Legislature(2003 - 2004)

03/01/2004 03:30 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
        SB 275-DEPT. OF ENVIRONMENTAL CONSERVATION FEES                                                                     
CHAIR SCOTT OGAN announced SB 275 to be up for consideration.                                                                   
MS.  KRISTIN RYAN,  Director, Division  of Environmental  Health,                                                               
Department  of  Environmental  Conservation (DEC),  said  SB  275                                                               
allows DEC  to recover  the estimated  cost of  services provided                                                               
for the  pesticide registration program  to the seafood  and food                                                               
safety  laboratory   services  -  PSP  testing,   in  particular,                                                               
contingency  plan review  and financial  responsibility for  non-                                                               
crude oil operations.  It also eliminates the  prohibition on the                                                               
department to include travel costs  and actual costs for services                                                               
and allows  the department  to add late  fees and  revoke permits                                                               
when companies do not pay for their services.                                                                                   
SENATOR WAGONER  asked if  the fees  include any  amortization of                                                               
the  bonds that  are going  to  be sold  to  build a  new lab  in                                                               
MS.  RYAN  recalled  that  last   year  during  bond  discussions                                                               
legislators asked  the department to  increase fees to  cover the                                                               
costs  to construct  the  new seafood  and  food safety  facility                                                               
along with the higher operating costs.                                                                                          
     The work we do at the  laboratory are the two areas [in                                                                    
     which] we have proposed to  increase or charge fees for                                                                    
     services we  haven't in  the past.  But, the  bond bill                                                                    
     has already been completed and  construction of the new                                                                    
     laboratory  will start  this spring.  These fees  would                                                                    
     offset the operating costs of the facility.                                                                                
CHAIR OGAN asked if the bonds had been sold.                                                                                    
MS. RYAN replied yes.                                                                                                           
SENATOR   WAGONER  asked   Ms.  Ryan   if  she   had  copies   of                                                               
correspondence   from  the   growers  associations   and  various                                                               
aquaculture projects dealing with shellfish.                                                                                    
MS.  RYAN  replied that  she  has  had  some contact  with  Roger                                                               
Painter,  in particular,  and some  other growers  about the  new                                                               
$125 PSP test fee.                                                                                                              
SENATOR WAGONER said he was concerned  that a lab was being built                                                               
that would put the shellfish growers out of business.                                                                           
SENATOR  SEEKINS asked  what the  fee is  for testing  pesticides                                                               
regarding page 2, line 14.                                                                                                      
MS. RYAN  replied that SB  275 proposes  a $40 fee.  Other states                                                               
charge $125  for similar services.  The reason the  department is                                                               
only charging $40 is because the  intent is to offset the general                                                               
funds used in the pesticide program.                                                                                            
SENATOR ELTON  asked if  the department's goal  is to  offset the                                                               
general  fund cost,  did it  use the  same logic  in setting  the                                                               
proposed fee for PSP testing.                                                                                                   
MS. RYAN replied:                                                                                                               
     That is  a difficult question  to answer. The  fee that                                                                    
     we  propose for  PSP testing  is related  to the  costs                                                                    
         associated with doing the test only. It is not                                                                         
      associated with necessarily offsetting other general                                                                      
     fund expenses at the laboratory.                                                                                           
SENATOR ELTON  still wanted clarification  on why  the department                                                               
is not fully  recovering the costs associated  with the pesticide                                                               
program. He asked if it fears the  fees would have too much of an                                                               
impact, but that  it wants to fully recover  the costs associated                                                               
with the PSP testing program.                                                                                                   
MS.  RYAN  replied  that  the  registration  process  is  already                                                               
occurring and the  general fund expenses to  provide that service                                                               
are $69,000, which a fee of $40 completely covers.                                                                              
SENATOR WAGONER asked  what portion of the  bond amortization the                                                               
fees would cover.                                                                                                               
