Legislature(2019 - 2020)BUTROVICH 205
02/05/2020 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| SB155 | |
| HB122 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 155 | TELECONFERENCED | |
| *+ | HB 122 | TELECONFERENCED | |
SB 155-EXPLORATION & MINING RIGHTS; ANNUAL LABOR
3:32:33 PM
CHAIR MICCICHE announced the consideration of SPONSOR SUBSTITUTE
FOR SENATE BILL NO. 155, "An Act relating to exploration and
mining rights; relating to annual labor requirements with
respect to mining claims and related leases; relating to
statements of annual labor; defining 'labor'; and providing for
an effective date."
3:32:59 PM
SENATOR BISHOP, speaking as sponsor SB 155, thanked Chair
Micciche for the moment of silence for former Chair Birch. He
said the timely remembrance coincides with a mining bill that is
in front of the Senate Resources Committee, noting Senator
Birch's mining background.
He submitted that SB 155 streamlines mining laws. Updated
recommendations and changes will make it easier for Alaskan
miners to do business with clarity and the ability to cure
faults. The bill will help with the administration's vision that
Alaska is open for business and to let capital flow into the
state from around the world. The state has a history in mining
and the bill will tune up mining regulations and statutes.
3:35:01 PM
He explained that the process for the legislation started three
years ago in response to miners having issues with voided
claims. He said himself, Senator Coghill, Senator Giessel, the
Alaska Miners Association (AMA), and the previous administration
saw a need for change. He thanked the Alaska Department of
Natural Resources (DNR), Commissioner Feige, AMA, fellow
senators, and the governor for collaborating on the legislation.
3:37:17 PM
He explained that miners annually fill out a standard form for
their assessment work. Miners were reporting that technical
violations were resulting in voided claim notices via mail.
Article XIII, section 8 in the Alaska Constitution addresses
annual labor or annual lease payments under the Mineral Leasing
Act. The legislative intent for the bill is to preserve due
process for miners. Miners should be able to have a cure period
to protect their investments if they meet their annual labor
statements and lease payment requirements, even though there
might be a discrepancy.
3:39:11 PM
CHAD HUTCHISON, Counsel, Senate Majority Office, Alaska State
Legislature, Juneau, Alaska, explained that the legislation
involved several years of work that involved an AMA working
group that included credible attorneys and miners. She said the
legislation addresses concerns voiced by individual miners
throughout the state.
He addressed slide 2 in his presentation, This Bill is About
Mining Rights, as follows:
• Mining-A large part of Alaska's past, present, and future.
o Alaska Constitution Section 8.1-General Policy
square4 Encourage development of the resources
o Alaska Constitution Section 8.11-Mineral Rights
• Designed for miners out in the field...not lawyers.
Pursuant to Governor Dunleavy's "Open for Business" Policy.
• Based on "real world" experience.
He said the bill is about mining rights. Senator Bishop said the
bill starts with the Alaska Constitution, Article XIII. Alaska
is one of the few states that has a natural resource article in
its constitution as a general policy to encourages resource
development for making maximum use, and consistent with the
public interest. Alaska continued the mineral rights at
statehood. The mineral rights, specified in Article XIII,
section 11, are dependent on the performance of annual labor,
royalties, and rent payments. The bill will touch on issues
related to section 11.
3:41:12 PM
SENATOR BISHOP pointed out that Alaska's mining industry has
4,500 direct jobs, not counting the indirect and induced jobs.
Mining jobs are some of the highest paying in the state,
averaging $102,000 a year. Annual payroll, total direct and
indirect, amounts to $715 million. The Red Dog Mine shows how
mining jobs have paid dividends to the NANA Regional Corporation
and the Alaska Industrial Development and Export Authority
(AIDEA). He pointed out that the state is on the precipice of
looking at some other projects to come online that will
significantly increase jobs.
SENATOR BISHOP addressed slide 3, Example, as follows:
• Small miner in Alaska
• Small typo in date.
• Was forced to refile his claim.
• Tremendous risk! Top filing is an issue.
o Lost investment/equipment/time.
• Hurt production for Alaska.
He said the future economy requires critical minerals like
copper, molybdenum, and gold. All those elements along with
changes from the bill will affect both big and small mining.
He revealed that a small miner in Fairbanks shared that a typo
on one of his labor affidavits forced him to refile his claim,
an action that caused concern and created tremendous investment
risk from an abandonment issue because of some paperwork
problem. The typo risk is one of the things that the bill is
trying to correct.
3:43:39 PM
SENATOR COGHILL asked for an explanation of the annual reports
and payments.
SENATOR BISHOP explained that the payment schedule depends on
where the miner is at in their rent clock.
SENATOR COGHILL asked if the payment issue is based on a timing
or an event.
SENATOR BISHOP answered that payment is based on acreage and
timing. If a miner has not made a lease payment by November 30,
it's Katy bar the door. Miners do have the option to make a
partial payment, but the requirement for full payment is
November 30.
CHAIR MICCICHE said receiving additional information on the
process would be valuable.
SENATOR BISHOP pointed out that a mining rent increase is based
in statute on a 10-year lease cycle. The rent increase is based
on the Consumer Price Index (CPI) in Anchorage. He noted that
his rent recently increased by 23 percent.
