CS FOR SENATE BILL NO. 140(RES) "An Act relating to the powers and duties of the Department of Natural Resources, modifying that department's power to control and manage land within the Hatcher Pass Public Use Area, and authorizing municipal selection of that land, and relating to the Alaska coastal management program; and providing for an effective date." BRUCE CAMPBELL, staff to Senator Randy Phillips, testified. SB 140 was a mission alignment bill. It also changed statutory adjustment needed to allow for the budget allocation to the Department of Natural Resources. The statutory adjustments for Department of Natural Resources would make the planning and classification process more flexible, optional or more permissive. "Shall" was replaced with "may" in many places in the first ten pages of the bill. This would allow flexibility in the classifications land planning process. The land planning process was not the only process the department engaged in. It was one of the steps prior to getting to a land sale. Land planning classification usually preceded a best interest finding, which also had a public review and public notice. It also preceded sales or leases, each of which had its own public notice, public hearings, findings and determinations that were generally preformed in a specific order. This change would perhaps lower litigation cost, according to Bruce Campbell. The second half of the bill, beginning on page eleven, would move the Division of Governmental Coordination and its associated coastal management program into the Department of Natural Resources. [Pause on the record to determine the location of the language in the bill.] Bruce Campbell explained where the language defining the Alaska Coastal Policy Council was located. The intent was to move the process with no major policy changes or alterations to the program that would disturb the on-going process. The individuals themselves would not physically move. The Division of Governmental Coordination currently did not have a director. Efficiencies would be realized by the savings of eliminating this position through merging the division with the Department of Natural Resources. Co-Chair John Torgerson wanted to know if the witness still anticipated a saving in the maintenance of efforts from combining the two agencies. Would more federal funding be captured? Bruce Campbell had spoken to the National Oceanographic and Atmospheric Administration and was told the funding would probably not change. The programs had reached a funding cap. US Representative Don Young was working on obtaining more funding, but Bruce Campbell did not anticipate an increase in federal funding. Current state funds allocated to the Division of Governmental Coordination were fairly low and functioned under the Office of Management and Budget, Office of the Governor. Senator Al Adams asked if the merger would create any potential conflict with the regulation of state land use or with activities on private or public lands. Bruce Campbell replied that he did not see any and detailed. Federal law expressly requested that the governing state agency have the power to direct state land and water use planning and regulations, which the Office of Management and Budget did not have but the Department of Natural Resources did have. Federal law required that the entity that operated the coastal zone program shall have the power to approve or disapprove, after public notice, specific permits or actions. The Division of Governmental Coordination assumed that through a peripheral relationship to Department of Natural Resources, Department of Environmental Conservation and Department of Fish and Game. The specific mission alignments affected both the structure in which federal code was built and in the agency's impact on that. Co-Chair John Torgerson wanted to know what the changes in the proposed committee substitute would do. Bruce Campbell replied that it added language to the provision of the merger. It also added language in the planning process portion to allow it to become optional. He showed where on page two line 28 "may" was inserted, and was "shall" deleted. This was repeated in other areas of the bill. This stipulated that the commissioner "may" engage in a planning process to determine among other things whether there were sufficient funds to do the project. Currently, statute stated that the planning process was required. Without the change the ability to sell and lease lands would be difficult for the department. Co-Chair John Torgerson asked what changes were made in Section 23. Bruce Campbell answered this was an add-on made by the Senate Resources Committee and included the shift on page ten lines 20, 24 and 25 that excluded specific tracts of land that were included in municipal lease. This amounted to 939 acres of land where there was overlap between the Legislatively created public use area and the contract happening in the Hatcher Pass area. This involved an agreement to construct a ski resort. Bruce Campbell continued with other changes made on page eight to allow the use of electronic technologies for public notices. This could result in savings and if successful, the department would be expected to build upon. The department had asked to remove a coordinating body from the public notice provision. They felt that was not a useful