Legislature(2001 - 2002)

04/04/2001 03:40 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     ALASKA STATE LEGISLATURE                                                                                   
                    SENATE RESOURCES COMMITTEE                                                                                
                           April 4, 2001                                                                                        
                             3:40 p.m.                                                                                          
MEMBERS PRESENT                                                                                                               
Senator John Torgerson, Chair                                                                                                   
Senator Drue Pearce, Vice Chair                                                                                                 
Senator Robin Taylor                                                                                                            
Senator Kim Elton                                                                                                               
Senator Georgianna Lincoln                                                                                                      
MEMBERS ABSENT                                                                                                                
Senator Rick Halford                                                                                                            
Senator Pete Kelly                                                                                                              
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 35                                                                                                              
"An  Act relating  to electronic  application  for  and issuance  of                                                            
licenses,  permits, and tags  issued by the  Department of  Fish and                                                            
Game; relating  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. 139                                                                                                             
"An Act  relating to fees  for certain uses  of state water  and the                                                            
accounting   and   appropriation   of  those   fees;   relating   to                                                            
authorizations  for the temporary  use of state water; making  other                                                            
amendments  to  the Alaska  Water  Use  Act;  and providing  for  an                                                            
effective date."                                                                                                                
     HEARD AND HELD                                                                                                             
SENATE BILL NO. 167                                                                                                             
"An Act instructing  the commissioner of natural resources  to issue                                                            
a patent  for the remaining  interest in certain  state land  to the                                                            
owner of the agricultural rights to that land."                                                                                 
     HEARD AND HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
SB 35 - No previous action to record.                                                                                           
SB 139 - No previous action to record.                                                                                          
SB 167 - No previous action to record.                                                                                          
WITNESS REGISTER                                                                                                              
Mr. Kevin Brooks, Director                                                                                                      
Division of Administrative Services                                                                                             
Department of Fish and Game                                                                                                     
P.O Box 25526                                                                                                                   
Juneau AK 99811                                                                                                                 
POSITION STATEMENT: Supported SB 35.                                                                                          
Captain Howard Starbard                                                                                                         
Division of Wildlife Protection                                                                                                 
Department of Public Safety                                                                                                     
453 South Valley Way                                                                                                            
Palmer AK 99577                                                                                                                 
POSITION STATEMENT: Commented on SB 35.                                                                                       
Mr. Bob Loeffler, Director                                                                                                      
Division of Mining, Land and Water                                                                                              
Department of Natural Resources                                                                                                 
550 W 7th Ave., Ste 1070                                                                                                        
Anchorage AK 99501                                                                                                              
POSITION STATEMENT: Commented on SB 139 and SB 167.                                                                           
Mr. Stan Foo                                                                                                                    
Alaska Miners Association                                                                                                       
3301 Arctic Blvd., #202                                                                                                         
Anchorage AK 99501                                                                                                              
POSITION STATEMENT: Supported SB 139.                                                                                         
Mr. Bob Stiles, President                                                                                                       
DRven Corporation                                                                                                               
711 H St. #600                                                                                                                  
Anchorage AK 99501                                                                                                              
POSITION STATEMENT: Supported SB 139.                                                                                         
Mr. Tadd Owens, Executive Director                                                                                              
Regional Development Corporation (RDC)                                                                                          
121 W. Fireweed #250                                                                                                            
Anchorage AK 99504                                                                                                              
POSITION STATEMENT: Opposed SB 139.                                                                                           
Ms. Pam Miller                                                                                                                  
P.O. Box 101811                                                                                                                 
Anchorage AK 99504                                                                                                              
POSITION STATEMENT:  Opposed SB 139.                                                                                          
Mr. Bill Ward                                                                                                                   
Ward Farms                                                                                                                      
P.O. Box 1087                                                                                                                   
Delta Junction AK 99737                                                                                                         
POSITION STATEMENT: Opposed SB 139 and supported SB 167.                                                                      
Mr. Gary Sonnichsen                                                                                                             
P.O. Box 1506                                                                                                                   
Delta Junction AK 99737                                                                                                         
POSITION STATEMENT:  Opposed SB 139.                                                                                          
Mr. Bill Michel                                                                                                                 
P.O. Box 708                                                                                                                    
Delta Junction AK 99737                                                                                                         
POSITION STATEMENT:  Opposed SB 139.                                                                                          
Mr. Keith Warren                                                                                                                
