HOUSE BILL NO. 144 "An Act authorizing the Department of Environmental Conservation to charge certain fees relating to registration of pesticides and broadcast chemicals; and providing for an effective date." Co-Chair Therriault provided members with a proposed committee substitute, work draft 0-LS0573\L, dated 3/18/98 (copy on file). MIKE TIBBLES, STAFF, REPRESENTATIVE THERRIAULT observed that the legislation is not intended to be a solution for everyone. It attempts to address some of the serious concerns about how statutes, under AS 44.46, can be interpreted. An attempt was made to include interested parties in the discussions. Concerns by the Department of Environmental Conservation and industry were considered and incorporated into the proposed committee substitute where possible. Changes incorporated by the proposed committee substitute do not modify the intent. The legislation allows the Department of Environmental Conservation enough authority to ensure that users of the system pay for the actual direct costs of services being provided. The legislation has built in safeguards to prevent abuses and ensure that general governmental functions, which benefit the State, are paid for by the state. Inquiries for information and training of DEC staff are two examples where the State benefits and should therefore carry the cost. Mr. Tibbles reviewed the proposed committee substitute: * Section 1 still requires that the Department establish fixed fees for direct costs. A technical change has been made to make this section permissive and relocate all references to restrictions and limitations to another section of the bill. * Section 1(a)(1) gives DEC the authority to charge for other services relating to agriculture, animals, food, drugs, cosmetics, and public accommodations and facilities. Mr. Tibbles noted that Ms. Adair previously testified that the language "other services" was originally attached to these types of functions. By removing this language, the Department of Environmental Conservation's authority to charge for many legitimate direct costs was inadvertently removed. This amendment was added to correct that situation. * Section 1(a)(3) adds authority for the Department of Environmental Conservation to charge for "sanitary surveys, determinations, classifications, and monitoring waivers". * Section 2 (e) contains new language for the negotiated agreements. It requires the Department of Environmental Conservation, at the request of an applicant, to negotiate a fee for service that is based upon the actual hourly wage rate of the employees performing the service. In addition, it may include travel and third party inquiries. Mr. Tibbles observed that this subsection is a result of the realization that there are complex situations where a fixed fee is not appropriate. It is intended to provide the Department with the flexibility to deal with those complex situations while placing restrictions to limit the charge to an appropriate level. * Subsection (f) increases the restricted use pesticide fee from $25 to $30. Mr. Tibbles noted that this change is in response to Ms. Adair's concern that there may not be enough receipts to cover the required state match for the pesticide program. * Subsection (g) adds a new subsection clarifying that the Department of Environmental Conservation may not charge for conferring with or providing information to third parties. ? Subsection (h) permits the Department of Environmental Conservation to charge an hourly rate for the solid waste program and is set out to be repealed in the year 2000 by section 3 of the bill. Mr. Tibbles explained that since the Department is currently charging an hourly fee for the industrial solid waste program, this change would authorize them to continue to do so under the direct cost restrictions. It also gives them time to establish by regulation reasonable fixed fees and to offer negotiated fee arrangements. * Subsection (i) adds a definition of "actual direct costs" to the bill. This subsection is intended to place restrictions on what can and cannot be included as part of the fixed fee. In response to a question by Representative Kelly, Co-Chair Therriault explained that subsection (g) clarifies that if the Department spends time answering questions about an application for a third person, the applicant will not be automatically billed for the Department's time. The Department would be serving the public's interest. Representative Davies asked if third party would exclude consultants, engineers, hydrologists, or attorneys that are representing the permittee. Mr. Tibbles recounted that conversations with the Alaska Legal Services indicated that persons acting as an agent or a legal representative of a permittee would be included as consideration of that permittee or applicant; however, the language could be changed to clarify the intent. STEVE BORELL, EXECUTIVE DIRECTOR, ALASKA MINER'S ASSOCIATION suggested that the proposed committee substitute be amended to included a new section under AS 44.46.025(a)(7). (7) Certification of federal permits or authorizations under 33 U.S.C. 1341 (sec. 401 Clean Water Act) provided there will be only one paid inspection per year for items covered by this subsection; Mr. Borell noted that several miners have expressed concern that if the Department of Environmental Conservation were to charge per inspection, that this could be used by third parties for harassment. The Department of Environmental Conservation follows-up on complaints regarding discharge violations. Without a limitation on the numbers of inspections that could be charged against a miner, opponents of mining could make spurious complaints. Representative Davies acknowledged the intent of proposed subsection (7). He questioned if complaints resulting in violations should result in a charge. Mr. Borell observed that operators do all they can to correct violations. Mr. Borell observed that meetings with the Department of Environmental Conservation indicated that there was a $450 thousand dollar shortfall in the Division of Water's budget that needed to be covered by fees. Industry worked with the Department on the concept of fees. At the last meeting it became clear that the Department was attempting to raise $1.5 million dollars through fees. At that time industry brought the issue to the Legislature to define the relationship between general fund and fees. Mr. Borell referred to language deleted on page 1, line 10, "and other services provided by the department." He maintained that this would have allowed the agency to charge for anything, anytime. JANICE ADAIR, DIRECTOR, DIVISION OF ENVIRONMENTAL HEALTH, DEPARTMENT OF ENVIRONMENTAL CONSERVATION commended the work by Mike Tibbles, staff, Representative Therriault. Ms. Adair reviewed remaining areas of concern. 