Legislature(2001 - 2002)
02/08/2002 03:34 PM Senate RES
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ALASKA STATE LEGISLATURE
SENATE RESOURCES COMMITTEE
February 8, 2002
3:34 p.m.
MEMBERS PRESENT
Senator John Torgerson, Chair
Senator Gary Wilken, Vice Chair
Senator Rick Halford
Senator Ben Stevens
Senator Kim Elton
Senator Georgianna Lincoln
MEMBERS ABSENT
Senator Robin Taylor
COMMITTEE CALENDAR
SENATE BILL NO. 140
"An Act relating to regulation and licensing of certain water-
power development projects."
MOVED SB 140 OUT OF COMMITTEE
SENATE BILL NO. 255
"An Act relating to exchanges of state land, interests, or
property for other land, interests, or consideration; approving
an exchange of land between the state and Gold Cord Development
Corporation; and providing for an effective date."
MOVED CSSB 255(RES) OUT OF COMMITTEE
PREVIOUS SENATE COMMITTEE ACTION
SB 140 - See Resources minutes dated 3/21/01.
SB 255 - No previous action to consider.
WITNESS REGISTER
Mr. Darwin Peterson
Staff to Senator Torgerson
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Presented SB 140 for the sponsor.
Commissioner Will Abbott
Regulatory Commission of Alaska (RCA)
701 W 8th
Anchorage AK 99502
POSITION STATEMENT: Commented on SB 140.
Mr. Keith Bayha
Alaska Public Waters Coalition (APWC)
10443 High Bluff
Eagle River AK 99577
POSITION STATEMENT: Commented on SB 140.
Mr. Eric Yould, Executive Director
Alaska Rural Electric Cooperative Association (ARECA)
703 W. Tudor
Anchorage AK 99503
POSITION STATEMENT: Supported SB 140.
Ms. Sally Saddler, Legislative Liaison
Department of Community and Economic Development
P.O. Box 110800
Juneau AK 99811
POSITION STATEMENT: Commented on SB 140.
Mr. Jerry Burnett
Legislative Aide to Senator Lyda Green
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Presented SB 255 for the sponsor.
Mr. Jim Stratton, Director
Division of Parks and Outdoor Recreation
Department of Natural Resources
400 Willoughby Ave.
Juneau, AK 99801-1724
POSITION STATEMENT: Present to answer questions.
Mr. Ron Swanson, Director
Community Development
Mat-Su Borough
350 E. Dahlia
Palmer AK 99645
POSITION STATEMENT: Supported SB 255.
Ms. Carol Carroll, Director
Administrative Services
Department of Natural Resources
400 Willoughby Ave.
Juneau, AK 99801-1724
POSITION STATEMENT: Supported SB 255.
ACTION NARRATIVE
TAPE 02-1, SIDE A
SB 140-SMALL WATER-POWER DEVELOPMENT PROJECTS
CHAIRMAN JOHN TORGERSON called the Senate Resources Committee
meeting to order at 3:34 p.m. Members present at the call to order
were Senators Wilken, Halford, Stevens, Elton, Lincoln and
Chairman Torgerson. Chairman Torgerson announced SB 140 to be up
for consideration and told members that SB 140 mirrors the federal
law that Senator Murkowski worked on for a number of years to
allow certain exemptions for hydro projects.
MR. DARWIN PETERSON, staff to Senator Torgerson, sponsor, said
Senator Murkowski introduced SB 422 in Congress, to amend the
Federal Power Act to provide for Alaska state jurisdiction over
small hydro-electric projects. He explained the purpose of SB 140
as follows.
SB 140 transfers to Alaska and only to the State of
Alaska, licensing and regulatory authority over hydro-
electric projects that are 5,000 kilowatts or less.
Bringing this regulatory authority closer to home will
reduce the great time and expense associated with
federal licensing and regulation of small hydro projects
in Alaska. The time and money required for federal
licensing is virtually prohibitive for some small
utility and personal projects. Before Alaska can acquire
the jurisdiction from the Federal Energy and Regulatory
Commission (FERC), the legislature must approve this
bill and the Governor must submit a program to FERC
satisfying its regulatory requirements.
