Legislature(1997 - 1998)

03/20/1998 01:48 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 144                                                             
"An Act authorizing the Department of Environmental                            
Conservation to charge certain fees relating to                                
registration of pesticides and broadcast chemicals; and                        
providing for an effective date."                                              
Co-Chair Therriault provided members with a proposed                           
committee substitute, work draft 0-LS0573\L, dated 3/18/98                     
(copy on file).                                                                
the legislation is not intended to be a solution for                           
everyone.  It attempts to address some of the serious                          
concerns about how statutes, under AS 44.46, can be                            
interpreted.  An attempt was made to include interested                        
parties in the discussions.  Concerns by the Department of                     
Environmental Conservation and industry were considered and                    
incorporated into the proposed committee substitute where                      
possible.  Changes incorporated by the proposed committee                      
substitute do not modify the intent.  The legislation allows                   
the Department of Environmental Conservation enough                            
authority to ensure that users of the system pay for the                       
actual direct costs of services being provided. The                            
legislation has built in safeguards to prevent abuses and                      
ensure that general governmental functions, which benefit                      
the State, are paid for by the state. Inquiries for                            
information and training of DEC staff are two examples where                   
the State benefits and should therefore carry the cost.                        
Mr. Tibbles reviewed the proposed committee substitute:                        
* Section 1 still requires that the Department establish                       
fixed fees for direct costs.  A technical change has                           
been made to make this section permissive and relocate                         
all references to restrictions and limitations to                              
another section of the bill.                                                   
* Section 1(a)(1) gives DEC the authority to charge for                        
other services relating to agriculture, animals, food,                         
drugs, cosmetics, and public accommodations and                                
Mr. Tibbles noted that Ms. Adair previously testified that                     
the language "other services" was originally attached to                       
these types of functions.  By removing this language, the                      
Department of Environmental Conservation's authority to                        
charge for many legitimate direct costs was inadvertently                      
removed.  This amendment was added to correct that                             
* Section 1(a)(3) adds authority for the Department of                         
Environmental Conservation to charge for "sanitary                             
surveys, determinations, classifications, and                                  
monitoring waivers".                                                           
* Section 2 (e) contains new language for the negotiated                       
agreements.  It requires the Department of                                     
Environmental Conservation, at the request of an                               
applicant, to negotiate a fee for service that is based                        
upon the actual hourly wage rate of the employees                              
performing the service.  In addition, it may include                           
travel and third party inquiries.                                              
Mr. Tibbles observed that this subsection is a result of                       
the realization that there are complex situations where a                      
fixed fee is not appropriate.  It is intended to provide                       
the Department with the flexibility to deal with those                         
complex situations while placing restrictions to limit the                     
charge to an appropriate level.                                                
* Subsection (f) increases the restricted use pesticide                        
fee from $25 to $30.                                                           
Mr. Tibbles noted that this change is in response to Ms.                       
Adair's concern that there may not be enough receipts to                       
cover the required state match for the pesticide program.                      
* Subsection (g) adds a new subsection clarifying that                         
the Department of Environmental Conservation may not                           
charge for conferring with or providing information to                         
third parties.                                                                 
? Subsection (h) permits the Department of Environmental                       
Conservation to charge an hourly rate for the solid                            
waste program and is set out to be repealed in the year                        
2000 by section 3 of the bill.                                                 
Mr. Tibbles explained that since the Department is currently                   
charging an hourly fee for the industrial solid waste                          
program, this change would authorize them to continue to do                    
so under the direct cost restrictions.  It also gives them                     
time to establish by regulation reasonable fixed fees and to                   
offer negotiated fee arrangements.                                             
* Subsection (i) adds a definition of "actual direct                           
costs" to the bill.  This subsection is intended to                            
place restrictions on what can and cannot be included                          
as part of the fixed fee.                                                      
In response to a question by Representative Kelly, Co-Chair                    
Therriault explained that subsection (g) clarifies that if                     
the Department spends time answering questions about an                        
application for a third person, the applicant will not be                      
automatically billed for the Department's time.  The                           
Department would be serving the public's interest.                             
