Legislature(1995 - 1996)

01/27/1995 08:02 AM House RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
               HOUSE RESOURCES STANDING COMMITTEE                              
                        January 27, 1995                                       
                           8:02 a.m.                                           
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Joe Green, Co-Chairman                                         
 Representative Bill Williams, Co-Chairman                                     
 Representative Scott Ogan, Vice Chairman                                      
 Representative Alan Austerman                                                 
 Representative Pete Kott                                                      
 Representative John Davies                                                    
 Representative Irene Nicholia                                                 
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 Representative Ramona Barnes                                                  
 Representative Eileen MacLean                                                 
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 Overview by the Department of Natural Resources (DNR)                         
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 NICO BUS, Acting Director                                                     
 Division of Support Services                                                  
 Department of Natural Resources                                               
 400 Willoughby Ave.                                                           
 Juneau, AK   99801                                                            
 Phone:  465-2406                                                              
 POSITION STATEMENT:  Provided an overview of the division and                 
                      answered questions                                       
                                                                               
 JERRY BROSSIA, Coordinator                                                    
 Joint Pipeline Coordinators Office                                            
 Department of Natural Resources                                               
 411 W. 4th Ave., Ste. 2C                                                      
 Anchorage, AK   99510                                                         
 Phone:  271-4135                                                              
 POSITION STATEMENT:  Provided an overview of the division and                 
                      answered questions                                       
                                                                               
 MARTY RUTHERFORD, Acting Commissioner                                         
 Department of Natural Resources                                               
 P.O. Box 107005                                                               
 Anchorage, AK   99510                                                         
 Phone:  762-2483                                                              
 POSITION STATEMENT:  Answered questions                                       
                                                                               
 KEN BOYD, Deputy Director                                                     
 Division of Oil and Gas                                                       
 Department of Natural Resources                                               
 P.O. Box 107304                                                               
 Anchorage, AK   99510                                                         
 Phone:  762-2547                                                              
 POSITION STATEMENT:  Provided an overview of the division and                 
                      answered questions                                       
                                                                               
 RON SWANSON, Director                                                         
 Division of Land                                                              
 Department of Natural Resources                                               
 P.O. Box 107005                                                               
 Anchorage, AK   99510                                                         
 Phone:  762-2692                                                              
 POSITION STATEMENT:  Provided an overview of the division and                 
                      answered questions                                       
                                                                               
 TOM BOUTIN, Director                                                          
 Division of Forestry                                                          
 Department of Natural Resources                                               
 400 Willoughby Ave.                                                           
 Juneau, AK   99801                                                            
 Phone:  465-2491                                                              
 POSITION STATEMENT:  Provided an overview of the division and                 
                  answered questions                                           
                                                                               
 BILL GARRY, Southeast Area Superintendent                                     
 Division of Parks and Outdoor Recreation                                      
 Department of Natural Resources                                               
 400 Willoughby Ave.                                                           
 Juneau, AK   99801                                                            
 Phone:  465-4563                                                              
 POSITION STATEMENT:  Provided an overview of the division and                 
                      answered questions                                       
                                                                               
 TOM SMITH, Director                                                           
 Division of Geological & Geophysical Surveys                                  
 Department of Natural Resources                                               
 794 University Ave., Ste. 200                                                 
 Fairbanks, AK    99707                                                        
 POSITION STATEMENT:  Provided an overview of the division and                 
                      answered questions                                       
                                                                               
 JULES TILESTON, Director                                                      
 Division of Mining and Water                                                  
 Department of Natural Resources                                               
 P.O. Box 107016                                                               
 Anchorage, AK   99510                                                         
 Phone:  762-2165                                                              
 POSITION STATEMENT:  Provided an overview of the division and                 
                      answered questions                                       
                                                                               
 JOHN CRAMER, Director                                                         
 Division of Agriculture                                                       
 Department of Natural Resources                                               
 P.O. Box 949                                                                  
 Palmer, AK   99645                                                            
 Phone:  745-7200                                                              
 POSITION STATEMENT:  Provided an overview of the division and                 
      answered questions                                                       
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 95-3, SIDE A                                                             
 Number 000                                                                    
                                                                               
 The House Resources Committee was called to order by Co-Chairman              
 Green at 8:02 a.m.  No roll call was taken.                                   
                                                                               
 CO-CHAIRMAN JOE GREEN announced the plane which was to bring in the           
 majority of presenters could not make it into Juneau.  He said the            
 meeting will be on teleconference and the presenters would                    
 participate via teleconference.                                               
                                                                               
 NICO BUS, ACTING DIRECTOR, DIVISION OF SUPPORT SERVICES, DNR, said            
 the committee had been presented with an overview handout                     
 containing a flow chart of the department.  He noted the                      
 commissioner designee, John Shively, will begin his duties February           
 13.  He stated Marty Rutherford is serving as acting commissioner             
 and manages the various divisions.  There are several functions               
 reporting to the commissioner's office including the Mental Health            
 Trust Land Office.  This office will reside within the department             
 but will take direction from the trust authority under contract and           
 work with the department to implement their policies as well as               
 manage the land.                                                              
                                                                               
 MR. BUS explained the Soil and Water Conservation Board is under              
 the direction of Bill Long, Executive Director, who directs the               
 various functions and serves as a facilitator for the different               
 soil and water districts.  He said there is also an Exxon Valdez              
 Restoration Team staff working with trustees to manage the land and           
 determine a plan.                                                             
                                                                               
 MR. BUS noted there are eight divisions in the DNR:  Division of              
 Land, Division of Mining and Water, Division of Oil and Gas,                  
 Division of Forestry, Division of Agriculture, Division of Parks              
 and Outdoor Recreation, Division of Geological and Geophysical                
 Surveys, and Division of Support Services.  He said DNR is charged            
 with the mission of stimulating the resource based economy while              
 conserving Alaska's wild, scenic, and cultural values.  In                    
 accomplishing that mission, the department would like to simplify             
 and accelerate regulatory processes and organizational structures             
 to allow rapid and sustained economic growth.                                 
                                                                               
 MR. BUS stated DNR would like to raise the public's awareness of              
 Alaska's natural resource assets, its market potential within                 
 Alaska and the world, and the effects on daily lives.                         
                                                                               
 Number 088                                                                    
                                                                               
 JERRY BROSSIA, COORDINATOR, JOINT PIPELINE COORDINATORS OFFICE                
 (JPCO), DNR, testified via teleconference and said the JPCO is a              
 joint federal/state office and has eleven different agencies which            
 issue various authorizations for pipelines, particularly the Trans-           
 Alaska Pipeline System (TAPS).  He stated the JPCO was also set up            
 to handle permitting for a large gas pipeline and a number of                 
 smaller pipelines feeding into the TAPS at the Prudhoe Bay end.               
                                                                               
 MR. BROSSIA noted the last few years have been hectic.  Staffs have           
 been combined into the joint office.  There are 83 people in the              
 office with only 15 in DNR.  He said the Department of                        
 Environmental Conservation (DEC) has 28 staff members, the Alaska             
 Department of Fish and Game (ADF&G) has two staff members, the                
 Department of Labor (DOL) has two staff members, Governmental                 
 Coordination has one staff member, the Bureau of Land Management              
 (BLM) has 30 staff members, the Environmental Protection Agency               
 (EPA) has one staff member, the U.S. Corps of Engineers has one               
 staff member and the U.S. Coast Guard has one staff member.  He               
 added the office also has access to Stone and Webster Consulting              
 Services for engineering assistance.                                          
                                                                               