As SB 140 is currently drafted, the Regulatory
Commission of Alaska (RCA) would be the regulatory
agency responsible. All current environmental
protections required under federal law will still apply
and cannot be preempted by this legislation. Even with
the passage of SB 140, some small hydro projects would
not be eligible for state jurisdiction: those located in
Metlakatla (an Indian Reservation), conservation units
as defined in ANILCA, and rivers designated under the
wild and scenic river system.
SENATOR ELTON asked who will address the environmental concerns
for FERC and whether, for instance, the U.S. Fish and Wildlife
Service will address habitat issues. He wanted to know what kind
of structure is needed to know who will address such issues if
it's under the state's jurisdiction and how that will be
coordinated. He thought the Division of Governmental Coordination
(DGC) would be better able to coordinate than the RCA.
MR. PETERSON replied that FERC has to approve the administration's
plan before the state can take over the regulatory responsibility
for these small hydro-projects.
COMMISSIONER WILL ABBOTT, Regulatory Commission of Alaska, said he
would walk members through the procedure for a 3.5 megawatt by-
the-river project in Southeast Alaska that is in the process of
going through FERC right now. He said the RCA had been involved in
the process since 1996 and hopes to get it out by the end of this
year. They are working under the "alternative plan," which is
supposed to be the "streamlined plan." They go through a series of
scoping meetings, both public and with other state and federal
agencies that would be involved in the permit. They figure out who
has to do what during the various processes to get them there.
They notify FERC that they want to do this, which reserves the
site for them for the next three years. After the scoping is done,
they apply for their license and start through the process of
review by all the committees. These committees will have to do a
number of studies that will be reviewed by both state and federal
agencies as they go. Toward the later part of the process, a draft
environmental impact statement will be produced. In the end, FERC
will finalize the impact statement and then issue a license. FERC
steps in when there is a dispute between agencies and/or agencies
and a licensee. FERC staff makes recommendations and the
commissioners will decide the dispute.
SENATOR ELTON asked if the RCA will operate in much the same way
that FERC does, sort of like an umpire, if this becomes a state
process under the RCA.
COMMISSIONER ABBOTT replied that the RCA does business like that
all the time, but it doesn't have as large a staff as FERC does.
SENATOR ELTON asked Mr. Abbott if he thought a lot of the studies
would be done solely by state agencies so that the Alaska
Department of Fish and Game (ADF&G) might do the studies that the
U.S. Fish and Wildlife Service (USFWS) would do under FERC.
COMMISSIONER ABBOTT replied that he didn't know for sure. That
needs to be worked out when the regulations are written that are
submitted to FERC. He thought that would be a big catch in the
whole plan and noted, "FERC has the final hammer on this as to how
we do it."
CHAIRMAN TORGERSON asked if the determination of which agency does
the study will be predicated on who owns the land that will be
affected.
COMMISSIONER ABBOTT said that's what happened in the scoping
meetings.
CHAIRMAN TORGERSON asked if the RCA gave the committee a new
fiscal note.
COMMISSIONER ABBOTT replied that they are still working on it. He
said their regulation process is not an insignificant task because
they have to figure out how they are going to work with all of the
state agencies. He remarked, "We're going to have to have some
fairly significant commitment from FERC as to what they will or
will not let us do. I see a lot of staff time trying to get these
regulations written." He stated support for the bill.
MR. KEITH BAYHA, Alaska Public Waters Coalition (APWC), said he is
a retired wildlife biologist and has previously participated in
FERC licensing procedures. He said that neither FERC, nor
Congress, fund fish and wildlife studies pertinent to a project
that would be covered by this act. They would review the studies
that the applicant arranged to have done through probably a
private consultant. It's possible for the applicant to provide
funds to ADF&G and the U.S. Fish and Wildlife Service, but that is
seldom done. If the matter is highly controversial, they put
together a multi-agency task force that's funded by the applicant
to pursue studies. Their product reports are submitted, in this
case, through the state agency or through FERC, to ADF&G and the
USFWS under the terms of the Fish and Wildlife Coordination Act,
which is cited in the legislation. They review the adequacy of the
consultants' work and their recommendations and may or may not
recommend for or against the project and may or may not recommend
mitigation and/or enhancement measures. They may find that some
projects do not significantly impact fish and wildlife and might
not even file a report, but if they find that impacts do exist,
they file a report to the FERC.
CHAIRMAN TORGERSON thanked him for the clarification and announced
the next speaker would be Mr. Eric Yould.