P.O. Box 1564                                                                                                                   
Delta Junction AK 99737                                                                                                         
POSITION STATEMENT:  Opposed SB 139.                                                                                          
Mr. John Wenger                                                                                                                 
HC 60 Box 280                                                                                                                   
Copper Center AK 99573                                                                                                          
POSITION STATEMENT:  Opposed SB 139.                                                                                          
Mr. Harvey Leonard                                                                                                              
HC 60 Box 315                                                                                                                   
Copper Center AK 99573                                                                                                          
POSITION STATEMENT:  Opposed SB 139.                                                                                          
Mr. Al Roig                                                                                                                     
HC 60 Box 274                                                                                                                   
Copper Center AK 99573                                                                                                          
POSITION STATEMENT:  Opposed SB 139.                                                                                          
Mr. Eric Nashlund                                                                                                               
HC 60 Box 271                                                                                                                   
Copper Center AK 99573                                                                                                          
POSITION STATEMENT: Supported SB 139.                                                                                         
Mr. Sam Lightwood                                                                                                               
HC 60 Box 229                                                                                                                   
Copper Center AK 99573                                                                                                          
POSITION STATEMENT: Supported SB 139.                                                                                         
Mr. John Kunik                                                                                                                  
P.O. Box 83                                                                                                                     
Glennallen AK 99588                                                                                                             
POSITION STATEMENT: Opposed SB 139.                                                                                           
Mr. Matt Krinke                                                                                                                 
P.O. Box 545                                                                                                                    
Glennallen AK 99588                                                                                                             
POSITION STATEMENT: Opposed SB 139.                                                                                           
Mr. Daniel Boone                                                                                                                
P.O. Box 53                                                                                                                     
Chitina AK 99566                                                                                                                
POSITION STATEMENT: Opposed SB 139.                                                                                           
Mr. Darwin Peterson                                                                                                             
Staff to Senator Torgerson                                                                                                      
State Capitol Bldg.                                                                                                             
Juneau AK 99811                                                                                                                 
POSITION STATEMENT: Commented on SB 167 for sponsor.                                                                          
Mr. Frank Miller                                                                                                                
Ninilchik AK                                                                                                                    
POSITION STATEMENT: Supported SB 167.                                                                                         
Mr. Chuck Graham                                                                                                                
Hope AK                                                                                                                         
POSITION STATEMENT: Supported SB 167.                                                                                         
ACTION NARRATIVE                                                                                                              
TAPE 01-27, SIDE A                                                                                                            
Number 001                                                                                                                      
              SB  35-ELECTRONIC FISH & GAME LICENSURE                                                                       
CHAIRMAN  JOHN  TORGERSON  called  the  Senate  Resources  Committee                                                          
meeting  to order  at 3:40 p.m.  and announced  SB 35  to be up  for                                                            
MR. KEVIN  BROOKS,  Director, Division  of  Administrative  Service,                                                            
Alaska Department of Fish  and Game (ADF&G), said that at the end of                                                            
1999 the department  had application  available on the Internet  for                                                            
purchase  of fish and  game licenses,  which proved  to be  popular.                                                            
ADF&G  sold  nearly  10,000  pieces  of  stock  and  generated  over                                                            
$800,000 of revenue  using this method. The total  revenue for ADF&G                                                            
for one year  is about $23 million  and 700,000 - 800,000  pieces of                                                            
stock.  The response  from the public  has been  very positive,  but                                                            
ADF&G  has  found that  the  statutes  as written  presume  a  paper                                                            
process.  The Internet  application  takes  24 -  48  hours for  the                                                            
department  to process.  It  works well  for  non-residents  because                                                            
there is  a lot more  preplanning  that goes into  their trips,  but                                                            
ADF&G is trying  to bridge the gap  for those people who  would want                                                            
to  fish the  same  day. He  said  ADF&G does  not  anticipate  that                                                            
Internet  applications  will  take  the  place  of over-the-counter                                                             
sales. ADF&G  has over 1,500 vendors  statewide that it appreciates                                                             
doing business with.                                                                                                            
SB 35  would allow  ADF&G,  in conjunction  with  the Department  of                                                            
Public Safety  and the Fish  and Wildlife  Protection, to develop  a                                                            
paperless method  of issuing licenses. Currently four  other states,                                                            
Idaho, Georgia,  Oklahoma,  and Florida, use  a "smart number."  The                                                            
number includes digits  that identify the license year and gender of                                                            
the individual  and possibly other information. The  number would be                                                            
encoded and  the bill would  require the  individual who decides  to                                                            
purchase a license in this  manner to agree to carry a picture I.D.,                                                            
which would help enforcement.                                                                                                   
MR. BROOKS  said ADF&G is trying to  take three things into  account                                                            
in  changing the  licensing  system: it  wants  to make  sure it  is                                                            
enhancing  public service;  it is not doing  anything to  jeopardize                                                            
enforcement  efforts;  and  it  is not  doing  anything  that  would                                                            
negatively affect the revenue stream.                                                                                           
He said ADF&G has attempted  to address some of the potential issues                                                            
