Legislature(2001 - 2002)
04/04/2001 03:40 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 139-STATE WATER USE CHAIRMAN TORGERSON announced SB 139 to be up for consideration. MR. BOB LOEFFLER, Director, Division of Mining, Land and Water, Department of Natural Resources (DNR), said he wanted to first describe the problem this bill solves and then go through what the bill does and explain how it's one part of the solution. He told members: In order to withdraw a significant amount of water from the state, you need a water right if it's a permanent withdrawal and a temporary water use authorization if it's temporary for five years. The basic problem we have is right now the system is broken. We cannot issue the water rights that people request. We don't provide the services that Alaskans need. At the peak, this program had $1.6 million in the program and 39 full-time people. Two years ago it was down to $325,000 and four people and quite frankly that's not enough to run the program that we have now - a program that maintains 21,000 water rights files, receives 250 applications for water rights and 150 applications for temporary water use permits. The consequences of those four people not being able to run the system is a backlog. We now have a backlog of 600 - 700 water right applications and a total of 3,000 actions - transfer, extensions and things like that. The consequences of that backlog are threefold: people call me up and say, 'When am I going to get my water right?' and I have to say, 'Well, given our back log, it's going to be two to three years.' And then they say, 'I can't do my development for two to three years? If I withdraw water, I'm going to break the law for two to three years?' That's not the way government should be run and that's not a service that I'm proud to provide. The second consequence is because of a staff that's trying to do things with shortcuts, we're targeted for litigation and we almost lost a year of exploration at NorthStar. The third consequence, of course, is that people go ahead and withdraw water without a permit. Often, that probably does very little harm to the resource. Occasionally, it does risk a resource. That's the problem we need to solve. It's a problem of a group that cannot run the program that we have today. It's not a problem created by a particular legislature or administration. We have had declining budgets for 20 years. This bill is one part of a three-part solution. I would like to describe again those three parts so you can see how the bill fits in and then I would like to go to what the bill does. The three parts of the solution we envision are first, we cannot continue to administer a program designed in the early 80s with budgets for this millennium. So we need to find a way to do more with less and perhaps to provide less service for less money, which will run the program on a smaller budget. To that end we're proposing regulations in the next two to three weeks that should significantly streamline the program and allow those water withdrawals that are least likely to affect the environment or other users go much quicker. We think 65 percent of our caseload will fall into that category. The second is even a streamlined program needs more than four people to run it. So to that end there is an increment in this year's budget for an additional $300,000 to both run the program and in four or five years rid us of the backlog. The performance measures I put down for that increment was that we would do a typical water right within 60 days and a typical temporary water use permit within about 15 days. The third part - streamline program - more money, is this bill does two things. The first thing it does is try to provide a long term income source to fund the program. I'm easy. Any way we get the money, we'll take it to run the program to provide the services that I think Alaskans need. But this bill tries to provide a long-term income source to do that and it does that through recommending water use fees. When you get a water right, it's a right forever. You never need to touch it again. This scale would assess a sliding scale water use fee. I've been shopping that around and I'd like to tell you the reactions I get from people about that. But first let me tell you what the second part of the bill does. Our temporary water use program, which we use for temporary water uses, has been the subject of a significant amount of litigation on the North Slope. It is a program that was implied by statute, but created in regulations. This bill would, in fact, provide explicit legislative authority for how the program has been working for 20 years. Some validated permits have been called into question by some of the North Slope rulings. So that's what the bill does. It does two things, a long-term income source for the program and explicit legislative authorization for a temporary water use fee program. It does not change how we run the water use program. Number 1500 MR. LOEFFLER said he produced a proposed amendment as the result of the reactions he received after showing this around in the mining community, the agriculture community, the Alaska Water Resources Association, the Resource Development Council and environmental groups. The groups came to the consensus that this is a problem. The state is not providing services that people demand and the problem needs to be fixed. He said: With respect to charging it through temporary water use fees, although there was some agreement, that is, an annual fee on your property right, the reaction ranged from reluctant approval to disgust to outright hostility. In a sense, people were saying, 'You have a problem, but this is a silly way to fix it.' What they were suggesting was a number of things: one, that an annual fee on a property that you own was inappropriate and no other state works that way and second, they were concerned, quite frankly, that there were no bounds to how much I could charge in the bill nor did existing permitees want to fund the 20-year backlog. So what was suggested instead is that they said you should charge people for the services you provide. You should charge people the reasonable direct cost of the permit application and that suggestion was pioneered by the legislature in HB 361 last year, commonly called the DEC fees bill. MR. LOEFFLER said the proposed amendment is the DEC fees bill. It puts into statute a framework that directs DNR to charge the reasonable direct costs of processing those applications and that's the long-term income source. MR.STAN FOO, Alaska Miners Association (AMA), stated support for SB 139. He said the AMA appreciates the