function. Senator Gary Wilken noted the multitude of fiscal notes and wanted to know which applied to the committee substitute. Co-Chair John Torgerson answered that probably none applied since the CS had not been adopted. Senator Gary Wilken noted a Coastal Policy Council Resolution. It was not included in the packet and he wanted it distributed for member's consideration. Senator Randy Phillips moved to adopt CS SB 140 Version "N" as a Workdraft. Without objection, it was adopted. GABRIELLE LAROCHE, Acting Director, Division of Governmental Coordination, Office of Management and Budget, Office of the Governor and Program Coordinator, Alaska Coastal Management Program, testified in opposition to the bill. The sixteen-member policy council, who had prepared the resolution opposing the legislation that Senator Gary Wilken spoke of, was comprised of nine locally elected governmental officials. Also, she noted that no one who had testified before the Senate Resources Committee was in favor of the bill. The sponsor staff stated that this was a mission alignment and efficiency bill. In response, she had three points that disproved that. First, the missions of the two agencies were different. Second, no savings to the state general fund could be identified with this legislation. Finally, previous legislative audits found the Division of Governmental Coordination was the most appropriate agency for administering the Alaska Coastal Management Program. She spoke to the conflict of interest in the missions and mandates of the Division of Governmental Coordination and the Department of Natural Resources. One of the main functions of the DGC was to make determinations and provide conflict resolutions between the Department of Natural Resources, Department of Environmental Conservation, Department of Fish and Game, developers and other interested parties. The bill could result in increased start-up costs when combining the agencies. Although there would be savings in the elimination of the director position, it would be offset by other costs such as position reclassifications and hiring procedures associated with the transfer. Short-term inefficiencies were also anticipated. A changeover of the lead agency would require an amendment to the federal program approval. She described the steps required in this process. Delays or decreases in federal funding would not only impact state agency functions, but also pass-through dollars provided to coastal districts and communities in the state. Gabrielle LaRoche told the committee that the director's position, which was proposed to be assigned to the Division of Land, would not qualify for full federal funding since the position would have other duties beside the coastal management program. The difference would have to be made up. She repeated her argument that the Office of the Governor was the best location for the Alaska Coastal Management Program. JANE ANGVIK, Director, Division of Lands, Department of Natural Resources, testified via teleconference from Anchorage. She opposed the bill and had two points to make. The first was that the Division of Governmental Coordination and the Department of Natural Resources were very different and performed different functions. The Division of Lands functioned as the owner of the state lands and made decisions on how to best use the state's resources. The Division of Governmental Coordination on the other hand was a permitting agency that attempted to resolve conflicts between parties whether they affected state, federal or private lands. Secondly, she believed the intention was to make the planning process optional for the Division of Lands. She disagreed that funding for the planning functions could be eliminated since the process would no longer be required. She also disagreed that with the elimination of the planning positions, the functions could be taken over by the personnel from the current Division of Governmental Coordination. Neither of those perceptions would be accurate because, she warned. She talked about the language addressing the planning requirements and explained that it still required the division to go through a reasoning process before making decisions. With no funding or staff to perform that function, that could not be done. She stressed that this legislation would not achieve the objectives of mission alignment stated by the sponsor. She detailed the different missions of the two agencies. JOHN BAKER, Assistant Attorney General, Natural Resources Section, Civil Division, Department of Law, testified via teleconference from Anchorage. He addressed the implications of Title 38. He characterized the Department of Law's concerns with the dispersion as constitutionally based. The department did not believe that these changes would make the bill, as written, unconstitutional. However, he did want to point out that there were constitutional implications in how the courts would likely construe the legislation. That would have a direct effect on whether the legislation would achieve its objective to produce cost and efficiency savings. Those comments were directed mainly at Sections 4, 10, 11, 13 and 14 of Version "N" that made the planning functions optional. The court under Alaska law would construe all legislation as avoiding a constitutional conflict whenever possible. To do that, it would