Legislature(2003 - 2004)
05/09/2003 03:37 PM Senate RES
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ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
May 9, 2003
3:37 p.m.
MEMBERS PRESENT
Senator Scott Ogan, Chair
Senator Thomas Wagoner, Vice Chair
Senator Fred Dyson
Senator Ralph Seekins
Senator Ben Stevens
Senator Kim Elton
Senator Georgianna Lincoln
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CS FOR HOUSE BILL NO. 104(FSH)
"An Act relating to payment of the fisheries business tax and to
security for collection of the fisheries business tax."
MOVED CSHB 104(FSH) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 191(FIN) am
"An Act relating to the Alaska coastal management program and to
policies and procedures for consistency reviews and the
rendering of consistency determinations under that program;
eliminating the Alaska Coastal Policy Council; annulling certain
regulations relating to the Alaska coastal management program;
and providing for an effective date."
MOVED CSHB 191(FIN) am OUT OF COMMITTEE
PREVIOUS ACTION
HB 104 - No previous action to record.
HB 191 - No previous action to record.
WITNESS REGISTER
Senator Gary Stevens
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 104
Mr. Chuck Harlamert
Tax Division
Department of Revenue
PO Box 110400
Juneau, AK 99811-0400
POSITION STATEMENT: Answered questions about HB 104
Ms. Marty Rutherford
Department of Natural Resources
400 Willoughby Ave.
Juneau, AK 99801-1724
POSITION STATEMENT: Presented CSHB 191(FIN) am
Mr. Charles Degnan
Bering Straits Coastal Resource Area
POSITION STATEMENT: Strongly urged that more local
participation be provided for in CSHB 191(FIN) am
Mr. Dan Bevington
Kenai Peninsula Borough
POSITION STATEMENT: Expressed concerns about CSHB 191(FIN) am
Mr. Andrew De Valpine
Bristol Bay Coastal Resource Service Area
POSITION STATEMENT: Expressed concern that CSHB 191(FIN) am
will delay projects
Ms. Judy Brady
Executive Director
Alaska Oil and Gas Association (AOGA)
121 West Fireweed Lane
Anchorage, Alaska 99503
POSITION STATEMENT: AOGA does not oppose CSHB 191(FIN) am
ACTION NARRATIVE
TAPE 03-45, SIDE A
CHAIR SCOTT OGAN called the Senate Resources Standing Committee
meeting to order at 3:37 p.m. Senators Wagoner, Stevens,
Seekins, Dyson, Elton and Chair Ogan were present. The first
order of business to come before the committee was HB 104.
HB 104-PAYMENT OF FISHERY BUSINESS TAX
SENATOR GARY STEVENS, sponsor of HB 104, told members that HB
104 recognizes the enormous problems faced by the salmon
industry over the last few years due to competition from the
farmed fish industry. This legislation is a priority of the
Salmon Industry Task Force. HB 104 would primarily affect
smaller processors, probably fewer than a dozen. Under current
law, property value must equal three times the amount of the
estimated tax or a bond must be posted equal to twice the
estimated tax. All taxes must be paid by April 1. HB 104 allows
for a monthly tax payment, $50,000 bond, or $100,000 in lienable
property. It provides an attractive option to small processors
to expand their processing operations. This legislation will
probably not create a savings to those processors because it is
more costly to pay taxes on a monthly basis. However, it will
attract new businesses into the salmon processing industry.
CHAIR OGAN questioned whether a similar version of this bill has
been before the committee.
SENATOR WAGONER reminded Chair Ogan that the committee heard a
bill that offered a 50 percent investment tax credit.
SENATOR GARY STEVENS clarified that this legislation is geared
toward the smaller processors.
CHAIR OGAN asked if DOR is concerned that this bill might result
in a loss in revenue because some of the marginally capitalized
processors might have a difficult time making payments.