by requiring a best interest  finding and getting the concurrence of                                                            
the Division  of  Enforcement, which  has expressed  concerns  about                                                            
going paperless.  Another issue of importance is finding  a good way                                                            
to record the  harvest. The bill would give legislative  approval to                                                            
pursue electronic licensing.                                                                                                    
CHAIRMAN  TORGERSON  said he  had some  of the same  concerns  about                                                            
recording harvest.                                                                                                              
MR. BROOKS  said they have  discussed whether  making the  licensing                                                            
system  easier for  a person  would make  someone  who is  otherwise                                                            
honest more  prone to  cheat on a  license. He  said ADF&G needs  to                                                            
work  with the  Board of  Game to  find an  effective  way to use  a                                                            
harvest ticket that is based on the honor system.                                                                               
CHAIRMAN TORGERSON  responded "It's only an honor  system if you got                                                            
away with it."                                                                                                                  
MR. BROOKS  agreed. He said  that a person  is supposed to  record a                                                            
harvest "while the slime is still on your hands."                                                                               
CHAIRMAN  TORGERSON said he  didn't see how  a person, "could  do it                                                            
with a beautiful  picture I.D. card  that says Alaska Fish  and Game                                                            
on it."                                                                                                                         
MR. BROOKS  responded that  a separate harvest  ticket would  be the                                                            
CHAIRMAN TORGERSON replied  then ADF&G has to mail it so it might as                                                            
well keep the other system.                                                                                                     
MR. BROOKS  responded that  he didn't view  that as a reason  not to                                                            
try to make this a better system.                                                                                               
CHAIRMAN  TORGERSON  said he  would  like to  see the  whole  system                                                            
before he gives him a bill.                                                                                                     
SENATOR ELTON  said it seems that  one of the check points  that may                                                            
get to that issue  is that this will not happen unless  the Division                                                            
of Enforcement concurs that it works for them.                                                                                  
CAPTAIN   HOWARD  STARBARD,   Division   of   Wildlife  Protection,                                                             
Department  of Public Safety (DPS),  said the bill as written  would                                                            
cause the Department  of Fish and  Game to get concurrence  from his                                                            
commissioner  when the system would  come up. He thought  electronic                                                            
licensing and recording of harvest would be hard to enforce.                                                                    
CHAIRMAN TORGERSON  asked if he envisioned  that each officer  would                                                            
use some sort  of mini-computer to look up an I.D.  number to see if                                                            
it's current.                                                                                                                   
CAPTAIN  STARBARD answered  affirmatively and  said that they  could                                                            
use something like a palm pilot.                                                                                                
SENATOR ELTON  noted the bill has a zero fiscal note,  but that they                                                            
would allow the  vendor to assess up to $3 more for  the issuance of                                                            
a permit or license electronically,  but the $3 would be retained by                                                            
the vendor  so it  doesn't increase  revenues to  the department  at                                                            
MR. BROOKS responded that  is correct and explained that currently a                                                            
vendor  gets 5 percent  of the  gross sale,  plus $1  per item.  The                                                            
commission  for a fishing license  and a king salmon stamp  is about                                                            
$3 for a resident.  A non-resident sale is substantially  higher. He                                                            
pointed  out that  section  really only  applies  if the  department                                                            
contracts with  someone to do it for  them. Currently, the  Internet                                                            
sales are made by the state  so no vendor commission is paid. All of                                                            
the money goes into the ADF&G fund.                                                                                             
SENATOR  ELTON asked  if this could  show a  positive fiscal  impact                                                            
because the more  licenses the department sells electronically,  the                                                            
less discount it will be giving to vendors.                                                                                     
MR. BROOKS  replied  that is  correct.  He added  that the  database                                                            
often has  a 90 -  100 day lag  to data capture  using a vendor  who                                                            
reports monthly. With Internet  sales, there's instant update of the                                                            
database and the department  doesn't have to hire someone to capture                                                            
the data.                                                                                                                       
CHAIRMAN TORGERSON  said they could  use a driver's license  so they                                                            
aren't giving everyone new numbers.                                                                                             
MR. BROOKS said they discussed  drivers' licenses, but not every one                                                            
carries a license either.                                                                                                       
CHAIRMAN  TORGERSON said the  committee would  set this aside  until                                                            
Mr. Brooks came back with a master plan.                                                                                        
                      SB 139-STATE WATER USE                                                                                
CHAIRMAN TORGERSON announced SB 139 to be up for consideration.                                                                 
MR. BOB  LOEFFLER,  Director, Division  of Mining,  Land and  Water,                                                            
Department  of Natural  Resources  (DNR),  said he  wanted to  first                                                            
describe the problem  this bill solves and then go  through what the                                                            
bill does  and explain how  it's one part  of the solution.  He told                                                            
     In order  to withdraw a significant  amount of water  from                                                                 
     the  state, you  need a water  right if  it's a permanent                                                                  
     withdrawal  and  a temporary  water use  authorization  if                                                                 
     it's temporary for five years.                                                                                             
     The  basic problem  we have  is right  now  the system  is                                                                 
     broken.  We  cannot issue  the  water rights  that people                                                                  
     request.  We  don't provide  the  services  that Alaskans                                                                  
     need.  At the peak, this program  had $1.6 million in  the                                                                 
     program  and 39  full-time people.  Two years  ago it  was                                                                 
     down to $325,000 and four  people and quite frankly that's                                                                 
     not  enough  to run  the  program that  we  have  now -  a                                                                 
     program   that  maintains  21,000   water  rights  files,                                                                  
     receives  250  applications   for  water  rights  and  150                                                                 
