SB 51-NATL. RES. WATER NOMINATION/DESIGNATION  3:31:16 PM CHAIR BIRCH announced the consideration of Senate Bill 51 (SB 51). He said his intent is to adopt a committee substitute (CS) and report the bill on to the next committee of referral. 3:31:51 PM SENATOR COGHILL moved to adopt the proposed CS for SB 51, labeled 31-LS0375\R, as the working document of the committee. SENATOR GIESSEL objected for discussion purposes. 3:32:14 PM TREVOR FULTON, Staff, Senator Birch, Alaska State Legislature, Juneau, Alaska, explained that there are two changes in the Version R CS for SB 51. He said the first change is cleanup recommended by Legislative Legal. On page 1, line 11, delete "and this section," which was a vestige from a previous draft of the bill. He explained that the second, more substantive, change begins on page 1, line 12, and encompasses the entire subsection (b). The change was in response to concern that the old subsection (b) may have diluted the sponsor's intent that the legislature has the final decision as to whether to designate an outstanding national resource water. The old subsection (b) required the Alaska Department of Environmental Conservation (DEC), Alaska Department of Natural Resources (DNR), and the Alaska Department of Fish and Game (ADFG) to unanimously agree on a nomination prior to forwarding it to the legislature; however, a decision by the departments not to forward a nomination could be construed as precluding a decision by the legislature which was not the intent of the bill. The new subsection (b) requires that all nominations be forwarded, not just those recommendations by the departments, in an annual report to the legislature. The annual report does not constitute an appealable, final agency decision. 3:32:36 PM SENATOR BISHOP joined the committee meeting. MR. FULTON summarized that the intent of the CS is to maintain the benefit of having the three resource departments lend a minimum level of scientific review and subject matter expertise to Tier 3 water nominations while reinforcing the final authority for Tier 3 designation lies in the hands of the legislature. CHAIR BIRCH asked Senator Giessel if she maintains her objection. 3:34:14 PM SENATOR GIESSEL removed her objection. CHAIR BIRCH announced that that the Version R CS for SB 51 is adopted. SENATOR GIESSEL said she had requested that the Legislative Legal bill drafter and the Department of Law be available during the committee meeting. She explained that she has four areas of questions. She asked Emily Nauman with Legal Services to address the CS for SB 51. She said the CS does not reference the legislature as the body that would make the determination. The CS only says on page 1, line 11, "only by law." She said her understanding of "by law" would mean a bill passed by the legislature and signed by the governor or it could mean "by initiative." She added that her understanding is the Alaska Constitution disallows initiatives that appropriate. She said she believes SB 51 is appropriating a resource of the state. She asked if a designation of water constitutes an appropriation per the constitution and therefore would be ineligible to be made by initiative. 3:36:03 PM EMILY NAUMAN, Legislative Counsel, Legal Services, Division of Legal and Research Services, Legislative Affairs Agency, Alaska State Legislature, Juneau, Alaska, answered that Senator Giessel is correct; by law the designation encompasses both an act passed by the legislature, signed by the governor and an initiative. She said she will follow up, but her initial reaction is the bill is not an appropriation because the legislature is not giving the land to someone or making an allocation of an asset. The legislature is just submitting to more stringent water quality standards. SENATOR GIESSEL countered that the designation of the water changes the ability of the land that is adjacent to that water body to be utilized in certain ways, thereby appropriating the land. MS. NAUMAN replied that she does not see the bill as an appropriation but will look further into the issue. SENATOR GIESSEL asked to hear from the Department of Law on the subject. 3:38:01 PM JENNIFER CURRIE, Assistant Attorney General, Alaska Department of Law, Juneau, Alaska, said she will have to do some additional research to make a determination because she is not sure. SENATOR GIESSEL emphasized that the committee needs to be aware of the appropriation issue. She asked Ms. Nauman to address on line 11 in the bill, the word "law" within the phrase "only by law". She noted that regulations have the force of law and asked if the phrase could be interpreted to mean the Department of Environmental Conservation (DEC) could pass regulations that would put in place a designation of Tier 3 waters and thereby have a force of law. MS. NAUMAN responded that she would have to take a moment to process the question prior to answering. SENATOR COGHILL suggested that the committee look at art. XII, sec. 11 of the Alaska Constitution because an initiative is allowed. He added that there was also a court case where the intent was to give land to the university, but the land was an appropriation which barred the transaction. MS. NAUMAN answered that Senator Giessel is correct that regulations commonly are described as law and she will get back to the committee on the effect of "only by law" and whether the section could be interpreted as the department adopting regulations. 