Representative Davies asked if third party would exclude                       
consultants, engineers, hydrologists, or attorneys that are                    
representing the permittee.  Mr. Tibbles recounted that                        
conversations with the Alaska Legal Services indicated that                    
persons acting as an agent or a legal representative of a                      
permittee would be included as consideration of that                           
permittee or applicant; however, the language could be                         
changed to clarify the intent.                                                 
suggested that the proposed committee substitute be amended                    
to included a new section under AS 44.46.025(a)(7).                            
(7) Certification of federal permits or authorizations                         
under 33 U.S.C. 1341 (sec. 401 Clean Water Act)                                
provided there will be only one paid inspection per                            
year for items covered by this subsection;                                     
Mr. Borell noted that several miners have expressed concern                    
that if the Department of Environmental Conservation were to                   
charge per inspection, that this could be used by third                        
parties for harassment.  The Department of Environmental                       
Conservation follows-up on complaints regarding discharge                      
violations.  Without a limitation on the numbers of                            
inspections that could be charged against a miner, opponents                   
of mining could make spurious complaints.                                      
Representative Davies acknowledged the intent of proposed                      
subsection (7).  He questioned if complaints resulting in                      
violations should result in a charge.  Mr. Borell observed                     
that operators do all they can to correct violations.                          
Mr. Borell observed that meetings with the Department of                       
Environmental Conservation indicated that there was a $450                     
thousand dollar shortfall in the Division of Water's budget                    
that needed to be covered by fees.  Industry worked with the                   
Department on the concept of fees.  At the last meeting it                     
became clear that the Department was attempting to raise                       
$1.5 million dollars through fees.  At that time industry                      
brought the issue to the Legislature to define the                             
relationship between general fund and fees.                                    
Mr. Borell referred to language deleted on page 1, line 10,                    
"and other services provided by the department."  He                           
maintained that this would have allowed the agency to charge                   
for anything, anytime.                                                         
DEPARTMENT OF ENVIRONMENTAL CONSERVATION commended the work                    
by Mike Tibbles, staff, Representative Therriault.                             
Ms. Adair reviewed remaining areas of concern.                                 
1. Training is limited to permittees and applicants.                           
Ms. Adair observed that most of the training is not for                        
permittees or applicants.  Most of the training is for waste                   
water and water system operators or installers.  In                            
addition, training of food service employees, pool spa                         
operators and sanitary surveyors would not be covered.                         
2. Fees are limited to activities surrounding (a)(2), (6)                      
and (7):                                                                       
- certifications;                                                              
- inspections;                                                                 
- training;                                                                    
- permit preparations and administration; and                                  
- plan review and approval.                                                    
Ms. Adair pointed out that registering pesticides allowed                      
under (a)(8) does not involve any of the above activities.                     
3. (g) Does not allow the Department to charge a fee for                       
conferring with 3rd parties.                                                   
Ms. Adair did not interpret the language in subsection (g)                     
in the same manner as Mr. Tibbles.  She asked for further                      
clarification that agents of the applicant are not included                    
under (g).  She pointed out that statutes require that                         
certain permits be publicly noticed.  She observed that                        
these notices have been charged to the applicants.                             
4. Actual Direct Cost                                                          
Ms. Adair observed that "actual direct cost" refers to the                     
actual hourly rate of employees directly engaged in                            
providing the service.  The Department currently establishes                   
a flat fee for most of their programs.  Annual costs of the                    
employees involved in the activity are added.  This is                         
divided by the number of works each employee provides per                      
year to determine an hourly rate for each employee.  She                       
stated that it would be difficult to determine the actual                      
cost of the employees involved.  Employees in the same job                     
class are paid different amounts due to longevity.  She                        
observed that the newest employee would be the cheapest.                       
She expressed concern with the exclusion of support staff.                     
She stressed that clerical staff is involved in permit                         
preparations.  Flat fees include a factor for clerical                         
services.  She observed that seafood inspections include 15                    
minutes of clerical staff for every hour of technical staff.                   
There is approximately 30 minutes of clerical support for                      
every hour of technical staff for the solid waste program.                     
Ms. Adair noted that some employees included in the flat                       
rate are responsible for supervising other employees.  She                     
observed that her involvement is not charged.                                  
