Legislature(2001 - 2002)
04/11/2001 04:07 PM Senate RES
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ALASKA STATE LEGISLATURE
SENATE RESOURCES COMMITTEE
April 11, 2001
4:07 p.m.
MEMBERS PRESENT
Senator John Torgerson, Chair
Senator Drue Pearce, Vice Chair
Senator Pete Kelly
Senator Kim Elton
Senator Georgianna Lincoln
MEMBERS ABSENT
Senator Rick Halford
Senator Robin Taylor
COMMITTEE CALENDAR
SENATE BILL NO. 24
"An Act giving notice of and approving the entry into, and the
issuance of certificates of participation for, a lease-purchase
agreement for a seafood and food safety laboratory facility; and
providing for an effective date."
MOVED SB 24 OUT OF COMMITTEE
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."
MOVED CSSB 139(RES) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
SB 24 - See State Affairs minutes dated 2/13/01 and Resources
minutes dated 3/21/01.
SB 139 - See Resources minutes dated 4/4/01.
WITNESS REGISTER
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: Supported SB 139.
Mr. Harvey Bascomb
Wasilla AK
POSITION STATEMENT: Commented on SB 139.
Mr. John Wenger
HC 60 Box 280
Copper Center AK 99573
POSITION STATEMENT:
Mr. Bill Ward
Ward Farms
P.O. Box 1087
Delta Junction AK 99737
POSITION STATEMENT: Commented on SB 139.
Mr. Rex Wrigley
HC 62 Box 5790
Delta Junction AK 99737
POSITION STATEMENT: Commented on SB 139.
Mr. Pat Schlichting
HC 60 Box 3050
Delta Junction AK 99737
POSITION STATEMENT: Commented on SB 139.
Ms. Deb Moore
Northern Alaska Environmental Center
218 Driveway St.
Fairbanks, AK 99701
POSITION STATEMENT: Opposed SB 139.
Mr. Tom Thompson
HC 01 Box 2011
Glennallen AK 99588
POSITION STATEMENT: Opposed SB 139.
Mr. Bob Stiles, President
DRven Corporation
711 H St. #600
Anchorage AK 99501
POSITION STATEMENT: Supported SB 139.
Mr. Jan Konigsberg
Trout Unlimited
7511 Labrador Circle, Ste.100
Anchorage AK 99502
POSITION STATEMENT: Opposed SB 139.
Mr. Tadd Owens, Executive Director
Resource Development Corporation
121 W. Fireweed Lane, Ste 250
Anchorage AK 99503
POSITION STATEMENT: Supported SB 139.
Mr. Jim Munster
Anchorage AK
POSITION STATEMENT: Supported SB 139.
ACTION NARRATIVE
TAPE 01-28, SIDE A
Number 001
SB24
SB 24-LEGIS APPROVAL OF SEAFOOD/FOOD SAFETY LAB
CHAIRMAN JOHN TORGERSON called the Senate Resources Committee
meeting to order at 4:07 p.m. and announced SB 24 to be up for
consideration.
SENATOR PEARCE moved to pass SB 24 from committee with individual
recommendations. There were no objections and it was so ordered.
SB 139-STATE WATER USE
CHAIRMAN TORGERSON announced SB 139 to be up for consideration. He
said a proposed committee substitute (CS) was drafted to address a
number of the problems discussed in the last meeting.
SENATOR PEARCE moved to adopt the CS to SB 139, labeled Luckhaupt
4\11\01, Version C. There were no objections and it was so ordered.
MR. BOB LOEFFLER, Director, Division of Mining, Land and Water,
Department of Natural Resources (DNR), explained the philosophy
behind the CS:
When last we were here, we explored the problem that the
water program is broken and that part of the solution is
doing things faster with less money but part of the
solution is a long-term income source. DNR now has the
authority to raise fees, but we heard in the last meeting
on teleconference that people were very concerned about
DNR's unlimited ability to raise fees. They were
concerned that DNR would increase fees just to increase
bureaucracy and that we would charge for a property right
that people have had for a long time. The agriculture
people in general would be paying for water that they
occasionally use in a dry year and would be lumped in for
payment like the North Slope. Those are the problems we
heard and I think this bill tries to address it.
In some ways this is an anti-fee bill. It puts
significant limitations on DNR's ability to charge fees.
It would eliminate DNR's ability to charge the water use
fee that we proposed last time. Instead, the long-term
income source would allow DNR to charge only the
reasonable direct costs of the application, itself. So,
if you imagine you are someone with a one million gallon
water right, we would not institute a new charge on that.
