Legislature(2001 - 2002)
04/23/2001 01:15 PM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
April 23, 2001
1:15 pm
MEMBERS PRESENT
Representative Beverly Masek, Co-Chair
Representative Drew Scalzi, Co-Chair
Representative Hugh Fate, Vice Chair
Representative Joe Green
Representative Mike Chenault
Representative Lesil McGuire
Representative Gary Stevens
Representative Mary Kapsner
Representative Beth Kerttula
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE CONCURRENT RESOLUTION NO. 17
Expressing the legislature's support for sale of a portion of
Alaska's North Slope natural gas for electrical generation to
power data centers within the North Slope Borough.
- HEARD AND HELD
HOUSE BILL NO. 249
"An Act relating to disposal of certain property acquired by the
agricultural revolving loan fund."
- MOVED HB 249 OUT OF COMMITTEE
HOUSE BILL NO. 244
"An Act relating to a grant of state land to the Denali Borough
for a railroad and utility corridor and a railroad development
project; repealing provisions relating to a grant of a right-of-
way of land for a railroad and utility corridor to the Alaska
Industrial Development and Export Authority; and providing for
an effective date."
- MOVED HB 244 OUT OF COMMITTEE
CONFIRMATION HEARINGS
Board of Fisheries
Dr. John R. White - Bethel
Russell Nelson - Dillingham
- HEARD AND HELD
PREVIOUS ACTION
BILL: HCR 17
SHORT TITLE:SALE OF NATURAL GAS TO POWER DATA CENTERS
SPONSOR(S): RLS
Jrn-Date Jrn-Page Action
04/20/01 1096 (H) READ THE FIRST TIME -
REFERRALS
04/20/01 1096 (H) RES
04/23/01 (H) RES AT 1:00 PM CAPITOL 124
BILL: HB 249
SHORT TITLE:AG REVOLVING LOAN FUND PROPERTY DISPOSAL
SPONSOR(S): REPRESENTATIVE(S)JAMES
Jrn-Date Jrn-Page Action
04/20/01 1097 (H) READ THE FIRST TIME -
REFERRALS
04/20/01 1097 (H) RES
04/23/01 (H) RES AT 1:00 PM CAPITOL 124
BILL: HB 244
SHORT TITLE:RIGHT-OF-WAY TO DENALI BOR. FOR RR/UTIL.
SPONSOR(S): REPRESENTATIVE(S)JAMES
Jrn-Date Jrn-Page Action
04/11/01 0959 (H) READ THE FIRST TIME -
REFERRALS
04/11/01 0959 (H) TRA, RES
04/17/01 (H) TRA AT 1:00 PM CAPITOL 17
04/17/01 (H) Heard & Held
MINUTE(TRA)
04/19/01 (H) TRA AT 1:00 PM CAPITOL 124
04/19/01 (H) Moved Out of Committee
MINUTE(TRA)
04/20/01 1094 (H) TRA RPT 3DP 2NR
04/20/01 1094 (H) DP: SCALZI, MASEK, KOHRING;
04/20/01 1094 (H) NR: KOOKESH, KAPSNER
04/20/01 1094 (H) FN1: (DNR)
04/20/01 1095 (H) FIN REFERRAL ADDED AFTER RES
04/20/01 1103 (H) COSPONSOR(S): HARRIS, WILSON
04/23/01 1151 (H) COSPONSOR(S): SCALZI
04/23/01 (H) RES AT 1:00 PM CAPITOL 124
WITNESS REGISTER
BOB EVANS
Netricity, LLC
Box 100384
Anchorage, Alaska 99510
POSITION STATEMENT: Provided opening remarks regarding
Netricity's proposed project.
JAMES DODSON, Executive Vice President
Andex Resources, LLC;
Vice President, Netricity, LLC
(No address provided.)
POSITION STATEMENT: Presented Netricity's proposed project on
the North Slope.
