Legislature(2001 - 2002)

02/08/2002 03:34 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     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                                                             
COMMISSIONER  ABBOTT  said  that's  what happened  in  the  scoping                                                             
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                                                             
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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