SB 26-LAND DISPOSALS/EXCHANGES; WATER RIGHTS  5:27:03 PM CHAIR GIESSEL announced SB 26 to be up for consideration. WYNN MENEFEE, Chief of Operations, Division of Mining, Land and Water, Department of Natural Resources (DNR), said he would go through a quick sectional analysis of SB 26. He noted that some language at the back of the bill takes out sections and that can get confusing going through it section by section. Section 1 deals with general permits. It allows the commissioner the ability to issue general permits for activities that are unlikely to result in significant or irreparable harm. It has exceptions for fish and game habitats (AS 16.20), the Alaska Surface Coal Reclamation Act (AS 27.21), forest resources (AS 41.17) and parks and recreation facilities (AS 41.21). 5:29:17 PM SENATOR FRENCH asked what prompted the standard formula of "significant and irreparable harm" for issuing general permits. MR. MENEFEE replied that the word "significant" is subjective and decisions have to be made on a case by case basis. "Irreparable harm" is if you can't rehabilitate or repair something. SENATOR FRENCH said their approach allowed them in all instances except for the four and asked if they thought about doing it the other way since this is the beginning of a fairly broad expansion of the permitting authority. MR. MENEFEE responded that this is not an expansion of authority, but merely a clarification of it. Under AS 38.05.020 (a)(1) the department has the ability to prescribe different methodologies for permitting, which includes general permits. They have already done general permits and have "generally allowed uses," which is a whole host of things people can do without getting a permit. So, the commissioner's discretionary authority has been used; this just states specifically that general permits are allowed for clarification, because a lot of them are already being used. SENATOR FRENCH asked how many general permits have been issued recently. 5:32:09 PM MR. MENEFEE replied at the initial creation of a general permit there was very few; one last year, but the subsequent authorizations coming out of it ran from 50 to 100 and that would build over time. People can purchase non-timber forest products general permits on line and he could get that figure for him, but he didn't have a good number for the burn barrel type of permits. SENATOR MICCICHE asked for the title that specifies the scope of general permits. MR. MENEFEE said he was referring to AS 38.05.020(a)(1) and that is where general permits would be done. This statute would be specifically sited if this bill was adopted. Section 2 removes the reference to an additional requirement that the director of the Division of Mining, Land and Water shall consult with other departments. This is where you have to refer back to section 43 in the back of the bill that talks about land exchanges. This provision also reinserts the part about following AS 38.05.035(e) into section 22. This section talks about giving notice of the land exchanges no later than three months after making the acquisition. CHAIR GIESSEL asked if it would be beneficial to jump to section 22 for continuity of thought. MR. MENEFEE said yes and explained that section 22 (starting on page 15) rolled in the applicable parts of the exchange, which includes public and agency review procedures, public notice, legislative approval for exchanges over $5 million, and equal values. Section 23 says the director shall consider only the land and other considerations the state would convey to receive an exchange; and section 22 (on line 13, page 15) says that the director can equalize the value of the property or other considerations conveyed or received to the state. There may be other things besides just strict land value that could be used in that. 5:38:13 PM MR. MENEFEE jumped back to section 3 that allows the director to contract for the sale of land and payments over time. It changes the threshold from $5,000 to over $10,000 and then just mentions a preliminary finding if it's a non-oil and gas related decision. On page 5, line 10, the director may make available to the public a preliminary written finding and provide opportunity for public comment for a period of 30 days. CHAIR GIESSEL asked if the 30-day public comment period is standard. MR. MENEFEE answered yes, for disposals of interest. CHAIR GIESSEL asked what mechanisms he uses for notifying the public about any of these things. MR. MENEFEE replied that they involve on line public notice, posting in newspapers and in a conspicuous location near the activity, reaching out to interest groups and notifying adjacent land owners. The statute says they have to do anything they consider needs to be done in order to notify the public. CHAIR GIESSEL asked if any of the public notice methodology was being changed by this bill. MR. MENEFEE answered no. SENATOR FAIRCLOUGH asked for an example of issuing a preliminary report, because everywhere it's listed it says "may." So, it's at the department's discretion. 