Legislature(2001 - 2002)
02/22/2002 01:13 PM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 392-WATER RIGHTS AMENDMENTS Number 2484 CO-CHAIR MASEK announced that the next order of business would be HOUSE BILL NO. 392, "An Act relating to the use and appropriation of water." Number 2528 PETE FELLMAN, Staff to Representative John Harris, Alaska State Legislature, presented HB 392 on behalf of Representative Harris, sponsor. He noted that previous legislation, HB 185 and SB 139, had generated a lot of discussion in Districts 35 and 36; there were many questions and thoughts from landowners, farmers, small rural villages, and water users. He said HB 392 is an effort to address some of those questions; it will also help determine how the Division of Mining, Land and Water is going to serve Alaskans' needs. For example, HB 392 attempts to address questions such as why there is an annual fee charged when there is no change in the water permit; he said [the annual fee] seems to be a way to generate money or create jobs. MR. FELLMAN mentioned [that the bill] creates a priority second to domestic [water] use for agriculture. He said agriculture is the foundation of all economies, without which there is no food. Referring to the terrorist attacks of September 11, 2001, he suggested Alaska would have three days' worth of food [if shipping ceased]. He remarked that giving a water preference to farmers is similar to an insurance policy. Number 2726 MR. FELLMAN said farmers bear the expense of creating the system to extract water. Some changes made last year allowed farmers to use water but provided no guarantees of [long-term water use]. He talked about farmers acquiring loans for irrigation systems and the difficulties of not having a secure source of water. He indicated the bill is a way to open discussion and provide [security for] farmers making the investment in Alaska. He discussed making it easier to renew temporary water permits. He gave an example of a farmer who had applied for a temporary water permit in May but wasn't issued a permit until October; consequently, he was unable to irrigate [because he missed the deadline]. He mentioned that if an application is filed and there is no response from the department in 30 days, then the applicant would have the right to use the water. Number 2816 MR. FELLMAN noted that the definition of "significant amount of water" is left to the department to determine. He said irrigation requires a significant amount of water for 30 days; however, on an annual basis this would amount to less water than would be used if water were used on a daily basis. He remarked that he thought there should be some clarification of what "significant use" is. He said "our" effort was a good one - a million gallons a day for 100 consecutive days. To irrigate 40 acres would require about 87,000 gallons of water per acre in a 30-day period; this would amount to an annual use of just over 3 million gallons of water, he said. He mentioned that using 5,000 gallons a day would amount to 2 million gallons of water annually. Although the water use is significant for 30 days, it is comparable to other uses over the long term. Number 2867 CO-CHAIR MASEK referred to Section 4 [page 3], proposed subsection (j). She asked about the current process. MR. FELLMAN indicated he thought it was currently in statute. He said the [subsection] was added so the [permits] could be reauthorized easily at the end of a certain period. CO-CHAIR MASEK asked if [reauthorization] would require going through the provisions again. MR. FELLMAN said not if all of the circumstances were still relevant to the application. Number 2920 REPRESENTATIVE FATE asked how [HB 392] would affect water usage in the mining industry. He said there are two types of mining that both require large amounts of water. MR. FELLMAN said he thought mining used pass-through water. If it is not used, then it doesn't go anywhere; it's used and diverted. He indicated a farmer would have priority over a miner with regard to water rights if there were a lack of water. He indicated he didn't think it was very likely to have farming and mining in the same area, however. Number 2963 REPRESENTATIVE FATE said he did [know of areas likely to have both farming and mining in close proximity]. He said strict state and federal laws regulate the usage of water in the mining industry; he indicated those laws may counter provisions in the bill. Not all water used in mining is pass-through water, he said. A certain percentage doesn't go back into the stream; the water put back into the source is usually as clean or cleaner than the water taken out, he offered. He mentioned that there might be problems related to impounding dams. TAPE 02-9, SIDE B Number 2990 REPRESENTATIVE FATE indicated the bill might curtail the amount of water that miners can use. Miners do get water permits, he remarked. He reiterated his question about whether [the bill] would cause a conflict. Number 2976 MR. FELLMAN indicated he would be willing to work to bring the mining industry, the oil industry, and agriculture underneath the same "umbrella." He said he thought development of natural resources and use of water were primary to the state's income and future. Mr. Fellman told Representative Fate he would be willing to meet with his staff to discuss the language and make improvements. REPRESENTATIVE FATE indicated improving the language would help resolve any conflict the bill might have with the mining industry. MR. FELLMAN agreed. Number 2942 REPRESENTATIVE KERTTULA noted a possible conflict because her