     applications for temporary water use permits.                                                                              
     The consequences  of those four  people not being able  to                                                                 
     run the system is a backlog.  We now have a backlog of 600                                                                 
     -  700 water  right  applications  and  a total  of  3,000                                                                 
     actions -  transfer, extensions and things like  that. The                                                                 
     consequences  of that backlog  are threefold: people  call                                                                 
     me up  and say, 'When am I going  to get my water right?'                                                                  
     and I have  to say, 'Well, given our back log,  it's going                                                                 
     to be two to three years.'  And then they say, 'I can't do                                                                 
     my  development  for two  to three  years? If  I withdraw                                                                  
     water,  I'm  going  to break  the  law for  two  to  three                                                                 
     That's  not the way  government should  be run and that's                                                                  
     not a service that I'm proud to provide.                                                                                   
     The  second  consequence  is  because of  a  staff that's                                                                  
     trying  to do things  with shortcuts,  we're targeted  for                                                                 
     litigation  and we almost  lost a year  of exploration  at                                                                 
     The third consequence, of  course, is that people go ahead                                                                 
     and withdraw water without  a permit. Often, that probably                                                                 
     does very  little harm to the  resource. Occasionally,  it                                                                 
     does  risk  a resource.  That's  the  problem we  need  to                                                                 
     solve.  It's a  problem  of a group  that cannot  run  the                                                                 
     program that we have today.  It's not a problem created by                                                                 
     a particular  legislature or  administration. We have  had                                                                 
     declining  budgets for 20 years. This bill is  one part of                                                                 
     a  three-part solution.  I would  like to  describe  again                                                                 
     those three parts so you  can see how the bill fits in and                                                                 
     then I would like to go to what the bill does.                                                                             
     The three parts of the solution  we envision are first, we                                                                 
     cannot  continue to administer  a program designed in  the                                                                 
     early 80s with budgets for  this millennium. So we need to                                                                 
     find  a way to do  more with less and  perhaps to provide                                                                  
     less service  for less money,  which will run the program                                                                  
     on  a  smaller   budget.  To  that  end  we're  proposing                                                                  
     regulations  in the next  two to three  weeks that should                                                                  
     significantly  streamline  the  program  and  allow  those                                                                 
     water  withdrawals  that are  least likely  to affect  the                                                                 
     environment  or other users go  much quicker. We think  65                                                                 
     percent of our caseload will fall into that category.                                                                      
     The second  is even a streamlined program needs  more than                                                                 
     four  people  to  run it.  So  to  that end  there  is  an                                                                 
     increment   in  this  year's  budget  for  an  additional                                                                  
     $300,000  to both  run the  program  and in  four or  five                                                                 
     years  rid us of the backlog.  The performance measures  I                                                                 
     put  down  for that  increment  was  that  we would  do  a                                                                 
     typical   water  right  within  60  days  and  a  typical                                                                  
     temporary water use permit within about 15 days.                                                                           
     The third part - streamline  program - more money, is this                                                                 
     bill does  two things. The first  thing it does is try  to                                                                 
     provide  a long term  income source  to fund the program.                                                                  
     I'm easy.  Any way we get the money, we'll take  it to run                                                                 
     the program to provide the  services that I think Alaskans                                                                 
     need.  But this bill tries to  provide a long-term income                                                                  
     source  to do that and it does  that through recommending                                                                  
     water use  fees. When you get a water right, it's  a right                                                                 
     forever.  You never  need to  touch it  again. This  scale                                                                 
     would  assess a  sliding scale  water use  fee. I've  been                                                                 
     shopping  that  around  and  I'd  like  to  tell  you  the                                                                 
     reactions  I get from people about that. But first  let me                                                                 
     tell  you what  the  second part  of  the bill  does.  Our                                                                 
     temporary  water use program,  which we use for temporary                                                                  
     water uses,  has been the subject of a significant  amount                                                                 
     of litigation  on the  North Slope. It  is a program  that                                                                 
     was implied  by statute, but created in regulations.  This                                                                 
     bill   would,  in  fact,  provide   explicit  legislative                                                                  
     authority  for how  the program  has been  working for  20                                                                 
     years.  Some  validated  permits  have  been  called  into                                                                 
     question  by some of  the North Slope  rulings. So that's                                                                  
     what  the  bill does.  It  does two  things,  a long-term                                                                  
     income  source for  the program and  explicit legislative                                                                  
     authorization  for a temporary  water use fee program.  It                                                                 
     does not change how we run the water use program.                                                                          
Number 1500                                                                                                                     
MR. LOEFFLER said he produced  a proposed amendment as the result of                                                            
the reactions  he received after showing  this around in  the mining                                                            
community,  the agriculture  community, the  Alaska Water  Resources                                                            
Association,  the Resource  Development  Council  and environmental                                                             
groups. The  groups came  to the consensus  that this is a  problem.                                                            
The state  is  not providing  services  that people  demand and  the                                                            
problem needs to be fixed. He said:                                                                                             
     With respect  to charging it  through temporary water  use                                                                 
     fees,  although  there was  some  agreement, that  is,  an                                                                 
     annual  fee on your  property right,  the reaction ranged                                                                  
     from reluctant approval  to disgust to outright hostility.                                                                 
     In a sense,  people were saying, 'You have a problem,  but                                                                 