5:41:47 PM MR. MENEFEE replied that putting the "may" in doesn't change a lot for the general public. Most of the litigation is based on a challenge of process more than of the actual decision. Sometimes they do issue preliminary written findings at times, even though they only have to do a written one for non-oil and gas disposal of interest, they want to make sure they don't have a situation where the public is going to hold up a project by just challenging on sheer process questions alone. 5:42:55 PM He said section 4 clarifies that a person has to address how they are substantially affected during an administrative appeal rather than just saying they are "aggrieved." In order to be eligible to file the administrative appeal they have to have submitted written comment or presented oral public testimony at a public hearing. This section also clarifies that the applicant can appeal. CHAIR GIESSEL asked the definition of "substantially and adversely affected." MR. MENEFEE said he would let Ashley Brown answer that, but "substantially" doesn't have a great definition, because it is used on a case by case basis. "Adversely affected" is defined in section 33. 5:44:51 PM SENATOR FRENCH added that earlier he was asking about "significant and irreparable," and the words here are "substantially and adversely affected." 5:45:04 PM ASHLEY BROWN, Assistant Attorney General, Department of Law (DOL), explained that "substantially and adversely affected" is defined in section 33 in the context of general appeals to DNR. It is not defined in section 4. Otherwise it is something that would be determined by the department on almost a case by case basis. 5:46:06 PM SENATOR BISHOP asked if the department is trying to make some bright lines on what might be substantially and adversely affected or some benchmarks, or is this just a judgment call on the director's part. MS. BROWN replied that "adversely affected" is defined elsewhere in the statute, and to that extent there is a clear bright line. Otherwise, it would be developed probably the same way "aggrieved" is currently interpreted. Under this bill that would be whoever is "substantially and adversely affected." Regulations could potentially further clarify this. SENATOR FRENCH asked if it wouldn't be more likely that a court would eventually clarify this. MS. BROWN answered yes. SENATOR FRENCH asked if this is meant to overturn or modify Gilbert v. State where the court said someone who is aggrieved has an interest that is adversely affected by the conduct complained of. MS. BROWN replied that she couldn't answer that. 5:48:19 PM SENATOR FRENCH said the question is going to come up over and over again and they need to know the intent in drafting the bill. MR. MENEFEE explained that this measure is trying to increase the quality of the appellants' appeals to actually give linkage to how the decision is adversely affecting them. Currently, regardless of what lawyers say when a person says he is "aggrieved" that means they are upset; therefore I should be able to appeal. And that's all they sometimes write in. He said over the last five years they have averaged 43 appeals a year, a lot of appeals to work through when you have to go through basically the same process you did for the original decision. The appeals officers that help the commissioner in crafting these estimated that 15-25 percent of them are people putting in appeals that say "I don't like this" without showing how they are adversely affected by it. The department is trying to raise the threshold, so someone actually has to say how they are affected, so it can provide some linkage between the action and what they are talking about. SENATOR FRENCH said at least a dozen sections of this bill touch on this idea and maybe it should have gone to the Judiciary Committee first, but he wanted to know how many of the 43 appeals would have been knocked out of court by this standard. MR. MENEFEE said he couldn't answer that, because he doesn't make judicial decisions. SENATOR MICCICHE said a person eligible to file an appeal for reconsideration would have had to participate in the public comment period by submitting written comment or presenting oral testimony, and folks that find out afterward that they are affected by a final written finding are eliminated. So, essentially this raises the bar so that anyone that could potentially be affected had better enter the discussion early in the process as opposed to finding out that they could own adjacent property or be an organization affected by the outcome. Is that correct? 