MS. RYAN replied that she would have  to get back to him on that,                                                               
but  amortization of  the bonds  is  a portion  of the  increased                                                               
operating costs.  The rent payments  on the current  facility are                                                               
similar to what the bond payback  fees would be. However, the new                                                               
facility  has  increased  electricity   demands  to  operate  the                                                               
equipment and, therefore, higher operating costs.                                                                               
SENATOR  SEEKINS   asked  where   the  refinery  fits   into  the                                                               
MS.  RYAN replied  that she  can't respond  to that  part of  the                                                               
legislation and would get back to him on that.                                                                                  
MR.  EDMOND  COLLAZZI,  Program Coordinator,  Division  of  Spill                                                               
Prevention and Response, DEC, explained  that refineries were not                                                               
going to  be charged since  they handle  crude oil coming  in and                                                               
turn  it  into  refined  oil.  "The fees  are  intended  for  the                                                               
handlers and transporters of refined oil, once it is refined."                                                                  
MR.  GARY ZAUGG,  Pac Alaska  (geoduck mariculture),  said he  is                                                               
against SB 275 unless the PSP testing fee is modified.                                                                          
MR.  TOM HENDERSON,  Kake,  said he  is an  oyster  grower and  a                                                               
member of  the Alaska Shellfish Growers  Association that opposes                                                               
the fees  in SB  275. Saying,  "The PSP  testing fees  would just                                                               
about  kill  every  shellfish growing  business  in  Alaska,"  he                                                               
contended  that  the industry  is  new  and most  growers  aren't                                                               
making  any money,  yet. A  quick look  at a  grower who  is just                                                               
starting out reveals  an investment of about  $10,000 to $30,000.                                                               
An oyster farmer  starts selling about 25 dozen  oysters per week                                                               
and has to  submit samples for two  tests to be able  to sell the                                                               
oysters - a total of $250.  The grower probably gets $6 per dozen                                                               
net from  the oysters - $150  in gross sales. Some  growers would                                                               
end  up  paying  $10,000  to  $15,000 per  year  just  for  their                                                               
testing. Other growers  who were also growing clams  would pay up                                                               
to $25,000  a year. "Nobody in  this state is making  $25,000 per                                                               
year profit on their farm."                                                                                                     
MR. HENDERSON  said that he had  been involved in growing  for 10                                                               
years and  has not started making  a profit yet as  far as income                                                               
tax is  concerned. "I  might survive, because  I'm at  the lowest                                                               
level of  PSP testing." He  noted that Alaska's fees  are already                                                               
higher than any other state; it  also has the highest rate of PSP                                                               
in the  world with no  public testing.  The only testing  that is                                                               
done is  done on the  farms. He  related how farmers  in Kachemak                                                               
Bay publicized high  levels of PSP at one point  and probably had                                                               
a positive impact on the public use of shellfish in that area.                                                                  
SENATOR  WAGONER  asked   if  he  currently  paid   the  cost  of                                                               
transporting samples for testing.                                                                                               
MR. HENDERSON  replied that  he does and  sends them  through the                                                               
post office  express mail. It  costs $13.50 per sample  and takes                                                               
one and half to two  days. Occasionally the sample arrives partly                                                               
decomposed, but it's always been good to use.                                                                                   
MR.  ANDREW  HACKMAN,  Consumer  Specialty  Products  Association                                                               
(CSPA),  said he  supports the  $40 fee,  but would  like to  see                                                               
clarification  that  would limit  it  to  no  more than  $40  per                                                               
registration.   He  explained   briefly   that  the   association                                                               
represents  manufacturers  of  antimicrobial products,  like  Mr.                                                               
Clean,   which   is   considered   a   pesticide   according   to                                                               
federal/state   law.  It   also  represents   products  such   as                                                               
insecticides and insect repellants like Off or Raid.                                                                            
CHAIR OGAN asked if the association is based in Washington, D.C.                                                                
MR. HACKMAN indicated that is correct.                                                                                          
MR.  ART KING,  President, [Indisc.]  Homeowner's Association  on                                                               
Prince of Wales  Island, said that having to pay  for PSP testing                                                               
would  discourage  newcomers  to  the  industry  and  cause  some                                                               
