Legislature(1995 - 1996)
04/29/1996 03:42 PM Senate RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CSSSHB 191(FIN) MANAGEMENT OF STATE LAND AND RESOURCES CHAIRMAN LEMAN brought CSSSHB 191(FIN) before the committee as the next order of business. He noted there was a draft Resources SCS before the committee, but suggested waiting until a quorum was established before going through the entire bill section by section. CHAIRMAN LEMAN asked why the sponsor and the department are proposing to change the rate for the shore fishery leases from the way it is now, which is a system that recovers the cost of operating that program, to one in which it not only does that, but goes beyond and establishes a rental rate based on a percentage of the permit value. SARA FISHER , staff to Representative Gen Therriault who is prime sponsor of HB 191, said basically there is a use of state land that has a commercial value and the restructuring of these sections would recognize the commercial use of these sites. She pointed out that in Section 25 of the new draft Resources SCS, the reference to the term "action" has been removed which restores it to the original language requiring the director to attempt to determine who is the most qualified applicant for the site. If one application is received, the commissioner may issue a lease at a rental rate, as opposed to the administrative rate which is set in regulation and is currently $300. Many of the leases that had been signed many years ago are still under the old lease rate of $150 per year. CHAIRMAN LEMAN pointed out the shore fishery lease program is a voluntary program to help sort out conflicts between adjoining or adjacent shore fishery participants. His concern is that by raising the price and going beyond what is taken out to cover the program, it will drive people out. He wondered if an analysis has been done on what percentage of people will be driven out and what the impact will be on the program if the fee is raised. CHAIRMAN LEMAN opened the hearing to public comment. STEVE BORELL, Executive Director, Alaska Miners Association, testifying from Anchorage, stated their support for CSSSHB 191(FIN) and in particular Sections 30-35. Mr. Borell said earlier in the session, Representative Therriault removed a section from this legislation and place it into CSHB 331(RES), and he suggested the section be reinserted in HB 191. He said the issue in HB 331 is to clarify the existing statute and establish in statute the current interpretation of practice that has been followed by DNR and by industry effectively since statehood. The change is needed to ensure that the rights of the state to its subsurface mineral resources where the surface estate has been sold or otherwise transferred to a third party. Unless specifically closed to mineral entry, this land is still available for staking of mining claims. It has been the interpretation and practice of the state that claims staking alone can be allowed and without giving permission of the third party surface estate owner. He pointed out that in the Fairbanks area there are various small homesites of a few acres that run the risk of causing existing mining claims to be void. Number 545 BILL BARKER, a set netter testifying from Kodiak, voiced his opposition to Section 24, 25 & 26. He said there doesn't appear to be any reason to change the fee structure at this time. If the basis for the fee structure is placed on the limited entry permit and the value of the limited entry permit, then we have a tax being placed on the fishery resource, not on the land resources. He suggested if there is going to be a tax placed on the fisheries resource, then it needs to be placed on all of the fishermen. As far as the operation of the shore fisheries leases and the pursuit of the shore-based gillnet operation, he said everybody understands the rules, and with some of the language being proposed in HB 191, the rules start to change and he can see many problems with bringing these changes. TAPE 96-68, SIDE B Number 025 CHAIRMAN LEMAN informed Mr. Barker that the Resources SCS before the committee addresses some of the issues he spoke to. DUNCAN FIELDS, testifying from Kodiak, concurred that it is the consensus of his community that the shore fishery lease program is paying for itself, in fact current information shows that revenues in excess of expenditures in FY 95 is about $150,000. He questioned why the lease rate for set net leases is being increased when the program is paying for itself. He pointed out many of the current lease holders pay a rate of $150, and with the current language in the bill, that will jump to approximately $556, which is approximately a $400 increase per permit holder. He believes this will drive people away from the program, and the net result will be less revenue than the program currently enjoys. He also suggested a lease rate of a definite amount makes much more sense than a sliding scale based on a percentage of permit value. Number 086 CHAIRMAN LEMAN commented that it appears that the only section that's really in conflict in the bill is the new Section 26. He said Sections 25 and 27 were reworked to accommodate the concerns that were expressed by a lot of people. ROBERT PURPURA, representing the Katsitsna Bay Salmon Producers and testifying from Homer, stated their objection to the language in Section 26, namely the 0.6 percent assessment on limited entry permits with a $600 cap. They believe it is unfair to target a small group of other set netters, and they do not feel that any extra cost at this time is warranted in their fishery. He urged that the committee not support the language to determine the fee of the