Legislature(1995 - 1996)
03/25/1996 08:08 AM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 240 - MINING BONDING POOL Number 0661 ANNETTE KREITZER, Legislative Aide for Senator Leman and the Senate Resources Committee, testified on SB 240. She said the difference between SB 240 and HB 439, clarifying that she had not seen the latest version of HB 240, is that the two versions are virtually the same. She said the exception is that the Chair of the Senate Resources Committee choose not to include the Surface Coal Mining Advisory Commission because of the associated cost and the likelihood that the issues raised can be addressed by the Alaska Minerals Commission. She said, upon testimony on the Mining Bonding Pool in the Senate Resources Committee by the Alaska Minerals Commission, the commission said they could address those issues. She said the Senate felt that now was not a good time to introduce a new commission and they felt that the Alaska Mineral Commission could address it. Number 0724 REPRESENTATIVE KOTT clarified that SB 240 would not include language allowing the commission and said HB 439 has been stripped of all but the commission and had a zero fiscal note when it was passed out of the House Labor and Commerce Committee last week. Number 0747 MS. KREITZER said the Senate Resources Chair did consider that possibility and made an explicit decision not to include it in SB 240. CO-CHAIR GREEN asked if that was because of the fiscal note. Number 0760 MS. KREITZER said it was excluded because of a fiscal note concern and the fact that the Alaska Mineral's Commission indicated that they considered the work within the realm of their responsibilities. Number 0785 CO-CHAIR GREEN asked if the Senate Resources Chair realized that a zero fiscal note was possible would he still have concerns about the inclusion of the commission. MS. KREITZER said she would have to understand the need for the commission as opposed to the Alaska Mineral's Commission. She said she was not privy to the testimony of the House Labor and Commerce and asked Representative Kott to explain what occurred. Number 0812 REPRESENTATIVE KOTT said, generally, the premise was that a separate commission was established with a sunset date of two years. He said three members would be appointed by the Governor, three members appointed by the President of the Senate and three members appointed by the House Speaker. The House Labor and Commerce Committee felt the work that was charged in HB 240 would in fact be done by the committee. He said the Alaska Mineral's Commission had some opportunity, as the sunset date is several years down the road and the date it would probably be extended whereby this task force or commission would just have two years to accomplish their work. He said the industry testimony agreed that this commission was needed. Number 0863 REPRESENTATIVE OGAN said he had concerns about including a commission in the context of adding another layer of bureaucracy. he said he agreed with SB 240. Number 0901 STEVEN BORELL, Executive Director, Alaska Miner's Association, testified via teleconference from Anchorage. He said the association supports SB 240. He said, when the original state reclamation statute was established, coal mining was recognized as something that should be added in the future. He said, at the time, the sponsor of the reclamation bill, Representative Betty Fahrenkamp, specifically decided not to include coal and left the word, "may" because she did not want to get the whole coal issues in with the reclamation bill. He said the reclamation bill was an offshoot of several previous pieces of legislation and it was difficult enough to get a statute in place which met both the needs of reclamation of state lands and have a reasonable bill. The original bill would have had greater difficulties passing if coal was included. Number 1003 ROBERT B. STILES, President, DRVen Corporation, President, Alaska Coal Association, was next to testify. He said his corporation is in strong support of SB 240, as they were in support of HB 240. He said no Western coal producers has ever defaulted on a reclamation bond. He added that typical reclamation bonds for surface mining operations are dictated by surface mining statute and is typically on the level of $5,000 to $10,000 an acre and said SB 240 would do nothing to change that. He said the net effect will, not only increased the asset value of the state bonding pool with the addition of coal mining, but the income to the bonding pool will also increase. He said, given the fact that no one has ever defaulted on a bond, the risk level of the bond will actually decrease. He said this is a win-win situation for everyone. Number 1076 MR. STILES said that SB 240 will assure everyone that bonding is available for, what will typically be, greenfield coal developments in Alaska. He said greeenfields are atypical of coal developments in the rest of the nation. He said, usually, coal is developed in areas where an existing infrastructure is already in place. Number 1104 MR. STILES referred to the question raised by Representative Kott and said that his corporation is in support of the temporary Coal Commission. He said that particular commission is now present in an alternative bill, CSHB 439 and is important because the funding for the regulatory program, which controls coal surface mining in the state of Alaska, was at some degree of risk. He said when the Federal Surface Mining bill was enacted, Alaska in its unique circumstance was not considered. As a result of that recognition, a special study was conducted, in 1980 by the National Science Foundation, which found that many of the regulations associated with the federal bill are not applicable in Alaska and recommended that Alaska be granted latitude in developing its regulatory program which governs surface mining in the state. He said, for unknown reasons or obscure reasons, the regulatory program developed for the state did not take advantage of the latitude that was offered as a result of this study. MR. STILES said one of the missions of this commission, were it to be established, would be to re-examine the regulations in regards to this study along with information that has been developed over the last 15 years in order to recraft and re-evaluate the surface mining regulatory program as it applies in the context of the state. He said this requires the commitment of some resources and said the industry is willing to commit the resources on their behalf to that commission and would support the state doing the same. Number 1270 CO-CHAIR GREEN referred to the change on page one from "may" to "shall" and asked if an individual who wishes to mine gets to develop a mine as a result of this language change. He suggested that this individual might be someone who should have a bond. He asked if this concern was shared by the industry. Number 1332 MR. STILES said the concern is the one inch thick regulatory program. He said surface coal is unique in the resource industries in that it is the only one with an entire regulatory structure developed for it alone. He said bonding is one of the hurdles typically associated with the opening of a greenfield coal mine. He said working your way through a very complex regulatory program and permitting process is difficult and cited an example of an application consisting of a 35, three inch, three ring notebooks thick document. He said this application is a significant document which represents several million dollars. He said an individual, that gets through the process to the point where he is at the bonding stage, deserves the mine. Number 1429 CO-CHAIR GREEN referred to the fluctuation in coal prices and asked about an influx of miners into areas. He then asked if only big mining companies would be involved. Number 1481 MR. STILES said the bonds, in the state bonding pool, are just like bonds that you would get through regular surety. The bonds are secured with some hard fast asset. He said if an operator had a bond called on him, he would never get a surface mining permit anywhere in the country which is a fairly significant deterrent. He said the fact, that the bonds are secured with assets in the state, reduces the risk of a call on the bond pool. He said the bonds are larger, but the assets which have to be pledged to secure the bonds are larger which creates a balance. Number 1551 REPRESENTATIVE KOTT made a motion to move SB 240 with zero fiscal note and individual recommendations. Hearing no objections SB 240 was moved from the House Standing Committee on Resources.
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