Legislature(2011 - 2012)HOUSE FINANCE 519

04/05/2012 09:30 AM FINANCE

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10:01:33 AM Start
10:01:41 AM HB360
10:36:51 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 360                                                                                                            
     "An  Act enacting  the  Interstate  Mining Compact  and                                                                    
     relating  to the  compact; relating  to the  Interstate                                                                    
     Mining  Commission;  and  providing  for  an  effective                                                                    
10:01:41 AM                                                                                                                   
REPRESENTATIVE BOB LYNN explained  the legislation. The bill                                                                    
authorized Alaska to participate as  a full voting member in                                                                    
the Interstate  Mining Compact Commission.  Currently Alaska                                                                    
was an  associate member who  cannot vote. He  remarked that                                                                    
the mining  industry has  historically been  the cornerstone                                                                    
of  the  Alaska economy  and  was  growing more  significant                                                                    
every  day.  Alaska  currently  had  seven  operating  mines                                                                    
employing more  than 2000  people in  high paying  jobs. The                                                                    
Interstate  Mining Compact  Commission (IMCC)  was a  multi-                                                                    
state  governmental  organization representing  the  natural                                                                    
resources  and  environmental  protection interests  of  its                                                                    
member states.  The compact's purposes  were to  advance the                                                                    
protection  and   restoration  of  land,  water   and  other                                                                    
resources  affected  by mining  and  act  as the  industry's                                                                    
collective voice in Washington D.C.  He asked for support of                                                                    
the bill in light of its importance for Alaska's future.                                                                        
ED  FOGELS,  DEPUTY   COMMISSIONER,  DEPARTMENT  OF  NATURAL                                                                    
RESOURCES (via  teleconference) pointed  out that  mining in                                                                    
Alaska had been increasing over  the past several years. The                                                                    
seven  operating mines  were all  doing well.  He identified                                                                    
increasing  controversy  over  mining in  recent  years  and                                                                    
skepticism  of the  permitting  process.  At the  governor's                                                                    
request,  the  Department  of Natural  Resources  (DNR)  was                                                                    
exploring  ways to  strengthen  and  improve permitting  for                                                                    
mining and  other sectors  and make  it more  efficient. The                                                                    
department   examined  how   other   states  permitted   and                                                                    
regulated  mining and  aimed to  improve collaboration  with                                                                    
the federal government. Membership  in the IMCC would assist                                                                    
the state's goal of improved  collaboration with the federal                                                                    
regulatory agencies. Alaska had  been an associate member of                                                                    
the  compact   for  six  years.  The   commission  presently                                                                    
consisted  of 24  states and  provided a  robust information                                                                    
exchange  between the  member states  and fully  represented                                                                    
the  states  when  testifying  before  Congress  on  crucial                                                                    
legislation.  The  compact also  met  with  the key  federal                                                                    
agencies that  oversee the permitting process  in Alaska. He                                                                    
provided an  example of the Environmental  Protection Agency                                                                    
(EPA) initiative to  take over bonding for  hard rock mining                                                                    
throughout  the nation.  All  mining  states were  concerned                                                                    
about the initiative to take  over mine bonding and threaten                                                                    
each state's ability  to permit and regulate  its mines. The                                                                    
commission  was  bringing  its  members  together  to  start                                                                    
working  with  the   EPA  to  educate  the   agency  on  the                                                                    
initiative's    ramifications   and    propose   alternative                                                                    
solutions. He emphasized the benefit  of full membership for                                                                    
Alaska in the compact.                                                                                                          
10:08:05 AM                                                                                                                   
Representative   Guttenberg    questioned   whether   Alaska                                                                    
relinquished   any   state   sovereignty  by   joining   the                                                                    
commission  as a  full member.  Mr. Fogels  answered in  the                                                                    
negative. He reported that specific  language existed in the                                                                    
bill, which  ensured Alaska's  authority. He  explained that                                                                    
the commission  was an advisory  body that does  not dictate                                                                    
to the states  what they can and cannot do.  The role of the                                                                    
commission was to make the  member states, "a joint voice to                                                                    
the U.S. Congress."                                                                                                             
Representative Guttenberg asked  whether anything prohibited                                                                    
Alaska speaking on its own  behalf that might contradict the                                                                    
compact as  it dealt with  other states. Mr.  Fogels replied                                                                    