MR. CHUCK HARLAMERT, Tax Division, Department of Revenue (DOR),
replied:
... we can reasonably expect that the bill will be
attractive to processors who are thinly capitalized
because it is, in the end, in terms of your cost of
capital, the most expensive security option available
or there are many cheaper options available. So you
would expect folks who are inherently less able to pay
to elect it and so the likelihood of loss is more than
your average taxpayer perhaps. A 15-day payment period
does help mitigate that as long as we can keep our
tabs on those folks so hopefully we can limit our
losses.
CHAIR OGAN asked if the bill will require more staff time to
process monthly payments.
MR. HARLAMERT said the payments are not that difficult to
process. However, monitoring non-payments and dealing with
delinquent accounts in short order may be more time consuming.
SENATOR SEEKINS asked how many of the businesses that will be
affected by this legislation are resident owned.
MR. HARLAMERT said he does not have that information. He said
this will not apply to the large, established taxpayers or the
very small catcher-processor businesses. It will apply to the
mid-range processor who pays around $100,000 to $300,000 per
year in fisheries business taxes. Some of those are [owned by]
non-residents.
SENATOR SEEKINS asked if a non-resident would be less likely to
have lienable real property in the state.
MR. HARLAMERT said many non-residents own their processing
facilities outright.
SENATOR SEEKINS said he does not mind giving a break to someone
who lives here, but he does not like giving a break to a
business that lives off of our resources and is owned by an out-
of-state resident.
CHAIR OGAN reminded members the Interstate Commerce Clause
prevents discrimination based on residency.
SENATOR SEEKINS said he was thinking that he would trust a
person with lienable property in Alaska more than he would trust
a person without lienable property in Alaska.
CHAIR OGAN noted the bill requires $50,000 in cash for those
without lienable property.
There being no further testimony or questions, SENATOR DYSON
moved CSHB 104(FSH) from committee with individual
recommendations and its attached fiscal notes.
CHAIR OGAN noted that without objection, the motion carried.
The committee took up HB 191.
CSHB 191(FIN) am-COASTAL MANAGEMENT PROGRAMS
CHAIR OGAN announced that the committee has held three hearings
on very similar legislation so he would like to limit today's
testimony to the changes in the bill. He asked Ms. Rutherford to
explain the changes to the latest version.
MS. MARTY RUTHERFORD told members that Breck Tostevin with the
Department of Law was also available to answer questions. She
then informed members she is under contract to the Department of
Natural Resources (DNR) and the Administration. She gave the
following testimony.
th
Last we spoke was Monday, April 28, and this
committee had, under consideration, a committee
substitute to SB 143 that was very similar to CSHB 191
- the finance version as amended and adopted by the
House. However, the House has made five amendments
since your last hearing and I will speak to those if I
might. I'd also like to note that the Administration
supports these five amendments.
The first amendment is to Section 20 at AS
46.40.096(d) on page 12, line 28. The House adopted
this amendment, which restores the language that is in
the existing statute, which states that the reviewing
entity request comments from 'interested,' as opposed
to 'affected,' persons. So, restoration of the
'interested' language was made to avoid arguments that
the section would not provide for the public notice
required by federal law....
The second change is to Section 22 on pages 13 and 14
- AS 46.40.096(j). This is a clarifying amendment made
by the House concerning the process used when only DEC
permits are required for a project in the coastal
zone. The change, again in subsection (j), clarifies
that under an .096(g) consistency review - perhaps I
might note again the review where activities are
subject only to air and water quality [indisc.] - the
change in subsection (j) clarifies that when it is an
.096(g) consistency review, which is a review where
activities subject only to DEC's air, land, and water
quality [indisc.] required, that DEC will exclude from
this consistency review those activities that are
subject to DEC permits but DEC will evaluate the
project to determine if there are any other activities
that are the subject of a district local enforceable
policy. If there are, then those activities will be
evaluated for consistency against the local policies.
So, for example, if the project was a bulk fuel
storage facility, the DEC permits required for that
facility would be excluded from a consistency review.
However, if a district had a local enforceable policy
that dictated bulk fuel storage could not be sited
next to a [indisc.] water body, then DEC must
determine that the activity of siting the tank farm
was consistent with the local policy....