3:46:03 PM
SENATOR GIESSEL addressed the fourth bullet point regarding
tremendous risk. She asked what top filing means and why is it a
risk to a miner.
SENATOR BISHOP explained that if an individual or group has a
hiccup on their claim if voided, they cannot re-stake their
claim for one year. However, a new leasee can stake the claim by
top filing.
SENATOR GIESSEL summarized that if the miner makes a small error
in their annual labor report, another person can come in and
automatically take that claim away with no recourse.
SENATOR BISHOP specified that the applicant must be the first in
line. He said the bill proposes a cure period for up to two
years, but with a penalty.
CHAIR MICCICHE remarked that the bill addresses a fairness
issue. There are some cases were families have invested hundreds
of thousands of dollars up to millions of dollars over
generations. In one case a widow is going though a very
difficult time because of a top filing situation. He said he
appreciates that Senator Bishop brought the bill forward.
3:48:34 PM
MR. HUTCHISON addressed slide 4, Sections 1, 2, 3 Deal with
Qualifications, as follows:
• Section 1 - As 38.05.190(a) is amended - Qualifications
o Adds that mining rights can be acquired by:
square4 Conservators of minors or incapacitated adults;
square4 Individuals at least 18 years of age or older who
have declared their intentions to become citizens
of the United States;
square4 Limited Liability Companies (LLCs);
square4 Registered trusts (with a qualified trustee)
He explained that current mining rights qualifications includes
U.S. citizens over the age of 18 years of age, U.S.
corporations, and guardians of U.S. miners. The bill updates the
statute for 2020 based on recommendations by the AMA working
group. The bill includes conservators who handle the financial
aspects of miners and incapacitated adults.
He explained that the qualifications for "persons" changed to
"individuals" that are at least 18 years of age or older that
have declared their intention to become citizens of the United
States.
MR. HUTCHISON highlighted that foreign interest that explores
and invests in the state is good for working Alaskans. For
example, Sumitomo and Canadian mining interests in Interior
Alaska. The Fort Knox Mine receives electrons from Golden Valley
Electric Association (GVEA) and the tax base for the Fairbanks
North Star Borough benefits as well. There is nothing wrong with
foreign investment because Alaskans benefit. Alaskans are those
miners along with supply companies and all the support structure
around the mine, many are Alaskan companies.
SENATOR KIEHL asked who would not be qualified.
MR. HUTCHISON answered that an incapacitated adult without a
guardian or conservator and someone under the age of 18 that did
not have a guardian would not be qualified.
3:51:21 PM
He explained that the bill includes LLCs and registered trusts
with a qualified trustee. Information on registered trusts is a
publicly searchable document on CourtView. All the
recommendations for the bill brought a modern mindset of how
mining interests pass to trusts and beneficiaries.
CHAIR MICCICHE pointed out that there is not a residency
requirement in the statutes. He asked if there is any preference
or are the statutes just how mining laws have always been
because federal law does not allow Alaskans to have greater
standing than anyone else.
MR. HUTCHISON answered that he can only think of an equal
protection under the Commerce Clause for the free and open
ability to participate in the nation's commerce. He said
historically speaking, foreign-based companies have contributed
to mining interests over multiple decades.
CHAIR MICCICHE assumed that the non-residency requirement was
from the Commerce Clause, federal law that superseded state law.
Even if the state attempted to change the requirement, the
attempt would be unconstitutional.
MR. HUTCHISON answered correct.
3:53:17 PM
MR. HUTCHISON addressed slide 5, Sections 1, 2, 3 Deal with
Qualifications (Continued), as follows:
• Section 2 - AS 38.05.190(b) is repealed and reenacted
• An unqualified person may become qualified or transfer the
interest to a qualified person within 90 days after the
department sends written notice. If the defect is not
cured, the department may make a "void" declaration.
He explained that section 2, AS 38.05.190(b), pertains to
qualification. Senator Bishop mentioned that qualification and
due process are big issues among the miners' perspective in
interior Alaska. If the state takes away mining rights and
investments, there must be due process and the ability to cure.
If the department makes a "void" declaration for a non-cured
defect, the department sends the declaration and the person has
90 days to make a response.
3:54:06 PM
He addressed slide 6, Sections 1, 2, 3 Deal with Qualifications
(Continued), as follows:
• Section 3 - New subsections are added to AS 38.05.190.
These are new subsection (c), (d), (e), (f), and (g).
• (c) - If the department learns that an unqualified person
has acquired an interest, the department shall send written
notice to the owner and address listed in the most recent
statement of annual labor or to the address in the deed or
assignment of the claim. The notice statement shall express
that the interest will be void unless the defect is cured.
• (d) - Failure to comply will result in a "void." However,
there shall be no "void" declaration if the person becomes
qualified.
• (e) - An unqualified person can cure either before or after
receiving notice. However, a person may not cure if there
has been "void" declaration. If "void" a person cannot re-
stake for one year.
He explained that section 3 adds new subsections that gets into
what the bill sponsors envision for due process. Subsection (c)
establishes that the department shall send written notice to a
relevant address when it learns that an unqualified person has
acquired an interest. Subsection (d) addresses failure to comply
with a void. Subsection (e) defines the cure process after a
miner receives a void notice.