that nothing  existed in the legislation  or membership that                                                                    
prohibited the state from speaking on its own behalf.                                                                           
Representative  Neuman  wondered  if the  IMCC  carried  any                                                                    
authority  to improve  some of  the mining  laws facing  the                                                                    
state.  He  mentioned  increased attention  by  the  Federal                                                                    
Safety Mining  Act. He  wondered if  the compact  could work                                                                    
toward compromises with the federal  government to allow the                                                                    
state  to  take over  safety  management  of smaller  mining                                                                    
operations.  Mr.  Fogels  replied  that the  IMCC  can  help                                                                    
achieve  some  of  the  member's goals.  He  added  that  it                                                                    
depended  on  the specific  federal  law  that dictated  the                                                                    
program. He noted a recent  IMCC effort to work with state's                                                                    
concerns. As  a result, the  federal Mine Safety  and Health                                                                    
Administration (MSHW) director pledged  to work more closely                                                                    
with  states to  resolve issues.  He  did not  know how  the                                                                    
effort  would  affect  the  state  of  Alaska's  issues.  He                                                                    
assured  the  committee of  DNR's  continued  effort on  the                                                                    
10:12:19 AM                                                                                                                   
Co-Chair Stoltze OPENED public testimony.                                                                                       
GREG CONRAD,  EXECUTIVE DIRECTOR, INTERSTATE  MINING COMPACT                                                                    
COMMISSION (via teleconference) testified  in support of the                                                                    
legislation. He related that Alaska  was an associate member                                                                    
since  2006  and had  the  opportunity  to learn  about  the                                                                    
benefits  and  services that  IMCC  provided  to its  member                                                                    
states. The  legislation was introduced  to bring  the state                                                                    
into  full membership.  He felt  it was  important that  the                                                                    
states regulatory concerns were  heard in Washington D.C. He                                                                    
shared that the IMCC was  recognized for "its experience and                                                                    
expertise on  mining issues." Over  the past year,  the IMCC                                                                    
testified to  Congress on  behalf of  the member  states six                                                                    
times on  various mining subjects.  The IMCC  was frequently                                                                    
asked  to  provide recommendations  on  a  number of  mining                                                                    
issues  on  Capitol  Hill   and  before  federal  regulatory                                                                    
agencies.  The  commission's  member states  commitment  and                                                                    
input on common  concerns allow the IMCC to  "speak with one                                                                    
Mr.  Conrad talked  about why  Alaska should  become a  full                                                                    
member of  the commission.  He emphasized  that "the  act of                                                                    
participation  and  commitment  of the  full  member  states                                                                    
carry the  organization forward in support  and leadership."                                                                    
Alaska will  have a formal vote  as a full member  and carry                                                                    
influence  "in guiding  the direction  of the  compact." The                                                                    
state  will  have  leadership opportunities  and  a  greater                                                                    
chance to  wield influence within the  organization. Alaska,                                                                    
as a full  member will be better understood  by Congress and                                                                    
other federal  interests the IMCC  worked with.  He believed                                                                    
that Alaska's participation in the  IMCC offered the state a                                                                    
unique and special voice in mining.                                                                                             
10:17:09 AM                                                                                                                   
Co-Chair Stoltze  asked Mr. Fogels  what he saw as  the role                                                                    
of the Alaska Mental Health Trust  in the IMCC as one of the                                                                    
new mining partners in the  compact. Mr. Fogels replied that                                                                    
the biggest  benefit for the Mental  Health Trust membership                                                                    
was  to  make  sure  that  the  permitting  process  was  as                                                                    
efficient  as  possible.  The trust  will  have  a  stronger                                                                    
relationship  with federal  agencies  through  the IMCC.  He                                                                    
remarked  that  the  trust was  looking  at  potential  coal                                                                    
development and other major mining activities.                                                                                  
Co-Chair Stoltze CLOSED public testimony.                                                                                       
Vice-chair Fairclough discussed the fiscal note FN 1 (DNR).                                                                     
She reported that the fiscal  note appropriated $60 thousand                                                                    
for membership and travel expenses.                                                                                             
Vice-chair   Fairclough   commented    that   the   governor                                                                    
participated  as a  designee for  the associate  membership.                                                                    
She wondered  how the state  became an associate  member and                                                                    
whether  the membership  included travel  in the  governor's                                                                    