     this is a silly way to fix it.'                                                                                            
     What  they were suggesting  was a number  of things:  one,                                                                 
     that  an  annual  fee  on a  property  that  you  own  was                                                                 
     inappropriate  and  no  other  state works  that  way  and                                                                 
     second,  they were  concerned, quite  frankly, that  there                                                                 
     were no bounds to how much  I could charge in the bill nor                                                                 
     did existing  permitees want to fund the 20-year  backlog.                                                                 
     So  what  was suggested  instead  is  that they  said  you                                                                 
     should  charge people  for the services  you provide.  You                                                                 
     should  charge people  the reasonable  direct cost of  the                                                                 
     permit  application and that  suggestion was pioneered  by                                                                 
     the legislature  in HB 361 last year, commonly  called the                                                                 
     DEC fees bill.                                                                                                             
MR. LOEFFLER  said the proposed amendment  is the DEC fees  bill. It                                                            
puts  into  statute a  framework  that  directs  DNR to  charge  the                                                            
reasonable direct costs  of processing those applications and that's                                                            
the long-term income source.                                                                                                    
MR.STAN FOO, Alaska Miners  Association (AMA), stated support for SB
139.  He  said the  AMA  appreciates  the  department's  efforts  to                                                            
address  this issue  that involves  all  water users.  The AMA  also                                                            
supports the  technical amendments  and is encouraged by  the effort                                                            
to use the DEC fees bill  in the framework for this effort. However,                                                            
he expressed  concern that  water fees should  not be necessary  for                                                            
uses such as suction dredges  or water that's collected and released                                                            
back into a stream.                                                                                                             
MR.  BOB  STILES,   President,  DRven   Corporation,  said   he  was                                                            
testifying  on behalf of the DRven  Corporation. Drven supports  the                                                            
technical amendments  to this bill and recognizes  the problems that                                                            
DNR faces.  DNR is charged with managing  a resource that  often has                                                            
no constituency.  One of the main reasons he is present  today is to                                                            
illustrate that  water rights, while they are not  flashy, do have a                                                            
MR. TADD  OWENS, Executive  Director, Resource  Development  Council                                                            
(RDC), said  the RDC  worked for about  2 1/2  years with a  diverse                                                            
group of industry  representatives, the legislature  and DEC to pass                                                            
HB 361 and  they support the department's  recommendation  that this                                                            
program be  added into that structure  for fees. It distributes  the                                                            
burden of the program's  costs fairly between the private sector, in                                                            
terms of  industry applying  for these  permits,  and the public  at                                                            
large. He stated, "Another  critical issue this bill solves is DNR's                                                            
backlog.  There are  a  lot of  folks out  there who  are  operating                                                            
essentially  without their  authorization  and we  do support  DNR's                                                            
request for funding to take care of that backlog."                                                                              
MS. PAM MILLER,  an Anchorage resident, said she is  concerned about                                                            
SB 139  as Alaska has  the best  water statutes  in the nation  that                                                            
were set up to protect Alaska's clean water, fish and wildlife.                                                                 
MR. BILL  WARD, Ward Farms,  opposed SB 139,  and said he came  from                                                            
states where  water was a very valuable  commodity and water  rights                                                            
were sought  after. They were handled  with very little bureaucracy                                                             
and overhead.  He said the bureaucracy in Alaska is  quite large; to                                                            
get water  rights  he had  to go through  ADF&G,  the Department  of                                                            
Environmental  Conservation  and  Coastal  Zone  Management.  He  is                                                            
concerned  that "reasonable  fees" is  more for  government than  it                                                            
would be for the private  sector. He said he uses half the amount of                                                            
water exempted  from a residential household, or about  800 gallons.                                                            
He is  stuck between  the big  commercial rigs  and the residential                                                             
users. He warned,  "If you want to make money for  the general fund,                                                            
that's okay,  but please  don't set up a  level of bureaucracy  over                                                            
nothing more than people to shuffle papers."                                                                                    
MR. GARY  SONNICHSEN,  a Big Delta  resident,  supported Mr.  Ward's                                                            
testimony and  opposed SB 139. He  said the department's  plan is to                                                            
charge  more fees  to  add a  lot more  government  and  a lot  more                                                            
paperwork, which will create more problems.                                                                                     
MR. BILL  MICHEL, a Delta  Junction resident,  said he didn't  think                                                            
the  state  had any  surface  or subsurface   rights to  the  water.                                                            
Therefore, they have no business to tax it.                                                                                     
MR. KEITH  WARREN, a Delta  Junction resident,  said in the  private                                                            
sector, if you  can't make your budgets for whatever  reason, you've                                                            
got to  dole it  out. He  thought the  government  should take  this                                                            
lesson from the private sector. He opposed SB 139.                                                                              
MR. JOHN  WENGER,  a Copper Center  resident,  supported Mr.  Ward's                                                            
testimony 100 percent and  said what really concerns him is that the                                                            
next  largest user  group  is the  public  water supply.  If  Copper                                                            
Center's  water supply  falls  under  the department's  over  15,000                                                            
gallon a day category  and the people have to start  paying fees, it                                                            
would put a lot of people back financially.                                                                                     
MR. HARVEY  LEONARD, a Copper  Center resident,  opposed SB  139. He                                                            
thought it was  another attempt by bureaucracy to  make them pay for                                                            
something they don't have the money to pay for.                                                                                 
MR. AL ROIG,  a Copper Center resident,  opposed SB 139.  He thought                                                            
the  bill was  poorly written  and  would do  nothing  but create  a                                                            
larger bureaucracy.                                                                                                             
MR. ERIC  NASHLUND, a Copper  Center resident,  said that SB  139 is                                                            
just a revenue-generating source.                                                                                               
TAPE 01-27, SIDE B                                                                                                            