The third amendment, made in House Finance, is in
Section 22, page 15, lines 7 through 15. This
addresses the exception to the 90-day consistency
review deadline. I think it's the last item we were
discussing at the hearing on the 28th. This amendment
is to .096(o) and provides that the 90-day deadline is
not applicable to the consistency review involving the
disposal of an interest in state land or resources and
that's because DNR's disposal process is statutorily
identified and [indisc.] interest finding. The
amendment goes on to clarify that the deadline is
suspended in three circumstances. The first is when an
applicant has not adequately responded within 14 days
of receipt of a request for additional information.
The second situation is when the applicant requests
that the review time be suspended. The third is when a
draft consistency determination undergoes an
administrative appeal within the department, which is
known as an elevation.
The fourth change was made on the House floor
concerning the transition provisions set out on pages
22 and 23, Section 46 (b) and (c). The changes provide
that the current coastal management plan regulations -
this would be 6 AAC 80 and 6 AAC 85, and these
regulations and the district programs remain in effect
until they are amended through the DNR public process
or they sunset under the bill's transition provision.
We believe this is also a clarifying amendment.
The last change is to Section 47, page 23, lines 26
through 28. This is new language added in House
Finance to the transition provision.... The new
subsection (b) provides that upon request, DNR shall
consult with the coastal districts to identify the
plan amendment that will meet the standards and
guidelines established under the act. So, basically,
this [indisc.] one of the concerns by the districts
that they would have to be determining on their own
without assistance what portions of the plans meet
guidelines under the amendment. So this just dictates
that DNR will be responsive if the districts ask for
assistance.
Those are the five changes, Mr. Chairman, and I would
like to restate that the Administration does support
the five amendments and Mr. Tostevin and I are
available to answer questions should you wish it.
CHAIR OGAN asked Ms. Rutherford to characterize how these
amendments were negotiated and who was involved.
MS. RUTHERFORD said the first and fourth amendments that
replaced "affected parties" with "interested parties" and
changed the transition provision were suggested by the Office of
Coastal Resource Management (OCRM) within NOAA to make sure that
the Administration's intent was reflected in the act and meets
federal requirements. The second amendment, regarding the
process used when only DEC permits are required, was a
combination of OCRM asking questions and the Administration's
recognition that further clarification was necessary. The third
amendment came about in discussion with the Senate Resources
Committee members at the April 28th meeting when Senator Elton
asked about suspension versus termination. The Administration
felt that needed to be clarified. The fifth amendment was
included to address concern by communities.
SENATOR ELTON noted that he discussed with Ms. Rutherford a
previous agreement between the City and Borough of Juneau (CBJ)
and the U.S. Army Corps of Engineers that has made development
easier but might be threatened by this legislation. He asked if
she was able to find out if that agreement is at risk or whether
any of the amendments address that situation.
MS. RUTHERFORD responded that she told Mr. Freer [of the CBJ]
that she was available to discuss the matter with the city's
department of law. She never received a request. The issue was
discussed among members of the Administration and they feel
quite comfortable that this legislation will not affect a
municipality's Title 29 ability to promulgate ordinances and to
create its own agreements with the Corps of Engineers.
SENATOR LINCOLN asked Ms. Rutherford who will decide whether a
matter of concern is adequately addressed by state or federal
law under Section 14(2)(C)(ii).
MS. RUTHERFORD said the DNR commissioner will make that
decision. She noted that an earlier change to the bill on page
10 requires that the department shall approve a district coastal
management plan submitted for review and approval if specific
standards are met. She said the commissioner has the decision-
making role and some inherent discretion. She added, "...but by
creating local enforceable policies, we hoped we brought some
comfort to the districts and the various legislative committees
that, in fact, there is tremendous room for still creating
enforceable policies that are not addressed by state or federal
law."
SENATOR LINCOLN commented that answers her question but does not
give her comfort.
CHAIR OGAN took public testimony.