MR. HUTCHISON summarized that the miners must receive the
benefit of the doubt. The intent is to give ample liberal
opportunity for the miner to cure. Mining rights owners must
receive the freedom and flexibility to address a cure prior to
receiving a void notice.
3:55:17 PM
SENATOR BISHOP referred to Senator Giessel's question on a
voided claim. He said subsection (e) specified that if the claim
is void, the person cannot re-stake for one year.
SENATOR COGHILL pointed out that currently there is no notice.
The presumption is the miner has the responsibility to know if
their filing report has a problem.
SENATOR BISHOP explained that the only notice a miner receives
is their claim is gone.
SENATOR COGHILL concurred that the void notice is a dramatic
issue.
MR. HUTCHISON said miners have said there has not been a proper
notice and that is what the bill is trying to correct.
SENATOR COGHILL emphasized that millions of dollars and a life's
work could go up in smoke based on the void notice issue.
MR. HUTCHISON specified that the small miners have addressed the
void notice issue with the bill sponsors. The small miners do
not have a team of attorneys or a department to fill out their
paperwork. The consternation from the void notice comes from the
small mom-and-pop operations, the placer miners from Interior
Alaska. There is a lot of confusion sometimes about how DNR
implements some of their policies.
3:57:03 PM
SENATOR COGHILL noted that he has asked how many placer miners
in other states. There are a handful, but if there is a placer
mining place in the United States it is going to be in Alaska,
specifically in the interior of Alaska. Alaska is not the only
place for placer mining, but placer mining is significant and a
big deal to the state.
MR. HUTCHISON addressed slide 7, Section 3 - Continued, as
follows:
• (f) - If the unqualified person fails to cure the defect
within 90 days after the department sent written notice,
the department may declare the exploration or mining
interest "void" and open to location. There shall be no
third-party location or judicial action within those 90
days.
• (g) - "qualified to do business in this state" means
holding a certificate issue by the Commissioner of
Commerce, Community, and Economic Development (necessary to
do business in the state).
MR. HUTCHISON said in subsection (f), the intent is to give the
benefit of the doubt to the small miner.
SENATOR BISHOP specified that the bill does not say there cannot
be a void notice filing, just that the miner has 90 days to get
their house in order.
He said in reference to Senator Coghill's comments on placer
miners, based on two-year-old data, there are 600-permitted
placer miners in Alaska. Placer miners are mom-and-pop
operations that generate over $105 million directly to the
economy.
3:58:24 PM
CHAIR MICCICHE said he is curious why people will choose various
timelines and asked how the bill sponsors arrived at 90 days for
the cure period.
SENATOR BISHOP replied that typically a miner is in the field
and gets to town once a month to check their P.O. boxes. Ninety
days provides miners with ample time to address any certified
mail from DNR.
MR. HUTCHISON continued to address slide 7, subsection (g). He
said the subsection simply defines business qualifications and
the requirement to hold a certificate issued by the Alaska
Department of Commerce, Community, and Economic Development
(DCCED).
He pointed out that the DCCED license is just one license, a
miner must also have a mining license from the Alaska Department
of Revenue and from DCCED. The two departments must cross
reference to make sure a miner is in good standing. Also,
depending on how big the mining operation is, the state requires
many other permits from the corresponding agencies.
4:00:22 PM
MR. HUTCHISON addressed slide 8, Section 4, 5 Deal with Mining
Claims, as follows:
• Section 4 - AS 38.05.195(b) - Establishment of deposit
right when using the Meridian, Township, Range, Selection,
and Claim system (MTRSC). How does MTRSC work? Location of
a claim is based on ground locations of quarter sections,
or, quarter by quarter section of a township on a
rectangular survey system. The locator marks the claim,
using the MTRSC system in good faith. The corners are
marked on the ground of the claim, in the event of a
conflict. The system is approved by the commissioner.
• Adds: a valid MTRSC system location establishes rights to
deposits within the section that are open to claim staking
at the time of location.
He addressed slide 9, Mining Claim Form Example, an illustration
of a claim form that miners fill out. The claim identifies the
who, what, when, where, and why as to what is going on with the
claim. The claim example illustrates the quarter-by-quarter
section, the meridian is Fairbanks, the township is 8-North, the
range is 12-East, Section: 34, quarter-by-quarter section:
Southeast, of Quarter Section: Southeast. He noted that the
Claim Sketch allows for computer or handwritten illustrations.
There can be attachments that the miner can choose to include,
the same goes for the annual labor document. Recording a claim
certificate occurs in the recording district.
4:02:37 PM
He addressed slide 10, Section 4, 5 Deal with Mining Claims, as
follows:
• Section 5 - AS 38.05.195(d) - Changes in locations and
amended notices.
• Eliminated unnecessary language and focused on a simple
procedure outlined in AS 38.05.200. Notices can be amended
at any time to correspond with the amended locations, as
long as it does not interfere with the rights of others. If
there was an error in the notice or certificate of
locations, an amended certificate of location shall be
recorded in the same manner and with the same effect as the
original certificate.
He explained that section 5 pertains to changes to locations and
amended notices. The bill gets rid of unnecessary language
related to annual labor. The change eliminates a conflict in the
way annual labor is going to operate later in the bill, AS
38.05.200.