MR. SAM LIGHTWOOD,  a Copper Center  resident, said the legislature                                                             
is requiring  fees and  other small  amounts for  services that  the                                                            
state normally  provides for its citizens.  Mr. Ward said  he had to                                                            
apply for four  different water rights permits. That  is duplicative                                                            
and makes the process so  complicated. He noted, "It was much better                                                            
when we  had a little  more adequate  funding  from the legislature                                                             
directing to provide  these services to people. The  answer to that,                                                            
of course, is the legislature  needs to find better sources of their                                                            
funding.  They are  nickel  and diming  everyone  to  death and  the                                                            
overall plan has to be worked out."                                                                                             
He thought  the  legislature  should reinstate  the  income tax  and                                                            
said, "I hope I get out of here alive."                                                                                         
MR. JOHN KUNIK,  a Glennallen resident, said the bill  would require                                                            
water meters,  meter readers, installation  crews, law enforcement,                                                             
etc. He asked  what would happen to individuals who  live on federal                                                            
lands who use water and how all the water would be metered.                                                                     
MR. MATT  KRINKE, a  Glennallen resident,  opposed  SB 139. He  said                                                            
[he] can't afford the money to pay for the bureaucracy.                                                                         
CHAIRMAN  TORGERSON asked if  the bill will  affect water rights  on                                                            
federal land.                                                                                                                   
MR. LOEFFLER  answered  that  all water  is reserved  by the  state.                                                            
There is an implied  federal water right that the  feds have a right                                                            
to for certain  federal lands, but it is determined  through a joint                                                            
process that is very complicated  or typically they just come to the                                                            
state for a water right.                                                                                                        
CHAIRMAN TORGERSON  asked if the state could bill  them more than it                                                            
does Alaskans or whether they are billed at all.                                                                                
MR. LOEFFLER  replied that they are  billed an application  fee like                                                            
everyone else.                                                                                                                  
MR. DANIEL BOONE,  a Chitina resident, said, "I don't  think this is                                                            
a good bill.  One of the  main reasons is  that a few years  ago the                                                            
State of Alaska  left us millions  of dollars in hydro projects  for                                                            
small communities  around the state, like Bradley  Lake. By charging                                                            
a fee to the electric  companies and the small private  utilities to                                                            
generate cheaper  electricity, the  rates will immediately  increase                                                            
probably twofold."  He  said the other reason he is against the bill                                                            
is that too many places  in Alaska have "public wells" and this bill                                                            
would increase the fees on them.                                                                                                
SENATOR ELTON referenced  the language on page 5, line 24, and asked                                                            
if AS  46.15.080 applies  to the  issuance or  extension under  this                                                            
section  of an authorization  for  temporary use  of water. He  said                                                            
"Temporary"  is defined as  five years and  possibly 10 years  under                                                            
the extension according  to a conversation he had with Mr. Loeffler.                                                            
He did not  understand why Mr. Loeffler  didn't want the  provisions                                                            
of that to apply  when the provisions say that the  commissioner has                                                            
to consider  the effect on  fish and game  resources, public  health                                                            
and economic activity resulting from the activity.                                                                              
MR.  LOEFFLER  responded  that  they consider  the  effect  on  fish                                                            
resources  and public  health before  they prioritize  water  users,                                                            
"but a  temporary water use  does not convey  a property right.  OAO                                                            
gives  us a best  interest  criterion before  we  convey a  property                                                            
right.  This is  part of  making clear  that a  temporary water  use                                                            
authorization  is, in  fact, a  revocable authorization  - does  not                                                            
convey  a property  right or  anything  like a property  right.  But                                                            
certainly  we work  very closely  with Fish  and Game  to take  into                                                            
account  any  affect  on fish  resources,  wildlife,  or,  for  that                                                            
matter, prior water right holders."                                                                                             
SENATOR  ELTON  said,  "I  understand   that  you  want  to  make  a                                                            
distinction between  a permit and a temporary water  authorization."                                                            
He asked where  in statute it compels  Mr. Loeffler to consider  the                                                            
effect  on  fish  and game  resources  or  public  health  or  other                                                            
economic  activities   for  a  temporary  authorization   if  he  is                                                            
exempting himself from those provisions.                                                                                        
MR. LOEFFLER  answered that  he is required  to consult with  ADF&G.                                                            
Under  subsection  (f),  he  is  expected   to  put  limitations  on                                                            
protecting the  rights of other people and the public  interest. The                                                            
methods and regulations  he has been dealing with  for 20 years also                                                            
require  him to do  that and that's  been the  department's  mode of                                                            
operation. He said he would  have to get back to him with a complete                                                            
SENATOR ELTON  asked, "I  took a look at  the public notice  section                                                            
that is  repealed under  this bill  and it seems  to me that  I know                                                            
that public notice can  be onerous, but the public notice provisions                                                            
here  provide that  within  15 days  of  publication  of notice,  an                                                            
interested  person may file an objection  and that the commissioner                                                             
has to consider  that objection within  30 days, can extend  that to                                                            
180 days, if the commissioner  thinks there's enough there to have a                                                            
hearing  -  AS  46.15.133,  the  section  that  they  are  exempting                                                            
themselves from."  He said if NorthStar is exluded,  he wondered why                                                            
giving  notice with  15 days  to file  an objection  and giving  the                                                            
commissioner  30 days to  make a determination  has been onerous  in                                                            
the past.                                                                                                                       
MR. LOEFFLER answered:                                                                                                          
     Most  of the temporary  water use permits  are for things                                                                  
     like construction  camps and  when the agencies determine                                                                  