This bill would not do that. If you apply for a water
right, this bill would use the methodology pioneered last
year by the legislature in what is commonly called the
DEC fees bill or HB 319 to charge the reasonable direct
costs. Those costs exclude - that is DNR would not be
allowed to include - the cost of salaries, administrative
support, that is people like me - we wouldn't on our
budgeted overhead write rent and utilities - public
notice costs, when those costs are not required by
statute, costs related to an appeal to a permit, that is
other than the applicant and expenses not necessary to
comply with the law or travel expenses for small
businesses such as agriculture.
So what we would do under this bill is we would divide up
classes of applications and charge what the accounting
allows us to - the reasonable and direct costs. So if
it's an easy application, like Delta or Kenny Lake, where
there are not a lot of folks, the applications are
relatively straightforward. We might establish those as a
class and they wouldn't be lumped in with oil and gas on
the North Slope or hydro where we tend to spend a lot of
our time. So, I believe in summary that this is a bill
that provides certain limitations on the ability of DNR
to charge. It allows us to adopt regulations that
establish classes so that we can charge the costs not
lumping agriculture in with oil and gas.
I will say the application costs will go up, mostly on
oil and gas and hydro and somewhat less on the remaining
much easier water right applications.
MR. LOEFFLER followed up with a section-by-section review of the
bill. He said section 1 is the policy with respect to water fees.
Paragraph 4 was changed to say they would charge the reasonable
direct cost of water management. Subsection (b) indicates that it's
a policy of the state to assess a reasonable fee for the services
it provides facilitating the use of water and sets off those seven
limitations on what they can't charge.
Subsection (c) indicates that the department may not charge for
something that is not specifically related to a service with the
exception of the current $50 administrative service fee. Subsection
(d) says that DNR would minimize the cost on individuals and
businesses that withdraw less than a significant amount of water.
He said this means that they need a streamlined system that
minimizes the cost on adjudications that either doesn't take much
water and that isn't complex. He said Section 2 is the same and
Sections 3 - 5 are deleted and are replaced with one amended line
inserting the water use program into the existing law with the
existing fee methodology pioneered last year for HB 361. Section 4
is new and indicates DNR may not charge fees except consistent with
HB 361 and the current $50 administrative service fee that is set
in statute so it can't be inflated. Sections 5 - 10 are the same.
Section 11 provides an effective date for the fee provisions of
July 1, 2002. He corrected himself saying that all of section 6 was
deleted and that modified the export statute to allow people to
export less than a significant amount of water.
Number 650
SENATOR LINCOLN asked what "reasonable direct cost" and "minimize
the direct cost" mean.
MR. LOEFFLER responded:
'Reasonable direct costs' are defined in AS 37.10 and
they really are the salaries and benefits of the people
working on that class of applications. They would keep
accounts and every four years they would change the
regulations to make sure we were only charging the
salaries and benefits of those actually working on the
applications. With respect to 'minimize reasonable direct
costs,' I believe that's in the findings of the bill and
so I believe it is philosophical. It is a direction to me
to make sure that we run an efficient program.
CHAIRMAN TORGERSON said he thought this was somewhat experimental
as they establish some of the DEC fees that RDC want them to do.
Anything that's not in the inclusions could be considered as part
of the fee.
MR. HARVEY BASCOMB, a Wasilla resident, said that some problems had
been taken care of in SB 139, but he was calling from his farm and
didn't have time to read the whole thing. He said that there had
been a three-year drought and he has 300 head of cows that don't
have feed because of it. He has a loan application in for a
$100,000 irrigation system, but there is no way he would do that
without a guaranteed water right permit and a reasonable fee.
CHAIRMAN TORGERSON explained that he would be billed at the high
peak usage and the fee is $50 per year once he gets his permit. The
charge for the permit would be a "reasonable fee." The department
was going to categorize areas. Agriculture in certain areas would
be one class and a fee would be set for that class.
MR. BASCOMB complimented Mr. Loeffler on knowing his job well and
added that, "After 18 years, I've experienced that we can't water
animal herds without irrigation any more and if we can't afford
irrigation, we just have to lock our doors."
CHAIRMAN TORGERSON assured him that the committee understood that
and is working on the committee substitute to that end.
MR. BASCOMB thanked him for his work.
Number 1100
MR. JOHN WENGER said he wanted to see a lot more public input from
around the state's water districts.
