Legislature(2003 - 2004)
03/13/2003 09:05 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 79
"An Act extending the termination date of the Alaska Minerals
Commission."
This was the first hearing for this bill in the Senate Finance
Committee.
Senator B. Stevens, the bill's sponsor, explained that this
legislation extends the termination date of the Alaska Minerals
Commission until 2014. He stated that the Commission is comprised
of eleven members and was established in 1986. He noted that the
Commission's mission is to provide recommendations and suggestions
to mitigate constraints on the development of minerals in the
State.
Senator B. Stevens brought attention to the Commission's seven
recommendations on page vii of the 2003 Alaska Minerals Commission
report [copy on file]. He stated that these recommendations
"resonate the objectives of the current Administrative in trying to
find ways to develop the infrastructure to have access to the
natural resources of the State and bring them to market." He
encouraged the Committee to support this legislation.
Senator Hoffman asked whether the Division of Legislative Budget
and Audit conducted an audit regarding the extension of the
Commission.
Senator B. Stevens stated that an audit was not conducted.
NEIL MACKINNON, Vice Chair, Alaska Minerals Commission, and
President of Hyak Mining Co. spoke in favor of the bill.
Senator Taylor encouraged the industry and the Commission to
develop draft legislation to address industry's concerns and
further the Commission's recommendations. He mentioned that water
quality standards set by the Department of Environmental
Conservation, and in particular, drinking water regulations that
negatively affected placer miners, could be addressed. He suggested
a bill requiring that State standards not exceed federal water
quality guidelines would be an example of appropriate legislation.
Mr. MacKinnon responded that, historically, the Commission presents
broad, rather than specific, recommendations to the Legislature.
Senator Taylor reiterated that draft legislation would be welcome.
Mr. MacKinnon cited Section 1c) "Water Quality Standards" on page
three of the report as follows. He relayed the Commission
recommendation that revisions to the Alaska water quality standards
be adopted.
1c) Water Quality Standards
Findings: When municipal water treatment plants or industrial
projects require water discharge permits, the Department of
Environmental Conservation must insure that the proposed
discharge will meet the State of Alaska water quality
standards for various parameters. Due to the rapidly advancing
science on both the potential environmental effects of these
parameters and the changing technology for detecting the very
low concentrations, the most appropriate numerical criteria
for these parameters keeps advancing.
In 1999, the U.S. Environmental Protection Agency (EPA)
approved a new list of water quality criteria that updated
many of the numerical criteria. The EPA also responded to the
environmental science that had developed over the years and
replaced the old total recoverable values with new dissolved
criteria.
In recognition of this advancing science, the Department of
Environmental Conservation proposed revisions to the Alaska
water quality standards on August 2, 2002. The public comment
period on these proposed changes was completed in October,
2002. These revisions need to be adopted by the State
immediately, and forwarded to the EPA for review and approval.
The Commission Recommends That:
The Governor should instruct the Department of Environmental
Conservation to adopt the revisions to the Alaska water
quality standards as proposed on August 2, 2002.
Senator Taylor asked whether the Administration has acted upon the
recommendation.
Mr. MacKinnon responded that was unaware whether the recently
elected Administration has had an opportunity to address the
report's recommendations.
Senator Taylor questioned whether regulatory changes would be
sufficient.
Mr. MacKinnon replied that other recommendations in the report
include 1a) "Litigation Reform" recommendations that have, he
noted, been purposefully placed at the beginning of the
recommendation list. He noted that 1b) "Permit Efficiency"
recommendations are being furthered by "the movement" of the
Division of Habitat and the Division of Governmental Coordination
into the Department of Natural Resources. These sections read as
follows.
1) Regulatory Reform
1a) Litigation Reform
Finding: A critical component to resource development in the
State of Alaska is insuring that development projects, once
permitted by the appropriate State Agencies, can proceed
without delay. Unfortunately, groups opposed to development
routinely file litigation with the sole objective of either
preventing or delaying permitted development. Often the basis
for the litigation is without merit. Under Alaska's current
law, such groups, regardless of financial resources or
membership composition, can routinely quality as "public
interest litigants", in which case there is absolutely no
financial downside to them if they lose the litigation .The
net result is that there is no disincentive to these groups
not to pursue litigation. As a consequence, the State of
Alaska as well as industry and developers are forced to defend
themselves in lengthy and costly litigation with little chance
of recovering any costs or attorney fees woven when they
prevail in the litigation.
