Legislature(2011 - 2012)BARNES 124
03/14/2011 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HJR19 | |
| HB174 | |
| HB89 | |
| HJR8 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HJR 19 | TELECONFERENCED | |
| *+ | HB 174 | TELECONFERENCED | |
| *+ | HB 89 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HJR 8 | TELECONFERENCED | |
HB 89-EXTRACTION OF BEDLOAD MATERIAL
2:12:28 PM
CO-CHAIR SEATON announced that the next order of business is
HOUSE BILL NO. 89, "An Act authorizing the commissioner of
natural resources to offer bedload material for disposal for
flood control purposes in exchange for a percentage of the
profit from the sale of that material."
CO-CHAIR SEATON moved to adopt CSHB 89, Version 27-LS0334\B,
Bullock, 3/11/11, as the working document.
REPRESENTATIVE P. WILSON objected for discussion.
2:13:01 PM
LOUIE FLORA, Staff, Representative Paul Seaton, Alaska State
Legislature, informed the committee that the differences between
Version B and HB 89 can be found on page 1, line 6, where the
language "approved flood control project" was changed to "site-
specific flood mitigation plan". The change was in response to
conversations with the Department of Natural Resources (DNR)
regarding the "flood mitigation project", which is usually a
federal term implicating the U.S. Army Corps of Engineers in a
broader project. There are statutes under existing AS 38.05
that address federal flood mitigation projects, whereas this
legislation [aims to address] smaller scale site-specific
projects that would be approved by the commissioner of DNR.
Conversations with the Department of Transportation & Public
Facilities (DOT&PF) revealed their concern that the entire
statute could apply to their operations when they perform gravel
removal to protect their infrastructure. The DOT&PF didn't want
to bureaucratize their process. Therefore, on page 1, line 14
through page 2, line 1, the language "other than the state or
federal government or a political subdivision of the state" was
inserted in order to exempt DOT&PF from this statute. He
clarified that this statute applies to a private entity
performing the removal. Mr. Flora then pointed out the
conceptual amendment that makes changes to ensure that the state
infrastructure isn't impacted by the extraction, which can be
found in the committee packet.
2:17:18 PM
REPRESENTATIVE P. WILSON removed her objection.
There being no further objection, Version B was before the
committee.
2:17:38 PM
MR. FLORA explained that Version B would allow the commissioner
of DNR to make a finding based on the findings listed on page 1,
lines 8-13. Once those findings are complete, the commissioner
under a site-specific plan, would be able to offer bedload
material under navigable waters to be extracted by a private
contractor for approved flood mitigation projects. The main
problem with any extraction issue is that the state is bound by
statute to receive the fair market value for its bedload
material sales. He told the committee that the committee packet
includes a price listing of the fair market value [of bedload
material] statewide. The upfront fees that an extractor must
pay are quite high and inhibit the ability to extract the gravel
and resell it. Therefore, this legislation would allow the
extractor, under a site-specific plan, to extract the gravel,
net out the transportation extraction costs, and pay the state
no less that 12.5 percent of the profit. The general intent of
HB 89 is to alleviate flooding problems, providing financial
incentive for extractors to extract and sell the gravel. Mr.
Flora then directed the committee's attention to aerial slides
of bedload flooding. Generally, bedload flooding is when gravel
comes down during a sustained rain event and fills the stream
over time, which results in flooding.
2:20:10 PM
CO-CHAIR SEATON, referring to a photograph of Seward, explained
that so much gravel comes down the Resurrection River with its
low flow that it deposits and builds up such that sometimes
there are portions of the river that are higher than the
airport. Paying $3.25 per yard to take out the gravel, which is
paid upfront and can't be done as commercial use, creates a
problem. There is a similar problem in Valdez, he mentioned.
The purpose of HB 89 is to let the commissioner, in those cases
where there is bedload buildup, determine that the state is
receiving extra value by mitigating floods for which it will
have to pay in terms of emergency services and damages to
airports and roads. The legislation would allow the department
to hold an alternative sale of which the state will receive a
minimum of 12.5 percent of the net profit of the sale. The
aforementioned would allow businesses to remove this material,
which would save the state money in the long term. Co-Chair
Seaton then displayed various slides that illustrate the
situation in Seward.