MARK MEYERS, Director
Division of Oil & Gas
Department of Natural Resources
550 W 7th Avenue, Suite 800
Anchorage, Alaska 99501-3560
POSITION STATEMENT: Presented the division's views on
Netricity's proposed project.
KEVIN BANKS, Petroleum Market Analyst
Division of Oil & Gas
Department of Natural Resources
550 W 7th Avenue, Suite 800
Anchorage, Alaska 99501-3560
POSITION STATEMENT: Provided additional information regarding
the division's study of natural gas.
PAUL FUHS, Lobbyist
Pacific Yukon Corporation
1635 Sitka Number 301
Anchorage, Alaska 99501
POSITION STATEMENT:
BARBARA COTTING, Staff
to Representative Jeanette James
Alaska State Legislature
Capitol Building, Room 214
Juneau, Alaska 99801
POSITION STATEMENT: Testified on behalf of the sponsor of HB
249.
REPRESENTATIVE JEANETTE JAMES
Alaska State Legislature
Capitol Building, Room 214
Juneau, Alaska 99801
POSITION STATEMENT: Testified as the sponsor of HB 249 and HB
244.
CAROL CARROLL, Director
Division of Support Services
Department of Natural Resources
400 Willoughby Avenue
Juneau, Alaska 99801-1724
POSITION STATEMENT: Testified that DNR isn't certain that HB
249 corrects an oversight in [HB 116].
DEREK MORRIS, Farmer
HC 30 Box 5329-AO
Wasilla, Alaska 99687
POSITION STATEMENT: Testified in support of HB 249, but wants
to ensure that the board obtains the maximum return to the
state.
GARY STROMBERG, Farmer
(No address provided.)
POSITION STATEMENT: Expressed concern with the RFP.
HARVEY BASKIN, Farmer
(No address provided.)
POSITION STATEMENT: Testified in support of HB 249.
ROBERT FRANKLIN, President
Alaska Farm Bureau
PO BOX 75184
Fairbanks, Alaska 99707
POSITION STATEMENT: Testified in support of HB 249.
RACHEL HECKER
PO Box 870349
Wasilla, Alaska 99687
POSITION STATEMENT: Testified to the need to have open
competitive bidding.
TODD HECKER
PO Box 870349
Wasilla, Alaska 99687
POSITION STATEMENT: Testified on the need to dispose of the
[Point MacKenzie] properties.
MARK BROUILLET
PO Box 877465
Wasilla, Alaska 99687
POSITION STATEMENT: Testified in support of HB 249.
DAVID HECKER, Partner
Black Sun Farms
PO Box 870349
Wasilla, Alaska 99687
POSITION STATEMENT: Testified on HB 249.
CRAIG TRYTTEN, Dairy Farmer
(No address provided.)
POSITION STATEMENT: Testified in support of HB 249.
JOSEPH FIELDS, President
Kantishna Holdings, Inc.
PO Box 71047
Fairbanks, Alaska 99707
POSITION STATEMENT: Testified in support of HB 244.
NANCY BALE, President
Denali Citizens Council
PO Box 240054
Anchorage, Alaska 99524
POSITION STATEMENT: Expressed concerns.
LINDA PAGANELLI
(No address provided.)
POSITION STATEMENT: Testified in opposition to HB 244.
JOAN FRANKEVICH, Regional Staff
Alaska Regional Office
National Park Conservation Association
POSITION STATEMENT: Testified in opposition to HB 244.
DR. JOHN R. WHITE, Appointee
Alaska State Board of Fisheries
PO Box 190
Bethel, Alaska 99559
POSITION STATEMENT: Testified as appointee to the Board of
Fisheries.
RUSSEL NELSON, Appointee
Alaska State Board of Fisheries
PO Box 161
Dillingham, Alaska 99576
POSITION STATEMENT: Testified as appointee to the Board of
Fisheries.