 MR. BROSSIA stated the staff was combined in a way to avoid                   
 duplicate efforts.  He said currently there are seven agencies                
 requiring oil spill plans for Alyeska and the staff has been able             
 to develop one oil spill plan, integrating the various interests of           
 the different state and federal agencies, so Alyeska only has to do           
 the plan once.                                                                
                                                                               
 Number 120                                                                    
                                                                               
 MR. BROSSIA told committee members that during the past year, the             
 U.S. Congress severely criticized Alyeska for its maintenance                 
 operation.  He noted because of that criticism, a number of                   
 congressional hearings and investigations were held by the                    
 Government Accounting Office (GAO), resulting in a number of                  
 audits.  The audits looked at the status of the TAPS and whether or           
 not it met regulatory standards.  A number of deficiencies were               
 found and the JPCO brought in Stone and Webster for assistance in             
 looking at how to address a large audit project containing 5,000              
 deficiencies.                                                                 
                                                                               
 MR. BROSSIA said the JPCO, over the past few years, has tried to              
 move into a more pro-active approach and is monitoring safety and             
 environmental and engineering aspects of the pipeline, thus helping           
 to avoid repeat audit problems.  He stated there are five major               
 areas which are looked at in connection with the pipelines.  The              
 JPCO wants to ensure that if there is any kind of oil spill, they             
 are ready.  He noted that one of the risk areas is to prevent oil             
 spills.                                                                       
                                                                               
 Number 141                                                                    
                                                                               
 MR. BROSSIA explained a second area considered in the monitoring of           
 the pipelines is the prevention of accidents.  He felt Alyeska has            
 shown a good safety record.  The third area is overall                        
 environmental protection.  The fourth area is general regulatory              
 compliance which helps ensure there is not a failed audit.                    
 Finally, he said the JPCO is very concerned about concerned                   
 employees.  Therefore, the office is sensitive to criticism and               
 internal complaints from employees within the companies.                      
                                                                               
 MR. BROSSIA pointed out that heard often at Alyeska currently is              
 the idea of quality programs.  He said some of the concepts                   
 developed in the past year is what the JPCO is calling a                      
 configuration management approach to quality.  Simply stated, that            
 approach involves the design of something using various specs,                
 codes and laws.  He stressed that the necessary documentation needs           
 to be present to show that what was designed is what was received.            
 He noted that in itself was an issue that covered approximately               
 one-half of the various audit criticisms which have evolved over              
 the last year.  Alyeska was not able to show that what they                   
 designed is what they got and proper record keeping was not in                
 place.                                                                        
                                                                               
 Number 167                                                                    
                                                                               
 MR. BROSSIA explained the main goal of the JPCO is to remove, in              
 the next year, all continuous issues which have appeared in the               
 audits on the TAPS, enabling Alyeska to get a clean bill of health            
 so the issues will not be an issue in the Arctic National Wildlife            
 Refuge (ANWR) debate.  He said a number of Congressmen have made it           
 clear there will not be any more future oil field development in              
 ANWR unless the TAPS maintenance problems are corrected.  He noted            
 currently one-half of the audit issues have been resolved.                    
                                                                               
 MR. BROSSIA summarized that the JPCO is trying to serve as a single           
 point of contact for the government when addressing pipeline                  
 concerns such as regulatory authorizations, safety issues, etc.,              
 and ensuring the proper fixes are done during maintenance and                 
 operations on the pipelines.   He noted the JPCO is an industry               
 funded office.  Therefore, the monies to the office come directly             
 from the companies.  He added that the JPCO did work for Yukon                
 Pacific in the last year and will do maintenance work for them to             
 keep their right of way.  There is also a proposed small pipeline             
 project 40 miles east of Prudhoe Bay under consideration.  He                 
 reiterated the JPCO will continue to do as much pro-active work as            
 possible.                                                                     
                                                                               
 CO-CHAIRMAN GREEN asked for a roll call.  Members present at the              
 call to order were Representatives Green, Williams, Ogan,                     
 Austerman, Davies, Kott and Nicholia.  Members absent were                    
 Representatives Barnes and MacLean.  He noted there was a quorum              
 present.                                                                      
                                                                               
 Number 217                                                                    
                                                                               
 REPRESENTATIVE JOHN DAVIES asked Mr. Brossia to give the committee            
 background on the development of the GAO audits.  He wondered how             
 a situation could develop where there are 4,000 - 5,000 problems.             
 He wondered if the JPCO is too underfunded to accomplish the                  
 required monitoring.                                                          
                                                                               
 MR. BROSSIA responded GAO began their investigation as a result of            
 several concerned employees who raised issues.  He said those                 
 concerned employees felt they had no platform because in 1990 the             
 state government had not operated the JPCO office for about 12                
 years.  The JPCO was defunct between 1977 and 1990.  Therefore, the           
 employees had no place to bring their concerns.  He stated the BLM            
 office was down to three to five people.  After the Exxon Valdez              
 spill, the employees were concerned about corrosion, oil spills,              
 electrical safety, etc. and they did not have a platform.  Thus,              
 the employees took that platform to the U.S. Congress, resulting in           
 Congressmen Miller and Dingell specifically asking the GAO to                 
 investigate the TAPS in general, and the hearings then took place.            
                                                                               
 REPRESENTATIVE DAVIES clarified the main problem was the employees            
 had no platform.  He wondered if that kind of situation can now be            
 addressed on a more timely basis.                                             
                                                                               
 MR. BROSSIA replied yes.  He said the JPCO has gone through an                
 intensive learning process and now realizes who their customers and           
 clients are.  The JPCO has learned that the TAPS needs to be dealt            
 with as a system, from Prudhoe Bay to the tankers.  He noted that             
 looking at all of the components as a system has helped the JPCO              
 understand some of the concerns of the original whistle blowers.              
 He explained the JPCO has developed a comprehensive monitoring                
 program that has an underlying platform of safety and has also                
 developed a good quality program with procedures and processes in             
 place to do the various kinds of work at Alyeska.  He felt the JPCO           
 is much better prepared to address future concerns and problems in            
 the oil pipeline industry in general.                                         
                                                                               
 Number 276                                                                    
                                                                               
 CO-CHAIRMAN GREEN stated the federal government has the authority             
 to take over operations or the scrutiny of the pipeline unless the            
 state shows it can do it adequately.  He questioned if there is any           
 indication that could happen or will the oversight stay with the              
 state.                                                                        
                                                                               
 MR. BROSSIA responded there is always a possibility that something            
 could happen but added that under current laws, the authority to              
 monitor the TAPS specifically is very splintered and fractionated.            
 The federal government clearly has the authority to monitor 400               
 miles of the pipeline for the right-of-way agreement.  The DNR                
 monitors 400 miles of that agreement.  There are several pump                 
 stations which are on private land and the authority of DNR and BLM           
 is limited.  He stated DEC has authority on oil spill types of                
 issues and DOL has authority in electrical, pressure vessels, and             
 Occupational Safety and Health Administration (OSHA) issues.  He              
 said if all of that is pieced together, there is a cohesive unit              
 which is under the authority of the state.  He felt it would be               
 doubtful that Congressmen Dingell or Miller could take over without           
 major legislative changes.                                                    
                                                                               