budget. Mr.  Fogels responded that the  current dues portion                                                                    
of the membership was covered  through existing funds in the                                                                    
Division of Mining,  Land and Water in the  amount of $7,500                                                                    
per  year. The  travel expenses  were also  paid for  out of                                                                    
"existing budgets" and the state  only attended a portion of                                                                    
the    meetings.    Full   membership    entailed    greater                                                                    
participation in IMCC meetings.                                                                                                 
10:21:39 AM                                                                                                                   
Vice-chair  Fairclough asked  for clarification  of how  one                                                                    
aspect  of membership  dues were  calculated. She  described                                                                    
the dues as  an equal portion (divided  among member states)                                                                    
of 50% of the IMCC budget.  Mr. Conrad affirmed that was one                                                                    
component of the budget.                                                                                                        
Vice-chair  Fairclough requested  clarification on  the dues                                                                    
related  to  the  other  50   percent.  She  noted  an  IMCC                                                                    
reference  to a  formula that  calculated the  state's total                                                                    
resource value  for extraction. She  wondered how  she could                                                                    
determine  the current  status of  Alaska's additional  dues                                                                    
compared to other states. She  asked whether Alaska would be                                                                    
the major contributor to the  compact and whether that would                                                                    
reduce  the other  states contribution.  She asked  what was                                                                    
Alaska's  contribution  compared  to the  commissions  total                                                                    
budget. Mr.  Conrad explained how  dues were  calculated. He                                                                    
cited Article 7 in the  legislation that defined the formula                                                                    
used   to    determine   member's   dues.    The   requested                                                                    
appropriation was a combination of  two factors: one half of                                                                    
the contribution  was pro-rata  and the remainder  was based                                                                    
on  the  value  of  mineral production.  He  indicated  that                                                                    
Alaska's  dues   from  coal  and  non-coal   production  was                                                                    
approximately $35,000.  Several member  states pay  more. He                                                                    
offered to  provide a dues  assessment chart  that presented                                                                    
the  fee distribution  among the  member states.  He relayed                                                                    
that the operating expenses for  the IMCC were approximately                                                                    
$550 thousand. The compact employed  two full time staff and                                                                    
a  part  time  book  keeper.  Administrative  expenses  were                                                                    
approximately 20 percent of the budget.                                                                                         
Vice-chair Fairclough requested  clarification about how the                                                                    
mineral valuation  was obtained.  Mr. Conrad  responded that                                                                    
the   IMCC  calculated   the  value   of  non-coal   mineral                                                                    
production   from  the   most   recent  Mineral's   Yearbook                                                                    
published by the United States  Geological Survey. The value                                                                    
of coal  was determined  using the  figures provided  by the                                                                    
federal  Energy  Information  Administration,  part  of  the                                                                    
United States Department of Energy.                                                                                             
Vice-chair  Fairclough  extrapolated  that the  two  numbers                                                                    
were  tied together  to form  a  base and  a percentage  was                                                                    
determined   from  that.   Mr.  Conrad   replied  that   the                                                                    
percentage  was  calculated  based  upon the  value  of  the                                                                    
mineral  production  compared  to  the rest  of  the  member                                                                    
10:28:02 AM                                                                                                                   
Representative  Guttenberg  referenced the  backup  document                                                                    
"Interstate Mining Compact Commission"  (copy on file), Page                                                                    
3, first paragraph:                                                                                                             
     The  Governors  of  the  party states  are  to  be  the                                                                    
     commissioners.  This means  one commissioner  from each                                                                    
     party state.  However, it  was considered  essential to                                                                    
     provide mechanisms for the  representation of the state                                                                    
     by a  Governor's alternate,  when the  Governor himself                                                                    
     could  not carry  out his  responsibilities in  compact                                                                    
     work  in  person.  To   accomplish  this  purpose,  the                                                                    
     article requires that  there be in each  party state an                                                                    
     advisory  body  to  counsel  the  Governor  in  matters                                                                    
     relating to the compact. …                                                                                                 
     In  order   to  assure   the  connection   between  the                                                                    
     Governor's  work on  the  Interstate Mining  Commission                                                                    