PAUL A. SHADURA II, Self-appointed Board of Fisheries nominee
PO Box 1632
Kenai, Alaska 99611-1632
POSITION STATEMENT: Presented the House Resources Standing
Committee with reasons to consider him for a position on the
State of Alaska Board of Fisheries, after briefly testifying in
opposition to the reappointment of Dr. John White.
JUDE HENZLER, Executive Director
Bering Sea Fishermen's Association (BSFA)
725 Christensen Drive
Anchorage, Alaska 99501
POSITION STATEMENT: Testified in support of the reappointment
of Dr. John White and Mr. Russell Nelson to the Board of
Fisheries.
ROBERT WILLIAMS
PO Box 206
Kasilof, Alaska 99610
POSITION STATEMENT: Spoke in opposition to the reappointment of
Dr. John White to the Board of Fisheries.
KEN LARSON
1074 Eliz Street
North Pole, Alaska 99705
POSITION STATEMENT: Testified in support of the reappointment
of Mr. Nelson and Dr. White to the Board of Fisheries.
VIRGIL UMPHENOUR
878 Lynnwood Way
North Pole, Alaska 99705
POSITION STATEMENT: Testified in support of the reappointment
of Mr. Nelson and Dr. White to the Board of Fisheries.
PATRICK BOOKEY
PO Box 55194
North Pole, Alaska 99705
POSITION STATEMENT: Testified in support of the reappointment
of Mr. Nelson and Dr. White to the Board of Fisheries.
CARL ROSIER, President
Alaska Outdoor Council (AOC)
8298 Garnet Street
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of the reconfirmations
of Mr. Nelson and Dr. White.
REUBEN HANKE
PO Box 624
Kenai, Alaska 99611
POSITION STATEMENT: Testified in support of the reconfirmations
of Mr. Nelson and Dr. White.
JOE HANES
PO Box 3132
Soldotna, Alaska 99669
POSITION STATEMENT: Testified in support of the reconfirmations
of Mr. Nelson and Dr. White to the Board of Fisheries.
DREW SPARLIN
37020 Cannery Road
Kenai, Alaska 99611
POSITION STATEMENT: Testified in opposition to the
reappointment of Dr. John White to the Board of Fisheries.
AUSTIN AHMASUK
PO Box 1292
Nome, Alaska 99762-1292
POSITION STATEMENT: Recommended Dr. John White and Mr. Russell
Nelson for confirmation to the Board of Fisheries.
ACTION NARRATIVE
TAPE 01-40, SIDE A
Number 0001
CO-CHAIR BEVERLY MASEK called the House Resources Standing
Committee meeting to order at 1:15 p.m. Representatives Fate,
Green, Chenault, Stevens, Masek, and Scalzi were present at the
call to order. Representatives McGuire, Kapsner, and Kerttula
arrived as the meeting was in progress.
HCR 17-SALE OF NATURAL GAS TO POWER DATA CENTERS
CO-CHAIR MASEK announced that the first item of business would
be HOUSE CONCURRENT RESOLUTION NO. 17, Expressing the
legislature's support for sale of a portion of Alaska's North
Slope natural gas for electrical generation to power data
centers within the North Slope Borough.
Number 0150
BOB EVANS, Representative, Netricity, LLC, informed the
committee that Netricity is a company that was formed to place
an Internet data center on the North Slope by using Alaska
natural gas to generate the power for the data center. Mr.
Evans remarked that projects such as this don't come along
often, but when they do it is important for the state to review
the following. Firstly, do the people have the credibility to
do what they say they are going to do. Secondly, do they have
the finances to do what they propose. Thirdly, will they have a
commitment to Alaska that will benefit Alaska. He felt that
after the presentation, the committee will agree that this is an
exciting opportunity for Alaska.
Number 0309
JAMES DODSON, Executive Vice President, Andex Resources, LLC;
Vice President, Netricity, LLC, testified via teleconference.