4:03:23 PM
MR. HUTCHISON addressed slide 11, Affidavit of Annual Labor. He
specified that annual labor takes up sections 6, 7, 8, and 9 in
the bill. The illustration on slide 11 shows what an affidavit
looks like. The affidavit is usually a page of substantive
language and it can have an attachment. The affidavit notes
lease name, location, Alaska Division of Land (ADL) number,
meridian, township, range, and section(s). The important part of
the affidavit is to show labor performance. He summarized that
he would specify what labor is in the State of Alaska when it
comes to developing a mining claim.
He addressed slide 12, Sections 6, 7, 8, 9 Deal with Annual
Labor, as follows:
• Section 6 - AS 38.05.210 (a) - Outlines clear guidelines
for performance of annual labor - Performing annual labor
means that the miner is working the ground and trying to
produce.
• Added:
o Annual labor performance can be done under a common
plan for development.
square4 May include adjacent mineral interests.
square4 Expenditures may be made on or for the benefit of
any one claim.
o Labor shall be performed at the following rates:
square4 $100 for each claim;
square4 $400 for each quarter section MTRSC claim
square4 $100 for each partial or whole 40 acres of each
mining claim not established using the MTRSC
system.
o For not more than five consecutive years, the claim
holder may make a cash payment instead of performing
annual labor.
He said the bill provides a clear understanding of added
components and what already exists. Some changes may be subject
to change. For example, an adjustment to the language in the
common plan for development. The bill allows labor forms under a
common plan for development. That may include adjacent mineral
interests and expenditures that benefit any one claim. He
explained that the noted labor rates currently exist in statute.
MR. HUTCHISON said one of the most important things that the
bill sponsors want is for miners to produce. The bill includes
language that says that not more than five consecutive years,
the claim holder may make a cash payment instead of performing
annual labor. The intent is to incentivize moving production
forward by having miners produce what is on the land rather than
paying the equivalent value in cash and doing nothing.
4:05:46 PM
CHAIR MICCICHE asked for an explanation on the labor piece in
the bill.
SENATOR BISHOP explained that the bill specifies the labor
spending minimum to be within the intent of the law to be whole.
He pointed out that existing regulation allows for carrying
labor costs forward.
CHAIR MICCICHE remarked that there is not a requirement for
production, but there is a requirement for spending to encourage
production.
SENATOR BISHOP answered correct. He said that is the reason why
there cannot be more than five consecutive years of cash
payments. The spending requirement is all about encouraging
production.
4:07:47 PM
SENATOR KIEHL said he has a two-part question on the labor
spending minimum. He explained that his first question is to ask
for an explanation on the $100 minimum labor rate for each
claim. He inquired how the $100 minimum rate was determined. He
noted that in reviewing earlier changes to the section, the rate
was still at $100.
SENATOR KIEHL said his second question is whether the $100
minimum rate is enough minimum labor spending to get production
from claims. He assumed that the minimum rate is to keep people
from warehousing, noting that the state is not worried about
operators who are spending $100,000 a year because they are
mining.
SENATOR BISHOP replied that he cannot answer the first question
because the rates are probably a policy call within the
department. He said he agreed with Senator Kiehl's comments on
his second question. He reiterated that the intent is to
encourage production as fast as possible. He admitted that
miners cannot twiddle their thumbs and throw capital away. He
said the small guys need to produce because they put it right
back into the ground.
4:09:32 PM
MR. HUTCHISON addressed slide 13, Sections 6, 7, 8, 9 Deal with
Annual Labor, as follows:
• Section 7 - AS 38.05.210(b) - Clarifies the information
found in a statement of annual labor
• Added:
o Individual signs the statement to certify that it is
true and correct to the best of the individual's
knowledge.
o The statement must include:
square4 The assessment work year
square4 The name and land administration number assigned
by the department.
square4 Every meridian, township, range, and section in
which the mining claim located
square4 The recording district
square4 The total amount of work required
square4 A description of the labor performed
square4 The value of the labor performed (including
excess labor value from previous year)
square4 The name and mailing address of the owner
designated to receive notices
He said section 7 clarifies what will be in the anticipated
annual labor statement. The bill adds many statement inclusions,
especially an individual signing that their statement is true
and correct to the best of their knowledge.
He addressed slide 14, Sections 6, 7, 8, 9 Deal with Annual
Labor, as follows:
• Section 8 - AS 38.05.210(c) - Allows for statement of
annual labor to be corrected at any time
• Added:
o The statement of annual labor can be corrected at any
time, before or after the effective date of this act,
before and "invalid" declaration.
o The corrected statement of annual labor shall be
recorded like the original.
o A corrected statement may not be applied against labor
required to be done during a subsequent year.
o A corrected statement shall be recorded in 90 days.
• Removed:
o 2-year threshold has been removed. In other words:
There had to be a correction within two-years.
MR. HUTCHISON explained that section 8 allows for corrected
annual labor statements, a policy that provides the miner every
benefit of the doubt. The section allows corrections at any time
prior to an invalid declaration. Corrected statement treatment
is the same as the original. There is no ability to apply
required labor during a subsequent year from a corrected
statement. Recording a corrected statement must occur in 90
days.
He noted that there used to be a two-year threshold to make a
correction and failure to make corrections within the two years
could have resulted in bad consequences. The bill eliminates the
two-year threshold and corrections can occur at any time.