MR. CHARLES DEGNAN, Bering Straits Coastal Resource Service
Area, said the coastal resource service area is concerned that
local input into projects is being eliminated in two ways. It
narrows authority to DNR to approve coastal management plans and
it eliminates the Alaska Coastal Policy Council. He recommended
that the coastal resource service areas be included. He pointed
out that Alaska is a very large and diverse state with a varied
climate and topography. It makes good sense that local citizens
have input into their local coastal districts. He would like to
see due deference to local districts. That would help local,
state and federal officials have continuous access to local
knowledge and expertise. He said it would also help to hold
public hearings in locations without the benefit of DNR's
presence.
MR. DAN BEVINGTON, Kenai Peninsula Borough, expressed the
following concerns. The section on page 4, line 17, AS
46.39.040, outlines how the plans will be developed. It appears
to leave DNR as the sole authority. [A portion of Mr.
Bevington's testimony was indiscernible due to teleconference
transmission problems.] He asked if subsection (3) on page 5,
line 1, will assure that the data will be provided in a timely
manner to assure a district function under the statutes.
CHAIR OGAN asked Ms. Rutherford to address that question.
MS. RUTHERFORD said subsection (3) is existing language and DNR
will implement that subsection in exactly the same way it has in
the past.
MR. BEVINGTON said the language on page 5, line 24, appears to
give DNR sole discretionary authority over the appropriateness
of local district plans with no provisions for a dialog or
appeal. He said although he understands the need for a more
efficient system, a provision for that discussion should be
provided.
MR. BEVINGTON referred to the language on lines 14 through 23 on
page 9, and said it appears to give sole discretion to DNR in
regard to the acceptance of a plan. He said he understands DNR's
mandate to provide good management of our resources, but he
still sees some oversight and participation in developing the
plan to be beneficial. In the past, the coastal policy council
has provided that to some degree.
CHAIR OGAN asked if Mr. Bevington's last point addressed the
most recent changes to the bill.
MR. BEVINGTON said it did not. He then told members the Kenai
Peninsula Borough completed 585 reviews last year. He wanted to
assure committee members that the Borough has been committed to
this program. He said his last concern is with Section
46.40.096(g)(1)(A) on page 16; he believes that line should
read, "is authorized only or solely under a general or
nationwide permit...".
With no questions of Mr. Bevington, CHAIR OGAN called the next
testifier.
MR. ANDREW DEVALPINE, Bristol Bay Coastal Resource Service Area,
said Ms. Rutherford said she has heard from industry that this
bill has gaps large enough to drive a truck through and people
like himself have told her it is too restrictive and limited in
regard to input. In his mind, that raises a red flag as to how
this will all pan out. The notion behind the bill is to simplify
permitting. If it passes, it appears there will be fewer people
to process the permits and more than 30 plan renewals and new
laws and regulations to learn. He agrees the state has strong
environmental protections in place. He cautioned if it is true
that developers are lining up at the door, waiting for this bill
to pass because it will make the process easier, DNR will not
only have the added job of revising the ACMP, it will also have
"more paper going through this restricted pipeline."
MS. JUDY BRADY, Executive Director of the Alaska Oil and Gas
Association (AOGA), said AOGA can live with the amendments in
the latest version. AOGA is aware that some of the amendments
are necessary for the purpose of clarification, but it has some
concerns with others, one being with the phrase, "not adequately
responded to within 14 days." She noted the word "adequately"
always creates tension between 2 or 3 parties but AOGA believes
that will be straightened out in the regulations. Regarding the
fifth amendment, AOGA assumed that the department would offer
assistance anyway. AOGA also assumed that would be part of a
public process and that the details would be worked out in the
regulations.
CHAIR OGAN asked Ms. Brady if AOGA shares the previous
testifier's concern about the constricted pipeline scenario
regarding the paperwork.
MS. BRADY said AOGA would not have worked with the
Administration and the Legislature to clarify the coastal
management program if the program had not been so bad. Any
inconvenience that businesses will have to go through for the
next few years to make this a workable program will be
worthwhile. AOGA believes that whatever is required by the bill
will be an improvement over what it has to deal with right now.