The groups that regularly oppose resource development are not
simply concerned citizen groups but more often special
interest groups supported financially by national and/or
international organizations whose stated mission is resource
preservation. The result of these systematic and orchestrated
lawsuits files by purported "public interest litigants is
inhibiting development by escalating development costs, both
in terms of real dollars spent on litigation and lost dollars
due to delays. Modifying Alaska's existing rules and
regulations for proposals where public input and
administrative appeal was afforded by eliminating "public
interest litigant" status in Administrative appeal decisions
and awarding fees and costs to the prevailing party in
litigation ensures a level playing field. Likewise, requiring
disclosure of funding sources by those who seek to qualify as
litigants and/or who seek to file an Administrative Appeal
allow those defending the litigation to know the identity of
those who are actually supporting the litigation and the
amount of that financial support.
Modification of Alaska's existing "public interest litigant"
rules and regulations is not aimed at preventing litigants
from pursuing administrative appeals, rather the intent is one
of fundamental fairness- ensuring that the identity of those
who initiate the litigation are know and that the potential
negative consequence of such litigation are borne equally by
all parties to the litigation .The objective is not to inhibit
meritorious litigation, but rather to inhibit frivolous
litigation by ensuring that there is a consequence to those
who file and support such litigation.
If responsible resource development is to be promoted and
achieved, it is imperative that once development projects are
permitted they are not delayed, by individuals, or entities
that choose to pursue frivolous litigation. Modifying Alaska's
existing rules and regulations regarding "public interest
litigants" is critical to promoting and achieving responsible
resource development in the State of Alaska.
The Commission Recommends That:
1a.1) Public Interest Litigant Status needs to be limited. The
Legislature should modify existing State Statutes to
specifically provide for any party bringing a civil
action seeking judicial review of Administrative Agency
decisions, in which they were afforded an opportunity for
public input and administrative appeal, not be awarded
"public interest litigant" status. Furthermore, the
prevailing party in such civil action shall be entitled
to an award of attorney fees and costs as in other civil
actions.
1a.2) Funding Sources need to be disclosed. The Legislature
should modify existing State Statutes to require that a
condition of obtaining litigant status and/or of filing
an Administrative Appeal, under regulations, is the
initial and supplemental disclosure of the identity of
those who provide funding to the entity who seeks
litigant status and/or initiates an Administrative appeal
and the amount of such funds during the past two years
and during the term of the Administrative Appeal.
1b) Permit Efficiency
Finding: A key element in marketing Alaska as an attractive
and competitive place to do business is the ability to process
permit applications in a responsible, consistent and
expeditious manner.
In the 2001 legislative session, funding was provided for the
Alaska Department of Environmental Conservation (ADEC) to
reconstitute the qualified core of water quality permitting
staff. Equally important to adequate funding, the agencies
need the flexible management tools necessary to provide
responsive, effective, and efficient management of permitting
issues.
Permitting delays negatively impact business in Alaska. Delays
are often due to staffing shortages which creates backlogs for
industry project permit review.
To help resolve this problem, ADEC had recently utilized the
Department of Natural Resources (DNR) authority for third
party contracting through the Large Mine Permit process, and
has contracted directly with third party contractors to assist
with permit review. ADEC is also planning to select one or
more individuals/firms that would be available on-call to
provide technical assistance to a permitting team regarding
risk assessments and monitoring requirements for National
Pollutant Discharge Elimination System (NPDES) discharges, and
mixing zones for placer miners.
Supplementing permanent staff during permit development is a
positive step that will allow agencies to respond more readily
to the intermittent demands associated with industry growth,
Further, it will support the limited number of permanent staff
personnel via access to the varied technical and scientific
expertise required for responsible permitting.
In some circumstances, permitting delay has been characterized
by industry as "procedural duress." Industry recognizes that
permitting review is an iterative process through discussion
and supplementing of relative information, public review,
comment and response to comment. However, an unreasonable
extension of any of these elements can lead to costly and
unnecessary delay. At present there are instances where State
requests for additional information, and subsequent time
extensions, appear to be based on a partial or cursory review.
This results in additional time delay through multiple
information requests. Further concern is often raised
regarding extension of public review and comment periods. This
practice is detrimental to the agency, to the industry, and
ultimately to economic development within Alaska, potentially
leading to the loss of millions of dollars in revenue, and
related monetary losses in taxes and royalties.
Permitting agencies need to ensure that the permitting process
is not unnecessarily extended. Initial permit review should
result in a single and complete list of information
deficiencies. Additional requests for information should be
limited to questions arising out of new information.
