02/08/2024 01:30 PM House FINANCE

HOUSE BILL NO. 178                                                                                                            
                                                                                                                                
     "An Act relating to village safe water and hygienic                                                                        
     sewage disposal facilities."                                                                                               
                                                                                                                                
2:35:12 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster  referenced a letter from  the Department of                                                                    
Environmental Conservation (DEC) Village Safe  Water Program                                                                    
(VSW) (copy  on file)  regarding the  change to  the scoring                                                                    
system, which was the main provision in the bill.                                                                               
                                                                                                                                
GENE  MCCABE, DIRECTOR,  DIVISION  OF  WATER, DEPARTMENT  OF                                                                    
ENVIRONMENTAL  CONSERVATION,  voiced   that  VSW  heard  the                                                                    
request from  the legislature and starting  with the current                                                                    
funding cycle DEC  had eliminated the use  of Operations and                                                                    
Maintenance Best  Practices (O&M Best Practices)  scores for                                                                    
eligibility  criteria   for  VSW  funding.  The   issues  of                                                                    
capacity and  sustainability would  be discussed as  part of                                                                    
project  development   as  the  process  moved   along.  The                                                                    
management practice  scores would  be reviewed if  they were                                                                    
voluntarily submitted as part  of the evaluation process but                                                                    
would not be a perceived barrier.                                                                                               
                                                                                                                                
2:36:48 PM                                                                                                                    
                                                                                                                                
Representative Hannan noted that she  did not have a copy of                                                                    
the letter.                                                                                                                     
                                                                                                                                
2:37:34 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:42:25 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Foster  indicated that  the committee  received the                                                                    
letter and  had it  in their  possession. He  recounted that                                                                    
the  impetus  for   the  bill  was  in   response  to  small                                                                    
communities around the  state without water and  sewer or in                                                                    
need   of  upgrades   and   concerns   shared  by   entities                                                                    
representing the  communities like  the Alaska  Health Board                                                                    
and the Alaska Native  Tribal Health Consortium (ANTHC). Due                                                                    
to the  cost of developing the  infrastructure, capacity was                                                                    
an issue. If  there was no one to maintain  it would develop                                                                    
into  a larger  issue over  time, which  was the  motivation                                                                    
behind  the scoring  system. However,  scoring was  an issue                                                                    
for small communities that lacked  capacity but needed water                                                                    
and sewer  systems the most; some  communities lacked modern                                                                    
water  and sewer  systems for  many years.  He characterized                                                                    
the  issue as  a Catch  22. He  remarked on  the frustration                                                                    
over the slow  progress on developing rural  water and sewer                                                                    
systems. He  believed that the systems  should be supported.                                                                    
He  voiced  that the  bill  was  one  way  to speed  up  the                                                                    
progress  and figure  out the  problems later.  He read  the                                                                    
email  from  DEC's  Office  of  the  Commissioner  that  was                                                                    
attached to the letter:                                                                                                         
                                                                                                                                
     Good morning,                                                                                                              
                                                                                                                                
     DEC  has heard  the concerns  expressed by  communities                                                                    
     and   partners   regarding    the   implementation   of                                                                    
     Operations  and Maintenance  Best  Practices (O&M  Best                                                                    
     Practices)  assessment  tool  for  Capital  Improvement                                                                    
     Project (CIP) funding  eligibility. To more effectively                                                                    
     meet  the needs  of communities,  collaborate with  our                                                                    
     partners, and  ensure the efficient  and timely  use of                                                                    
     the available  funds, DEC will  no longer use  O&M Best                                                                    
     Practices  as  an  eligibility  criteria  for  VSW  CIP                                                                    
     funding.                                                                                                                   
                                                                                                                                
     Below you will  find an email that will  be shared with                                                                    
     Stakeholders  shortly   regarding  VSW   Best  Practice                                                                    
     scoring. Please let me know if you have any questions.                                                                     
                                                                                                                                
     Thank you and have a great day.                                                                                            
                                                                                                                                
Co-Chair Foster wanted to ensure  that the letter was on the                                                                    
record  since   the  bill  had  been   introduced,  but  the                                                                    
situation appeared  to be resolved. He  asked the department                                                                    
to explain how it will proceed without the scoring system.                                                                      
                                                                                                                                