3:40:17 PM SENATOR GIESSEL directed attention to page 1, line 12 that says, "The department may accept an application for a nomination." She said the original version of SB 51 said the department shall accept nominations, whereas the CS says the department is accepting applications for nominations. She asked Ms. Nauman what the difference is between the application and the nomination because it sounds like another step. MS. NAUMAN replied that she does not see the application for nomination as another step other than to possibly differentiate the fact that there might need to be some paperwork filled out or some minimum requirement for a nomination to become complete and therefore that would become sort of an application. SENATOR GIESSEL asked if the department would therefore have to approve an application for a designation to become a nomination. MS. NAUMAN replied that inquiry is not specified in the bill. SENATOR GIESSEL remarked that there was a gap. She said the CS requires the department to make a recommendation about the nominations. Page 2, line 3 says, "The report must provide a recommendation regarding whether each nominated water should be designated as outstanding national resource water." She asked if "no recommendation" is among the options for the department. MS. NAUMAN answered that the bill states that the report must provide a recommendation so the department could provide "no recommendation" and not be in a substantial violation of the section; that response would be based on the department's interpretation that they must provide a recommendation and whether or not no recommendation was actually some sort of form of not having an opinion either way. 3:42:46 PM SENATOR GIESSEL asked what the legal significance of a recommendation is and if it is appealable. She inquired what would happen if the department recommend" and the legislature takes an opposite action. MS. NAUMAN answered that the recommendation she envisions is the department provides a possible supported, researched opinion about whether the water qualifies for the Tier 3 designation or whether it is worthy of the Tier 3 designation. The legislature is free to disregard a recommendation or follow a recommendation. The recommendation by the department does not bind the legislature in any way. In fact, the legislature could consider any body of water for a Tier 3 designation regardless of whether a recommendation was passed on from the department. She said regarding the question about whether the recommendation is a final decision, the language on page 2, lines 7-10 says, "The preparation and delivery of a report under this subsection does not constitute a final agency decision or action, and the recommendation is not subject to appeal, including appeal or review under AS 44.62 (Administrative Procedure Act)." attempted to foreclose that. It clarifies that it is not the opinion of the legislature that the recommendation is the final action on a decision whether to designate a body of water as outstanding national resource water. That decision is actually being taken up by the legislature. 3:44:22 PM SENATOR GIESSEL read the language on page 2, line 9, "the recommendation is not subject to appeal, including appeal or review under AS 44.62 (Administrative Procedure Act)." She said the question is what is the legal significance of "recommendation." She inquired if someone can protest or sue if the legislature were to refuse to take up the bill or to reach a conclusion that was different than the report's recommendation. MS. NAUMAN replied that people sue all of time about almost everything, it's why most of the world's lawyers are employed, but to the extent that the legislature takes up or does not take up any matter is a matter of the legislature's prerogative and that argument can be made about any action of the legislature. The legislative powers are a constitutional one that is inherent in the body's ability to pass or not pass any piece of legislation. She opined that she does not see a successful lawsuit of someone suing over the legislature's decision on the department's recommendation. SENATOR GIESSEL asked Ms. Currie for her thoughts on the legal significance of a recommendation. MS. CURRIE answered that she agreed with Ms. Nauman that a recommendation is merely the opinion given by the different resource agencies and that the legislature is free to use or not use the departmental recommendations to make its decision. 