 CO-CHAIRMAN GREEN said he is aware of drills conducted in the                 
 shipping lanes and repairs to the lines.  He wondered if the JPCO             
 oversees drills for possible spills where the lines cross rivers,             
 etc.                                                                          
                                                                               
 MR. BROSSIA replied yes.  He said the JPCO has a specific unit in             
 the office involving an integrated approach where DEC is the lead             
 agency for conducting those drills and EPA is the co-leader.  The             
 JPCO supplies necessary assistance to ensure the various functions            
 within the drill are met.  He stated everyone works together to               
 plan the drills.                                                              
                                                                               
 Number 337                                                                    
                                                                               
 REPRESENTATIVE SCOTT OGAN questioned what the ratio is on what the            
 state pays and what the federal government pays for the operation.            
                                                                               
 MR. BROSSIA responded he did not have specific information to                 
 answer the question.  However, he said there are 83 people in the             
 office.  Most of the people who work on the pipeline are funded               
 from the industry.  BLM has a direct reimbursement from Alyeska, so           
 the 30 BLM people are completely federally funded.  In regard to              
 the 15 DNR staff members, the department is on a negotiated                   
 agreement with Alyeska and monies also come in from the sale of               
 gravel, rentals, etc.  The two ADF&G people are funded through the            
 state mechanism.  The two DOL staff members are funded by BLM.                
 Three of DEC's staff of 28 are funded by BLM and one is funded by             
 DNR through the rental sales and agreement with Alyeska.  One                 
 Governmental Coordination person is also funded through the state             
 process.  EPA pays for their one person, the Corps of Engineers               
 pays for their one person and the U.S. Coast Guard pays for their             
 person.  He stated Alyeska reimburses the federal government for              
 the effort.                                                                   
                                                                               
 MARTY RUTHERFORD, ACTING COMMISSIONER, DNR, testified via                     
 teleconference and stated she will withhold her comments until all            
 of the divisions have testified.                                              
                                                                               
 Number 390                                                                    
                                                                               
 KEN BOYD, DEPUTY DIRECTOR, DIVISION OF OIL AND GAS, DNR, testified            
 via teleconference and discussed a pie chart entitled "Where Our              
 Money Comes From" which committee members did not have.  He said              
 the pie chart showed income of 85 percent from petroleum income and           
 15 percent from non-petroleum income.  He stated the major sources            
 of income for fiscal year 1994 included bonus:  $1.2 million;                 
 rentals:  $7.8 million; royalties:  $696 million; and taxes $727              
 million.  He stressed those numbers are getting smaller.                      
                                                                               
 MR. BOYD explained the Division of Oil and Gas employs 53 people              
 who are divided into three major groups.  The first group is the              
 director's office.  The two other groups are Leasing/Evaluations              
 and Lease Administration/Royalty Accounting or essentially covering           
 things happening before a lease sale and things happening after a             
 lease sale.  He said before the lease sale, there is an evaluation            
 by the area geologist and geophysicist and an economic analysis,              
 which provides the commissioner the means to determine what the               
 lease sale parameters will be.  A best interest finding is created            
 which is presented to the public and shows the ins and outs of how            
 a lease sale will work and provides the social and economic impact            
 in the different areas.  He noted there is also the title and sale            
 preparation.  Finally, there are support groups such as cartography           
 and the computer group.  He added that a five year schedule showing           
 the oil and gas lease sale schedule for the next five years should            
 be available next week.                                                       
                                                                               
 Number 463                                                                    
                                                                               
 MR. BOYD explained the other broad group of people in the division            
 is in lease administration and royalty accounting.  After the lease           
 sale, the royalty accounting involves people who count the millions           
 of dollars coming into the state.  Then there is the permit and               
 compliance group who ensures that certain terms and conditions are            
 being met.  These people issue the permit and check on compliance             
 in conjunction with the Division of Land.                                     
                                                                               
 MR. BOYD stated the director's office provides policy guidance,               
 public outreach and information and in the past, royalty                      
 settlements completed over the past two years.  He added there are            
 still some small royalty issues to be settled (indiscernible)                 
 Native corporations.  He said one of the provisions of the royalty            
 settlements is that the (indiscernible) reopen for various and                
 sundry reasons.  He felt something which might come forward as a              
 result is the lifting of the export ban.                                      
                                                                               
 MR. BOYD explained the director's office also is responsible for              
 marketing.  The division has a booth at some of the international             
 trade shows to promote Alaska, exploration licensing, incentive               
 credits, etc.  He said the director's office also does market                 
 analyses for oil price valuation to ensure the state is getting a             
 fair amount of dollars for its oil.                                           
                                                                               
 MR. BOYD stated the Leasing/Evaluation section issues the five year           
 schedule.  The best interest finding for sale 79, the sale in the             
 Gulf of Alaska, is on the table currently.  He added this section             
 also does public hearings, title searches and sale preparations,              
 geology/geophysics and economics.                                             
                                                                               
 MR. BOYD said the Lease Administration/Royalty Accounting section             
 is redoing the oil and gas royalty accounting system, which should            
 give the division more flexibility in reporting and accounting.  He           
 stated this section is responsible for in-kind sales and explained            
 the process.  He noted unitization is under this section which                
 involves grouping together leases with common interests.  Permit              
 compliance, lease enforcement and production forecasting is also in           
 this section.                                                                 
                                                                               
 MR. BOYD told committee members that recent initiatives include               
 exploration licensing, exploration incentive credits, and coalbed             
 methane.  He noted the regulations for exploration licensing are              
 very far along.  He noted that some changes have been made to the             
 regulations and the division is very close to getting them out for            
 public comment.  He said the expansion of the exploration incentive           
 credit program is already in place and will apply to unleased state           
 land and private land.  Those regulations have been written and are           
 currently with the Department of Law.                                         
                                                                               
 Number 570                                                                    
                                                                               
 MR. BOYD said the legislature appropriated funds a couple of years            
 ago for a capital project involving the drilling of a well near               
 Wasilla.  He stated a report is almost finished which shows that              
 even though there is not coalbed methane everywhere, the project              
 proves there is a coalbed methane resource in Alaska.  He noted it            
 is hoped that industry will take the results of that well into the            
 broader spectrum of what extent that resource can be used in remote           
 villages.                                                                     
                                                                               
 CO-CHAIRMAN GREEN concurred with Mr. Boyd's optimism and his desire           
 to do something with coalbed methane, especially in remote                    
 villages.                                                                     
                                                                               
 Number 597                                                                    
                                                                               
 REPRESENTATIVE DAVIES noted the handout the committee received (may           
 be found in the House Resources Committee Room, Capitol Building,             
 Room 124, and after adjournment of the second session of the 19th             
 Alaska State Legislature, in the Legislative Reference Library),              
 which indicates there are three lease sales scheduled for 1995.  He           
 recalled that Mr. Boyd had mentioned sale number 79 in the Gulf of            
 Alaska.  He wondered what other sales would be taking place.                  
                                                                               
 MR. BOYD responded the two sales are the Shaviovik sale which is on           
 the western border of ANWR and the Cook Inlet reoffering sale,                
 which is a combination sale of old acreage previously leased or               
 unleased.  He added in regard to the reoffering sale, as long as              
 the commissioner determines there are no new circumstances, the               
 original best interest finding can be used and the land can get on            
 the sale quickly.                                                             
                                                                               
