR moved to pass SJR 31 from committee with individual                                                              
recommendations.  There were no objections and it was so ordered.                                                               
           HB 114-REPEAL PROHIBITION ANTLERLESS MOOSE                                                                           
CHAIRMAN HALFORD announced HB 114 to be up for consideration.                                                                   
MR. ED GRASSER, Aide to Representative Beverly Masek, explained                                                                 
that this is kind of an inflammatory issue.  Most of the advisory                                                               
committees in the State "chewed them out" because it took all their                                                             
power away.  Representative Masek decided that an outright repeal                                                               
of AS 16.05.780 wasn't the right way to go.  They discussed the                                                                 
issue with several advisory committees and the Department and                                                                   
decided to change the way the current law works.  The new language                                                              
would create a situation where the advisory committees would have                                                               
to act in the positive to prevent the Board from reauthorizing a                                                                
cow moose hunt which involves a lot of time and expense.  Usually,                                                              
the Board just rubber stamps what the advisory committee sends                                                                  
them.  Right now the Department has to go out with the area                                                                     
biologists and round up all the advisory committees in an area                                                                  
where an anterless moose hunt is taking place, get permission to                                                                
continue it, and bring that information to the Board to act on the                                                              
Advisory committees made it real clear that they didn't want to                                                                 
give up that power.                                                                                                             
SENATOR TAYLOR moved to adopt the committee substitute.  There were                                                             
no objections and it was so ordered.                                                                                            
SENATOR MACKIE said there was a letter from Commissioner Rue,                                                                   
ADF&G, supporting the original HB 114 and asked if he supported the                                                             
MR. GRASSER answered that he thought that was the case, though,                                                                 
they would have to check with the Department.  They were trying to                                                              
reduce the costs involved with this reauthorization every year.  He                                                             
thought it would be good to include language that makes it clear                                                                
that the reauthorizations only takes place in the area for which                                                                
the Board is meeting.                                                                                                           
MR. MATT ROBUS, Deputy Director, Division of Wildlife Conservation,                                                             
supported the outright repeal of the prohibition in the original                                                                
version.  However, the Department introduced language similar to                                                                
what's in the CS a couple of years ago and agree that it is an                                                                  
appropriate way to go.  One conceptual change he would like to see                                                              
that would further reduce the costs involved in the reauthorization                                                             
process would be to word this so that it took on the same two year                                                              
region by region cycle the Board of Game meetings now do.                                                                       
Presently, every spring they have a meeting of the Board of Game in                                                             
either Anchorage and Fairbanks.  Staff and advisory committees from                                                             
throughout the State that have antlerless moose hunts in their area                                                             
have to go through the motions of reviewing the status of the herd                                                              
and decide whether they want to go forth with this hunt for another                                                             
year.  This means they bring staff from regions around the State to                                                             
the meetings and those costs could be done away with if they                                                                    
adopted the same cycle.                                                                                                         
MR. DICK BISHOP, Alaska Outdoor Council, supported HB 114. The                                                                  
statute from 25 years ago has fallen into disuse and become a                                                                   
SENATOR TAYLOR asked about a clause saying if no one sends them                                                                 
anything, you can do what you want.  But if a majority of the local                                                             
advisory board objects, then you may not adopt.                                                                                 
MR. GRASSER explained that this is how it's been happening for the                                                              
last 30 years except for one or two occasions when the Department                                                               
had to go out to places and have the advisory committee hold a                                                                  
meeting.  A lot of times they forget or just don't get around to                                                                
it.  The way the current statute reads, if they don't have a                                                                    
meeting, they can't have a cow moose hunt.                                                                                      
CHAIRMAN HALFORD said they would hold this bill pending                                                                         
enlightenment from the sponsor.                                                                                                 
CHAIRMAN HALFORD adjourned the meeting at 4:25 p.m.                                                                             

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