CHAIR OGAN said he would prefer to see the whole program
repealed.
SENATOR LINCOLN noted that Ms. Brady said AOGA could live with
the legislation but does not embrace it. She asked Ms. Brady if
AOGA tried to work out its concerns in the legislation with the
Administration.
MS. BRADY said that AOGA provided some responses to the changes
in the legislation after the first hearing when the coastal
districts wanted to maintain enforceable policies and
consistency reviews. AOGA preferred a totally self-implementing
program. The Administration made it clear that it had made a
commitment to the coastal districts. AOGA accepted that because
this legislation does make some very important changes to remove
roadblocks in the process. Some of the amendments before the
committee now are the result of that original change so while
she cannot say that AOGA supports them, it supports the bill in
general and does not oppose any of the amendments.
SENATOR WAGONER commented that he has heard the Kenai Peninsula
Borough and people from his district express concern about the
speed with which this bill is progressing through the
legislature. He said there is not a lot of support for this bill
at this time in his district.
SENATOR ELTON said he sees this bill, as amended by the House,
as a fundamental shift in how coastal areas are developed. He
has not heard from any of the districts or coastal communities
that the current program is perfect.
TAPE 03-45, SIDE B
SENATOR ELTON said as Ms. Brady testified, he is aware of
concerns about the process and the structure that coastal
communities have. However, the communities are quick to say that
this legislation represents a fundamental change that shifts a
lot of the decision making power from the coastal policy
council, bifurcates the process by excluding DEC from some of
the process, and sets a very high threshold for ill-defined
enforceable policies. He said his concern about moving forward
with the bill is that other issues have been resolved using a
negotiated process involving stakeholders. He noted the air
emissions legislation involved a process with everyone who had
concerns. That process made the committee's work much easier
because those involved worked out the best approaches. Because
this legislation creates such a fundamental shift, he would have
preferred that the legislation underwent a process like that. He
said with the exception of one coastal community, he has heard
of no one who supports this legislation. Many of the coastal
communities want to develop their resources in the quickest,
most beneficial way possible because they are hurting
economically. He said he cannot support this legislation as
written as he believes the communities' concerns are legitimate
and could be worked out using a stakeholder process.
SENATOR WAGONER responded that he is not asking for a
stakeholder process. His concern is that the Kenai Peninsula
Borough handled over 500 applications last year; it is not
delaying the process. He asked to hold the bill in committee for
another two or three days to give the Borough time to discuss
the changes with communities and provide additional input.
SENATOR LINCOLN referred to a letter dated May 6 to committee
members signed by 17 individuals from boroughs and communities.
Those individuals talked about the legislation's potentially
devastating impact to public involvement and that the
communities have not had ample time to study all of the impacts.
They also said it is not feasible to rewrite all coastal
management plans in a one-year period. They provided good
reasons to hold the bill for work during the interim. She said
she will not vote to move this bill from committee because of
that letter.
CHAIR OGAN noted this bill has been discussed at four or five
committee hearings and many of the concerns have been addressed.
He said his concern is that the clock is ticking and the state's
fiscal situation is urgent. He has made this legislation a
priority because he views it as part of the Governor's plan to
jumpstart the economy. He supports moving it from committee
today.
SENATOR BEN STEVENS moved CSHB 191(FIN) am with its attached
fiscal notes and individual recommendations.
SENATOR ELTON objected and said the committee needs to recognize
the existing coastal zone management process is a dispute
resolution process. It speeds up development because it keeps
decisions out of the court system. He said he is not sure that
consolidating power in the state government will speed up
development.
SENATOR BEN STEVENS clarified [for the purpose of the motion]
that the bill has several fiscal notes.
A roll call vote was taken. CHAIR OGAN announced the motion
carried with Senators Stevens, Dyson, Seekins, Wagoner and Chair
Ogan in favor, and Senators Elton and Lincoln opposed.
There being no further business to come before the committee,
CHAIR OGAN adjourned the meeting at 4:37 p.m.
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