MR. BILL WARD, Delta Junction, said he had faxed his comments to
Senator Torgerson and said authorizing a number of gallons per well
doesn't work. He had some questions about the committee substitute.
One of them was with the $50 annual administration fee, but he
didn't have a problem with reasonable fees. He appreciated the
committee's continuing work on this bill.
MR. REX WRIGLEY, a Delta Junction resident, said he didn't like to
see more of a bureaucracy formed when things should be made
simpler.
MR. PAT SCHLICHTING, a Delta Junction farmer, said he is getting up
to speed on the bill and supports most of it, but he didn't see an
exemption for personal use.
Number 1371
MS. DEB MOORE, Northern Alaska Environmental Center, said she
understands this bill would allow DNR to give temporary water use
permits without public notice or comment and that is what she is
most concerned about. She understands that the Alaska Constitution
says agencies must give out public notice prior to giving away
Alaska's resources. It was important enough for the constitutional
framers to mention water resources by name.
MR. TOM THOMPSON said he put in a well for $30,000, because the
public well at Glennallen had been poisoned by a fuel leak that was
never repaired. Now he's being told he is going to have to pay
taxes for drinking his water and said, "I do own the water right to
my property." He thought it also might be unconstitutional.
MR. BOB STILES, President, DRven Corporation, said he has worked on
restructuring this bill with Mr. Loeffler. He said this bill
imposes the same sort of structure as DEC has imposed on its water
program and will use to implement the solid waste program this
year. He stated, "This is a very workable fee structure." He said
that DEC is happy with the result of its first exercise and
applying it to the water program.
MR. JAN KRONIGSBERG, Trout Unlimited, said he understands that the
amendment DNR is offering only fixes a couple of problems. It's
supposed to provide sufficient funding to take care of their
backlog of water rights applications and it's supposed to confirm
DNR's authorization for temporary use of the water and the validity
of those that have already been issued and called into question by
the Superior Court. He wonders if it may not create further
problems for the water users of fish and wildlife that depend on
adequate in-stream flow. He thought the committee should be able to
answer the following questions before sending the bill out:
· Will the fee structure actually clear up the backlog? It may
be useful to audit DNR's program to determine exactly what the
problems are.
· Does the water use statute conflict with the Alaska
Constitution and prior water rights?
· Will this bill more effectively implement the Water Use Act?
He actually recommended that the bill be tabled until all concerned
parties have a better understanding of the nature of the problem
and can offer a range of solutions.
MR. TADD OWENS, Executive Director, Resource Development Council
(RDC), said the RDC helped work on the fee structure and is very
supportive of SB 139.
MR. JIM MUNSTER, Anchorage Resident, supported SB 139. He said he
was a hydrologist at DNR for 11 years and worked on many water
rights cases over the years. DNR has a critical funding problem. He
remarked, "I think we need to look at the goals of getting more
money into the program to clear up the backlog and have people work
on water short areas."
MR. MUNSTER said that regulatory changes were needed to make more
efficient use of state resources in clearing the backlog. His
concern was that even with the current bill, it would take multiple
years before the backlog gets cleared. He knows of projects that
have been impacted by not getting their day in court. He also
supported the temporary water use permit section. He is not aware
of any problems associated with water availability and it has been
done for many years already. There are many safeguards built in
with other agencies evaluating temporary uses of water and he
supported that as well.
CHAIRMAN TORGERSON asked what DNR will do about the exemption for
personal water use.
MR. LOEFFLER responded:
Homeowners do not need to apply for a water right. Use
under 500 gallons a day currently doesn't require an
application. In the regulations we expect to propose,
while people would have to apply, we would exempt people
from getting water rights. It would be a very streamlined
program for a much greater use of water. Once you either
apply in the streamlined program or once you get a water
right, there is no further tax for residential use less
than 1,500 gallons.
CHAIRMAN TORGERSON asked if there would be no fee at all for less
than 1,500 gallons.
MR. LOEFFLER said effectively that would be the personal use
exemption.
CHAIRMAN TORGERSON asked if one would own the water if the land is
patented.
MR. LOEFFLER responded that the Constitution provides that all
water in Alaska is held by Alaskans. All water is under the Water
Use Act on federal, state, private, and Native lands.
CHAIRMAN TORGERSON said, "Then, he doesn't own the water."
MR. LOEFFLER responded that person could have a water right and
that is a property right to the water issued by the State of Alaska
or perhaps the Territory. There was a grandfather clause when the
Water Use Act was passed.