department's efforts to address this issue that involves all water users. The AMA also supports the technical amendments and is encouraged by the effort to use the DEC fees bill in the framework for this effort. However, he expressed concern that water fees should not be necessary for uses such as suction dredges or water that's collected and released back into a stream. MR. BOB STILES, President, DRven Corporation, said he was testifying on behalf of the DRven Corporation. Drven supports the technical amendments to this bill and recognizes the problems that DNR faces. DNR is charged with managing a resource that often has no constituency. One of the main reasons he is present today is to illustrate that water rights, while they are not flashy, do have a constituency. MR. TADD OWENS, Executive Director, Resource Development Council (RDC), said the RDC worked for about 2 1/2 years with a diverse group of industry representatives, the legislature and DEC to pass HB 361 and they support the department's recommendation that this program be added into that structure for fees. It distributes the burden of the program's costs fairly between the private sector, in terms of industry applying for these permits, and the public at large. He stated, "Another critical issue this bill solves is DNR's backlog. There are a lot of folks out there who are operating essentially without their authorization and we do support DNR's request for funding to take care of that backlog." MS. PAM MILLER, an Anchorage resident, said she is concerned about SB 139 as Alaska has the best water statutes in the nation that were set up to protect Alaska's clean water, fish and wildlife. MR. BILL WARD, Ward Farms, opposed SB 139, and said he came from states where water was a very valuable commodity and water rights were sought after. They were handled with very little bureaucracy and overhead. He said the bureaucracy in Alaska is quite large; to get water rights he had to go through ADF&G, the Department of Environmental Conservation and Coastal Zone Management. He is concerned that "reasonable fees" is more for government than it would be for the private sector. He said he uses half the amount of water exempted from a residential household, or about 800 gallons. He is stuck between the big commercial rigs and the residential users. He warned, "If you want to make money for the general fund, that's okay, but please don't set up a level of bureaucracy over nothing more than people to shuffle papers." MR. GARY SONNICHSEN, a Big Delta resident, supported Mr. Ward's testimony and opposed SB 139. He said the department's plan is to charge more fees to add a lot more government and a lot more paperwork, which will create more problems. MR. BILL MICHEL, a Delta Junction resident, said he didn't think the state had any surface or subsurface rights to the water. Therefore, they have no business to tax it. MR. KEITH WARREN, a Delta Junction resident, said in the private sector, if you can't make your budgets for whatever reason, you've got to dole it out. He thought the government should take this lesson from the private sector. He opposed SB 139. MR. JOHN WENGER, a Copper Center resident, supported Mr. Ward's testimony 100 percent and said what really concerns him is that the next largest user group is the public water supply. If Copper Center's water supply falls under the department's over 15,000 gallon a day category and the people have to start paying fees, it would put a lot of people back financially. MR. HARVEY LEONARD, a Copper Center resident, opposed SB 139. He thought it was another attempt by bureaucracy to make them pay for something they don't have the money to pay for. MR. AL ROIG, a Copper Center resident, opposed SB 139. He thought the bill was poorly written and would do nothing but create a larger bureaucracy. MR. ERIC NASHLUND, a Copper Center resident, said that SB 139 is just a revenue-generating source. TAPE 01-27, SIDE B MR. SAM LIGHTWOOD, a Copper Center resident, said the legislature is requiring fees and other small amounts for services that the state normally provides for its citizens. Mr. Ward said he had to apply for four different water rights permits. That is duplicative and makes the process so complicated. He noted, "It was much better when we had a little more adequate funding from the legislature directing to provide these services to people. The answer to that, of course, is the legislature needs to find better sources of their funding. They are nickel and diming everyone to death and the overall plan has to be worked out." He thought the legislature should reinstate the income tax and said, "I hope I get out of here alive." MR. JOHN KUNIK, a Glennallen resident, said the bill would require water meters, meter readers, installation crews, law enforcement, etc. He asked what would happen to individuals who live on federal lands who use water and how all the water would be metered. MR. MATT KRINKE, a Glennallen resident, opposed SB 139. He said [he] can't afford the money to pay for the bureaucracy. CHAIRMAN TORGERSON asked if the bill will affect water rights on federal land. MR. LOEFFLER answered that all water is reserved by the state. There is an implied federal water right that the feds have a right to for certain federal lands, but it is determined through a joint process that is very complicated or typically they just come to the state for a water right. CHAIRMAN TORGERSON asked if the state could bill them more than it does Alaskans or whether they are billed at all. MR. LOEFFLER replied that they are billed an application fee like everyone else. MR. DANIEL BOONE, a Chitina resident, said, "I don't think this is a good bill. One of the main reasons is that a few years ago the State of Alaska left us millions of dollars in hydro projects for small communities around the state, like Bradley Lake. By charging a fee to the electric companies and the small private utilities to generate cheaper electricity, the rates will immediately increase probably twofold." He said the other reason he is against the bill is that too many places in Alaska have "public wells" and this bill would increase the fees on them. SENATOR ELTON referenced the language on page 5, line 24, and asked if AS 46.15.080 applies to the issuance or extension under this section of an authorization for temporary use of water. He said "Temporary" is defined as five years and possibly 10 years under the extension according to a conversation he had with Mr. Loeffler. He did not understand why Mr. Loeffler didn't want the provisions of that to apply when the provisions say that the commissioner has to consider the