He informed the committee that the ownership of Netricity, LLC,
is currently 75 percent MDU Resources Group and 25 percent Andex
Resources, LLC. Andex Resources, LLC, is a private company that
is primarily engaged in natural gas exploration and production.
Netricity, LLC, is interested in building a power plant on the
North Slope co-located with the natural gas reserves located in
or near the Prudhoe Bay unit. The purpose would be to utilize
the electricity generated on the North Slope in data centers
packed with computes that host websites and process data over
the Internet. Those computers would be connected with the Lower
48 and Asia via fiber optics that already exists between Alaska
and the Lower 48 and Asia.
MR. DODSON explained that the plan would be to purchase up to
118 million cubic feet (MCF) of natural gas per day from the
State of Alaska out of its royalty share of gas. That amount of
gas would sufficient to power approximately a 500-megawatt
facility, which amounts to more power than the City of Anchorage
consumes. He noted that [Netricity, LLC] is looking at a
600,000 to 1 million server size facility in excess of 1 million
square feet in size. That size facility is currently being
permitted in the Silicon Valley area by US Dataport.
MR. DODSON expressed the belief that Alaska is uniquely poised
to take advantage of this opportunity because it has a large
amount of natural gas that is underutilized on the North Slope
and has a "stout" fiber-optic connection between the Lower 48
and Asia. Furthermore, the North Slope has the ambient cooling
and dry weather that any data center would want. The North
Slope also has tremendous physical site security because there
is basically one access road. The ability to strictly control
access to Internet data centers is very important. Furthermore,
the reliability of power is very important because one of the
largest problems faced by Internet data centers in the Lower 48
is the lack of available power. Moreover, the power being
utilized in the Lower 48 is power that isn't really designed for
the data centers; the power isn't clean or constant. Therefore,
Mr. Dodson felt that isolating this function on the North Slope
could provide a quality advantage, a cost advantage, a physical
security advantage, and a cooling advantage in comparison to the
Lower 48.
Number 0785
MR. DODSON, in response to Representative Fate, reiterated that
this data center would use approximately 118 mcf of gas a day.
The current plans for moving gas off the North Slope are in the
neighborhood of 4 bcf (billion cubic feet) a day pipeline and
thus Netricity would be one-fortieth of that number. However,
Netricity's use would be on the North Slope and wouldn't detract
or displace any gas going into the pipeline.
REPRESENTATIVE FATE asked if that amounts to about one-quarter
of that 12.5 percent royalty. Representative Fate explained
that he was basing that on 4 bcf. He also inquired as to the
exact share of the 12.5 percent royalty on gas that the state
currently enjoys.
MR. DODSON answered that approximately 8 bcf a day is being
funneled through Prudhoe Bay today. Therefore, Netricity would
be looking at one-eightieth of that amount. The state's share
of that 8 bcf a day amounts to roughly 1 bcf a day and thus
Netricity would be looking at one-tenth of that amount.
Number 0923
REPRESENTATIVE GREEN inquired as to the location of this and
inquired as to what would be done with the power that is
generated.
MR. DODSON explained that the power would go to a data center
that is located approximately 100 feet to .5 mile maximum from
the power plant. The data center would use the power right
there on the North Slope. Mr. Dodson related the basic theory
that it doesn't make sense to push gas, for example, from Texas
to New York to burn in a power plant that powers a data center
in New York when the light, that data in the form of photons,
could be sent [to the location of the power]. Therefore, the
location of the Internet data host doesn't matter but rather
it's important to be able to move the electrons to the location
where the computers are being powered. So, some of Alaska's
former disadvantages, its remoteness, colder climate, and large
isolated gas supply, are viewed as advantages for this project.
REPRESENTATIVE GREEN related his understanding that 500
megawatts would be a "mammoth" communication center.