interpret the legislation with its own view of what the constitution required. The department believed that the court would view the constitution as requiring some record of the decision making for all disposals of land and other state resources in order to make public participation in that process meaningful. The department anticipated that the court would require the Department of Natural Resources to continue to engage in a process described in Title 38. The legislation could change the name of the process. If the goal were to reduce the workload in the planning and classification functions, this bill would not accomplish that. He deferred to Gabrielle LaRoche's comments on the Coastal Management Program implications. Senator Al Adams had a question on the constitutionality of the bill. Was that because the constitution specifically stated that the government needed a reasonable approach to land management and that the public was entitled to a due process? John Baker replied that there were several sections of Article 8 of the constitution that required public notice and pointed out the linkage to the classification and planning process. In a nutshell, the linkage should be described as that which a record of decision making was produced. The court required not only public notice, but meaningful public notice that the public was able to participate in. JOHN DUNHAM, Planning Department, North Slope Borough. Testified via teleconference from Barrow to the items in the bill relating to the Coastal Management Program. He was concerned that the move was unneeded and that there would be no net savings. He was concerned how the Division of Governmental Coordination activity would integrate administratively into the Department of Natural Resources. He talked about the change in employment status from exempt positions and how that might affect the impartiality or the expertise of the decision-makers. He then referred to the land planning process. He detailed the unfulfilled municipal entitlement situation. He noted that the North Slope Borough was not the only municipality in this position and felt this bill would have a larger impact than the committee realized. The Division of Lands and the Division of Governmental Coordination were completely different agencies. He closed by saying there were no simple answers. JOHN EASTON, Program Director, Bristol Bay Coastal Resource Service Area, testified via teleconference from Dillingham testified against the bill. This would affect the Bristol Bay Area Plan that included state land classifications and designations. This plan and others had gone through a full public process to find the best use. The Division of Governmental Coordination served its mission. SB 140 would remove a network system that worked quite well. LINDA FREED, Community Development Director, Kodiak Island Borough testified via teleconference from Kodiak. She had serious concerns with the state land planning functions. She felt the bill was short sighted. The Kodiak Island Borough was opposed to the Coastal Management Program portions of the bill and did not see the savings in merging the office with the Department of Natural Resources. She did not feel that by eliminating the director's position was advantageous. The director position played an important part in the process, often as an arbitrator. BILL EASTHAM, President, Mat-Su Motor Mushers, testified via teleconference from Mat-Su in opposition to the Senate Resources Committee version of the bill. He felt the Hatcher Pass community would have no control over the area. KATHY WELLS, Creator, Hatcher Pass Management Plan, testified via teleconference from Mat-Su in opposition to the bill. She did not want the Mat-Su Borough to acquire the land arguing that it did not have the capacity to properly manage it. She was concerned with the poor public notice process with this bill. KAROL KOLEHMAINEN, Program Coordinator, Aleutians West Coastal Resource Service Area, testified via teleconference from Mat-Su. She spoke to the concerns of the CRSA with the bill. She did not support the merging of the two agencies or the elimination of the planning process requirement. She also had concerns about funding for the CRSA. ROBBIE FAGERSTROM, Co-Chair, Alaska Coastal Policy Council, testified via teleconference from Nome. He requested the committee members be provided with two letters to use when making their decisions regarding this bill. He referenced a Legislative Audit Report that found the Division of Governmental Coordination was the most appropriate location for the coastal policy functions. Tape # 117 Side B 9:57 AM Robbie Fagerstrom continued. NANCY MICHAELSON testified via teleconference from Anchorage regarding the Hatcher Pass Public Use Area. She told of the area and the many recreational activities her family and thousands of other South-central Alaskans enjoyed there. She pointed out that the borough was not bound by the limitation agreement and was more interested in developing the land. MURRAY WALSH, Planning and Development Consultant testified in Juneau. He felt the provisions in SB 140 would not accomplish the goals of the permitting process. The only defense his permit applicants had was the Division of Governmental Coordination, which served as a referee. Co-Chair John Torgerson ordered the bill held in committee.