3:46:23 PM SENATOR GIESSEL asked Ms. Currie to confirm that the recommendation would not hold legal binding status. MS. CURRIE answered no, especially with the wording regarding it not being an appealable decision. She noted that the original legislation stated that if the resource agencies had a negative recommendation that it would not go any further; however, the goal was to make sure the legislature makes that decision and not the resource agencies, so that language was taken out so that all recommendations have to be forwarded to the legislative body. SENATOR GIESSEL said her fourth topic has to do with the permanence of the designation. A similar bill was heard in 2016 and at that time the Senate Resources Committee questioned DEC as to the question of "permanence." She said she inquired if the declaration of Tier 3 waters is a permanent designation in perpetuity. She noted the committee's letter back from the commissioner stated that he did not think the designation is permanent and yet at the same time the EPA itself could not give a clear answer on the designation. She asked if the legislature could repeal the designation by repealing the law and what would the options be for the EPA in the future if they were to contest the state's decision and even go so far as repealing Alaska's primacy over waters. She inquired if the Department of Law has experience with the EPA regarding the declaration of Tier 3 waters and its permanency. MS. CURRIE replied that the Department of Law is aware of two states that currently have regulations that allow a de- designation of a Tier 3 water; however, the department does not know whether the de-designation has ever been attempted. She said she does not think that categorially the EPA has said there is no process for de-designation because they would have had to approve those regulations. She deferred to Andrew Sayers-Fay with DEC to talk about EPA's role in de-designating if the state were to designate a water. 3:49:50 PM ANDREW SAYERS-FAY, Director, Division of Water, Alaska Department of Environmental Conservation, Juneau, Alaska, explained that since 2016, the division has had some follow-up conversations with the EPA about the ability to de-designate a Tier 3 or an outstanding national resource water body. The EPA conveyed that they do not see anything that prohibits a state from taking the de-designation action. The division has not gotten into the nuances of how the de-designation process would work or what role the EPA may or may not play if the state took a de-designation action. SENATOR GIESSEL asked Mr. Sayers-Fay if the communication with the EPA is in writing. MR. SAYERS-FAY replied that there is one email that he has received from a staff member at EPA Region 10 about the de- designation topic. He explained that the EPA staff member referenced what other states have done. He said he does not have the follow-up email to verify that the division has received further information. SENATOR GIESSEL said she appreciates the fact that the committee has an email from a staffer at DEC, but she is not consoled by the email. She stated that she would be interested to know if DEC could get a letter from the head person from the EPA indicating whether the designation was in fact revocable. 3:51:35 PM SENATOR BISHOP said he would have more comfort with a law passed by Congress that addressed a designation's revocability. He remarked that he does not care what the EPA director says because of the changes a new administration can make with a new director and a new directive. SENATOR GIESSEL said she has concern about the cost associated with the bill. She assumed that the three resource departments would have to do some analysis before a recommendation is made. She inquired if DEC has any estimate on what an analysis would cost before the department would make a recommendation. MR. SAYERS-FAY replied that the bill, as written, envisions the departments' analysis is done for the benefit of the legislature to make a decision about a nomination and so the depth and direction of what is being asked for by the legislature would determine the level of cost and if there was an actual bill that raised Tier 3 issue, the legislature could provide further direction on what issues needed to be looked at or to what degree. 3:54:03 PM SENATOR GIESSEL asked him to confirm that DEC would make a recommendation not knowing the degree of pristineness, not knowing what kind of work is going on upstream, what kind of uses of the water. She inquired if the work she previously noted would have to be done before DEC makes a recommendation to establish a Tier 3 water. MR. SAYERS-FAY replied that there is more than one path to answer the recommendation process. In a previous version of proposed regulation, DEC enumerated several things the department thought worthy of consideration. If SB 51 were to pass, DEC would look into whether or not there is a need to establish regulations again and the department would probably answer those types of questions because those issues were raised due to the impact that Tier 3 designation has for water quality and then for any discharges to that water body and the potential to impact tributaries flowing into that water body, there are a number of questions that would naturally exist about what are the uses and what are the potential impacts, DEC would definitely start down that path. He said he previously addressed in a previously proposed bill that the possibility that the legislature could also provide additional direction for DEC to look at specific issues. MR. FULTON addressed Senator Giessel's question on the sponsor's intent as far as who bears the cost of application or nomination. He specified that the sponsor's intent in drafting the bill is that the applicant will bear most of the cost as clearly reflected in the department's zero fiscal note. Most of the departmental costs would probably be associated with collecting a certain level of water quality data proving there is stakeholder and community support for the Tier 3 nomination, and then whatever else is needed to prove. 