MR. DODSON agreed. Depending upon the size of the servers and
processors and their individual process demands, he estimated
that there would be between 600,000 to 1 million servers and
computers working in this facility. In further response to
Representative Green, Mr. Dodson explained that the data would
arrive via a GCI system that goes from Seattle to Anchorage and
round to Valdez on to the Trans-Alaska Pipeline to Fairbanks.
Then there would need to be a smaller fiber-optic system that
would have to be dug from Fairbanks to the Prudhoe Bay field.
Another route would be the World Communications Infrastructure,
Inc., (WCI) that moves from Fairbanks along the Alaska Railway
system, down to Anchorage, out to sea, and down to Portland.
Both the GCI and WCI lines have connections to the North Pacific
cable to Asia, specifically Japan.
MR. DODSON, in response to Representative Green, informed the
committee that based on discussions with GCI and what Netricity
views as dry land changes - merely a switching of gear -
Netricity believes that there will be sufficient capacity and
redundancy to handle the data traffic from the facility
envisioned.
REPRESENTATIVE GREEN inquired as to the royalty gas purchase
price rate.
MR. DODSON answered that the price has yet to be negotiated with
the commissioner of the Department of Natural Resources, if the
contract is finalized and approved by the legislature. Mr.
Dodson said that there has been review as to when a pipeline
would be installed on the North Slope and its volumes. From
that, a net present value of natural gas was determined for a
typical 1,000 cubic foot unit on the North Slope at a 10 percent
discount. The following three scenarios were developed: 65 tcf
(trillion cubic feet) moving out at 2.5 bcf a day; 65 bcf moving
out at 4.0 bcf a day; 35 tcf moving out at 4.0 bcf a day. From
those the highest net present value for the gas currently was
determined to be $.36. When that number, $.36, was presented to
the Division of Oil & Gas, the department's economist said that
it has to determine what gas is worth in the natural gas market.
However, Netricity doesn't see a natural gas market to tie to
and thus the aforementioned scenarios were utilized. Although
selling into Chicago is a different market than selling on the
North Slope, it was difficult to determine how else to develop a
number.
Number 1355
REPRESENTATIVE GREEN referred to page 2 of HCR 17, which refers
to "substantial added value to Alaska's natural gas resources".
Although he wasn't sure what "substantial" is, he suggested that
$.36 is somewhat low. Therefore, he asked if Netricity is
prepared to move forward if the cost is higher.
MR. DODSON, in response to whether the project would still be
workable at $.72, said that the numbers would have to be run
again. Although he said that it could probably work, he noted
that other factors come into play such as the debt the company
could obtain and whether the North Slope Borough would help the
company underwrite some notes to lower costs. Mr. Dodson
pointed out that the ability to bring the data centers to the
North Slope is inversely proportionate to the cost of the
electricity. Therefore, the lower the cost of the gas, the
lower the cost of the electricity, which increases the
likelihood of placing a data center at the North Slope.
However, in the end the Internet data center market will be the
determining factor.
MR. DODSON pointed out that the $.36 was not an attempt to low
ball the project but rather it was based on discount scenarios
based on what was viewed as possible pipeline scenarios.
Furthermore, Netricity would be competing with a different
market [because] the gas would be used on the North Slope. Mr.
Dodson informed the committee that he had attended a conference
on Arctic gas at which Governor Knowles estimated that Alaska
has around 70 years worth of gas to move out at 4 bcf a day.
Therefore, regardless of what Netricity does or doesn't do on
the North Slope, 4 bcf a day will move out. If Netricity is
able to come in and create an incremental one-tenth of a bcf a
day market, basically Netricity would be using gas that is cued
to move forward. Since there is so much gas waiting to move
down the pipeline, Netricity is saying that it can turn it into
cash now while employing Alaskans, adding value to the resource,
and placing Alaska in the position of being a major node on the
Internet.
REPRESENTATIVE GREEN reiterated that his concern is in regard to
the "substantial added value". He noted that gas sales to the
Mid-continent (ph) are perhaps only one of three alternative
under review. Representative Green said that he merely wanted
to be sure that the project wasn't hinging on a fairly low
value.