Ms. Adair maintained that actual direct cost would affect                      
local governmental involvement.  She stressed that local                       
governments are waiting for fees to cover the cost of                          
programs.  If fees do not cover costs it will be difficult                     
to get local governments to take on certain programs that                      
they could better administer.                                                  
Ms. Adair noted that federal and state laws require sanitary                   
surveys.  There are areas that where private surveys are not                   
5. Employee Training                                                           
Ms. Adair emphasized that a well-trained employee saves                        
private companies money.  Untrained state employees are at a                   
disadvantage when negotiating with well-trained industry                       
representatives.  She maintained that the public interest is                   
not served when state employees are not well trained.                          
6. Ban on Hourly fees                                                          
Ms. Adair acknowledged that the ban does not apply to the                      
Air Program.  She observed that the Solid Waste Program has                    
an hourly fee structure.  Other flat rate programs have                        
hourly fees.  After hour inspections are offered to meat                       
processing plants for an hourly fee.  Hourly inspections are                   
only done at the request of the processor.  Applications,                      
which are withdrawn during the review process, are charged                     
an hourly rate for work completed.                                             
7. Low Pesticide Levels                                                        
Ms. Adair maintained that pesticide levels are too low.  She                   
observed that 2,000 to 3,000 pesticides are sold in the                        
state of Alaska.  The Department of Environmental                              
Conservation estimated that 95 percent are unrestricted use                    
pesticides.  Based on this amount the Department estimates                     
that it will be $15.5 thousand dollars short of what is                        
needed to run the program.  She spoke in support of                            
retaining the Department's ability to set registration fees                    
by regulations.                                                                
Representative Davies questioned if users could initiate                       
hourly fees.  Ms. Adair noted that after hour inspections                      
are currently at the request of processors.  The Department                    
also initiates hourly fees when applications are withdrawn                     
during the review process.  She suggested that hourly fees                     
be excluded for water permits only.                                            
In response to a question by Representative Kohring, Ms.                       
Adair explained that the Environmental Protection Agency                       
registers pesticides based on the chemical makeup of the                       
pesticide product.  The Department of Environmental                            
Conservation registers pesticides used in the State.  The                      
primary reason pesticides are registered is for the issuance                   
of monitoring waivers for drinking water systems.  If a                        
pesticide has not been used in the State, public water                         
systems can be issued monitoring water waivers for that                        
COUNCIL, (RDC) ANCHORAGE spoke in support of HB 28. He                         
thanked the sponsor and staff for their work on HB 28.   He                    
observed that RDC supports fixed costs and cooperative                         
funding agreements.  He spoke in support of fixed fees.  He                    
maintained that standardized fees should be established for                    
the most common permits.  He proposed an aggressive general                    
permits program.  Mr. Freeman also provided the Committee                      
with further written remarks (Copy on file.)                                   
JUNEAU expressed frustration with various aspects of the                       
permitting system.  He expressed concern that the goal of                      
the permitting system is to raise money, not to serve the                      
public.  He observed that the permitting agency has a                          
monopoly.  He asserted that built in protections should                        
exist.  He spoke in support of a general permit for routine                    
classes of activities.  He maintained that permittees should                   
be charged for actual direct costs.  He stressed that                          
permittees should not be burdened with a lot of indirect or                    
agency overhead costs.                                                         
Mr. Harris observed that the legislation limits fees to the                    
actual direct costs and allows flexibility.  He acknowledged                   
the need for fees, but emphasized the need for protections                     
to keep the system in control.                                                 
Representative Davies suggested that the clearest way to                       
charge actual direct costs would be through hourly fees.                       
In response to a question by Representative Davies, Mr.                        
Harris emphasized that agencies perform public services.  He                   
stressed that agencies should help pay for overhead costs.                     
He proposed that actual employee time spent on a project                       
should be charged to the applicant.  Lights, power and other                   
overhead and administrative costs should be paid by the                        
agency.  The cost of employees directly engaged in providing                   
the service should be charged.  He felt that clerical staff                    
working directly on permits should be included.  General                       
support staff in the Department, such as the commissioner's                    
administrative assistant, should not be included.  He                          
maintained that broader overall costs are the role of the                      
HB 144 was HELD in Committee for further consideration.                        
(Tape Change, HFC 98 -72, Side 2)                                              

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