3:57:05 PM At ease. 3:57:20 PM CHAIR BIRCH called the committee back to order. MR. FULTON continued that the departmental costs will include anything else required to prove that a water body is ecologically and or recreationally significant, which is the definition of a Tier 3 water body by the EPA. He reiterated that the costs will be borne by the applicant as reflected in the zero fiscal note presented by the department. SENATOR GIESSEL remarked that one of the things that Congress has realized is the fact that they abdicate their responsibility when they write something very broadly and then expect the departments to write regulations. She admitted that often the Alaska Legislature has also written regulations that do not reflect a bill's intent by not being specific. She said her concern is leaving the decision to a departmental commissioner or whoever happens to be the regulation writer at the time. SENATOR KAWASAKI noted that the bill changed a lot between the Version K and the version R. He pointed out that the original fiscal note says, "The department shall accept nominations and the department may forward those nominations to the legislature." Version R says, "The department may accept an application, that they shall prepare a report." He opined that the two versions are very different, and the fiscal note ought to reflect the change. He asked for an explanation of the change. 3:59:55 PM MR. SAYERS-FAY answered that the original language was the department shall accept a nomination. The only significance in the change in language is that if there was further direction from the legislature or regulations that indicated a minimum amount of information that was needed and that was not submitted with the nomination, that that might provide a basis with the new language for the department to not accept that nomination; but, absent that the language is fairly similar in its intent for the department to receive a nomination, reviews it, and provides a report. MR. FULTON addressed Senator Kawasaki and said as to the question regarding "may" versus "shall," he noted that he had a conversation with the legislature's attorney about the exact subject regarding when the department "shall" accept a nomination, that "shall" leaves the form of a nomination to be very broadly interpreted, but "may" gives a department some level of discretion as to whether or not the package fulfills a certain criteria that the sponsor is looking for in a proper nomination. SENATOR COGHILL asked if the first thing that would be looked at is the federal register on what the requirements of Tier 3. MR. FULTON deferred the question to the department. He noted that the federal register is vague in terms of what constitutes an outstanding national resource water and his thought is the register just says the water must be recreationally and ecologically significant. 4:02:40 PM SENATOR COGHILL remarked that looking at the register first might make a difference to the legislature. He noted in a footnote under are. XI, sec. 7 of the Alaska constitution that says, "If it infringes on the legislature's ability to allocate resources among competing uses, then it fails to ensure that the legislature and only the legislature retains control over the allocation." He opined that there is some case law that is beginning to show that if the state restricts uses there may be a significant issue between Alaska and the federal government. He said the legislature needs to make sure that the tension is properly described. CHAIR BIRCH noted that there was testimony earlier in the regarding the fact that DEC has adopted water quality standards that relate to how the proposed legislation will be executed. The regulatory package speaks to the Tier 3 analysis process for the protection of water quality and outstanding natural resource water. SENATOR BISHOP noted that Senator Kawasaki addressed the fiscal notes for the Version K and the Version R. He said common sense dictates that there is an application process where nomination is set at a high bar that is backed with science. He opined that even though the study is paid for by the applicant, there needs to be a number associated with the fiscal notes. 