Number 1678
MR. DODSON, in response to Representative Stevens, estimated
that there would be between 250-300 full-time jobs if the power
plant can reach 500 megawatts and the data center is fully
built. Those jobs will be on a schedule similar to that used by
the oil industry, a two weeks on/two weeks off schedule.
REPRESENTATIVE STEVENS asked if there is any commitment to train
and employ Alaskans.
MR. DODSON replied yes and remarked that there are two major
opportunities. First, there is the opportunity to bring in
Native Alaskans and allow them to train at the University of
Alaska. The work would mainly be swapping out boards and power
supplies when things fail. Second, if Native Alaskans can be
utilized for this employment, they could have the opportunity to
access both the cash economy and the subsistence economy. That
is with a two weeks on/two weeks off schedule, Native Alaskans
can maintain more of a Native lifestyle while still accessing a
cash economy.
MR. DODSON, in response to Representative Fate, answered that
the 500 megawatts and the 118 mcf are peak loads. Therefore,
the data center wouldn't run at that capacity all the time.
Number 1834
MARK MEYERS, Director, Division of Oil & Gas, Department of
Natural Resources, testified via teleconference. On the surface
Netricity's proposal is "a neat idea" and the division is
delighted with the possibility of selling gas on the North
Slope. Although there is no initial opposition to the sale of
North Slope gas, there is [a question] as to what that gas is
worth. In order to provide a baseline, Mr. Meyers informed the
committee that gas is sold to run utilities and to help fund
TAPS [and from that the division] receives $1.12 in mcf.
Therefore, the $.36 proposed by Netricity is roughly 25 percent
of what is received from the current gas sales on the North
Slope and is 10 percent less than the current retail value of
that gas in Chicago. Mr. Meyers said that the real question is
how one evaluates large, significant volumes of gas.
"Certainly, if we were to value it under what we could
competitively get for the gas, it would be a substantial
subsidy, on the order of tens of millions of dollars
potentially, which would go directly against royalty value that
again, is money directed to the permanent and general fund," he
said. Therefore, there is the challenge to [find] a realistic
and fair valuation mechanism for this major sale of gas while
[dealing] with a long-term contract. A long-term option would
be difficult without having a better handle on the valuation of
North Slope gas.
Number 1949
KEVIN BANKS, Petroleum Market Analyst, Division of Oil & Gas,
Department of Natural Resources, testified via teleconference.
Mr. Banks mentioned that when he first heard of Netricity's
proposal he viewed it with skepticism, which has since grown
into excitement. There is real merit in what Netricity wants to
do. However, "It all depends on the price," he said. At this
point, there are many proposals for sales of North Slope gas and
it seems that the state is in a somewhat uncertain position in
regard to what will move forward. Mr. Banks informed the
committee that as part of the fast track budget and the
governor's initiative to commercialize natural gas on the North
Slope, the division has proposed a couple of studies that will
look at the in-state demand for natural gas, how royalty in-kind
gas might be used to meet that demand, and the important
mechanisms that should be considered when developing the value
of the natural gas. Although these studies haven't begun,
funding has been received for part of them. The division
intends to develop an RFP and move forward on these studies
soon. Mr. Banks pointed out that a best interest finding is
required in any disposition of royalty oil in-kind. Therefore,
these studies will support the findings that the commissioner
will have to make before selling the gas. For those reasons,
the division intends to move forward and will include data
centers as a potential in-state demand in the study of future
demand.
REPRESENTATIVE McGUIRE inquired as to how long the
aforementioned study would take.
MR. MEYERS answered that the intent is to have the information
[from the study] available in the November/December timeframe,
which is when the division hopes to hear from the producers.