 MS. RUTHERFORD added the department would be giving the legislature           
 a copy of the five year oil and gas lease sale schedule soon.                 
                                                                               
 CO-CHAIRMAN GREEN wondered how the royalty accounting section works           
 with the Department of Revenue.                                               
                                                                               
 MR. BOYD stated they work closely, particularly in the audit                  
 function.  He said it is a matter of shared information and                   
 responsibilities.  He felt the two groups are working very well               
 together as a result of a series of meetings as well as better                
 communication.  The two groups meet on a regular basis to discuss             
 common problems and concerns.                                                 
                                                                               
 Number 668                                                                    
                                                                               
 CO-CHAIRMAN GREEN stated occasionally there are royalty sales in-             
 kind and local refineries actually buy oil from the state out of              
 their royalty share.  He wondered if those are handled through Mr.            
 Boyd's office or through the Oil and Gas Royalty Board.                       
                                                                               
 MR. BOYD responded both.  The Division of Oil and Gas would                   
 initiate the potential sale through a letter or some sort of                  
 communication with a particular entity.  He said there are several            
 different ways the oil can be sold either through competitive or              
 non-competitive bids.  In most cases there is a non-competitive               
 sale, either long term (more than a year) or short term (less than            
 a year).  In all cases, the Division of Oil and Gas is involved.              
 In come cases the Oil and Gas Royalty Board is involved, where the            
 division takes the terms of the sale to the board, the board                  
 reviews the terms and then makes a recommendation to the                      
 legislature.  In all cases, the legislature has the opportunity to            
 review the terms.                                                             
                                                                               
 MR. BOYD said for a competitive sale it is different because even             
 though the Oil and Gas Royalty Board is involved, legislative                 
 approval is not required.  Therefore, it depends on how the sale is           
 structured.                                                                   
                                                                               
 CO-CHAIRMAN GREEN clarified the state would get at least as much              
 from the sale of royalty in-kind as it would get if the state sold            
 it in value.                                                                  
                                                                               
 MR. BOYD said there is a rule in law which says royalty in-kind               
 equals royalty in value.                                                      
                                                                               
 REPRESENTATIVE OGAN noted the division advocates petroleum resource           
 development throughout the state.  He wondered how much money is              
 devoted to that advocation.  He also asked if Mr. Boyd could cite             
 specific petroleum resource developments which the advocation has             
 resulted in.                                                                  
                                                                               
 TAPE 95-3, SIDE B                                                             
 Number 000                                                                    
                                                                               
 MR. BOYD stated for the last four years, the division has tried to            
 attend one of the international meetings (held in the U.S.) of the            
 American Association of Petroleum Geologists, which has an                    
 international scope, or the Society of Exploration Geophysicists.             
 The attendance usually runs from 7,500 to 10,000 people.  The                 
 division usually sends three to four knowledgeable people and has             
 a booth which features posters on whatever is of interest at the              
 time.  He said in the past, the booth has focused on the Arctic               
 National Wildlife Refuge (ANWR), the state's five year oil and gas            
 leasing schedule, and in the last couple of years, on exploration             
 licensing, exploration incentive credits and coalbed methane.  He             
 added the costs involved depend on where the meeting is located.He            
 noted on the average, attendance at the meeting costs $8,000.  MR.            
 BOYD said specific successes are hard to name but he felt Alaska's            
 name has been circulated amongst the smaller companies who attend             
 the meetings.  He added there has been a lot of interest in coalbed           
 methane.  He observed it is difficult to say the booth made all the           
 difference in the world.  However, the division does a lot of phone           
 calling and many questions are answered.  He said the division has            
 a mailing list of 1,200 small companies and develops brochures to             
 keep people current.  He felt the costs are low compared to the               
 benefits.  He stated he could not count the number of dollars                 
 generated.                                                                    
                                                                               
 Number 033                                                                    
                                                                               
 CO-CHAIRMAN GREEN said there has been a lot of press about                    
 incentives to increase interest in petroleum development within the           
 state.  The Governor has gone and toured three of the major oil               
 companies.  He wondered if incentives would be negotiated through             
 the Division of Oil and Gas.                                                  
                                                                               
 MR. BOYD answered it would depend on what the incentive might be.             
 For example, royalty issues would come through the Division of Oil            
 and Gas and tax issues would go through (indiscernible).                      
                                                                               
 RON SWANSON, DIRECTOR, DIVISION OF LAND, DNR, testified via                   
 teleconference and said the Alaska Statehood Act land acquisitions,           
 in which the Division of Land plays a key role, establishes the               
 foundation for Alaska's economic and resource base.  He explained             
 that after clear title is secured for this land, these state-owned            
 lands and resources are analyzed for their appropriate uses.  He              
 stated in a process which brings together a representation of                 
 Alaska's citizens and all major landowners, the Division of Land              
 plans for use and development of its land and resources,                      
 guaranteeing through such planning activities access through                  
 issuance of rights-of-way, continued public use through                       
 designations such as recreation rivers system, and areas designated           
 for mining and other development.                                             
                                                                               
 MR. SWANSON told members that land use plans and their resulting              
 land use classifications are required by law before the division              
 can dispose of state land.  The division has also found that land             
 use plans greatly diffuse individual objections as land and                   
 resource uses are addressed on a more global scale rather than as             
 an individual basis.  He said that little more than one-third of              
 state land still has no land use plan in place.  By this spring,              
 the division will have completed the Yakataga and Kenai area plans.           
 He stressed important areas needing plans include most of                     
 Southeast, Kodiak, Nenana River Corridor, including the Wolf                  
 Townships, and the 40-Mile to include the Taylor Highway.  Other              
 plans are over ten years old and need to be reviewed and updated              
 because of changed conditions, uses and the need to convey land to            
 local municipalities.  He noted that some of these include Bristol            
 Bay, Susitna Basin, and the Copper River Basin.                               
                                                                               
 MR. SWANSON said the Division of Land serves the state as a real              
 estate developer and property manager by providing land for                   
 Alaskans to own and use.  The division currently maintains about              
 1,000 sale contracts for parcels of land purchased by Alaskans, and           
 the division will have a land disposal late summer for an                     
 additional 500 parcels for about 3,000 acres.  He stated the                  
 division also issues leases that range from set-net fishing sites             
 or aquatic farms to shore-based fish or timber processing                     
 facilities, to North Slope oil support industry sites and                     
 commercial recreational lodge sites.                                          
                                                                               
 Number 086                                                                    
                                                                               
 MR. SWANSON explained the Division of Land makes gravel and other             
 materials available for residential, commercial, and industrial               
 development and is the state's survey authority to establish                  
 property boundaries.  He said the division protects the state's               
 assets by establishing and enforcing reasonable conditions to                 
 protect the environment when authorizing land use, stopping                   
 unauthorized uses, and planning for land and resource use and                 
 conservation.                                                                 
                                                                               
 MR. SWANSON commented the division is responsible for stewardship             
 of land retained in state ownership for public access, energy                 
 development, legislatively designated public use and recreation               
 areas, and a host of the public use purposes.  He said the division           
 is available to serve as project manager on major development                 
 projects such as the Fort Knox Gold Mine, coordinating state                  
 agencies with industry to form a working project team.  He noted              
 the division maintains offices in Juneau, Anchorage, and Fairbanks            
 to provide these essential services to all Alaskans.                          
                                                                               