2:23:49 PM
CO-CHAIR FEIGE asked if the commissioner gets to pick the site;
that is the sale is preemptive in nature.
CO-CHAIR SEATON responded that is correct. He explained that
under HB 89 a contractor or someone with a project that has a
bedload would apply to the commissioner. The commissioner would
then have to make the findings [outlined in the legislation] and
determine whether it would be beneficial and provide enough
added value to the state in flood mitigation. Nothing in the
legislation restricts or expands the department's ability to let
gravel extraction now. Currently, people can apply to DNR, but
they have to pay $3.50 per cubic yard. That $3.50 per cubic
yard is high enough that commercial entities aren't applying for
it because it doesn't make financial sense. The legislation
aims to avoid the state having to use state equipment during a
flood to maintain a channel, rather it would be performed over
time with the state as a partner that takes a minimum of 12.5
percent of the profit.
2:25:15 PM
CO-CHAIR FEIGE asked if the all findings listed on page 1, lines
8-13, will apply or will one finding apply.
CO-CHAIR SEATON pointed out the use of the term "and", which
means that all the findings must apply.
2:26:06 PM
REPRESENTATIVE KAWASAKI expressed the desire to obtain the best
value for the state's resources, including gravel. He then
inquired as how the legislation addresses the Compton case
regarding selling something for less than its value.
CO-CHAIR SEATON reiterated that the legislation allows part of
the value to the state, as determined by the commissioner, to
include the savings to the state in terms of flood mitigation
and offsetting costs the state will incur due to floods if the
gravel isn't removed. In response to Representative Kawasaki,
Co-Chair Seaton offered to contact Legislative Legal Services
for comment on Representative Kawasaki's concern.
MR. FLORA mentioned there is existing statute in AS 38.05 that
allows the department for flood control projects to provide
5,000 cubic yards free of charge and additional yardage at $.50
per cubic yard for political subdivisions. Therefore, there is
existing precedence in statute.
2:28:17 PM
REPRESENTATIVE DICK asked if there is anyone locally selling
gravel that would be adversely affected by selling it below fair
market value.
CO-CHAIR SEATON said that he couldn't answer that because this
situation could occur at several spots across the state.
However, he suggested that it's likely that those who currently
sell gravel would apply for this usage.
REPRESENTATIVE GARDNER interjected that for those who sell
gravel, the ability to purchase it at below market value would
be advantageous to them.
REPRESENTATIVE HERRON related his understanding that HB 89
offers a narrow application to mitigate disasters and doesn't
attempt to compete.
CO-CHAIR SEATON concurred.
CO-CHAIR FEIGE pointed out that to sell gravel it must be sized,
which requires various crushing and sorting equipment and
trucks. Therefore, Co-Chair Feige didn't view the legislation
as resulting in unfair competition. He characterized HB 89 as a
short-term source of inexpensive raw materials for [existing]
operators.
2:33:14 PM
CO-CHAIR SEATON moved to adopt Conceptual Amendment 1, as
follows:
Page 2, line 8, following "state.";
Insert "The commissioner may request the plans
for bed load material extraction to be reviewed by a
professional engineer with relevant experience."
REPRESENTATIVE P. WILSON objected for discussion.
2:34:20 PM
REPRESENTATIVE P. WILSON related her understanding that
departmental staff would've already examined the area, and
therefore she surmised that this individual would've already
done something like this. Therefore, she questioned whether
department staff could perform this work at no cost to the
municipality [or the project].
CO-CHAIR SEATON said that the language on page 1, including the
findings, is general. A person applying to take and dispose of
bedload material will have a plan of development and extraction
and DOT&PF would like to ensure that it has been reviewed by an
engineer with relevant experience. Such oversight is desired to
ensure the state's structures aren't damaged as a result of the
removal of the bedload material. He did note, however, that
there could be situations in which the commissioner would
determine that review by an engineer isn't necessary. The
aforementioned could be the case when, for example, the area
[where the bedload material is being deposited] is in the middle
of a flood plain where there are no bridges or state
infrastructure and the desire is to merely have a channel.