2:46:59 PM                                                                                                                    
                                                                                                                                
CARRIE  BOHAN,  FACILITIES  PROGRAM MANAGER,  DEPARTMENT  OF                                                                    
ENVIRONMENTAL   CONSERVATION,  noted   that   DEC  was   not                                                                    
eliminating  the  best  practices tool  altogether  but  was                                                                    
removing the score as a  criterion for funding. She believed                                                                    
that it was an important tool  and the partners at the Rural                                                                    
Utility  Business Advisor  agreed. She  delineated that  the                                                                    
department needed  a way to  gauge how the  communities were                                                                    
performing  in  the  financial,  managerial,  and  technical                                                                    
categories  to  determine  how   to  allocate  resources  to                                                                    
provide the proper support. The  department had programs and                                                                    
worked collaboratively  with programs  in the  Department of                                                                    
Commerce,  Community and  Economic  Development (DCCED)  and                                                                    
outside technical agencies that  received federal funding to                                                                    
provide  support in  the ongoing  effort to  build capacity.                                                                    
She   indicated  that   communities   may   choose  not   to                                                                    
participate in  the opportunity  to use  the tool.  The best                                                                    
practices  tool would  be  used as  a  component of  project                                                                    
scoring but  the bulk of the  score was based on  the health                                                                    
impact of the project.  Unserved and underserved communities                                                                    
received  additional points  in  acknowledgement that  their                                                                    
need was crucial. She hoped  that the perception of the tool                                                                    
would change overtime  and become viewed as  a resource. The                                                                    
division  would continue  to assess  the  metrics for  their                                                                    
effectiveness.  She wanted  to  move the  tool  away from  a                                                                    
measure  of  eligibility to  a  resource  available to  help                                                                    
communities.                                                                                                                    
                                                                                                                                
Co-Chair Foster  surmised that  there was  a gray  area; the                                                                    
tool was not being eliminated but  would not be a barrier to                                                                    
funding or less so.                                                                                                             
                                                                                                                                
Representative Hannan  wanted to  know who wrote  the letter                                                                    
since there  was no signature.  Ms. Bohan answered  that she                                                                    
crafted the letter that was  sent to stakeholders via email.                                                                    
She followed  with a  mailed letter  to all  the communities                                                                    
eligible for  Village Safe Water (VSW)  funding and informed                                                                    
them  of  the  changes  in  the way  the  program  would  be                                                                    
administered.                                                                                                                   
                                                                                                                                
2:50:56 PM                                                                                                                    
                                                                                                                                
Co-Chair  Foster  felt that  VSW  was  moving in  the  right                                                                    
direction. The  outcome would become more  measurable moving                                                                    
forward. He appreciated VSW's work on the issue.                                                                                
                                                                                                                                
Co-Chair  Edgmon  thanked DEC  for  moving  forward with  an                                                                    
alternative method.  He related that the  tool was effective                                                                    
when  there was  not  significant funding  for the  program.                                                                    
However,  with  the  current  influx  of  funding  over  the                                                                    
current  and  prior  fiscal year  totaling  roughly  half  a                                                                    
billion dollars  for water and sewer  facilities, a solution                                                                    
that was  not prohibitive for small  communities that lacked                                                                    
the operational  capabilities to maintain its  utilities was                                                                    
warranted. He  personally thanked  Ms. Bohan for  taking the                                                                    
lead on  the issue.  He stated  that "the  devil was  in the                                                                    
details" and he wanted  the results monitored. He emphasized                                                                    
it  was  imperative  that small  communities  in  need  must                                                                    
receive the funding.  He hoped the effort was a  step in the                                                                    
right  direction.  He  wanted  to  avoid  a  situation  that                                                                    
happened in  Bethel in  the prior year  where a  $19 million                                                                    
project was halted because the  community was unable to meet                                                                    
a  certain   criterion  in   a  very   prescriptive  scoring                                                                    
mechanism.  He  offered  that he  would  be  monitoring  the                                                                    
results closely.                                                                                                                
                                                                                                                                
Representative  Cronk voiced  that he  had many  communities                                                                    
served by VSW and thanked  the department for addressing the                                                                    
issue.                                                                                                                          
                                                                                                                                
2:53:40 PM                                                                                                                    
                                                                                                                                
Co-Chair  Foster   noted  the   bill  would  be   set  aside                                                                    
indefinitely.                                                                                                                   
                                                                                                                                
HB 178 was HEARD and HELD for further consideration.                                                                            
                                                                                                                                
2:53:45 PM