MR. ERIC YOULD, Executive Director, Alaska Rural Electric
Cooperative Association (ARECA), said as a general rule ARECA
thinks it is an excellent idea to accelerate the process,
especially for projects of 5 megawatts or less. He said there are
probably some reasons that one project is taking six years. He
has been involved in several hydro-power licensures throughout the
state all the way back to 1977. He thought this bill could work if
the RCA would get some good technical expertise to augment its
adjudicatory capability. They are the proper group to administer
this program if they have the engineers, scientists and biologists
that could go head to head with the state and federal agencies
that are not always in favor of or objective in developing these
projects. The ARECA Board of Directors adopted a resolution
basically endorsing the concept of having the Department of
Natural Resources act as the lead agency as opposed to the RCA,
but he believes the RCA is the proper authority to do it. Again,
his concern is that they don't have the technical, scientific,
professional and engineering expertise to do the job.
CHAIRMAN TORGERSON said it was not his intent to move this to DNR.
The RCA already does this type of work and asked Mr. Yould to talk
a bit more about that issue.
MR. YOULD replied that it would take more staff and he's not sure
how much more.
CHAIRMAN TORGERSON said they have to do this type of work now and
he didn't see that as a barrier. He said they talked about the opt
in and opt out option last year, a major stumbling point, and that
is not going to be in the bill. He suggested instead of including
a sunset date, they repeal the law if it becomes unwieldy.
SENATOR ELTON said he is assuming Mr. Yould's testimony is
designed to make them think this could be a faster and cheaper way
for applicants who want to start a project.
MR. YOULD said he thought the potential is there, but his members
have take a certain amount of solace in having a third independent
body, FERC, that has the authority to stand up to both the federal
and state agencies and make them be realistic in their
expectations of studies and processes. Once they received licenses
for projects and found themselves at the mercy of state agencies
who sometimes are not friendly to the concept of hydropower and
make the lives of the people who develop them quite miserable. If
those same people have inordinate authority under this program,
that would actually slow down or stop a project and he'd have to
say ARECA doesn't want it. He said:
FERC is a system that we know; it's an independent
arbiter. We found we trust them; they are fair on both
sides. They make us do all the environmental and socio-
economic studies and at the same time they make sure the
resource agencies don't request such an inordinate
amount of assessments that it kills the project.
MS. SALLY SADDLER, legislative liaison, Department of Community
and Economic Development (DCED), told members that DCED had an
interagency meeting recently with DNR, ADF&G, DGC, the RCA and
DEC. She stated:
We do believe that RCA is the appropriate agency to
assume a lot of these roles. When the federal
legislation was pending, the Governor did support giving
Alaska this jurisdiction over this state-operated FERC
program and at the same the Governor recognized that
this is, in fact, a very complex undertaking and we want
to be sure that the state program does result in the
proper design and construction along with protecting the
fish and wildlife, at least as well or as rigorously as
FERC does. The agencies are in the process right now of
getting a handle, trying to understand what the FERC
process is about, because right now we understand our
roles and duties under the existing federal program.
What we need to be doing is looking at what additional
duties, statutes, and regulatory authority may be needed
to go ahead and operate a state version of this FERC
program. For instance, FERC has jurisdiction over entire
watersheds, whereas Fish and Game right now - their
jurisdiction applies only to streambeds. So, these are
the kinds of things we need to examine with respect to
the FERC program to understand the cost implications and
program details if we were to take over this kind of a
state program.
MS. SADDLER said they have to be able to balance the user fees
with the possibility of a need for a direct appropriation at a
time when revenues might not be equal to expenditures. She
understands that the State of Oregon has a small state run hydro
program and it hopes to get a copy of that and get ideas and
insights as to what it takes to operate this kind of program.
SENATOR ELTON said the fiscal note contemplates a half-time
position to analyze waterpower applications and he anticipates
that putting things together for state regulation will take a
considerable amount of work upfront. He wanted to know if there
would be a fiscal note to reflect the amount of work that needs to
be done by all of the agencies.
MS. SADDLER replied that is one of the issues they talked about
last year when they spoke with Chair Thompson. She stated:
We looked at this as more of a straight-forward
regulatory adopting process and since we have a chance
to work with our member agencies and get a better
understanding of what FERC is about, we believe we will
be redoing our fiscal note and it may be a little more
substantial than what we have.