The Alaskan industries, agencies, Administration, and
Legislature can work together to provide responsible and
reliable permitting that ensures the protection of the
environment and a sound future. For this to happen, we cannot
be complacent in trying to improve permitting efficiency
through funding alone. All of the recommendations provided
must occur in concert for Alaska to fulfill its potential for
sustainable and attractive resource development.
The Commission Recommends that:
1b.1) The Administration must continue to aggressively search
for and find means to accommodate the use of third-party
contractors who will work under the core managers to
provide permit development supports on an as-needed basis
and extend these efforts to all types of environmental
and resource permitting. The Legislature needs to
encourage and support the Administration in this effort.
1b.2) The Legislature should require a periodic permitting
status report accounting for agency staff and management.
1b.3) Salary scales for public workers must be improved
relative to the private sector in order to retain competent
staff
Senator Hoffman asked the status of the issue regarding the
construction of large permanent buildings at mining sites.
Mr. MacKinnon responded that this issue has not been addressed by
the Commission "for quite some time." He noted that the removal of
cabins and other structures has been discussed.
Senator Hoffman commented that the issue of constructing new large
buildings, particularly in remote, large project areas such as the
developing Donlin Creek mining site, should be readdressed.
Mr. MacKinnon professed that the Commission has addressed the issue
of cabins and other structures that present an obstacle to the
development of a mining site. However, he continued, buildings in
general have been discussed in "a general context."
Co-Chair Wilken observed that the Alaska Minerals Commission's
"report is laced with recommendations." He asked whether the
Commission members, upon the completion of the report, place
themselves in an advocacy position or whether they present the
report to the Legislature to act upon. He aired that furthering
these recommendations would be "important to the industry."
Therefore, he questioned "the role" that the Commission "plays"
after the report is provided to the Governor and the Legislature.
Mr. MacKinnon responded that, historically, the Commission compiles
the annual report and conducts a formal presentation to the
Governor and the Legislature. He noted that oftentimes, a
Legislator "takes an active role" in furthering a recommendation.
He qualified that Commission members have not, historically, played
a significant role with legislation.
Co-Chair Wilken asked whether the Commission has a legislative
committee that furthers its recommendations.
Mr. MacKinnon responded that the Commission's limited budget
provides funding for a few public meetings and the Legislative
presentation.
Co-Chair Wilken opined that Commission members are "a pretty
powerful group of people" who could use their positions to further
mining interests in the State. He suggested that Commission members
join together to promote the industry.
Mr. MacKinnon asserted that members do follow issues. He exampled
that he personally follows essential fish habitat issues on the
State and federal level, and that such things as water quality
issues are followed by other members.
Co-Chair Green qualified that the stated purpose of the Commission
is to provide the Legislature and the Governor with pertinent
mining related information, and, she continued, it is the
responsibility of the Legislature and the Governor to act upon the
report. She commended the Commission on a "very good" report.
2b) Restricting the Use of Mining Airstrips
Finding: In many remote mining camps, the only feasible summer
access is by use of an airstrip on, or adjacent to, the mining
operation. Unauthorized use of these strips, often by
commercial operations, can result in potentially unsafe
condition, and the attendant threat of liability, both to the
miner and to the State.
The Commission recommends that:
The Governor and the Legislature should direct the Division of
Mining, Land & Water to mend the mining regulations so that
when an airstrip is required for access to a specific mining
operation, the Plan of Operation will allow the permit holder
to restrict the use of the airstrip.
Co-Chair Green asserted that the Legislature had previously adopted
legislation addressing the use of airstrips. She asked whether the
industry is experiencing liability issues concerning the use of
airstrips by non-industry related aircraft in remote locations.
Mr. MacKinnon responded that airstrips are a liability problem. He
exampled some of the situations that have occurred, and he stated
that some placer miners are experiencing difficulty in obtaining
insurance coverage if they cannot close the airstrip to casual
users.
Senator Taylor responded that the Legislature addressed this issue
"extensively" a few years prior. He stated that he remembers the
adopted legislation "to provide relief" on this issue.
Co-Chair Green asked whether the State would be required to
coordinate airstrip legislation with the Federal Aviation Agency
(FAA).
DR. LANCE MILLER, Member, Alaska Minerals Commission and Executive
Director, Juneau Economic Development Council, explained that the
use of an airstrip is a FAA issue. He continued that although some
airstrips are private, access would be required in emergency
circumstances.