existing farmers to fold.                                                                                                       
MR. JOHN PUGH, [Indisc.] one of  the largest growers in the state                                                               
on Prince  of Wales  Island, said he  produces steamer  clams and                                                               
oysters and sends  out six PSP samples per week  for seven months                                                               
a  year  and one  sample  a  month for  five  months  a year.  He                                                               
estimated having  to pay $25,500 per  year if he had  to pay $125                                                               
per  sample. He  has been  in operation  for four  years and  had                                                               
never been in the positive.  "This would surely drive my business                                                               
into the ground."                                                                                                               
MR.  JIM WILD,  Elfin Cove  Oysters, said  he had  been operating                                                               
since 1994.  Currently, he does two  PSP samples per week  in the                                                               
summer, which would  cost $250 and another $20  for express mail.                                                               
He sells   $600 to  $1,000 worth of  oysters and didn't  think he                                                               
would  be able  to maintain  if he  had to  pay the  high testing                                                               
fees. He pointed out that he  already pays $1,500 per year to the                                                               
Department  of Natural  Resources (DNR)  for his  five-acre lease                                                               
and suggested  transferring some  of that money  over to  the DEC                                                               
budget. All he gets for the  lease is an annual envelope from DNR                                                               
asking for payment.                                                                                                             
CHAIR OGAN said he would  take his suggestion to the commissioner                                                               
of DNR.                                                                                                                         
MR. JEFF LONGRIDGE, Alaska Trollers  Association, said he is also                                                               
a  direct  marketer and  processor  of  fish  on his  vessel.  He                                                               
restricted his comments  to page 1 of SB 275.  Currently, he pays                                                               
a standard  fee for inspection  of vessels  based on the  size of                                                               
the operation.                                                                                                                  
     Modifying this bill  to add travel costs  to the permit                                                                    
     fee  structure leaves  us with  a  very uneven  playing                                                                    
     field. We in the  organization, and me personally, feel                                                                    
     that the fee structure should  be set up on a statewide                                                                    
     basis and  be a flat  level playfield for all.  When we                                                                    
     start  including travel  costs,  we could  have a  very                                                                    
     wide  disparity between  someone  who lived  in a  more                                                                    
     developed area  and someone who  lived in a  more rural                                                                    
     area. That is an unfair situation.                                                                                         
SENATOR BEN  STEVENS asked Ms.  Ryan how the $125  was formulated                                                               
and how  it relates  to amortization of  the bonds.  Secondly, he                                                               
asked if  any other  system is set  up where a  user fee  is tied                                                               
into the  amortization of a  state-owned asset. He felt  this fee                                                               
goes to a new level.                                                                                                            
CHAIR  OGAN asked  if he  was concerned  about the  dedication of                                                               
funds issue.                                                                                                                    
SENATOR STEVENS, slightly outraged, replied:                                                                                    
     Perhaps we should go to  the Alaska Bar Association and                                                                    
     put a  user fee on  the retirement of  every courthouse                                                                    
     bond that we have on  the lawyers that walk through the                                                                    
     door.... We ought to be  equitable and spread it across                                                                    
MS.  RYAN  responded   that  she  would  provide   him  with  the                                                               
calculation for the fees adding  that the department was asked to                                                               
offset  the costs  of operating  the lab  regardless of  the bond                                                               
payment. The staff  doing the testing is paid for  out of general                                                               
funds. The department  is not looking for ways of  paying off the                                                               
debt, but of  keeping the lab operating and payment  of the bonds                                                               
is part of that cost. The  reason that PSP tests are targeted for                                                               
fees is because  they are the largest quantity  of testing, about                                                               
984 per year, submitted to the department.                                                                                      
SENATOR STEVENS cordially thanked her for the follow-up.                                                                        
CHAIR  OGAN  held SB  275  for  further  work and  adjourned  the                                                               
meeting at 5:05 p.m.                                                                                                            

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