2:37:46 PM
REPRESENTATIVE P. WILSON inquired as to who pays for the
aforementioned review by an engineer.
CO-CHAIR SEATON answered that it would be paid for by the person
wishing to extract the gravel. He clarified that he wouldn't
want to say that the departments have free engineers with
expertise in relevant areas.
2:38:30 PM
ROGER HEALY, P.E., Director/Chief Engineer, Division of
Statewide Design & Engineering Services, Department of
Transportation & Public Facilities, paraphrased from the
following written remarks [original punctuation provided]:
The Department of Transportation & Public Facilities
is familiar with the challenges of containing the
waters and sediments of our rivers adjacent to our
transportation infrastructure. Whether it is flooding
of the Seward Airport or undermining of highway
embankments along the Haines or Glenn Highway, our
large braided glacial rivers have a high bed load of
sediment making the river hydrology unstable and
difficult to easily predict deposition areas and new
flow channels.
Our Department does not typically undertake upstream
or in-stream excavations adjacent to our bridges,
highways, or airports, but when we do so as a part of
our capital projects to protect new or expanded
infrastructure, the in-stream work is designed by
registered professional engineers specializing in
river hydrology.
Because our transportation infrastructure of highways,
airports, and bridges represent significant state
owned assets, the Department recommends to the
Committee that any in-stream work adjacent to or
upstream from the State's transportation or facility
infrastructure authorized through this proposed bill
be designed by professional engineers with relevant
experience. Our Department would encourage and
support coordination between the Department of Natural
Resources and our Department when removal of bedload
material is proposed near our transportation
infrastructure.
Thank you for the opportunity to testify, and if you
have any questions, I will be happy to answer them.
2:40:25 PM
MR. HEALY, in response to Representative P. Wilson, responded
that for work that is adjacent to highways and airports, DOT&PF
engineers will undoubtedly be involved in the review of the
plan. However, he pointed out that there is a liability
associated with the excavation. If there are associated impacts
to the excavation, then the operator should follow the guidance
of a professional engineer. Still, the department would have to
assess the impact of these projects because the engineers are
currently working on active projects. He pointed out that
doing the detailed discussion and analysis from a design
standpoint versus a review standpoint creates a different cost
impact to the department.
2:42:50 PM
REPRESENTATIVE P. WILSON noted that the state budget already
includes these [engineering] positions, and she opined that
DOT&PF shouldn't charge for this work.
2:43:23 PM
CO-CHAIR SEATON surmised that if these engineers will have to be
available throughout the state, then there will likely need to
be another position to implement this. Due to the legislature's
work in constraining the number of personnel in the state
departments, involving department staff could result in
significant delays of projects. He noted that the gravel
operators thought the 12.5 percent of profit was reasonable and
acceptable. In further response to Representative P. Wilson,
Co-Chair Seaton clarified that the aforementioned is covered in
the [gravel operators'] plan of development. Co-Chair Seaton
further clarified that the person performing the project would
have to pay for the design of the project and the engineer's
review of the project.
2:45:52 PM
REPRESENTATIVE P. WILSON opined that someone from the state must
oversee this anyway and review the project, and therefore she
questioned why the state's engineers wouldn't be the ones to
review the plan.
CO-CHAIR SEATON echoed Mr. Healy's comment that from an
engineering standpoint there is a difference between designing a
project and reviewing another engineer's design.
2:46:41 PM
REPRESENTATIVE GARDNER said that although these situations seem
to happen on an emergency basis, it would seem that one could
see the gravel building up. Therefore, removal of the gravel
could be arranged and sold prior to an emergency situation. She
opined that the language on page 1 of Version B would allow the
aforementioned. If that's the case, she inquired as to how the
cost would compare when it's not an emergency situation,
particularly in terms of the payment proposal in the
legislation.
CO-CHAIR SEATON clarified that this isn't thought of as an
emergency situation, rather it's a situation in which when
bedloading is known to occur flooding is known to occur.