4:11:02 PM
He addressed slide 15, Sections 6, 7, 8, 9 Deal with Annual
Labor, as follows:
• Section 9 - AS 38.05.210 - Added new subsections (e), (f),
(g), (h), (i), (j), and (k)
• (e) - A single statement of annual labor may be recorded
for the benefit of more than one mining claim.
• (f) - A timely recorded statement of annual labor is prima
facia evidence of performance.
• (g) - The department shall not declare a mining claim
invalid based on a deficiency in a statement of annual
labor until 90 days after written notice.
o Certified mail
o Additional cop sent via regular mail
• (h) - If a person fails to correct in 90 days, the
department may make an "invalid" declaration. No third-
party location or judicial action within those 90 days.
• (i) - A decision to declare a location invalid based on a
deficiency in a statement of annual labor must be issued no
later than five years after the date of the annual labor is
recorded.
• (j) - Department not required to review statements of
annual labor.
• (k) - Failure of a co-owner to contribute shall be treated
in accordance with AS 38.05.215-AS 38.05.235.
MR. HUTCHISON said section 9 deals with additional provisions
for the annual labor statement. The section allows recording of
a single annual labor statement for more than one claim.
He explained that in subsection (f), a recorded statement of
annual labor is prima facia, which means on its face is evidence
of performance. From the court's perspective and the
department's perspective, the recorded statement is on its face
evidence of performance.
He said subsection (g) deals with notice mailing. The department
shall not declare a mining claim invalid until 90 days after
written notice. Small miners brought forth the notice issue
because their work environment requires them to be out in the
field. The subsection makes sure miners have the proper notice.
He explained that in subsection (h), the department shall make
an invalid declaration if a person fails to correct in 90 days.
However, no third parties can locate, and no judicial action can
happen within those 90 days. The subsection protects the miner
and provides the ability to rectify.
He detailed that subsection (i) places a five-year lookback
limit on the department to declare a location invalid based on a
deficiency.
He said subsection (j) is an important section that does not
require the department to review annual statements of annual
labor. The section does not require the department to look at
the files and potential issues.
He explained that subsection (k) outlines the failure of a co-
owner to contribute.
4:13:17 PM
SENATOR BISHOP specified that that subsection (j) does not
require the department to review statements of annual labor.
However, various departments will review mining permit
applications that require stringent review for the right
reasons.
CHAIR MICCICHE asked if mining claims must be adjacent for a
single statement of annual labor.
SENATOR BISHOP replied that a single statement requires
connected claims.
4:15:32 PM
MR. HUTCHISON addressed slide 16, AS 38.05.215-AS 38.05.235 -
What Do Those Statutes Say, as follows:
• A non-contributing co-owner may be required to forfeit
interest to the other co-owner, after direct written notice
or 90 days public notice in a local newspaper of record
from the contributing co-owner.
• If a forfeiture occurs, within 120 days, the co-owner that
claims forfeiture shall record in the recorder's office
where the claim is located:
o Copy of notice
o Affidavit of service
o Affidavit of co-owner
square4 Must include that delinquent amount has not been
rectified.
• If a lienholder on an unpatented mining claim, the
lienholder may perform annual labor to prevent forfeiture.
• Notice must be sent to the address of owner.
• Lienholder work shall be reimbursed. Must be properly
recorded 90 days within completion.
• A lawsuit may be filed to enforce a lien after notice of
the claim of lien.
• A lien for performance of annual labor must be done in good
faith to protect interests.
He summarized that the statutes show that there is a process if
a co-owner forfeits.
4:16:27 PM
He addressed slides 17 and 18, Section 10 Defines "Labor," as
follows:
• Section 10-Labor includes:
o Work performed in good faith on a mining claim,
leasehold location, or mining lease that is directly
related to prospecting for, developing, or producing
minerals, including:
square4 Excavating, tunneling, drilling, or clearing
brush and timber in support of prospecting for,
developing or producing minerals
square4 Constructing or maintaining roads, trails, and
landing strips
square4 Extracting or producing ore
square4 Performing metallurgical analyses, environmental
studies, economic feasibility studies,
engineering, and permitting
square4 Constructing settling ponds, water supplies, and
other utilities
square4 Providing worker housing
square4 Performing reclamation activities under a
reclamation plan
square4 Transporting workers and equipment in the state
to or from a mining site (not to exceed 50
percent of the total value of labor in the
statement of annual labor for the assessment
year)
square4 Conducting a geological or airborne survey by a
qualified expert and verified by a detailed
report that sets out:
• The location of the survey
• The nature, extent, and cost of the survey
• The name, address, and professional
background of the person conducting the work
MR. HUTCHISON specified that section 10 defines what labor is
going to be, an issue that the AMA working group addressed. The
intent for the labor definition list is that work performance is
in good faith for developing a mining claim, leasehold location,
or a lease.
He noted that statute already defines a qualified expert used
for geological or airborne survey. A qualified expert means an
individual qualified by education experience to conduct
geological, geochemical, or geophysical surveys.
4:17:37 PM
He addressed slide 19, Section 11 Defines Abandonment," as
follows:
• Section 11 - AS 38.05.265(a) and (b) - Clarifies
"abandonment" -
• (a) - Failure to perform labor or make improvements or make
a payment in lieu of labor, timely record a certificate of
location or statement of annual labor, timely pay annual
rental, or timely pay any required production royalties
constitutes abandonment.