     there  is no environmental  harm, a 15  to 40 day wait  to                                                                 
     halt  construction in  mid-summer is  a problem. In  areas                                                                 
     where we think  there is likely to be harm, we  can public                                                                 
     notice  it and we are  not prohibited  from doing it.  The                                                                 
     practice for  the last 20 years has been not to  [indisc.]                                                                 
     things   and  everyone  imagines   a  5-year  or  10-year                                                                  
     facility, but often we used  them for DOT, which is one of                                                                 
     our   major   consumers.   In   the   middle   of  summer                                                                  
     construction, yes Senator  and Mr. Chairman, a 15 - 30 day                                                                 
     delay is a problem.                                                                                                        
     When we  are giving a state resource  away forever,  which                                                                 
     is a water  right, we're constitutionally  required  to do                                                                 
     public notice. But for something  that we believe that we,                                                                 
     the  agencies, determine  won't  harm the  environment  or                                                                 
     other  water users and  is temporary  and is revocable  if                                                                 
     there is a problem that  delay often will cause a problem.                                                                 
SENATOR ELTON responded:                                                                                                        
     When you get to be my age,  10 years can seem like forever                                                                 
     and  the second comment  would be that  I understand  that                                                                 
     you may have  a problem with DOT or someone wanting  water                                                                 
     rights  for  two days  to  make concrete  or  cement,  but                                                                 
     that's already  covered in AS 46.15.133, because  it says,                                                                 
     the   Commissioner    may  designate    types   of   water                                                                 
     appropriations that are  exempt from this section. So, the                                                                 
     commissioner   isn't   precluded  from   making  a   quick                                                                 
     decision, because there  is a provision that allows him to                                                                 
     do that.                                                                                                                   
Number 1900                                                                                                                     
SENATOR LINCOLN  asked Mr. Loeffler  to expand on the fact  that DNR                                                            
expects to  discount fees  for non-consumptive  use. She also  asked                                                            
what the impact  of these fees would be on the previous  speaker who                                                            
was a farmer and,  therefore, had the 800-gallon exemption  per acre                                                            
for 6,000 acres.                                                                                                                
MR. LOEFFLER said:                                                                                                              
     Let me answer the second  one first - what are the impacts                                                                 
     of the  fees. Under  the bill as written,  the fees  would                                                                 
     range from $50 to $500 for  a water right. So if you had a                                                                 
     water  right, if  you had a  number of  water rights,  you                                                                 
     could  have   multiples  of  $500  each  year.  Although,                                                                  
     typically  we try to consolidate  them for that reason.  I                                                                 
     will say that  under the amendments that I suggested  that                                                                 
     you  would pay  the reasonable  cost of  adjudicating  the                                                                 
     water right and then there  would be no more fees. So, for                                                                 
     the person  in Delta who has  a farm, the bill as written                                                                  
     would provide an annual  fee that is a sliding scale based                                                                 
     on  the amount  of  water  right. For  the  amendment,  we                                                                 
     suggested  a  one-time  application   fee  that  would  be                                                                 
     related  to the  cost of adjudicating.  In  an area  where                                                                 
     there's  not a  lot of people  and not  much problem  with                                                                 
     adjudication, you would  expect to have a reasonably small                                                                 
SENATOR LINCOLN asked if that would be less than $1,000.                                                                        
MR. LOEFFLER  said he didn't know,  but he thought most small  water                                                            
right holders  would be less  than $1,000.  He said he would  get an                                                            
CHAIRMAN  TORGERSON  said they  had heard  the fear  out there  that                                                            
people just  don't trust government  to do a reasonable fee,  "and I                                                            
sort of agree with that…I'd like to see what your intent is."                                                                   
SENATOR LINCOLN  asked him to get  back to them on fees for  a miner                                                            
replenishing the water  source that goes right back into the stream.                                                            
CHAIRMAN TORGERSON  said he thought  that was a suggested  amendment                                                            
instead of just being mentioned in a fiscal note.                                                                               
SENATOR TAYLOR said: "If  we're going to set any fees at all, I have                                                            
voted for  my last  fee bill in  this legislature  after the  blood,                                                            
sweat and  tears that  you, Mr. Chairman,  and I  have put into  DEC                                                            
just trying to  get a handle on how they were going  to charge every                                                            
hotdog  cart out  there  to go  inspect  them and  never  did get  a                                                            
straight  answer in  two years. I'm  not about  to start  increasing                                                            
fees so as to support your agency."                                                                                             
CHAIRMAN TORGERSON  noted that they  had exempted the hotdog  carts.                                                            
He said  he intended  to work  more on  the bill  starting with  the                                                            
North Slope.                                                                                                                    
SENATOR ELTON  said he thought  part of the  problem was that  there                                                            
aren't as many people doing  permits now as there used to be. One of                                                            
the sad  things about the  testimony is that  people have said  they                                                            
are willing  to pay just  to speed the process  up, because  waiting                                                            
for two years or longer  is a significant economic drain. He stated,                                                            
"This is one  approach. Another would  be to restore funding  closer                                                            
to a level we had 15 or 16 years ago."                                                                                          
CHAIRMAN  TORGERSON  added,  "Or  exempt  the users  and  widen  the                                                            
brackets a  little bit more instead  of worrying about the  guy that                                                            
carries the canteen from Anchorage to Mat-Su.                                                                                   
                     SB 167-AGRICULTURAL LAND                                                                               
CHAIRMAN TORGERSON announced SB 167 to be up for consideration.                                                                 
MR. DARWIN PETERSON, staff to Senator Torgerson, said:                                                                          
     This  legislation is  intended to resolve  a problem  that                                                                 