father is a farmer. Number 2901 PHIL KASPARI testified via teleconference. He told the committee that he is a local producer in Delta Junction. He said he appreciates the way the bill was written with the farmer's interests in mind. Farmers do bear some tremendous costs in gearing up for their operation. Farming is a long- range investment, and not having any security regarding the ability to use water from year to year makes decisions difficult, he concluded. Number 2844 JAN KONIGSBERG, Trout Unlimited, testified via teleconference on behalf of the Alaska Public Water Coalition. He said the coalition is concerned about the executive actions, legislative, and regulatory initiatives affecting Alaska's water resources that would further special interests at the expense of the public interest. In terms of HB 392, he said the coalition would oppose any amendments to the [Alaska] Water Use Act that would establish specific preferences among different water users. He referred to Article VIII, Section 13, of the Alaska constitution, which he said establishes public supply as the only preferred use, subject to the reservation of water for fish and wildlife; granting a preferred-use status for any other use requires just compensation under Article XVI, Section 13. MR. KONIGSBERG said HB 392 is a bad bill; Sections 1 and 4, when read together, would decrease funding for water management but e allow for default approvals of temporary water use permits. He said those temporary water use permits would now be good for ten years. He remarked that the coalition supports temporary water use permits for truly temporary water uses not to exceed a year; the only protection that any water user gets for the long term would require permanence. He mentioned financial and water rights. MR. KONIGSBERG indicated he didn't understand how a temporary water use permit would increase the viability of an industrial application in terms of going to financial funding sources. Furthermore, Section 5 defines "significant amount of water" in a way that excludes almost all ice-road permits and temporary uses of water, thereby removing the permits from any kind of scrutiny at all. He mentioned "weak scrutiny" and amending [HB] 185. He said ice road construction usually stretches from November to early April; the "100 days in the calendar year" requirement means that the days between November and December will not be added to the days from January to April. He suggested this is an absurd way to calculate significant amounts of waters. Additionally, amounts smaller than 1 million gallons of water a day for 100 days could still be a vast amount of water. Furthermore, the coalition believes it should be reviewed, he told members. Number 2673 RUSS BOWDRE testified via teleconference. He told the committee he was a farmer and a rancher, and thought [HB 392] was an excellent bill. He said the bill [helps] to secure [farmers'] needs for water in the future. He indicated he thought the creators of the bill had taken everybody's needs into consideration. He indicated he was in support of HB 392. Number 2627 ART GRISWOLD testified via teleconference. He told the committee he was involved in agriculture and had been involved in mining in the past. He said he thought [HB 392] was a great bill. He said agriculture is [necessary]. In addition, money has been going outside of Alaska to buy food for years, when food could be produced in Alaska. Agriculture demands water, he pointed out. He said the situation is [intolerable] because farming in Alaska is a tight-budget [business]. Protections need to be developed if Alaska is ever going to become an independent state as far as agriculture, and so that [Alaska] has the safety of producing its own food. He said he disagreed with Representative Fate because gold isn't a nonrenewable resource, whereas agriculture is. Number 2550 BOB LOEFFLER, Director, Division of Mining, Land and Water, Department of Natural Resources (DNR), testified via teleconference. He told the committee that he thought the bill had significant problems. He said would explain how each section would affect the [water rights and temporary water use] program. He referred to Section 1, which he said eliminates DNR's administrative service fee. He explained that DNR would rather not bill people, but that [section] would [result in] a cost of approximately $130,000 in general funds to maintain the program. MR. LOEFFLER noted that Section 2 gives preference for agricultural use, which he said would have no effect most of the time; however, it would have an effect when there isn't sufficient water for agricultural use. He said if there are a number of unadjudicated applications, then preference would be given to agriculture first. He said DNR opposes a preference to specific uses; moreover, he said he didn't believe it was justified or good public policy. Agriculture has not had a problem with having water rights denied, he suggested. He mentioned that there is not a record of denied water rights and there is not a problem that [HB 392] would be needed as a solution for, although it could create a problem. He mentioned situations that involve single-family dwellings, or an existing community and a lot of unadjudicated water rights filed, or a backlog, for example. Number 2454 MR. LOEFFLER referred to Section 3 and said he didn't think allowing temporary water use permits to be renewed for an additional five years was justified. Temporary water use permits should be for things that are temporary, he remarked. He indicated that public comment has suggested there