• A locator may not relocate the claim until one year after
abandonment.
• Removed:
o A statement of annual labor that does not accurately
set out essential facts is void and has no effect.
• If an annual rental or a royalty payment is deficient but
is otherwise timely paid, abandonment does not result if
full payment is made within the period described in the
deficiency notice from the department or 30 days after a
final judgment establishing the amount due (if the
deficiency amount due was contested).
MR. HUTCHISON explained that a person is on the abandonment path
if they do not perform the labor or they do not pay the
royalties and rent. Claim relocation cannot occur until one year
after an abandonment declaration.
SENATOR BISHOP pointed out that relocation depends on whether
someone has not top filed.
MR. HUTCHISON concurred with Senator Bishop.
He summarized that section 11 removes issues in AS 38.05.265
that pertains to typos and essential facts in a statement of
annual labor report. The miner receives the benefit of doubt.
Abandonment, as defined in section 11, does not necessarily
occur if an annual rental or royalty payment is deficient.
4:19:13 PM
He addressed slide 20, Section 11 Continued, as follows:
• (b) - Added "rents and royalties." The language now states
that unless another person has located on the abandoned
claim or leasehold location (or the area is closed to
mineral location), a person may cure the failure to record
or pay rents or royalties (that led to abandonment) by:
o Properly recording the certificate of location or
statement of annual labor;
o Paying any required rental or royalties; and
o Paying the penalty equal to the annual rent from the
mining claim or leasehold location.
He summarized that section 11 solidifies that there is a
rectifying process if there is a payment deficiency.
He addressed slide 21, Section 12 - AS 38.05.270 - Transfers, as
follows:
• Clarified that the sale, lease, or other transfer of mining
property or interest in mining property be recorded, but
eliminated existing language which stated, "or shall be
approved by the director in compliance with such
regulations as the commissioner my adopt."
o Why? The removed language was too vague. What
"regulations?" Clarity and a "streamlined process" was
sought for the miners.
4:20:42 PM
CHAIR MICCICHE asked how someone becomes assigned if something
were to happen to a legal person controlling a claim.
MR. HUTCHISON asked if the question pertained to the estate
process or a trustee for a beneficiary.
CHAIR MICCICHE answered yes.
MR. HUTCHISON answered that he will have to get back to the
committee with an answer.
He addressed slide 22, Section 13 Deals with Recognition of
Locations, as follows:
• Section 13 - AS 38.05.275(a) - Ensures that mining on state
selected land located on or after an active unpatented
federal mining claim may be located only with recorded
permission of the unpatented federal mining claim holder.
He said section 13 is a good reference on the handling of mine
locations in the State of Alaska. The section references AS
38.05.185 to AS 38.05.275 regarding elements on the claim
process, qualifications, producing annual labor, etcetera. The
only addition to the section, as suggested by the AMA working
group, is that if there is state selected land on an active
unpatented federal mining claim, it may only be located with
expressed written permission from the federal mining claim
holder.
4:22:23 PM
He addressed slide 23, Sections 14, 15, 16 Deal with
Applicability, the Transition Process, and the Effective Date,
as follows:
• Section 14 - Clarifies applicability
• Section 15 - Ensures a smooth transition process (for
regulations).
• Section 16 - Immediate effective date.
MR. HUTCHISON explained that sections 14-16 clarifies
applicability sections specifically to section 8, which allows
for statement corrections of annual labor at any time. Section 9
deals with annual labor requirements and because of the change,
those are going to take effect before, on, or after if this bill
passes. Section 13 pertains to unpatented federal claims, the
unpatented federal permission starts on July 1, 2020. Section 15
deals with a transition process and states that the department
shall declare a site abandoned because of the revisions that are
happening in this legislation, until problems resolution, and
this has passed through a smooth transition process. Section 16
calls for the immediate effective date of the legislation.
SENATOR KIEHL asked if anything in the bill affects payment
deadlines and their impact on the validity of the claim right.
MR. HUTCHISON answered that miners still must make payments and
their associated deadlines. However, the ability to rectify has
changed where due process allows the miner to correct the amount
owed and to keep producing.
4:25:00 PM
CHAIR MICCICHE opened public testimony. He said the committee
will start with invited testimony.
4:25:20 PM
DEANTHA CROCKETT, Executive Director, Alaska Miners Association,
Anchorage, Alaska, noted that representatives from the AMA
working group will provide additional testimony to address a
highly technical issue. She said she appreciated the previous
comments from Senator Bishop and Mr. Hutchison in addition to
their work on SB 155 to make sure the senseless loss of claims
stops happening. She added that she appreciates and agrees with
Chair Micciche's description of the bill as a fairness issue.
She said AMA has spent a lot of time talking to people about the
bill because it has mining and exploration in its title.
However, AMA spent more time talking to people about what the
bill is not. The bill is simply a fix to the state's land and
mineral tenure statutes for clarification.
She shared that AMA jokingly says that the only people who care
about the claims issue is DNR and miners, the only two
demographics that it impacts, but fixing the issue is critical.
AMA and its working group have worked with DNR for almost four
years. In addition, AMA has worked with Senator Bishop and the
previous administration. The bill before the committee is a
product of hours of conversations with the AMA working group,
subject matter experts, and the DNR. There was a lot of give and
take to end up with the legislation.