Furthermore, at $3.50-$5.00 per cubic yard no one will come in
to remove the gravel and maintain the stream bed. Moreover,
river bed gravel is suboptimal. The purpose of HB 89 is to
create a situation in which a commercial operation can exist.
2:48:41 PM
REPRESENTATIVE MUNOZ asked whether DOT&PF would compete for this
gravel for its projects.
MR. HEALY explained that DOT&PF's gravel needs depend upon the
specific requirements of the project, and therefore some
projects would not be able to use river bed gravel. In general,
Mr. Healy said that DOT&PF probably wouldn't use river bed
gravel.
2:50:34 PM
REPRESENTATIVE P. WILSON removed her objection to Conceptual
Amendment 1.
There being no further objection, Conceptual Amendment 1 was
adopted.
2:50:59 PM
REPRESENTATIVE KAWASAKI noted that he has been working on
similar legislation in which royalty oil could be sold below the
fair market value. However, the legislation ran into problems
regarding selling an item below the fair market value due to the
Compton case. He inquired as to how the Compton case would
impact HB 89.
2:51:32 PM
DONALD BULLOCK, Attorney, Legislative Legal Counsel, Legislative
Legal and Research Services, Legislative Affairs Agency,
directed attention to Article 8, Section 1 of the Alaska State
Constitution, which read:
Statement of Policy.
It is the policy of the State to encourage the
settlement of its land and the development of its
resources by making them available for maximum use
consistent with the public interest.
MR. BULLOCK explained that HB 89 addresses a unique situation
with regard to a flood mitigation plan. Under the plan, it's
sometimes the case that gravel needs to be removed. There is a
benefit to the state for offering the gravel for sale at a
reduced price in order to encourage someone to remove the
gravel. The aforementioned would avoid the state having to pay
someone to remove the gravel in order to prevent flooding and
improve the area. Therefore, both sides would benefit.
2:52:50 PM
PHILLIP E. OATES, City Manager, began by relating his support
for CSHB 89, Version B. To illustrate support the City of
Seward has enacted a similar resolution for gravel that is owned
by the city. He thanked Co-Chair Seaton for coming to Seward to
examine the problem and develop a solution. He noted that the
city has had at the borough level comprehensive meetings with
DNR to address this issue. This issue is important because
gravel is uneconomic unless produced in large quantities and the
cost of transport often makes it uneconomic for commercial
purposes. Furthermore, the additional state charge for removing
gravel from streams makes it uneconomic. He opined that the
issue revolves around the state receiving value for its
resources. However, HB 89, he opined, adequately and fully
compensates the state in two ways. The legislation provides the
state a profit akin to what it receives for selling its other
resources and provides protection from flooding. Therefore, the
legislation prevents the state from having to assist after a
[flood] disaster happens. He opined that the legislation allows
communities/boroughs to remove the gravel at no cost to it,
allows the contractor to make a small profit, and provides
benefits to the state in terms of profit and flood prevention.
Mr. Oates then expressed the importance of validating [the plan]
through appropriate engineering as well as for it to be for
flood mitigation purposes. He opined that when the
aforementioned requirements are met it would be a win-win
situation.
2:56:21 PM
REPRESENTATIVE P. WILSON, referring to the definition of
"bedload material" on page 2, line 12 of the legislation, asked
if the definition of "bedload material" includes sand or
sediment.
CO-CHAIR SEATON answered yes.
2:56:46 PM
REPRESENTATIVE KAWASAKI related that he thought the legislation
dealt with displaced gravel after a flood. Is that the case, he
asked.
CO-CHAIR SEATON clarified that the legislation refers to
material that deposits over time when there isn't a flood. This
material builds up over time such that when there is a high
water event there is no streambed left and the bedload material
causes a flood.
2:57:41 PM
REPRESENTATIVE P. WILSON recalled the river braiding that looks
mostly to be sand, which occurs in the Tok area. She asked
whether the proposal in HB 89 would work in that situation.
CO-CHAIR SEATON reminded the committee that this legislation
would address areas where the commissioner has made the findings
that there is a flood mitigation plan.
2:58:46 PM
CO-CHAIR SEATON announced that HB 89 would be held over.