4:05:02 PM SENATOR KIEHL said the phrase that reoccurs in statute when talking about the quality of an application is "shall accept" as opposed to "may accept." He asked why the sponsor settled on "may accept" instead of letting the department say what quality standards need to be met in the application. MR. FULTON replied that the discussion did not go beyond what has already been explained. SENATOR KIEHL said he is still not clear on what standards the department will use to evaluate the recommendations. He said he appreciates the proposed anti-degradation regulation but continues to question what standards the legislature will use to tell the three commissioners to apply when they make a recommendation to the legislature for designation. MR. FULTON answered that that the regulation package does not describe those standards and that is something the legislature may not want to prescribe in law because the department would be fully capable of doing so in regulation. He explained that part of the reason why the sponsor wants the three departments involved in the designation process is for a certain level of scientific review in subject matter expertise. He said the sponsor is more comfortable deferring review to the departments for recommendation only, not for the final decision which will continue to be made by the legislature. 4:08:01 PM CHAIR BIRCH read the following: We did not receive amendments prior to yesterday's deadline, I would remind members as per the discussion any amendments, sponsor substitutes, blank committee substitutes, handouts or other documents you list, placed before the committee need to be delivered no less than 24 hours prior to the scheduled hearing discussed in advance. He said he did not see any additional amendments, questions or comments and asked if the committee is ready for a motion. SENATOR KAWASAKI asked if the committee will have discussion time. He pointed out that the previously noted amendment policy says amendments "should be submitted" and questioned the limited time for offering amendments based on the recent bill revision. He said he has lots of concerns with the legislation and noted that the Senate Resources Committee is the substantive policy committee versus the Senate Finance Committee. He remarked that he feels uncomfortable moving the bill without having more discussions on some of the concerns addressed during the hearing. He noted that he has an amendment packet for the bill. 4:10:35 PM SENATOR GIESSEL said she had questions for the Department of Law, DEC, and the drafter. She noted that questions about the cost to apply the regulations that have been drafted have not been answered. Also, some attorneys do not think there is an allocation issue but earlier testimony indicated this is similar to designating parks, which removes land from use. She said she understands that the goal of the legislation is to put a process in place to satisfy the EPA. She said she would argue that the EPA is out of line in commandeering the state and requiring something, but that is another issue. She said she believes that a much simpler version of the bill would meet the EPA's requirement that the state have a policy in place. 4:11:54 PM SENATOR GIESSEL offered Conceptual Amendment 1 as follows: My conceptual amendment is simple, it would take on page 1, line 11, it would cross out the word "law" and it would substitute two words, "the legislature." The line would read, "regulation, only by the legislature." Then, my conceptual amendment would go forward to delete, page 1 lines 12-13, and page 2 lines 1-10, leaving in place only subsection (c), "Water of the state may not be managed as outstanding national resource waster unless the water has been designated as outstanding national resource way under (a) of this section." and leaving in place section 2. The conceptual amendment would clearly define that the process will go through the legislature, but all the other details, we need a more substantive discussion and more legal information. 4:13:01 PM At ease. 4:13:30 PM CHAIR BIRCH called the committee back to order. SENATOR COGHILL objected to Conceptual Amendment 1. He explained that the amendment is substantive and should be introduced in writing for further debate. He said he tended to agree with the amendment, but the committee needs the written version as well as giving other amendments a chance to come up for debate. CHAIR BIRCH concurred with Senator Coghill. SENATOR GIESSEL requested a written opinion from both the Department of Law and Legislative Legal regarding whether the bill is an allocation of state resources, an allocation of land, and whether the process could be in fact done by regulation. She asked that in addition to the written opinion that the ramification from a "no recommendation" or a negative action from the legislature saying no be explained as well. 4:14:38 PM SENATOR GIESSEL withdrew Conceptual Amendment 1. CHAIR BIRCH added that the committee will have an opportunity to look at how the current water quality regulations are to be integrated with the legislation. SENATOR REINBOLD concurred with Senator Giessel that the legislation is an appropriation. 4:15:16 PM CHAIR BIRCH held SB 51 in committee.