 MR. SWANSON said the division receives many requests for leasing              
 state uplands and tidelands for long term commercial and non-                 
 commercial activities.  Many of these requests are associated with            
 oil and gas development, shore-based fisheries                                
 development/processing, and recreational and business development             
 for lodge or guiding activities.  He noted the division presently             
 has 530 lease applications awaiting action.                                   
                                                                               
 MR. SWANSON noted that many requests for use of state land do not             
 require the user to obtain an interest in the land as the use or              
 project is only for a short term and no permanent improvements are            
 involved.  In such situations, the division issues a permit, such             
 as a land use permit, tidelands permit, military maneuver permit,             
 trapping cabin permit, or guide permit.  He said the division                 
 presently has 237 permits to process.                                         
                                                                               
 MR. SWANSON stated material sales play an important role to                   
 industry as the state sells material from sources normally where              
 private sources are not available.  Within the next several months,           
 the division will sell an estimated 2.8 million cubic yards of                
 gravel in the Northern Region, 2.5 million of which is in support             
 of oil and gas development activities on the North Slope.  He said            
 over 50 material sales remain to be processed.  He noted at this              
 time, there are 687 right-of-ways awaiting processing statewide.              
 These range from the simplest small drive to complex utility lines.           
                                                                               
 Number 114                                                                    
                                                                               
 MR. SWANSON advised the division has approximately 142 remote and             
 homestead parcels awaiting appraisal at this time.  He said just as           
 the federal government conveys land to the state, municipalities              
 are certified to select land from the state.  The total acreage               
 committed by the legislature to municipalities under AS 29.65 is              
 over 1.2 million acres.  He stated the Division of Land is                    
 responsible for certifying the acreage due municipalities and for             
 processing municipal selections.  This year, the division has                 
 certified three municipalities' entitlements including the                    
 Northwest Arctic (41,438 acres), Lake and Peninsula (125,000                  
 acres), City of False Pass (0 acres) and will be certifying three             
 more including Aleutians East, Yakutat, and Denali.                           
                                                                               
 Number 125                                                                    
                                                                               
 MR. SWANSON noted that so far this fiscal year, the division has              
 conveyed 19 parcels, totalling approximately 4,000 acres.  He said            
 most of these parcels are needed for specific projects or public              
 purpose.  These include parcels in Whittier, Aleutians East                   
 Borough, Juneau, Chignik, Perryville, Wrangell, Fairbanks North               
 Star Borough and Sitka.  He stated during the remaining year, the             
 division will be processing 38 additional parcels, totalling                  
 approximately 93,000 acres.  This will include small high parcels             
 in Anchorage (Girdwood), Cordova, and Valdez.  The division will              
 also process larger parcels for the North Slope Borough, Aleutians            
 East, Anderson, and Skagway.                                                  
                                                                               
 MR. SWANSON said the current land obligation is approximately                 
 648,000 acres to 21 municipalities.  The division currently has               
 applications pending for 315,000 acres, leaving approximately                 
 333,000 acres not yet selected by municipalities.  He stated the              
 division has conveyed 430,000 acres to date and has another 250,000           
 acres pending survey by the affected municipalities.                          
                                                                               
 Number 142                                                                    
                                                                               
 REPRESENTATIVE DAVIES wondered how many staff members will be                 
 involved in the mental health land trust office.                              
                                                                               
 MR. SWANSON said currently that office has a staff of four people             
 and will be contracting with the other divisions within the                   
 department to conduct the activities.                                         
                                                                               
 MS. RUTHERFORD added that the Mental Health Trust Land Office is              
 not yet up and running.  Until that time, the department will not             
 have a real sense of how many people the land trust unit will need.           
 She felt the office could expand beyond the four and one-half                 
 people currently in the budget.                                               
                                                                               
 REPRESENTATIVE DAVIES recalled as a part of the settlement                    
 agreement there was a portfolio of DNR lands which will be sold to            
 raise cash.  He wondered what the status of that transaction is.              
                                                                               
 MR. BUS said that sale had been advertised and the portfolio was              
 sold this past December.  The First National Bank of Anchorage won            
 the bid and the contracts have been transferred.                              
                                                                               
 REPRESENTATIVE DAVIES asked how successful the sale was.                      
                                                                               
 MR. BUS responded the portfolio was sold for $15 million which was            
 less than what the legislation called for.  He noted that the                 
 legislation asked for the sale in May and between May and December            
 many of the contracts paid off.  He added that at the time of                 
 session, the prime interest rate was five percent and by the time             
 the portfolio was sold the interest rate was eight percent.                   
                                                                               
 Number 185                                                                    
                                                                               
 REPRESENTATIVE AUSTERMAN recalled that Mr. Swanson had mentioned              
 the land use plans for the state.  He requested Mr. Swanson to do             
 another quick overview.                                                       
                                                                               
 MR. SWANSON said Title AS 38.04 requires that land use                        
 classifications be in place before any land is disposed and noted             
 that disposed is defined as sold or leased.  In order to complete             
 a land use classification, a land use plan must be in place.  He              
 stated Alaska has been divided into geographical areas which                  
 involve area plans.  Area plans involve seven major steps.  He                
 explained the first step is to identify the issues and the second             
 step is to gather the necessary technical and scientific                      
 information to answer questions which the public and people who               
 analyze the issues might have.                                                
                                                                               
 MR. SWANSON stated next, alternatives are prepared and taken to the           
 public.  He noted this would involve a first draft.  The public has           
 three opportunities to comment.  The first round of public comment            
 includes an open house type format or in many cases, a full public            
 hearing.  After input from the public, the division then prepares             
 a draft plan which goes out to the second round of public meetings            
 and is much more focused with actual recommendations.  Based on the           
 comments received during the second round, the final plan is                  
 prepared and a legal notice is done for an additional 30 days.                
 Finally, the plan is adopted.                                                 
                                                                               
 MR. SWANSON said the areas of the state which are covered by area             
 plans are about two-thirds of the state-owned land in the state               
 including the Northwest (indiscernible) Borough, additional lands             
 on the Seward Peninsula, Tanana Basin, Kuskokwim, Bristol Bay,                
 Copper River, Southwest Prince of Wales Island, and Juneau.  He               
 said there is also a plan in place for Haines and Skagway.  He                
 noted the majority of Central Southeast does not have a plan in               
 place and a plan is needed.  Kodiak also needs a plan in place                
 mainly because of shore fishery activities.                                   
                                                                               
 MR. SWANSON explained the major areas which do not have a plan in             
 place include the North Slope, Brooks Range, and the upper Yukon              
 (basically the 40-Mile area).  He said in some areas there is not             
 a pressing need for a plan but in others there is.  He said once              
 someone goes through a planning process and sees the give and                 
 takes, it can been seen that the process solves problems in the               
 long run.  He noted it is a three year process and usually a plan             
 is put in place.  Once a plan is done, authorizations can be issued           
 quickly because everyone can see the give and take which happened.            
 He stated without a plan, there is usually a "not in my backyard"             
 attitude.                                                                     
                                                                               