effect on fish and game resources, public health and economic activity resulting from the activity. MR. LOEFFLER responded that they consider the effect on fish resources and public health before they prioritize water users, "but a temporary water use does not convey a property right. OAO gives us a best interest criterion before we convey a property right. This is part of making clear that a temporary water use authorization is, in fact, a revocable authorization - does not convey a property right or anything like a property right. But certainly we work very closely with Fish and Game to take into account any affect on fish resources, wildlife, or, for that matter, prior water right holders." SENATOR ELTON said, "I understand that you want to make a distinction between a permit and a temporary water authorization." He asked where in statute it compels Mr. Loeffler to consider the effect on fish and game resources or public health or other economic activities for a temporary authorization if he is exempting himself from those provisions. MR. LOEFFLER answered that he is required to consult with ADF&G. Under subsection (f), he is expected to put limitations on protecting the rights of other people and the public interest. The methods and regulations he has been dealing with for 20 years also require him to do that and that's been the department's mode of operation. He said he would have to get back to him with a complete answer. SENATOR ELTON asked, "I took a look at the public notice section that is repealed under this bill and it seems to me that I know that public notice can be onerous, but the public notice provisions here provide that within 15 days of publication of notice, an interested person may file an objection and that the commissioner has to consider that objection within 30 days, can extend that to 180 days, if the commissioner thinks there's enough there to have a hearing - AS 46.15.133, the section that they are exempting themselves from." He said if NorthStar is exluded, he wondered why giving notice with 15 days to file an objection and giving the commissioner 30 days to make a determination has been onerous in the past. MR. LOEFFLER answered: Most of the temporary water use permits are for things like construction camps and when the agencies determine there is no environmental harm, a 15 to 40 day wait to halt construction in mid-summer is a problem. In areas where we think there is likely to be harm, we can public notice it and we are not prohibited from doing it. The practice for the last 20 years has been not to [indisc.] things and everyone imagines a 5-year or 10-year facility, but often we used them for DOT, which is one of our major consumers. In the middle of summer construction, yes Senator and Mr. Chairman, a 15 - 30 day delay is a problem. When we are giving a state resource away forever, which is a water right, we're constitutionally required to do public notice. But for something that we believe that we, the agencies, determine won't harm the environment or other water users and is temporary and is revocable if there is a problem that delay often will cause a problem. SENATOR ELTON responded: When you get to be my age, 10 years can seem like forever and the second comment would be that I understand that you may have a problem with DOT or someone wanting water rights for two days to make concrete or cement, but that's already covered in AS 46.15.133, because it says, the Commissioner may designate types of water appropriations that are exempt from this section. So, the commissioner isn't precluded from making a quick decision, because there is a provision that allows him to do that. Number 1900 SENATOR LINCOLN asked Mr. Loeffler to expand on the fact that DNR expects to discount fees for non-consumptive use. She also asked what the impact of these fees would be on the previous speaker who was a farmer and, therefore, had the 800-gallon exemption per acre for 6,000 acres. MR. LOEFFLER said: Let me answer the second one first - what are the impacts of the fees. Under the bill as written, the fees would range from $50 to $500 for a water right. So if you had a water right, if you had a number of water rights, you could have multiples of $500 each year. Although, typically we try to consolidate them for that reason. I will say that under the amendments that I suggested that you would pay the reasonable cost of adjudicating the water right and then there would be no more fees. So, for the person in Delta who has a farm, the bill as written would provide an annual fee that is a sliding scale based on the amount of water right. For the amendment, we suggested a one-time application fee that would be related to the cost of adjudicating. In an area where there's not a lot of people and not much problem with adjudication, you would expect to have a reasonably small fee. SENATOR LINCOLN asked if that would be less than $1,000. MR. LOEFFLER said he didn't know, but he thought most small water right holders would be less than $1,000. He said he would get an estimate. CHAIRMAN TORGERSON said they had heard the fear out there that people just don't trust government to do a reasonable fee, "and I sort of agree with that…I'd like to see what your intent is." SENATOR LINCOLN asked him to get back to them on fees for a miner replenishing the water source that goes right back into the stream. CHAIRMAN TORGERSON said he thought that was a suggested amendment instead of just being mentioned in a fiscal note. SENATOR TAYLOR said: "If we're going to set any fees at all, I have voted for my last fee bill in this legislature after the blood, sweat and tears that you, Mr. Chairman, and I have put into DEC just trying to get a handle on how they were going to charge every hotdog cart out there to go inspect them and never did get a straight answer in two years. I'm not about to start increasing fees so as to support your agency." CHAIRMAN TORGERSON noted that they had exempted the hotdog carts. He said he intended to work more on the bill starting with the North Slope. SENATOR ELTON said he thought part of the problem was that there aren't as many people doing permits now as there used to be. One of the sad things about the testimony is that people have said they are willing to pay just to speed the process up, because waiting for two years or longer is a significant economic drain. He stated, "This is one approach. Another would be to restore funding closer to a level we had 15 or 16 years ago." CHAIRMAN TORGERSON added, "Or exempt the users and widen the brackets a little bit more instead of worrying about the guy that carries the canteen from Anchorage to Mat-Su.