4:28:02 PM
MS. CROCKETT said getting into the issues that Senator Bishop
and Mr. Hutchison outlined, statute review in its entirety
resulted in determining must-haves. One of those is to change
the qualifications for people or entities allowed to hold
claims, an issue that the bill addresses via LLCs, trusts,
etcetera.
She stated that the bill provides a cure provision if somebody
does find themselves to be unqualified for any reason, there is
an ability to fix that within 90 days.
She said the bill also clarifies the intent of the MTRSC claim
location system for DNR to correctly interpret how that system
is supposed to work.
She stated that there is unclear language about the affidavits
of annual labor, an issue that garnered most of the time. Fixing
the form, fixing the types of labor allowed and other things
related to annual labor affidavits is a critical issue for AMA.
She said AMA thinks that the bill does a great job of clarifying
the existing federal mining claim and state mining claim of
transfer of conversion of process.
She summarized that the bill addresses the must-haves that were
critical to AMA. The legislation creates land tenure and mineral
tenure that miners need, an industry-wide issue that affects
anyone that holds a mining claim in Alaska. She noted that the
overview used a lot of placer mining examples, but there are
large operations that have experienced the previously noted
issues as well.
4:29:57 PM
She said Mr. Hanneman and herself will address questions brought
up by committee members. She said there was a question about the
fee structure. Fees are based on acreage and timelines. The
longer a miner holds a claim, the more the miner pays. The fee
structure incentivizes production. She explained that the
longest scale occurs for claims held for 11 or more years. She
noted that the fees passed the previous year as part of the
DNR's regulation revisions, the fee for a claim holder for 11
years or more is $825.
CHAIR MICCICHE explained that his previous rate question was in
reference to the intention to use a mining claim as a low-cost
recreational site, an issue that created struggles in Cooper
Landing. He asked if the bill adequately addresses recreational
use of claims.
4:31:36 PM
KARL HANNEMAN, Chief Executive Officer, International Tower Hill
Mines, Fairbanks, Alaska, explained that under section 10, the
AMA working group has specifically proposed a new statutory
definition to address in part Chair Micciche's concern. The
definition states, "Work or improvements made in good faith on
or for the benefit of the mining claim;" that language does not
exist now anywhere. The change will assure claim owner
accountability toward advancing the property towards production.
CHAIR MICCICHE pointed out that section 10, lines 16 and 17
states that, "mining lease that is directly related to
prospecting for, developing, or producing."
MR. HANNEMAN specified that the definition for "labor" in
section 10 starts on line 15 and continues through line 17,
"'Labor' includes work performed or improvements made in good
faith on or for the benefit of a mining claim, leasehold
location, or mining lease that is directly related to
prospecting for, developing, or producing minerals, including."
He added that section 10 continues with a list of activities
that qualify as work.
CHAIR MICCICHE asked if the bill further incentivizes and
discourages the cabin and recreational site.
MR. HANNEMAN answered that was the AMA working group's
intention. He said in response to Chair Micciche's earlier
question on rates, statutes require miners to pay rent and
royalties on state land. Physical work must occur in the field
to advance a claim. The intent is not to change the timing or
amounts associated with the required timely rent or royalty
payments.
4:33:32 PM
CHAIR MICCICHE asked for an explanation on determining errors
and assigns of mining property.
MR. HANNEMAN answered that he was referring to an existing
statute that the bill will remove.
CHAIR MICCICHE asked if there is an adequate process to
determine the recording of an heir or assign of a mining
property.
MR. HANNEMANN conceded that a problem can occur if an
unqualified entity receives an estate settlement transfer. The
intent is to understand who is qualified to own and allow an
opportunity to cure.
SENATOR GIESSEL noted that sections 8 and 9 addressed the 90-day
period to correct a deficiency and statement of annual report.
She asked if there is a top filing prohibition during the 90-day
period.
MR. HANNEMANN answered yes.
4:36:28 PM
GREGORY BEISCHER, President, Millrock Resources, Incorporated,
Anchorage, Alaska, explained that Millrock Resources is a public
company that trades on the stock exchange. He said Millrock's
goal as geologists is to find a giant metallic load mineral
deposit like Red Dog, Fort Knox, or Greens Creek. The company
does not placer mine or operate on creeks. The company stakes
its claims in Alaska and attracts capital from all over the
world.
He said he will provide the committee with a couple of examples
of why the state needs to fix its mineral statutes. Currently,
there is a fair bit of uncertainty in tenure of mineral title.
In some cases, Millrock has lost its mineral rights which is
unacceptable. It is not perfectly clear whether land is open and
available for staking, a major disincentive to mineral
investment in the state from around the world.
He detailed that Millrock was top filed by another claimant that
pointed out an error in a historic affidavit of labor to DNR.
The error dated back almost 20 years prior to Millrock owning
the claim. Millrock bought the claims from a prospector and he
made an error on his affidavit. The DNR declared Millrock's
claims void, retroactively all the way back to the date of the
error. As a result, Millrock lost the claims, someone had top
filed and now they have got them. The only way Millrock is going
to get the claims back is to pursue it in court, an action that
Millrock is unsure will be successful.
MR. BEISCHER said in another case, Millrock was also top filed.