 Number 243                                                                    
                                                                               
 REPRESENTATIVE IRENE NICHOLIA wondered if there were any plans to             
 get a plan for the upper Yukon, lower Yukon and Yukon-Koyukuk.                
                                                                               
 MR. SWANSON said there are no plans at this time.  The division               
 will complete plans for Kenai and Yakataga this spring.  The                  
 division will then start the Central Southeast and Kodiak areas               
 which will take two to three years to complete.  When those are               
 complete, the division will then go to the upper Yukon and Yukon-             
 Koyukuk.  He stressed because it is a matter of staffing, it is not           
 possible to go any faster.                                                    
                                                                               
 CO-CHAIRMAN GREEN stated there has been an outcry from people                 
 regarding privatization both from a taxing standpoint and                     
 ownership.  He recalled that Mr. Swanson had given the number of              
 acres going to municipalities and the reasons land use plans take             
 so long.  He wondered if there has been any thought, in budgeting,            
 to contracting out some of the preparatory land use planning to               
 expedite the process.                                                         
                                                                               
 MR. SWANSON agreed the land use planning process could be                     
 contracted out.  However, the division does not have the money to             
 do so.                                                                        
                                                                               
 CO-CHAIRMAN GREEN wondered if in the division's budget presentation           
 to be made this year, if there has been any thought of going to a             
 contract rather than a state employee situation.                              
                                                                               
 MS. RUTHERFORD felt one of the items this Administration will be              
 looking at is new approaches to do what needs to be accomplished.             
 She added there have been discussions about contracting out for               
 things such as best interest findings and consistency                         
 determinations for oil and gas leasing.  At this point in time,               
 however, those possibilities are just in the discussion mode but              
 are worthy of consideration.                                                  
                                                                               
 REPRESENTATIVE DAVIES wondered if Representative Austerman's                  
 question about the percentage of state land having land use plans             
 had been answered.                                                            
                                                                               
 MR. SWANSON replied about two-thirds of state-owned lands have a              
 plan in place.  He added that some of these plans are very stale              
 and need to be redone.                                                        
                                                                               
 TOM BOUTIN, DIRECTOR, DIVISION OF FORESTRY, DNR, testified via                
 teleconference and stated the division has ten area offices located           
 throughout the state.  The majority of the offices are located                
 where staff can cost effectively manage wildland fires on the 134             
 million acres which the division is responsible for.  From a cost             
 accounting standpoint, the division is two-thirds fire suppression,           
 one-sixth enforcement of the Forest Resources and Practices Act,              
 and one-sixth other programs including timber sales.                          
                                                                               
 MR. BOUTIN updated the committee on current activities of the                 
 division.  He mentioned the Kenai timber management program which             
 was initiated as a result of the spruce bark beetle epidemic.  He             
 said the division has been able to offer eleven timber sales thus             
 far and noted the division has been in court on nine of the sales.            
 He stated the division does plan to continue with the timber sale             
 program.                                                                      
                                                                               
 MR. BOUTIN said in September, the legislative budget and audit                
 committee approved up to $600,000 of fiscal year 1995 stumpage                
 receipts.  To date the division has received about $400,00 which              
 will go toward reforestation.  He added that more of the money will           
 be spent in the Fairbanks area than originally intended because of            
 a strong rise in wood chip prices there.                                      
                                                                               
 MR. BOUTIN stated the department and the university reached an out            
 of court settlement with plaintiffs in the 1987 lawsuit against the           
 timber settlement with the university, allowing the university to             
 proceed with logging 230 million board feet east of the                       
 (indiscernible) River.  He added it is the largest amount of timber           
 in a single state plan.  He mentioned that Steve Kallick, an                  
 environmentalist, helped the division mediate the settlement,                 
 proving that environmentalists will allow logging if they are                 
 comfortable with the plan and are brought in early in the process.            
                                                                               
 MR. BOUTIN told committee members that 1995 will be about the most            
 active forest practices year yet.  Southeast notifications are up             
 already, much more logging is being seen on the Kenai Peninsula and           
 much more logging is being done in the Interior.  The division is             
 looking at what can be done in areas where the area forester is the           
 sole forester.  He noted the Forest Practices Act requires the                
 division to be out on the ground within a certain period of time              
 from when notifications are received.  From a budget standpoint,              
 this requirement will require dipping into those programs which are           
 not required by law, predominantly the timber sale program.  He               
 said this fiscal year, the division no longer has a timber sale               
 forester in Tok and the timber sale program will probably bear the            
 brunt of the increases in forest practices enforcement.                       
                                                                               
 MR. BOUTIN said recently the division made a sales pitch to the               
 U.S. Forest Service region to take over all (indiscernible) and               
 responsibilities on the Chugach National Forest to be funded by the           
 federal government.  He felt the Chugach National Forest is a very            
 logical place where the division can displace some of its fixed               
 costs over a greater number of fires since the Chugach averages               
 only 21 fires a year and the division is already involved with over           
 half of those fires.                                                          
                                                                               
 Number 415                                                                    
                                                                               
 REPRESENTATIVE DAVIES asked Mr. Boutin to update the committee on             
 how the inventories are proceeding.                                           
                                                                               
 MR. BOUTIN replied the (indiscernible) forest inventory has been              
 completed and published.  He said the soft wood inventory in the              
 Interior, particularly in the Tanana Valley State Forest is in a              
 draft stage.  The hard wood inventory is much less further along.             
                                                                               
 BILL GARRY, SOUTHEAST AREA SUPERINTENDENT, DIVISION OF PARKS AND              
 RECREATION, said the division operates 133 different park units               
 around the state.  The division has a very diverse operation                  
 because the division takes care of small parks as well as very                
 large parks.  He noted the large parks have fewer staff and the               
 small parks have more staff because the smaller parks are on the              
 road system and get large numbers of people.                                  
                                                                               
 MR. GARRY stated that back in the 1980s it was apparent that the              
 division was not going to survive budget wise due to large                    
 increases in tourism throughout the state.  To overcome the funding           
 problem, the division pushed for the fee bill which was received in           
 1988.  Since then, the fee bill has been the catalyst for many of             
 the division's responsibilities and programs.  He said it was                 
 obvious the way people used parks was influenced by whether or not            
 they paid.  If there was no payment required, people would tear the           
 parks up.  Once people were required to pay, there was a dramatic             
 reduction with problems in the parks.                                         
                                                                               
 MR. GARRY explained the fees do not directly relate to how much a             
 park costs.  He said the division gets about 30 percent of its                
 budget from fees currently.  He noted the general fund base is                
 constantly decreasing and the fee revenue keeps going up.                     
 Therefore, the division has been able to stay level and keep                  
 services going.  He said with the use of day fees, many problems              
 have been stopped.  He reiterated that the fee program has been               
 very successful.                                                              
                                                                               
 MR. GARRY said the other successful program in the division is the            
 volunteer program.  He stated nowhere else in the system has there            
 been that much support.  He noted if the division did not have the            
 volunteer program, there would be a problem because volunteers are            
 now as much a part of the division's management team as staff.                
                                                                               
                                                                               
 Number 540                                                                    
                                                                               
 REPRESENTATIVE OGAN stated there has been press about different               
 parks being closed due to lack of funding.  He asked Mr. Garry to             
 update the committee on that situation.                                       
                                                                               