5:52:56 PM MR. MENEFEE answered that the existing statutes had some provisions about having to participate in the process for disposal of interest decisions; it didn't address the other decisions that didn't fall under that category. Does it change the threshold on all things? No; but it raises the threshold for things that did not fall under that provision and provides 30 days' notice that here's your chance. He explained that the whole way the department crafts its public notice is just to try to encourage public participation. Currently, if they look at disposal of interest decisions they have had, if they didn't participate, then they wouldn't be eligible to appeal. This just continues that into anywhere they have given the same type of notice. So, if someone comes in after the fact and says they hadn't heard about this, they wouldn't have the ability to appeal at that point. 5:54:12 PM MR. MENEFEE continued the analysis explaining that section 5 clarifies if the commissioner doesn't act on a reconsideration, which is like an appeal but it's a decision the commissioner made originally, and if he doesn't act on it 30 days after the issuance of a written finding, it's considered denied. SENATOR FRENCH asked if this was a change in that as it stands now the commissioner actually has to act. Or is it just restating that? MR. MENEFEE responded the part that section 5 on page 7 removes the language, "the commissioner shall grant or deny an administrative appeal within 30 days after issuance of a written finding". Before "the failure of the commissioner to act on a request for consideration within this period" was a denial and it was already stated. This is just trying to clarify from what period; that is, no later than 30 days after issuance of the final written decision. 5:55:59 PM Section 6 is also clean up language. It deals with when people can go to court. Sections 7-9 clarify payments over time versus payment all up front. Sections 8 and 9 remove references to AS 38.05.065(b). It also clarifies that the contract, sale or properties sold under this chapter means all land sales versus only ones that are at public auction or by sealed bid. Section 10 allows a one-time extension (for two years) for leases in only three instances: the preference right, for renewal of a lease under (e) of this section and for applications to issue the lease on the same site but there are substantial changes. The extra time is for the decision or adjudication to be done on whether or not to issue the lease. 5:58:36 PM Section 11 is about highest bidders and replaces "aggrieved" with "substantially and adversely affected," again. SENATOR FRENCH said this section seems like a good example of a specific area of where you can at least narrow down who is at risk and whose rights are being changed, the bidders. He had greater concerns when it is applied to the public at large; and Mr. Menefee stated that this bill changes often where "aggrieved" is used to the "substantially and adversely affected" standard and asked if that was throughout all the statutes or just specifically within the DNR permitting provisions. MR. MENEFEE replied that the only provisions they are dealing with are the ones with DNR: they only addressed Titles 46, 44, and 38. 6:00:02 PM Section 12 clarifies prequalification of bidders. Section 13 rewords language to "substantially and adversely affected." Section 14 deals with leases for fisheries and changes language to "substantially and adversely affected." SENATOR MICCICHE asked the purpose of changing the appeal period from 30 days to 20 days. MR. MENEFEE answered to make it consistent with general appeals language in AS 44.37.811. 6:02:09 PM Sections 15 and 16 both relate to aquatic farm leases. There were statements about renewal in section 15 that were moved to section 16. It allows a renewal period of up to 10 years for one time. Section 17 deals with leasehold locations in addition to mineral closing orders. Section 18 adds things to clarify preliminary written decisions. Section 19 clarifies some preliminary decision work and deals with mineral and leasehold location orders. Section 20 clarifies decision terminology for different state lands. The definition is very broad, but it includes various things. One is shorelands and tidelands; before it said shore land and tide land. Section 21 expands on line public auctions to land sales. Sections 22-27 is all about exchanges and includes conveyance of mineral rights, existing rights, what type of values have to be exchanged and the need to come through the legislature for properties over $5 million. Section 27 also changes language to shoreland and tideland. 6:06:44 PM Section 28 revises the statute for unorganized borough platting actions by exempting owners that are subdividing with no public easement or right-of-way affected from the 30-day notice on that action, because historicallythe public does not seem to care. Sections 29-33 insert the "substantially and adversely affected" standard for administrative appeals. Section 29 clarifies when the requirements of AS 44.37.011 are applicable. Section 32 clarifies that a person has 20 calendar days after the issuance date of a final department decision in which to file an appeal or request for reconsideration. Subsection 33 adds new subsections to define what it means to be adversely affected and outlines additional requirements in the DNR administrative appeal process. 