leases be tied in with the permit. MS. LAUREN CARLTON , a setnetter testifying from Homer, referred to language on page 12, line 2, which provides that the rental rate shall be adjusted annually, and she said she would like to see it only adjusted every five years, which would provide the opportunity to look at the long-term values and how they have changed. She said their permit value might be high because they are part of Cook Inlet, but their sites are not valued as high, so just going on a permit value is not really being equitable to those who do not have a valuable site. She pointed out her area has seen a drastic decline in their salmon runs. She also pointed out that when someone goes in to buy a permit at a set net price, they are paying for the right to use that area, and there are also added costs that are not seen up front. Number 240 CHAIRMAN LEMAN said his recommendation is that Section 26 be deleted in its entirety which would mean that there would be no change to the existing system. JULES TILESTON , Director, Division of Mining & Water Management, Department of Natural Resources, testified from Anchorage that he was present to respond to questions dealing with the amendments associated with mining when they came before the committee. RON SWANSON , Division of Land, Department of Natural Resources, said after a hearing earlier in the session, he thinks the concerns relating to the bidding war were addressed by taking care of the problem of the department having to try to figure out who is most qualified, and if they can't, they would then draw the name out of the hat. It was also made clear that somebody with an existing lease would get a preference to renew. Mr. Swanson said the shore fishery lease is the only voluntary program that the Division of Land administers, and they consider it a commercial use of state land, so they believe that the compensation rate should go up rather than just covering the administrative cost. He said when it comes to budget cuts, the first thing that they have to look at is non-voluntary programs. He sated the Administration is neutral on what the compensation rate should be. CHAIRMAN LEMAN asked if it would be acceptable to the department to delete that section which would leave it as it is now which says that it must cover administrative costs. MR. SWANSON responded that the department would not oppose the deletion of that section. REED STOOPS , testifying on behalf of AJ Associates and speaking to a proposed amendment dealing with the right of entry on private land by a party for the sake of filing mining claims, said the reason for the amendment is the result of a Superior Court decision in a lawsuit that AJ Associates is involved with. There is a dispute over whether mining claims were validly filed on property that AJ Associates is the surface owner of. Judge Jahnke, in his decision, interpreted existing law to mean that anybody that's going to file a mining claim on land that has been conveyed by the state to a private party either has to have the permission of the land owner or alternatively permission of the Department of Natural Resources in order to file that claim. He said if the Legislature were to adopt the amendment the way it's drafted, it is not only prospective but retroactive, and by making it retroactive, it would have a direct impact on their case which is pending before the Supreme Court. He added if the Supreme Court overturns Judge Janke's ruling, the amendment may not be necessary. Their preference would be to not have to go litigate the case again because it will have effectively changed the decision is that case. For that reason, he said he would recommend that if the Legislature thinks it is good policy, it ought to do it prospectively at this pint, at least until the Supreme Court has rendered a decision. CHAIRMAN LEMAN said he was not sure he wanted to take that issue up in this bill, that it is something that should fly on its own, but he wanted to discuss that with the bill's sponsor. CHAIRMAN LEMAN recessed the meeting at 5:05 p.m. until a quorum could be established. The meeting was called back to order at 5:50 p.m. with a quorum of committee members present. Number 455 SENATOR PEARCE moved the adoption of SCS CSSSHB 191(RES), version "W" dated 4/26/96. Hearing no objection, the motion carried. REPRESENTATIVE THERRIAULT , speaking to deleting Section 26 in the Resources SCS, explained an agreement had been reached on Section 26, that instead of trying to attach the lease fee to a sliding scale, they were agreeable to just go to a flat $300 fee. He suggested deleting all the language in Section 26 and replacing it with language saying that the annual rental rate shall be set at $300. CHAIRMAN LEMAN added that the understanding is that existing leases do not shift to the rate until they expire. RON SWANSON added that their current fee is $300, although a lot of the leases are at $150, and this would fix them all at $300 and bring in a revenue to the state of a little over $400,000. It costs about $250,000 to administer the program. Number 515 SENATOR PEARCE moved as Amendment No. 1 to delete the language in Section 26 and replace it with language saying that the annual rental rate shall be set at $300. Hearing no objection, the Chairman stated the amendment was adopted. RON SWANSON , speaking to the issue in HB 331 relating to access for mining staking, explained that the proposed Amendment No. 2 is to exclude private land until the Supreme Court rules. It would make it very clear that a bond does not have to be posted before the claim is staked. SENATOR TAYLOR moved to adopt Amendment No. 2. Hearing no objection, the amendment