 MR. GARRY replied parks have not been closed.  He said through the            
 fee programs and the use of volunteers, the division has been able            
 to keep most parks open.  He noted a few of the parks along the               
 Alaska Highway have been transferred back to federal ownership and            
 management.                                                                   
                                                                               
 MS. RUTHERFORD noted there had been a lot of press on the                     
 possibility of some parks being closed due to lack of funding.  As            
 it turned out, the cut which was projected never happened.                    
 However, because of the press and ongoing discussions, there has              
 been a lot of interest raised by surrounding communities and                  
 municipalities in partnerships, co-managing with the department or            
 developing some type of program where those interested could                  
 participate in the management of facilities having high operating             
 costs and low usage.  She noted the division is now beginning to              
 develop some of those opportunities.                                          
                                                                               
 Number 597                                                                    
                                                                               
 REPRESENTATIVE DAVIES stated he had toured the House of Wickersham            
 in Juneau and said it is in sad repair.  He said some of the                  
 artifacts there are fascinating and easy to view.  He wondered if             
 there are any plans for the house.                                            
                                                                               
 MR. GARRY replied the house is in better shape than how it appears            
 inside.   In the last several years, the division has put a lot of            
 money into the foundation which was the major problem.  He said the           
 reason for the cracks inside and the demise of the walls is because           
 the house was not on a good foundation.  Once a good foundation was           
 put in and the house was leveled, the number of cracks increased              
 because the house was moved back to a level plane.  He stated the             
 problem is now cosmetic.                                                      
                                                                               
 MR. GARRY said the division is currently in the process of going              
 out with request for proposals (RFP) to privatize the house.  He              
 noted the first time the division came out with the RFP no                    
 responses were received.  He talked to industry people and found              
 out what needed to be changed.  He felt because there are now                 
 enough interested people, the house will probably go to a private             
 commercial operator by this summer.  He stated the division does              
 have a request for money to improve the first and second floor.               
 Last year's capital request was $250,000 but the request did not              
 rank high because of the plans to get a private operator.                     
                                                                               
 Number 671                                                                    
                                                                               
 TOM SMITH, DIRECTOR, DIVISION OF GEOLOGICAL & GEOPHYSICAL SURVEYS,            
 testified via teleconference and said the division is a strategic             
 information agency.  He stated the division's mission was clarified           
 in statute to take a long strategic look at potential Alaska land             
 for minerals, fuels, geological hazards, construction materials,              
 water resources to some degree and other investigations which are             
 concentrated on state lands.  He noted the division also serves as            
 a research agency.                                                            
                                                                               
 MR. SMITH told members the division is headquartered in Fairbanks,            
 near the state's main research university and can often take                  
 advantage of the libraries, human resources, student interns,                 
 faculty specialists, etc., there.   He said the division currently            
 has a staff of 30.  All staff except for one are at the Fairbanks             
 headquarters and the other is in Eagle River.  Additionally, the              
 division has plus or minus about ten student interns.                         
                                                                               
 MR. SMITH stated the (indiscernible) houses most of the subsurface            
 record of Alaska (indiscernible) from almost every oil and gas well           
 ever drilled in the state, as well as many mineral properties.  The           
 division's estimate of the cost to acquire that data initially is             
 in excess of $12 million.  He noted most of the work the division             
 does is heavily people oriented...acquiring new information and               
 giving it out to all users.  He added that the division tries to              
 distribute about 10,000 publications a year and also tries to                 
 market Alaska's resources at eight to ten professional conferences            
 held each year.                                                               
                                                                               
 TAPE 95-4, SIDE A                                                             
 Number 000                                                                    
                                                                               
 MR. SMITH said the division's organizational structure mirrors the            
 statute which the division was created under.  The division has               
 sections addressing minerals, energy, engineering and geologic                
 hazards, and publications.                                                    
                                                                               
 REPRESENTATIVE DAVIES asked what percentage of state land has been            
 mapped geologically.                                                          
                                                                               
 MR. SMITH responded ten percent of state lands have been mapped.              
 He added that the division's profile is heavily cooperative.  The             
 division works with many kinds of agencies, institutes,                       
 universities worldwide, Department of Energy, etc.                            
                                                                               
 REPRESENTATIVE AUSTERMAN wondered if the division looks at areas              
 having potential for hydroelectric projects.                                  
                                                                               
 MR. SMITH said the hydroelectric issue falls under the surface and            
 water analysis function of the state.  He noted that at one time,             
 this issue was a part of the division's responsibilities but now it           
 is in the Division of Mining and Water.  He added that his division           
 is heavily involved in looking at alternative energy sources for              
 rural areas.                                                                  
                                                                               
 REPRESENTATIVE OGAN asked if there are any plans, or have sources             
 been identified to enable a switch to different forms of energy to            
 generate electricity.                                                         
                                                                               
 MR. SMITH replied alternative energy sources for rural Alaska is              
 another major area of emphasis for the future.  The division is               
 interested in coal which is scattered in various basins throughout            
 the state.  He said the division is currently working in the Bethel           
 area on an alternative gas source.  He noted there is also an                 
 enormous energy component in peat and added that the division                 
 completed peat inventories in the past.  He also mentioned coalbed            
 methane.  He stressed that alternative energy sources is an issue             
 of high priority for the division.                                            
                                                                               
 CO-CHAIRMAN GREEN wondered if the division made a macro evaluation            
 of an area and an individual built a cabin in the area and slumping           
 or a fault movement occurred, is there any protection for the                 
 division since the division was not able to go out and detail the             
 situations.  He also questioned if the state would be subject to              
 any liability.                                                                
                                                                               
 MR. SMITH responded the division performs pre-engineering tasks.              
 The division does not get involved with actual on-site drilling or            
 evaluating the therma (indiscernible).  The division's efforts are            
 geared more toward defining areas and tracks of high hazard                   
 probability.  He stressed the division has never had a liability              
 problem and he felt the division's work is not specific enough to             
 constitute a land condemnation in a detailed sense.                           
                                                                               
 JULES TILESTON, DIRECTOR, DIVISION OF MINING AND WATER, testified             
 via teleconference and stated the division is currently pursuing              
 the integration of water and mining functions, including the                  
 determination of how the division can be more efficient for                   
 clients.  The division is converting, in several cases, what were             
 supervisory positions to tech staff and putting those people in the           
 field where the work is.                                                      
                                                                               
 MR. TILESTON said the division just initiated the first meeting               
 with the Department of Interior to determine if a system can be               
 devised to reduce litigation costs in connection with water bodies            
 and the question of who owns submerged lands.  He noted the                   
 division has 188 jurisdictional dams which are periodically                   
 inspected and the division also approves new structures such as the           
 one at Red Dog.  The other area the division is working on is                 
 multi-year permits for mining plans.  This would enable a miner to            
 tell the division his plans in sufficient detail to enable                    
 monitoring for up to five years.  He said the program will be cost            
 saving for the division and will be a paper reduction for the                 
 miners.                                                                       
                                                                               
 Number 136                                                                    
                                                                               
 MR. TILESTON said the division recently received from Cominco and             
 Nana the reclamation plan and the division has $1 million in                  
 bonding to (indiscernible) that plan which they have already                  
 submitted.  The plan will be going out for review to interested               
 agencies and publics.  (Indiscernible) creek a large gold deposit             
 located on the Yukon near Galena.  The division has been asked to             
 start an interagency meeting so a detailed plan can be developed              
 and permitting determined.                                                    
                                                                               