Millrock had staked a huge block of claims at significant
expense. In both cases, Millrock put several millions of dollars
into those claims in exploration. In the second instance,
Millrock was able to work things out with the top filer, but it
cost Millrock several hundred thousand dollars. In so doing,
Millrock lost its major mining company partner for co-exploring
the land. Millrock put $1.5 million into the ground and it was
suddenly in doubt, in jeopardy, and the partner walked away.
MR. BEISCHER said the disincentive clearly needs legislation. He
remarked that it is not right that a company can diligently
explore, pay its rent, do the required work, the geophysical
surveys, the geological mapping, the drilling, then to suddenly
lose the claim on a technicality. The bill will go a long way to
fixing the lack of clarity on title and uncertainty about
ownership of the mineral rights. No one is going to invest
millions if there is no mineral title assurance.
4:40:49 PM
He pointed out that the mineral statutes issue has caused the
DNR a lot of angst and controversy in addition to an awful
amount of time. DNR will become significantly more efficient and
save money with new statutes. He summarized that the bill would
result in more investment in the state and save the government
money.
CHAIR MICCICHE asked if Millrock operates outside of Alaska.
MR. BEISCHER answered that Alaska is Millrock's prime focus, but
Millrock has operations in Arizona and Northern Mexico.
CHAIR MICCICHE noted that his question was meant to address
Millrock's capital that is at risk. He said the two examples
that Mr. Beischer provided are significant. He asked if other
states have similar exposure in their statutes. He remarked that
Alaska's statutes have a gaping hole.
MR. BEISCHER answered that some of the Canadian jurisdictions
are well advanced and have that well locked in. He pointed out
that mineral and mining companies can invest all over the world.
There are stories in Third World countries like Congo,
Venezuela, and even Chile where the countries stripped the mines
away. There is uncertainty on title and tenure after millions in
investment and possibly losing mineral rights. However, losing
mineral rights in a First World country like the United States
and particularly Alaska is shocking.
4:43:00 PM
SENATOR GIESSEL noted that section 9, subsection (i) provides
that the department may not declare a mining claim, etcetera,
invalid as a result of deficiency and a statement of labor. She
detailed that the subsection provides for a five-year lookback
after the date of the deficient statement. She asked if the new
section would have remedied Millrock's 20-year lookback that
they just experienced.
MR. BEISCHER answered yes.
MR. HANNEMAN summarized that the primary goal is efficiency and
minimizing conflicts between miners in addition to conflicts
between miners and DNR. The key portions of SB 155 really are to
provide the opportunity to cure and maintain tenure over time.
The bill is not asking DNR to do more work, but to send a notice
with an opportunity to cure rather than a notice of abandonment.
The bill is a roadmap for the mining industry for the next 20
years.
4:46:39 PM
SENATOR COGHILL pointed out that the bill will also help new
filers as well because new filers will have a different process
when working with DNR. He asked how a new entrant might see the
claim staking process differently.
MR. HANNEMAN explained that the language for the MTRSC system
will clearly identify a section to stake.
SENATOR COGHILL remarked that the clarity for both new filers
and those who have filed will provide huge benefits.
CHAIR MICCICHE said the philosophy often from investors, both
mom-and-pop and multinationals, is that investment requires
reliable, predictable and durable expectations. He stated that
he likes the bill because the legislation goes from the widow
who lost a generation-long opportunity to the risking of capital
that requires processes to be tight and expectations understood
for investment.
4:48:54 PM
CHAIR MICCICHE held SB 155 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 122 v. U.A 1.28.2020.PDF |
SRES 2/5/2020 3:30:00 PM |
HB 122 |
| HB 122 Sponsor Statement 1.28.2020.pdf |
SRES 2/5/2020 3:30:00 PM |
HB 122 |
| HB 122 Sectional Analysis V. U.A 1.28.2020.pdf |
SRES 2/5/2020 3:30:00 PM |
HB 122 |
| HB 122 Explanation of Changes V. U.A 1.28.2020.pdf |
SFIN 3/17/2020 9:00:00 AM SRES 2/5/2020 3:30:00 PM |
HB 122 |
| HB 122 Fiscal Note - DNR-PKS-04-13-19.pdf |
SRES 2/5/2020 3:30:00 PM |
HB 122 |
| HB 122 Presentation by Rep. Hannan-Senate Resources.pdf |
SRES 2/5/2020 3:30:00 PM |
HB 122 |
| HB 122 Written Testimony Received By 1.28.2020.pdf |
SRES 2/5/2020 3:30:00 PM |
HB 122 |
| SB 155 SS v. K 2.3.2020.PDF |
SRES 2/5/2020 3:30:00 PM |
SB 155 |
| SB 155 SS Sponsor Statement v. K 2.3.2020.pdf |
SRES 2/5/2020 3:30:00 PM |
SB 155 |
| SB 155 SS Sectional Analysis v. K 2.3.2020.pdf |
SRES 2/5/2020 3:30:00 PM |
SB 155 |
| SB 155 SS Fiscal Note DNR-MLW-2-4-20.pdf |
SRES 2/5/2020 3:30:00 PM |
SB 155 |
| SB 155 SS Letter of Support - Council of Alaska Producers 2.5.2020.pdf |
SRES 2/5/2020 3:30:00 PM |
SB 155 |