was adopted. CHAIRMAN LEMAN said he would like to have a conceptual amendment to the amendment stating that this would apply only to municipal and state lands and would not get into the private land dispute right now. SENATOR TAYLOR moved the conceptual amendment. Hearing no objection, it was adopted. Number 600 SENATOR PEARCE noted Section 21 of CSSSHB 191(FIN) was not in the Resources SCS, and she asked if this means we are now going back to the mandatory preference right that is in current law about agricultural land. RON SWANSON explained that originally if you were an adjacent farmer you would not have a preference to pick up the land next to you, even if you needed it for expansion of your facility, and this will allow that to happen. It only goes to an Alaskan bidder, and it gives them a first preference to meet high bid. SENATOR LINCOLN referred to page 18, line 29, and the language "an operated exclusively." She said she had an amendment which would delete the word "exclusively." She said the reason for the amendment was because of an old school that was no longer in use in one of the communities, and the community wanted to use it but they couldn't under present law. By deleting "exclusively" they would then be able to utilize the abandoned school. MR. SWANSON stated the department would support the amendment. TAPE 96-69, SIDE A Number 025 SENATOR LINCOLN moved the adoption of Amendment No. 3, which would delete the word "exclusively." Hearing no objection, the amendment was adopted. SENATOR PEARCE asked if anything in the bill changes the liability that the purchaser or recipient of state lands would have for previous hazardous substance releases on state lands. MR. SWANSON responded that there are a couple of sections in the bill saying that the holder of the lease at the time the problem occurred is responsible for cleaning up anything. SENATOR PEARCE pointed out that AIDEA can't lease lands that they got back from Mark Air after the bankruptcy because DOT is trying to force AIDEA to do all the cleanup from even pre-Mark Air days. MR. SWANSON acknowledged that there is nothing in the bill that changes the liability standard if somebody leases state land. CHAIRMAN LEMAN directed attention to a memorandum from the legislative drafter suggesting technical changes to page 25, lines 13 & 14 relating to effective dates. Hearing no objection, he stated the drafter would be instructed to make the changes. SENATOR TAYLOR moved as Amendment No. 4, on page 14, line 5 delete "private residential" and delete all references to "residential" in subsection (f). SENATOR HALFORD directed attention to Section 29, and said to make it conforming under (a) it would necessitate deleting (2) which is all buildings and fixtures including gravel pads, foundations and slabs not belonging to the state within 60 days of termination of the lease. He also suggested in subsection (c) deleting "buildings and fixtures" on lines 23, 25, 27 & 28. The effect of these changes would be there would still be the cleanup requirements and the requirements regarding everything but essentially the real property improvements that can't be removed, and then they are treated in the same way that (f) would treat them for a residence. SENATOR LINCOLN asked if the effect of the amendment was just removing "private residential" and "residential" in subsection (f). SENATOR HALFORD responded that it was, so that condition and that method still applies to commercial improvements. All of the cleanup requirements still apply to everything but buildings and fixtures, which are the permanent fixtures. SENATOR TAYLOR suggested as part of Amendment No. 4, on page 14, line 7 to insert the words "shall be leased or purchased." After extensive discussion relating to Amendment No. 4 as outlined by Senator Taylor and Senator Halford, CHAIRMAN LEMAN stated the amendment was adopted. Number 305 SENATOR HALFORD moved as a conceptual Amendment No. 5 to insert exactly the same language in exactly the same way in whatever title deals with DOT on airports. He explained the amendment would fit into the title of the bill and it would fix an area where there are numerous problems for rural airports all across the state. REPRESENTATIVE THERRIAULT said he made a commitment that he would not allow a lot of different issues to be added to this bill, and he also pointed out that Representative Hanley has done a lot of work on a House bill that is in the system. SENATOR HALFORD stated he would withdraw the amendment. Number 459 SENATOR HALFORD moved as Amendment No. 5 to page 5, line 19, to delete the word "should" and insert "may" in its place. He said the change would take out at least some of the preload of the section toward anything but sale to private ownership. Hearing no objection, the Chairman stated Amendment No. 5 was adopted. SENATOR HALFORD said Sections 16, 17 and others which repeal the bidder must appear in person at the auction provisions are contrary to a general intent of the Legislature to always try and load any of these programs to be the most beneficial to Alaska residents. MR. SWANSON explained these provisions relate to a Superior Court case dealing with a Kodiak land disposal six years ago, and this brings the statute into compliance with that decision. After further questions and discussion on section of the bill, the committee took a brief at ease at 6:50 p.m., coming back to order at 7:19 p.m. CHAIRMAN LEMAN asked for the pleasure of the committee on HB 191. SENATOR PEARCE moved SCS CSSSHB 191(RES) be passed out of committee with individual recommendations. Hearing no objection, it was so ordered.
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