1. Training is limited to permittees and applicants. Ms. Adair observed that most of the training is not for permittees or applicants. Most of the training is for waste water and water system operators or installers. In addition, training of food service employees, pool spa operators and sanitary surveyors would not be covered. 2. Fees are limited to activities surrounding (a)(2), (6) and (7): - certifications; - inspections; - training; - permit preparations and administration; and - plan review and approval. Ms. Adair pointed out that registering pesticides allowed under (a)(8) does not involve any of the above activities. 3. (g) Does not allow the Department to charge a fee for conferring with 3rd parties. Ms. Adair did not interpret the language in subsection (g) in the same manner as Mr. Tibbles. She asked for further clarification that agents of the applicant are not included under (g). She pointed out that statutes require that certain permits be publicly noticed. She observed that these notices have been charged to the applicants. 4. Actual Direct Cost Ms. Adair observed that "actual direct cost" refers to the actual hourly rate of employees directly engaged in providing the service. The Department currently establishes a flat fee for most of their programs. Annual costs of the employees involved in the activity are added. This is divided by the number of works each employee provides per year to determine an hourly rate for each employee. She stated that it would be difficult to determine the actual cost of the employees involved. Employees in the same job class are paid different amounts due to longevity. She observed that the newest employee would be the cheapest. She expressed concern with the exclusion of support staff. She stressed that clerical staff is involved in permit preparations. Flat fees include a factor for clerical services. She observed that seafood inspections include 15 minutes of clerical staff for every hour of technical staff. There is approximately 30 minutes of clerical support for every hour of technical staff for the solid waste program. Ms. Adair noted that some employees included in the flat rate are responsible for supervising other employees. She observed that her involvement is not charged. Ms. Adair maintained that actual direct cost would affect local governmental involvement. She stressed that local governments are waiting for fees to cover the cost of programs. If fees do not cover costs it will be difficult to get local governments to take on certain programs that they could better administer. Ms. Adair noted that federal and state laws require sanitary surveys. There are areas that where private surveys are not available. 5. Employee Training Ms. Adair emphasized that a well-trained employee saves private companies money. Untrained state employees are at a disadvantage when negotiating with well-trained industry representatives. She maintained that the public interest is not served when state employees are not well trained. 6. Ban on Hourly fees Ms. Adair acknowledged that the ban does not apply to the Air Program. She observed that the Solid Waste Program has an hourly fee structure. Other flat rate programs have hourly fees. After hour inspections are offered to meat processing plants for an hourly fee. Hourly inspections are only done at the request of the processor. Applications, which are withdrawn during the review process, are charged an hourly rate for work completed. 7. Low Pesticide Levels Ms. Adair maintained that pesticide levels are too low. She observed that 2,000 to 3,000 pesticides are sold in the state of Alaska. The Department of Environmental Conservation estimated that 95 percent are unrestricted use pesticides. Based on this amount the Department estimates that it will be $15.5 thousand dollars short of what is needed to run the program. She spoke in support of retaining the Department's ability to set registration fees by regulations. Representative Davies questioned if users could initiate hourly fees. Ms. Adair noted that after hour inspections are currently at the request of processors. The Department also initiates hourly fees when applications are withdrawn during the review process. She suggested that hourly fees be excluded for water permits only. In response to a question by Representative Kohring, Ms. Adair explained that the Environmental Protection Agency registers pesticides based on the chemical makeup of the pesticide product. The Department of Environmental Conservation registers pesticides used in the State. The primary reason pesticides are registered is for the issuance of monitoring waivers for drinking water systems. If a pesticide has not been used in the State, public water systems can be issued monitoring water waivers for that pesticide. KEN FREEMAN, EXECUTIVE DIRECTOR, RESOURCE DEVELOPMENT COUNCIL, (RDC) ANCHORAGE spoke in support of HB 28. He thanked the sponsor and staff for their work on HB 28. He observed that RDC supports fixed costs and cooperative funding agreements. He spoke in support of fixed fees. He maintained that standardized fees should be established for the most common permits. He proposed an aggressive general permits program. Mr. Freeman also provided the Committee with further written remarks (Copy on file.) RICK HARRIS, SENIOR VICE PRESIDENT, SEALASKA CORPORATION, JUNEAU expressed frustration with various aspects of the permitting system. He expressed concern that the goal of the permitting system is to raise money, not to serve the public. He observed that the permitting agency has a monopoly. He asserted that built in protections should exist. He spoke in support of a general permit for routine classes of activities. He maintained that permittees should be charged for actual direct costs. He stressed that permittees should not be burdened with a lot of indirect or agency overhead costs. Mr. Harris observed that the legislation limits fees to the actual direct costs and allows flexibility. He acknowledged the need for fees, but emphasized the need for protections to keep the system in control. Representative Davies suggested that the clearest way to charge actual direct costs would be through hourly fees. In response to a question by Representative Davies, Mr. Harris emphasized that agencies perform public services. He stressed that agencies should help pay for overhead costs. He proposed that actual employee time spent on a project should be charged to the applicant. Lights, power and other overhead and administrative costs should be paid by the agency. The cost of employees directly engaged in providing the service should be charged. He felt that clerical staff working directly on permits should be included. General support staff in the Department, such as the commissioner's administrative assistant, should not be included. He maintained that broader overall costs are the role of the government. HB 144 was HELD in Committee for further consideration. (Tape Change, HFC 98 -72, Side 2)