Co-Chair Green requested follow-up information be provided
regarding the use of airstrips, as she stressed, this issue should
be pursued.
Dr. Miller commented that it is important for the "diverse group"
of Alaskans on the Commission to address issues affecting their
industry. He highlighted the economic importance of mining in the
State. He explained that this legislation proposes to extend the
termination date of the Commission another ten years because,
oftentimes, ten years is required for mining projects and issues to
develop. He acknowledged the interest being bestowed upon the
Commission's report by the Legislature.
STAN FOO, Mining Section Manager, Division of Mining, Land and
Water, Department of Natural Resources testified from an offnet
site to voice the Department's support of the legislation. He
stated that "the Commission provides important and meaningful
feedback," which serves as a "reality check" to the Governor, the
Legislature and the Division on mining industry issues "as well as
relevant land and water matters." He stated that the Commission
includes broad geographic representation from large and small
miners in the State.
Senator Bunde recognized the work conducted by the Commission. He
spoke to recommendations in the report that seek appropriations of
up to $5 million in State funds. He asked, in consideration of the
State's current budget situation, what the State could expect "as a
return to the general fund" for the State's investment in the
mining industry, in addition to the jobs and economic benefits the
State receives.
Mr. Foo explained that, in addition to the job opportunities and
economic benefits, the industry has annually contributed five to
seven million dollars in mining royalties, mining license taxes,
and mining claim rentals. He stated that these numbers are
reflective of years in which mineral prices have been suppressed.
He voiced that the Division anticipates an increase in claim
staking activities, particularly in the Denali Block region, which
would result in an increase in industry contributions to the State.
Co-Chair Green expressed that interest is being shown in expanding
the differing types of geologic mapping of the State. She asserted
that the variety of mapping types should be centrally coordinated.
She asked how the differing mapping approaches interrelate.
Mr. MacKinnon informed that geophysical and geological mapping is
addressed on page nine of the report.
Dr. Miller expressed that the Geographic Information Systems (GIS)
database contains a variety of the differing databases. He
explained that geophysical mapping is subsurface; geological
mapping denotes surface features such as rocks; and geospacial
mapping includes roads and towns. He stated that while the various
mappings are separate, they could be integrated to better plan
development.
Co-Chair Green voiced support for "coordinated mapping."
Mr. MacKinnon commented that combining geological and geophysical
maps would "put together the pieces of the puzzle."
Dr. Miller interjected that the different State agencies limit the
scope of their individual projects to specific mapping and do not
take into consideration, for example, the subsurface
characteristics of an area. In other words, he explained the map
does not provide the user with an in-depth overview
Senator Taylor specified that Wrangell is the only community in the
State that has invested in geophysical mapping. He asserted that as
a result of this undertaking, significant mine staking and activity
has resulted in the area. He cited the report as recommending that
additional mapping be conducted. He surmised that if 25 percent of
the State funds appropriated for lobbying efforts to open the
Arctic National Wildlife Refuge to oil exploration had instead been
spent on surveying Alaska's mineral deposits, the State would have
experienced significant growth in the mining industry. He opined
that the State is "ignorant" of its mineral deposits.
Senator Bunde asked whether the State would conduct mapping efforts
in conjunction with the United States Geological Survey (USGS).
Dr. Miller confirmed that the USGS and the Alaska Division of
Geological and Geophysical Services (DGGS) jointly conduct mapping
efforts.
Senator Taylor remarked that Legislators often ask the amount of
return to the general fund that would be expected from a State
investment in a project; however, he opined, this should oftentimes
not be a criteria when the State is making efforts to enhance an
industry. He noted that when an industry is healthy, contributions
to the general fund could be entertained. He spoke in favor of the
Donlin Creek mining site and noted that the Red Dog Mine has
provided employment opportunities and probably significantly
reduced "the drain" on the State's welfare program
Co-Chair Wilken asked the location of the report's cover
photograph.
Dr. Miller identified the cover photograph as depicting the
airstrip at Donlin Creek.
Senator Hoffman, noting the structure shown in the cover
photograph, asked whether it is permanent rather than a temporary
building.
Mr. MacKinnon ascertained the structure could be a collapsible
steel building.
Senator B. Stevens offered a motion to report SB 79 from Committee
with individual recommendations and attached fiscal note.
There being no objections, SB 79 REPORTED from Committee with a
previous $9,500 fiscal note, dated February 27, 2003, from the
Department of Community and Economic Development.
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