SENATOR ELTON asked Mr. Loeffler to address the constitutional
issue that might apply with what he's trying to do.
MR. LOEFFLER said, "I don't believe there's any chance of a
constitutional problem." He explained:
The Constitution requires public notice before we dispose
of an interest in land including water that is before we
give away a property right. For that reason, we public
notice all water rights and will continue to do so.
A temporary water use permit is just that. And we don't
public notice that. It is entirely revocable and we make
it very clear in the application that it is revocable and
conveys no property right. For that reason the
constitution does not, in fact, require public notice. So
I don't believe there is a constitutional issue; I also
do not believe there is a significant environmental issue
that would warrant public notice.
SENATOR ELTON expressed concern that even with a special injection
of money, DNR might fall even further behind. He stated, "This may
not address the backlog problem the way we want it to."
MR. LOEFFLER said he appreciated the question as it gave him a
chance to inform the committee of the performance measures in this
bill and fiscal note. He thought DNR could get the new median water
rights applications out in 60 days, a median temporary water use
permit out within 15 days and clear up the backlog within five
years. He commented, "The fiscal note shows that after five years,
our need for money, in fact, drops, because the people who would be
working on the backlog would no longer have anything to do. So the
performance measures I am promising are performance measures with
respect to current applications and a five-year performance record
with respect to the backlog."
CHAIRMAN TORGERSON asked if he got some help in the budget cycle
this year.
MR. LOEFFLER answered that he did and that it took the pressure off
for this year.
Number 2100
SENATOR LINCOLN asked him to expand on the backlog and what happens
to the people who are waiting for a response on their applications.
She asked, "Can they proceed with their business activity for
whatever they have applied for until they get something from the
department."
MR. LOEFFLER said, "They can't legally. We have a backlog of about
700 applications and 3,000 actions total including amendments and
amendment transfers. We would certainly act on that portion of the
backlog if someone has stopped. Quite frankly, I suspect a lot of
people who have applications have drilled their well and are
withdrawing water, but people who came to us saying they had a
problem we would prioritize first. I suspect with the resources
we're getting in this year's operating budget and in this bill, we
would be able to take care of that problem."
SENATOR LINCOLN said she bought property in 1961 and was asked if
she wanted the water rights grandfathered in. She asked if the
people who did that have free use of that water and if it ties into
the state's fee or assessment system.
MR. LOEFFLER said he wasn't sure about 1961. He answered, "The way
it worked is to be grandfathered in to a water right, you would
have to apply in the '60s and you are part of the state system and
we do bill you the $50 per year annual fee. Many single family
dwellings don't have a water right and don't require it."
SENATOR ELTON moved to adopt amendment 1. He said, "I don't think
there is a single recipe they could apply that would meet the needs
of temporary water users on the North Slope and the needs of people
who may want to tap into a stream falling off a cliff for a short
term construction proposal." He explained that the amendment
inserts "However, the commissioner must request comment on an
application for temporary use of water for the Department of Fish
and Game and the Department of Environmental Conservation," into in
Section 6(d).
He said that was a little more restrictive than language in the
bill, but much less restrictive than present statutory language and
gets to the issue of alerting agencies, if not the public, that
this use is occurring. The second part of the amendment articulates
two things that may need to jump out from the other public interest
language and that is "protect fish and wildlife habitat and public
health," into Section 6 also.
MR. LOEFFLER said, "Certainly, I believe that the review by DEC and
Fish and Game provide another safeguard that temporary use permits
would not, in fact, affect fish habitat and the environment. It is
something we do now and it is helpful to have that in statute. In
addition, it is our responsibility to protect [those things]."
CHAIRMAN TORGERSON asked if the term "requesting comment" gives the
departments veto power over a permit.
MR. LOEFFLER answered, "No, it doesn't."
CHAIRMAN TORGERSON asked if DNR takes their comments into
consideration before issuing the permit.
MR. LOEFFLER answered, "Yes, Mr. Chairman. We work very closely
especially with Fish and Game on the North Slope and I'm proud of
the working relationship. I believe that we have not had a permit
on the North Slope that they have disagreed with in a long time."
CHAIRMAN TORGERSON asked if there were any objections to amendment
1. There were none and it was adopted.
SENATOR LINCOLN moved to pass CSSB 139(RES) from committee with
individual recommendations. There were no objections and it was so
ordered.
CHAIRMAN TORGERSON adjourned the meeting at 4:55 p.m.
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