would be a potential for abuse, and if there is facility that is expected to go on for more than five years, then it should get a water right. He indicated he agreed with public comment. He mentioned that in the event that a temporary water right permit needs to be renewed and conditions haven't changed, there would not be a problem in obtaining a second permit. He reiterated that in general, he didn't see a need to renew temporary water use permits. MR. LOEFFLER specified that Sections 1 and 5 are problematic because temporary water use permits would be issued if DNR does not act to deny the permit in 30 days. For example, in an unusual case where an ACMP [Alaska Coastal Management Program] review is required, the review would take more than 30 days. In the instance that the ACMP review is required, despite what DNR does or what the application is, the [permit] would be automatically issued, he said. Similarly, DNR does occasionally issue public notice for temporary water use applications, in which case it would take more than 30 days. Number 2381 MR. LOEFFLER said [HB 392] would eliminate DNR's ability to give public notice when it is justified. In general, even though DNR does have a backlog regarding temporary water rights, the department is very good at getting temporary water use permits out when an applicant needs it. He said he didn't think that the facts justify Section 4. In addition, Section 5 is very problematic; it defines a significant amount of water to be a million gallons for 100 consecutive days; however, this would essentially eliminate the need for anyone to get a permit anywhere. He suggested that almost all uses throughout the state would be able to use a million gallons for less than 100 consecutive days. Mr. Loeffler gave an example of how the "significant amount of water" provision could be subject to abuse. He said he could think of almost no use in the entire state that would require a water right or temporary water use permit. This section would eliminate the protection that the review process has for Alaska's fisheries and wildlife; furthermore, prior appropriators no longer would have the protection of the program, he said. NUMBER 2302 MR. LOEFFLER suggested the best protection for farmers and others [involved in agriculture] is a water-management program that functions. As a result of the work put together last year and the funding work - especially the fee mechanism - DNR has committed, by the end of the fiscal year, that all typical new water rights will be processed within 60 days and that a typical water use permit will be processed within 20 days - a level of service that gives agriculture and other industries the surety they require. Getting to that point will solve the problems people have identified and will provide what Alaskan's need; however, this bill will not do so, he concluded. Number 2203 CO-CHAIR SCALZI asked Mr. Loeffler if discontinuing annual record maintenance could save any money. MR. LOEFFLER said it takes time for DNR to put out the fee and answer questions and complaints; [discontinuing annual record maintenance] would result in a savings of $5,000 to $6,000. CO-CHAIR SCALZI asked him if he meant $5,000 to $6,000 [in savings] versus $130,000 in revenue. MR. LOEFFLER said yes. Number 2162 CO-CHAIR SCALZI referred to Section 2. He asked Mr. Loeffler what other preference [agriculture] would have, besides the one over the mining industry. MR. LOEFFLER said everything. Under this bill, agriculture would have preference over the following uses: residential [this was later corrected by reference to Section 2], seafood processing, "hydro," oil, gas, lumber, forestry, in-stream flow, road construction, and so forth, he remarked. CO-CHAIR SCALZI mentioned last year's request from DNR for an additional $400,000 to address the backlog for water rights. He asked Mr. Loeffler if DNR had received that money and if the program has been accelerated for the logbook renewal. MR. LOEFFLER said last year DNR received $300,000 more in general funds. Over the next two years, DNR will receive less in general funds as it raises more money in fees, he explained. This year, DNR's budget proposes a decrement of $84,000; next year will be a similar amount. He said DNR will be raising that much more in fees; the result will be that DNR will be at the service levels [previously mentioned]. CO-CHAIR SCALZI asked Mr. Loeffler if DNR's backlog will be caught up by the end of the year. MR. LOEFFLER said with the exception of in-stream flow applications, the backlog will be caught up in five years. Number 2034 REPRESENTATIVE KERTTULA asked Mr. Loeffler what the average amount of time was to process a temporary water use permit. MR. LOEFFLER said DNR had made an effort over the last few years to process temporary water use permits so that the permitting is kept current. If the permit is complex - as many of the North Slope permits are - DNR works with the applicant for a couple of months before he or she applies. The permitting can take from a few days to a month, depending on the complexity of the issues. He mentioned that in extreme cases, DNR can process permits in two to three days, as long as DNR and the Alaska Department of Fish & Game (ADF&G) are convinced there won't be any significant impacts. He summarized that [permitting] is widely variable but relatively quick. He said DNR had promised a performance measure of a typical [permit's being processed] within 20 days in the future, but that's not too far from what happens now. Number 1936 REPRESENTATIVE KERTTULA asked MR. Loeffler what the