     and this advisory body, the  article also requires that                                                                    
     the Governor's  alternate be a  member of  the advisory                                                                    
Representative   Guttenberg    inquired   whether   Alaska's                                                                    
associate   membership  currently   required  a   governor's                                                                    
alternate and if  that was built in to  the existing budget.                                                                    
Mr.  Fogels  answered  that  an   advisory  board  does  not                                                                    
currently   exist.  He   communicated   that  the   governor                                                                    
appointed a designee  and he was currently  the designee. He                                                                    
contended that  an advisory board  was discretionary  by the                                                                    
use  of the  word  "may" in  HB 360.  The  governor had  two                                                                    
advisory  bodies  related  to mining:  the  Alaska  Minerals                                                                    
Commission   and   Natural    Resources   Conservation   and                                                                    
Development  Board. The  governor  remained undecided  about                                                                    
creating another advisory board for IMCC membership.                                                                            
Representative  Guttenberg  pointed  out that  the  document                                                                    
specified  that  the  IMCC  articles  required  an  advisory                                                                    
board.  Mr.  Fogels  confirmed  that  was  correct  but  the                                                                    
language  in the  legislation modified  the provision  which                                                                    
allowed  Alaska's  discretion  in  choosing  to  appoint  an                                                                    
advisory board.                                                                                                                 
10:30:41 AM                                                                                                                   
Co-Chair Stoltze asked  whether the administration supported                                                                    
the  bill.  Mr.  Fogels responded  that  the  administration                                                                    
supported the legislation.                                                                                                      
Vice-chair  Fairclough   remembered  that  when   the  state                                                                    
entered a  compact the state then  cannot make modifications                                                                    
to the  compact. She wondered whether  Alaska's modification                                                                    
was  actually permissible.  Mr.  Fogels  responded that  the                                                                    
Department of Law (DOL) and  the IMCC worked specifically on                                                                    
creating the modification.                                                                                                      
Co-Chair Stoltze requested a yes or no answer.                                                                                  
Vice-chair  Fairclough  questioned   whether  an  individual                                                                    
state's  modification  to  the  compact  was  prohibited  or                                                                    
whether the  IMCC "advised" against modification  by a state                                                                    
entering  the  compact. Mr.  Conrad  replied  that the  IMCC                                                                    
"advised"  that   the  compact  language  "not   be  amended                                                                    
significantly by the states."                                                                                                   
Co-Chair  Stoltze  asked   for  further  clarification.  Mr.                                                                    
Conrad  stated  that  the importance  of  compacts  was  the                                                                    
uniformity of  the membership  in the  legislative language.                                                                    
However, the  IMCC regularly agreed to  make adjustments for                                                                    
new  member  states  that were  deemed  appropriate  by  the                                                                    
Vice-chair  Fairclough  MOVED  to AMEND  the  Department  of                                                                    
Natural   Resources  fiscal   note   to  eliminate   $20,000                                                                    
appropriated   for  the   travel  budget.   She  felt   that                                                                    
sufficient funds  existed in DNR's  budget for  IMCC related                                                                    
Co-Chair Stoltze  concurred with  amending the  fiscal note.                                                                    
There being NO OBJECTION it was so ordered.                                                                                     
10:34:31 AM                                                                                                                   
Representative  Doogan asked  if the  motion eliminated  the                                                                    
travel budget  for FY 2013. Co-Chair  Stoltze indicated that                                                                    
was correct and specified  that the elimination was intended                                                                    
for all future years.                                                                                                           
Vice-chair  Fairclough  indicated  that  the  remaining  $40                                                                    
thousand  appropriation was  intended  to  meet the  state's                                                                    
obligation for membership dues.                                                                                                 
Vice-chair  Fairclough  MOVED  to   report  HB  360  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note(s.)                                                                                                    
HB  360 was  REPORTED  out  of committee  with  a "do  pass"                                                                    
recommendation and  new fiscal  note from the  Department of                                                                    
Natural Resources by the House Finance Committee.                                                                               

Document Name Date/Time Subjects
ADF&G Notice on Dvex.pdf HFIN 4/5/2012 9:30:00 AM
HB 360
HB360 Participants Witness List.pdf HFIN 4/5/2012 9:30:00 AM
HB 360
07 HB360 IMCC Back-Up - What We Do.pdf HFIN 4/5/2012 9:30:00 AM
HB 360
06 HB360 IMCC Back-Up - Member States page 1 only .pdf HFIN 4/5/2012 9:30:00 AM
HB 360
05 HB360 IMCC Background.pdf HFIN 4/5/2012 9:30:00 AM
HB 360
05 HB360 IMCC Background.pdf HFIN 4/5/2012 9:30:00 AM
HB 360
04 HB360 IMCC Back-Up - Welcome.pdf HFIN 4/5/2012 9:30:00 AM
HB 360
03 HB360 Sectional Analysis.pdf HFIN 4/5/2012 9:30:00 AM
HB 360
02 HB 360 REVISED Sponsor Statement.pdf HFIN 4/5/2012 9:30:00 AM
HB 360