 MR. TILESTON stated several things can be done in the state to                
 remove uncertainties and reduce costs.  The division has set in               
 motion a symposium which will start this spring to look at                    
 reclamation standards and requirements on a pre-geographic basis in           
 connection with the major coal fields on the North Slope, the north           
 side of the Alaska Range, and the Cook Inlet area to see if the               
 division can develop an approach which makes sense on what needs to           
 be done.                                                                      
                                                                               
 MR. TILESTON said the division is in the process of determining               
 whether or not it is in the state's best interest to go to a                  
 competitive lease for a small (indiscernible) coal field in the               
 Delta.  There have been three public hearings and there has been a            
 request for an extension.  That extension has been granted.  The              
 record to date suggests that the division may proceed.  As a                  
 result, there have been some very significant concerns about coal             
 truck traffic on the access road to the mine as well as recreation            
 use.  A mitigation workshop has been scheduled to look at those               
 issues and determine what can be done if the division goes to a               
 full lease.                                                                   
                                                                               
 Number 177                                                                    
                                                                               
 MR. TILESTON told committee members the division is working closely           
 with mental health because a major part of the division's long term           
 revenue is associated with minerals.  The division's mineral                  
 section is assisting in developing evaluations and ensuring the               
 division does not inadvertently take an action on a state mine                
 claim which belongs to the mental health side of the claim.                   
                                                                               
 MR. TILESTON mentioned the state mining claims in the Cooper                  
 Landing area.  He said in that area, the division has state mining            
 claims which have turned into primary places of residence of people           
 who are mining two weeks out of the year.  As a result, they are              
 paying $20 or $40 for 40 acres.  He stressed that is not the intent           
 of the state mining law.                                                      
                                                                               
 REPRESENTATIVE AUSTERMAN asked if the division is in the process or           
 is on an ongoing basis assessing or looking at coastal areas for              
 hydro projects.                                                               
                                                                               
 MR. TILESTON stated the division does.  He said normally the                  
 division only gets involved when there is an application being                
 filed with the federal energy regulatory agencies.                            
                                                                               
 MS. RUTHERFORD said that something the department is beginning to             
 do quite well is work with all aspects of (indiscernible) including           
 the environmental community.  She stated the department feels                 
 strongly about doing a good job with the public process.                      
                                                                               
 Number 230                                                                    
                                                                               
 JOHN CRAMER, DIRECTOR, DIVISION OF AGRICULTURE, testified via                 
 teleconference and said over the past several years the agriculture           
 community has found itself under the critical scrutiny of the                 
 public's eye.  The infusion of Alaska's capital in the agricultural           
 business has provided a six-fold increase in total gross farm                 
 income and over the past six years has remained relatively stable.            
 To maintain the stability and provide for continued growth, the               
 state must continue to support the industry by providing access to            
 reasonably priced lands, low interest operating loans, and local as           
 well as foreign market development.                                           
                                                                               
 MR. CRAMER pointed out that agriculture represents a $30 million              
 renewable resource industry.  In 1993, agriculture employed in                
 excess of 1,200 Alaska residents at an average hourly salary of               
 $7.50.  He said the agricultural business also represents one of              
 many opportunities to diversify the Alaskan economy by creating               
 opportunities for in-state production and marketing of food and               
 fiber.  He stated the division supports the Alaska agricultural               
 community through marketing and inspection services, agricultural             
 land management and resource conservation services, competitive               
 farm development and operating loans, and plant materials                     
 development and testing.                                                      
                                                                               
 MR. CRAMER stated the authority to provide the assistance is                  
 specifically outlined in Title 3 and 41.  Land and resource                   
 management responsibilities on lands classified for agricultural              
 purposes are carried out in close cooperation with the Division of            
 Land under authorities outlined in Title 38.  In addition, a number           
 of federally funded programs are provided through specific                    
 agreements with the U.S. Department of Agriculture.                           
                                                                               
 MR. CRAMER explained that the division is divided into six basic              
 programs.  The first is the Agriculture Revolving Loan Fund (ARLF).           
 He said conventional financing for agribusiness is not available in           
 Alaska due to restricted ag land title, perceived risk, and lack of           
 private sector experience in agricultural lending practices.  He              
 stated in fiscal year 1994, the ARLF filled the gap by providing              
 $1.9 million of low interest farm development, chattel, operating,            
 and product processing loans.  He noted the ARLF, through the                 
 Director's office, has focused a great deal of its attention toward           
 improving the delinquency rate of an inherited portfolio by                   
 restructuring loans to low risk borrowers with a productive                   
 history.                                                                      
                                                                               
 MR. CRAMER stated the ARLF aggressively pursued delinquent loans              
 through settlement action and/or litigation.  As a result of this             
 aggressive asset management program, the projected value of land,             
 equipment, stocks, judgments, and cash revenue returned to the ARLF           
 portfolio in 1993 was $7.7 million.                                           
                                                                               
                                                                               
 MR. CRAMER said some of the highlights in 1994 include seeing the             
 most successful year ever for the farmers markets in Fairbanks and            
 Anchorage.  The pork production went up 15 percent over 1993.  The            
 division is seeing new farmers coming into the market and has over            
 50 new listings in the Food and Farm Products directory this year.            
 He stated the division sold over 126 pieces of repossessed                    
 equipment and disposed of 15,902 acres this past year.                        
                                                                               
 Number 294                                                                    
                                                                               
 REPRESENTATIVE OGAN noted there is a lot of state-owned farm land             
 in the Palmer area.  He wondered what steps are being taken to get            
 farming back into private hands.                                              
                                                                               
 MR. CRAMER reiterated the state has disposed of 15,902 acres this             
 past year.  He said much of the land having the greatest potential            
 for private ownership and farming successes is located at Point               
 Mackenzie and is mental health land.  He hoped that the settlement            
 will go through and disposal of that property can begin.  He                  
 mentioned the division is working with the borough on future land             
 sales.                                                                        
                                                                               
 CO-CHAIRMAN GREEN thanked Mr. Cramer and told him everyone is                 
 impressed with the fungus free seeds the division has been working            
 on.                                                                           
                                                                               
 MR. BUS said the last division is the Division of Support Services.           
 He explained there are three sections in the division:  the                   
 Administrative Services, the Recorder's Office, and Information               
 Resource Management.                                                          
                                                                               
 MS. RUTHERFORD clarified the mental health settlement has released            
 the Point Mackenzie agricultural land from mental health ownership.           
 However, a lawsuit is pending before the Supreme Court.  The                  
 department will be carefully watching the original trust lands.               
 She said the issue has been resolved pending appeal and the                   
 department feels it will succeed with the appeal.                             
                                                                               
 MS. RUTHERFORD reemphasized DNR plays a very vital role in the                
 state's economic viability.                                                   
                                                                               
 CO-CHAIRMAN WILLIAMS announced the committee will meet in Ketchikan           
 on February 18.  At this meeting the committee will gather                    
 information from the U.S. Forest Service, Ketchikan, and                      
 environmental groups to try and get a resolution from the committee           
 in support of the timber industry.                                            
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 There being no further business to come before the House Resources            
 Committee, Co-Chairman Green adjourned the meeting at 10:00 a.m.              
                                                                               

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