6:08:56 PM SENATOR FRENCH said if a person objects to a decision the commissioner made, and the commissioner decided he was not "substantially and adversely affected," an unmotivated person would go home and be unhappy, but a motivated person would take their unhappiness to the court house and say I am significantly and adversely affected. Isn't that a natural outcome under this policy? MR. MENEFEE agreed, and explained that a decision made by the commissioner that ends up as a reconsideration, but if it's made by anybody below the commissioner, it's an appeal. Either one requires the commissioner to take another look at the decision. If they are substantially and adversely affected, the commissioner has several options - remanding, disagreeing with the appeal or upholding the appeal - but if anybody comes out of that and doesn't like the decision, they can take recourse by going to judicial appeal in Superior Court. SENATOR FRENCH asked what record the commissioner will be operating on to judge whether or not this person has the requisite interest to merit his attention on the matter. MR. MENEFEE answered that when the department receives an appeal, one of the first things they do is gather the entire administrative record, which has all the documentation on how the decision was made, how public comment was treated, the whole thing from start to finish - and that is gone through with a fine toothed comb - to see if they have fulfilled the statutes and regulations. If the commissioner feels the decision was correctly made, then he upholds it; it incorrectly, he has those other options. SENATOR FRENCH used the Chuitna Mine for an example, and said he filed a comment during the permitting process that said he didn't like the Chuitna Mine. That is what is on record and the commissioner decides to permit the mine. He is unhappy and says he is substantially and adversely affected and wants an appeal. How would the commissioner decide based on the record, which is his comment that he didn't like the Chuitna Mine, that he has enough of an interest to qualify for his attention? MR. MENEFEE said someone may have commented fairly loosely about their concerns about the project, but they participated in the public process and that meets the first threshold. Second, he would have to include a statement that explains how he was substantially and adversely affected by the decision. It must specifically describe the substantial and adverse affect on the person as a direct result of the decision and explain how the decision caused it (page 19, lines 5-8). It's incumbent upon the appellant to give the reasons and then the decision is made based on that. 6:14:45 PM He went to section 34 and said it moves the threshold from the original statute that says water may not be removed from one hydrologic unit to another without being returned or having a permit to a "significant amount of water" that is already defined in regulation. Sections 35-37 clarify language; it doesn't change the intent or the original statute. Sections 38 and 39 continue the issue of substantially and adversely affected and section 39 has a further definition, but it is specific to water (AS 46.15). Previous definitions were the broad appeals. 6:16:20 PM SENATOR MICCICHE asked why "significantly and" was not included in sections 33(f) and 39(e). MR. MENEFEE explained that the statement before was "aggrieved" and that term does clarify that the person must be directly affected by the decision by a physical or financial detriment. It may have been an omission. He asked Ms. Brown to comment if she could. 6:17:22 PM MS. BROWN said she didn't have a further comment. MR. MENEFEE said the biggest change to sections 40 and 41 was removing "or a person" for water reservations, but it won't affect people who are applying for water rights. The other aspect (section 40) is to try to bring the issue through an agency that has the responsibility to manage the resource the water reservation is supposed to be affecting. In section 41 it currently says "the commissioner shall review each reservation every 10 years" and that can be quite onerous if you have to go through all the stats and information and do more studies on it every 10 years. They are now saying "may". SENATOR MICCICHE asked theoretically if an NGO completed their own reservation study and was able to get a municipality or an agency to support their findings, then they could come back to reserve sufficient water if they felt it wasn't adequate. MR. MENEFEE replied that, yes, they can work with that agency or municipality, but the municipality or the agency would have to submit the application; it wouldn't be the NGO. 6:20:18 PM SENATOR FRENCH said section 40 had been in place since at least 1986, and maybe as early as 1980, and asked what prompted this change now. MR. MENEFEE