five-year backlog is. MR. LOEFFLER said the backlog is water rights. He clarified that there is no backlog for temporary water use permits. Number 1911 CO-CHAIR SCALZI asked Mr. Loeffler how the new regulations that were adopted last year will affect the backlog. MR. LOEFFLER said DNR didn't adopt new regulations last year, but it did receive the money to fund the existing system. He said DNR hired new personnel, which will help address the backlog. New regulations were proposed to help streamline the system; however, those regulations have not gone into effect. CO-CHAIR SCALZI asked Mr. Loeffler if DNR had gained anything in hiring five new personnel. MR. LOEFFLER said the new personnel had been hired recently. He said it wasn't until around late December that DNR acquired four out of the five personnel. He said he is convinced that DNR is in the process of accelerating so it can stay current and address the backlog; furthermore, this is the transition year to hire and train people. He indicated that half of those new personnel will keep applications current and the others will address the backlog. He reiterated that he expects the backlog to be current in five years. Number 1869 CO-CHAIR SCALZI asked Mr. Loeffler to explain the proposed regulations and how they will help the process. MR. LOEFFLER said the proposed regulations were to provide a streamlined method of processing small water rights [without] full adjudication. The current system does not require a single-family dwelling or less to apply for a water right. A well can be drilled; the water right is optional, he explained. The larger water rights would require full adjudication; DNR proposed a three-tier system, he said. The middle group [of water-rights applicants] would require an inquiry with ADF&G and the Department of Environmental Conservation (DEC). If there were no issues, then the applicant would be given an authorization to proceed. Public notice would not be required, he said. He mentioned that there are a number of comments that need to be reviewed before DNR can proceed. Number 1691 CO-CHAIR MASEK referred to Mr. Loeffler's earlier testimony and pointed out that [Section 2 of the bill], page 2, lines 24-29, read in part: When there are competing applications for water from the same source, and the source is insufficient to supply all applicants, the commissioner shall give preference first to public water supply including domestic water uses, second to agriculture and irrigation, and third [Then] to the use that alone or in combination with other foreseeable uses will constitute the most beneficial use. MR. LOEFFLER apologized for the error. He specified that his previous testimony that agriculture would be given preference to the domestic water supply was incorrect. Number 1597 CO-CHAIR MASEK noted that Mr. Loeffler had testified that there might be abuse of the water rights in regard to the agricultural user group. She referred to Section 5, subsection (10), which read: "significant amount of water" means the use of one million or more gallons of water a day for 100 consecutive days in a calendar year. CO-CHAIR MASEK asked Mr. Loeffler what the current amount of a significant amount of water is. MR. LOEFFLER said the current definition, in regulation, is 500 gallons day or 5,000 in a single day, or 30,000 of nonconsumptive use. CO-CHAIR MASEK mentioned percentage users and the proposed regulation that would allow temporary water use for an applicant unless the commissioner takes action to deny it. MR. LOEFFLER said DNR had not had that situation occur. He reiterated that DNR has been current on processing temporary water use permit applications. He said he didn't believe DNR had taken several weeks to process applications in situations of immediate need. He said that would occur in situations involving a significant issue that needed to be resolved to ensure that fish and wildlife are protected. Number 1467 CO-CHAIR MASEK asked how the proposed regulations define significant use and what the difference is between existing regulations and proposed regulations. MR. LOEFFLER mentioned the current proposed regulations and said, "The significant amount of water is ... the amount at which you have to apply, which is 500 gallons a day or 5,000 [gallons] in a single day." He said DNR keeps that as an application threshold but puts a second threshold in which, after a quick review, DNR determines that it is not a significant amount of water. The regulations give DNR the power to make that choice: up to 5,000 gallons a day from a anadromous fish stream or 50,000 from groundwater or a nonanadromous fish stream. He said DNR would only [raise the amount of water] after a review by DNR, ADF&G, and DEC, if they chose to review it. Number 1364 REPRESENTATIVE STEVENS asked Mr. Loeffler if Section 2 would take preference over endangered species. MR. LOEFFLER said DNR does not administer the Endangered Species Act; there is nothing DNR could do that would allow people to endanger an endangered species. He said DNR could give agriculture preference to anadromous fish under this [bill], however, if there were not enough water for both. CO-CHAIR MASEK asked Mr. Loeffler if DNR consults with ADF&G during the review process or if [DNR] has to get permission from ADF&G. MR. LOEFFLER said the law requires DNR to consult with ADF&G in all cases; however, it doesn't require ADF&G's concurrence or the need to wait for ADF&G's permission. CO-CHAIR MASEK indicated that HB 392 would be held for further consideration.
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