     dates  back to  the 1964  earthquake.  In 1943,  the  Ross                                                                 
     Miller  family homesteaded  27 acres of  land in Hope.  In                                                                 
     the early 1950s, the Millers  leased 15 acres of adjoining                                                                 
     land  from  the  Forest  Service,   which  they  used  for                                                                 
     pasture.  During the '64 earthquake,  the Millers lost  18                                                                 
     of  their  27-acre  homestead.  The  Earthquake  Exchange                                                                  
     Program compensated  the Millers for their loss  by giving                                                                 
     them  only  one acre  of  land.  Subsequently,  the  state                                                                 
     determined that the Millers  had been treated unfairly and                                                                 
     were  entitled to the  15 acres of  leased Forest Service                                                                  
     land as relief. In 1978,  agricultural rights to this land                                                                 
     were  conveyed   as  provided  by  former  state   law  AS                                                                 
     For  many  reasons,  fee simple  title  should  have  been                                                                 
     granted at this time. Recently,  DNR has declared that the                                                                 
     state  has   no  compelling  interest  in  retaining   the                                                                 
     remaining  interest   in this  property  and,  therefore,                                                                  
     supports conveying full  land rights. Unfortunately, there                                                                 
     are  no existing  statutes  that  would authorize  DNR  to                                                                 
     remove the agricultural restrictions on this land.                                                                         
     SB 167 would make a minor  statutory change to correct his                                                                 
     situation.  Anyone  who received  agricultural  rights  to                                                                 
     land under section 6(a)  of the Alaska Statehood Act would                                                                 
     be eligible  for fee  simple title if  the owner pays  the                                                                 
     fair  market value  for the  state's  remaining interest.                                                                  
     This  would only  apply  to tracts  that are  15 acres  or                                                                 
SENATOR TAYLOR asked if there were others in this class.                                                                        
CHAIRMAN TORGERSON said he didn't think there was.                                                                              
MR. LOEFFLER stated support for SB 167.                                                                                         
MR. BILL WARD,  a Delta Junction resident, said he  thought this was                                                            
a reasonable circumstance  to do a transfer from agricultural to fee                                                            
simple  and supported  SB  167. He  cautioned  them not  to use  the                                                            
legislative  process  to change  the  status of  other agricultural                                                             
lands around the  state because speculators would  take advantage of                                                            
CHAIRMAN TORGERSON said he shared his concerns and that this bill                                                               
only applies to one person at 15 acres.                                                                                         
MR. FRANK  MILLER,  a Ninilchik  resident, said  he appreciates  the                                                            
work  the committee  has  done  on this  bill.  His one  concern  is                                                            
subsection  (3) that says the owner  of the rights for agricultural                                                             
purposes  pays the  state the  fair market  value  of the  remaining                                                            
interest in the land estate,  as determined by an appraisal paid for                                                            
by the  owner. He said  that's like  buying their  own land  back at                                                            
this point and he thought  the price should go back to when the land                                                            
should have been conveyed.                                                                                                      
MR.  CHUCK GRAHAM,  a  Hope resident,  said  he concurred  with  Mr.                                                            
Miller's  comments  on  subsection   (3).  The  Millers  have  valid                                                            
preference  rights and should  have received  fee simple title  some                                                            
years ago.  He actually  thought the  price should  be based  on the                                                            
appraised value in 1967.                                                                                                        
CHAIRMAN  TORGERSON asked Mr.  Loeffler how  he was going to  handle                                                            
computing the fair market value of the Miller's property.                                                                       
MR. LOEFFLER explained  that they compute the market  value by doing                                                            
an  appraisal  today and  subtracting  the  appraised  value of  the                                                            
agricultural  rights  that  they  own.  The Millers  would  pay  the                                                            
difference under this bill.                                                                                                     
CHAIRMAN  TORGERSON asked  about the  assertion that  they are  owed                                                            
something because of the Earthquake Relief Act.                                                                                 
MR.  LOEFFLER replied  that  he had  no knowledge  of  that Act.  He                                                            
added, "All I know is that  in the 60's there was a preference right                                                            
they were given that allowed  them to have land with an agricultural                                                            
covenant. He didn't know anything about the earthquake."                                                                        
SENATOR  TAYLOR  said  that  agricultural  rights  are  basically  a                                                            
restriction   on  the  land   and  he  thought   this  removes   the                                                            
agricultural restrictions.                                                                                                      
MR. LOEFFLER responded  that they own certain rights to the land and                                                            
he would give them the  appraised value of the land minus the rights                                                            
of the land today.                                                                                                              
SENATOR  TAYLOR  asked  if  those  rights  have  a  value  they  can                                                            
MR. LOEFFLER answered yes.                                                                                                      
SENATOR TAYLOR  said he empathized  with the  people, but he  didn't                                                            
know if  you could legally  sell land at  some previously  appraised                                                            
MR. LOEFFLER  said he thought it would  go against the grain  of the                                                            
way they  have done business  in the state.  He said they  currently                                                            
own land subject  to agricultural  rights. He noted, "It's  the same                                                            
way  people at  Pt.  MacKenzie own  the  land with  an agricultural                                                             
covenant  on it. They own  the agricultural  rights so to speak.  In                                                            
that, they have  been living on it, their father and  grandfather. I                                                            
concur with Darwin's  assessment that there is no  state interest in                                                            
keeping  the land agricultural  at this  point. The  world is  not a                                                            
better place  if we do that. I would  support their urge  to get the                                                            
land, but Senator, I don't  know a way to do it for the 1967 price."                                                            
CHAIRMAN TORGERSON said  he didn't either and that he would hold the                                                            
bill until he talked to the Millers about it.                                                                                   
CHAIRMAN TORGERSON adjourned the meeting at 5:00 p.m.                                                                           

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