CHAIRMAN TORGERSON said they wouldn't be building hydro-projects
all over the place. There might be one every other year.
SENATOR WILKEN moved to pass SB 140 and attached fiscal note,
dated 3/20/01, from committee with individual recommendations.
CHAIRMAN TORGERSON said there would be a new fiscal note. There
were no objections and it was so ordered.
SB 255-LAND EXCHANGES: GOLD CORD DEVELOPMENT
CHAIRMAN TORGERSON announced SB 255 to be up for consideration.
MR. JERRY BURNETT, staff to Senator Lyda Green, sponsor of SB 255,
said the measure provides for legislative approval of an unequal
land exchange between the State of Alaska and Gold Cord
Development, Inc., and incorporates a proposed change to land
trade statutes to remove legislative approval for unequal land
exchanges with a value of less than $5 million. He explained:
Alaska State Parks has been working since 1978 to
develop an opportunity for private reuse and management
of historic buildings at Independence Mine State Park.
To facilitate road access to the underground mine tour,
the State of Alaska sought an exchange with Gold Cord
Inc., an owner of a critical section of the road. The
state held an easement across the property that was not
of sufficient size to accommodate anticipated
reconstruction to provide for bus access. In addition,
Gold Cord held a federal mining claim that extended into
the existing park boundaries. The exchange has been
agreed to by all parties. The state trades away no land,
but provides the process by which Gold Cord can receive
fee title to 19 acres of land valued at $63,000
currently held by Gold Cord as federal mining claims.
The state receives about six acres of land valued
at$68,500 from Gold Cord. Because the state brought no
land to trade and because final values are not equal,
the transaction requires legislative approval. The
difference here is $5,500. The Alaska Legislature has
approved another unequal value exchange at the
Independence Mine State Park between the State of Alaska
and Alaska Hard Rock Inc. for access in the year 2000.
In addition to the Gold Cord trade approval, SB 255
allows for administrative approval of land trades with a
value of under $5 million. Currently by statute, unequal
exchanges that do not benefit the State of Alaska are
not allowed. Any land exchange, whether equal or unequal
in value, involves only willing participants.
Under existing statute, even though all parties agree
and the state comes out ahead, unequal exchanges must
still receive legislature approval. Any exchange, equal
or unequal, over $5 million in state value, would still
come before the legislature for approval. Since the
exchange must benefit the state in any case, unequal
value exchanges under the $5 million level could be
accomplished administratively to enhance efficiency
under the terms of this legislation.
CHAIRMAN TORGERSON asked why "the environs" was deleted on page 2,
lines 17 and 18.
MR. BURNETT answered that any land exchange must be a benefit to
the State of Alaska, whether it's equal or unequal in value. In
order to enhance the efficiency of the Department of Natural
Resources, they requested a section to allow administrative
approval of unequal land exchanges. This is the policy decision
for the legislature.
CHAIRMAN TORGERSON asked what would happen if they delete that
section and whether that would accomplish what Senator Green wants
to do.
MR. RON SWANSON, Director, Community Development, Mat-Su Borough,
supported SB 255. He stated, "We feel it fully compliments our
plan for ski resort development that's located close by. It will
make the area a very good tourist destination facility." He said
the Borough Assembly in a resolution it passed on January 15
endorsed the exchange.
MS. CAROL CARROLL, Director, Administrative Services, DNR, said
DNR put the section on administrative approval for land values
under $5 million before the legislature because it has done a
couple of small value exchanges and found administrative
efficiencies in doing so.
CHAIRMAN TORGERSON asked her if she supported the bill without
that section. She said she did.
SENATOR HALFORD moved to delete Section 2 [Amendment 1].
SENATOR ELTON asked if the net effect, in future cases in which
the value is greater to the state than to the other land owner if
Section 2 is not deleted, would be to give DNR the administrative
latitude to make a decision on its own without coming to the
legislature.
SENATOR HALFORD said that is correct, but added that the other
values to the state may be subjective.
There was no further discussion and Amendment 1 was adopted.
SENATOR WILKEN moved to pass CSSB 255 (RES) from committee with
individual recommendations and its zero fiscal note. There were no
objections and it was so ordered.
There being no further business to come before the committee,
CHAIRMAN TORGERSON adjourned the meeting at 3:15 p.m.
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