answered because a mining interest came in that wanted to reserve enough water for mixing zones. It appears that the department has been able to deal with all of the mining issues through temporary water use authorizations and water rights working through the Department of Environmental Conservation (DEC). They had never had a filing from a mining company on a water reservation. SENATOR FRENCH asked if this will affect pending applications and if so, how many. Is it a simple process and does it cost much? MR. MENEFEE answered that water reservations is a complex process; there is a minimum of three years of water data collection and evidence to show how the level of water affects whatever you are trying to address; it could include fish sampling and flows throughout the years and has a $1,500 application fee. About 35 out of the 148 applications they have for water reservations would be affected by this. Most of them are groups and there is one individual. Those applications could be picked up by the Alaska Department of Fish and Game (ADF&G) for habitat, by the Coast Guard if it's for navigability or by the Division of Parks and Recreation if it was for a recreation purpose, but that isn't mandated. The effect of the statute is that it precludes them from issuing a reservation to those people. SENATOR FRENCH remarked just suppose he has collected three years of data, paid his $1,500 and waited very patiently for this and he was just tossed out. SENATOR FAIRCLOUGH asked how many other states allow a person to make this type of request to an agency. MR. MENEFEE replied none. 6:24:42 PM He continued that section 42 clarifies that the commissioner may issue one or more new temporary use water authorizations for the same project. For instance, a 15-year project would require three different water use authorizations and each reauthorization would require the same procedure of figuring out if it affects anything, has other conflicts or habitat concerns. Staff is aware of issuing a temporary water use authorization at least five times for the same water body on the North Slope; they have issued four times in a row on the same water body for the Department of Transportation and Public Facilities (DOTPF). He said DOTPF is expecting 50 applications and there are five water sources on each application, but every five years, you have to look from scratch if it's the right thing to do. SENATOR FRENCH asked if public notice is required before issuing a temporary water use authorization. 6:26:39 PM MR. MENEFEE answered no; they do an agency review. SENATOR FRENCH asked at what point a different designation is needed for what is called a temporary water use authorization, but is issued five different times for five years. MR. MENEFEE answered that they have reviewed this extensively with staff and the Department of Law (DOL) and there is no time that you actually have to change the designation. If someone does come in and applies for a water right for the same use, if that use is perfected, that water right is given and it's not taken back, but they also don't continually make further decisions on the habitat. It's just one time. Changes could occur during 15 years and adjustments might have to be made to the amount of water they take because maybe there is less water available, because of changing conditions between the years. You can't do that with a water right. CHAIR GIESSEL noted that he had already talked about section 43. 6:28:00 PM MR. MENEFEE continued on to section 44, which is transition language saying the DNR shall return any applications and fees pending upon the water reservation. So, they will get their money back. It says the commissioner may refer the application no longer authorized to an independent evaluation consideration by that agency. Section 45 allows the department to adopt regulations and has an immediate effective date in section 47. Section 46 instructs the Revisor to change the title and section 48 establishes the bill's effective date. SENATOR MICCICHE asked how many water reservation applications might be pending now. MR. MENEFEE answered 148; the majority of those were filed in the last few years, more in the last 10 years. But that can be expected as the state grows and more things are going on. SENATOR MICCICHE asked what portion of those applications is submitted by a person as opposed to an agency or municipality. MR. MENEFEE said he just got a correction and there are 438 applications and 37 of those are by individuals. SENATOR MICCICHE asked if persons that hold water reservations now lose it or do they get to maintain it if they successfully received it in the past. 6:31:28 PM MR. MENEFEE replied that they had never issued one to a person (they have only been issued to agencies), but nobody will ever lose one that has been perfected. CHAIR GIESSEL, finding no further questions, thanked Mr. Menefee for the review and said she would hold SB 26 and take public comment at a later date.