Number 2199
PAUL FUHS, Lobbyist, Pacific Yukon Corporation, testified in
support of [HCR 17]. Mr. Fuhs said that he would raise some
issues that relate directly to this resolution as well as to a
gas line development project. In regard to why this resolution
is even necessary, Mr. Fuhs pointed out that the producers have
been unwilling to sell Alaska's gas to anybody, including anyone
in the area because it would establish a well-head value.
However, the producers sell gas between themselves from which
the state receives no royalty value. Although [the producers]
testified in the House Special Committee on Oil and Gas that the
gas line isn't economic, they had no well-head value on which to
base [that statement]. Additionally, the House Special
Committee on Oil and Gas heard testimony that the realignment on
the North Slope, between the differing oil and gas ownership,
hasn't taken place because a couple of companies have objected.
Furthermore, there is not a gas balancing agreement between the
companies that would even allow a gas sale. Therefore, all the
barriers to the sale of gas on the North Slope remain.
MR. FUHS then turned to the state royalty gas. He recalled
testimony from the department that royalty gas is being sold on
the North Slope. However, he understood that the state couldn't
have any access to its royalty gas until it left the hydrologic
unit. Perhaps being on the North Slope is considered to be on
the hydrologic unit. Therefore, Mr. Fuhs pointed out that all
the state's lease gas is locked up on the North Slope as well as
all the state's royalty gas. Mr. Fuhs said, "Maybe the
department could negotiate a side deal with this company for
access to the gas or maybe it's considered to not be leaving the
hydrologic unit." These are some the issues that will continue
to be raised with other legislation. However, Mr. Fuhs
clarified that he didn't believe that HCR 17 should be delayed
because the legislature will have the ultimate say with a
royalty gas sale.
Number 2368
REPRESENTATIVE McGUIRE recalled a conversation with Mr. Dodson
regarding the construction employment that this proposed project
would bring to the North Slope. She requested that he provide
the committee with that information.
MR. DODSON informed the committee that a modular building
expertise has been developed in Anchorage and Nikiski. He
explained that modularization, to the extent possible, is
important on the North Slope. Mr. Dodson noted that he expected
the turbines to come out of the Houston Ship Channel to be
shipped to the North Slope. There is also the expectation that
the data centers will be built on a modular basis in either
Anchorage or Nikiski or both areas.
Number 2439
REPRESENTATIVE STEVENS asked if other industries beside the data
centers would find it appropriate to locate at the site of the
energy source.
MR. BANKS answered that he thought of a gas to liquids project
in which liquids can be manufactured and pumped along with the
oil [on TAPS].
MR. MEYERS pointed out the long-term possibility of the
efficiency in the generation and transmission of electricity.
That is, superconductivity would allow electricity to be
transmitted over long distances without losing power.
Number 2519
REPRESENTATIVE FATE asked if the projections have built in any
surplus energy for local use or for the possibility of the
aforementioned break through in technology for transmission.
MR. MEYER answered that [the department] is looking at that in
terms of the study that is being done now. Although this
Netricity idea caught the department by surprise, it is an
intriguing idea. Mr. Meyer said, "The other ... thing to think
on the North Slope too is we see a lot of up-side potential for
additional gas other than the gas at Prudhoe." For example, in
the North Slope Foothills or the Point Compton Fields. "We want
to encourage additional exploration for other supplies and
development of other currently known reserves. So, all this
could fit in the equation," he said. However, the challenge is
the proposed $.37 mcf price, a price that every community would
love to have. The challenge is to have a fair methodology for
supplying gas. He noted that the demand study is supposed to
encompass gas at various prices. Once the value of the gas is
known, then the demand can be "reverse engineered" because the
cheaper the gas, the more demand is created.
MR. DODSON informed the committee that Netricity's plan
anticipates putting in place 14 turbines with 45 megawatts, of
which 11 turbines will have 495 megawatts, which is full usage.
Of the three other turbines, at least one would be turning full
time, which would allow the sale of interruptible power and the
ability to pick up any drop in power from the landline turbines
when going offline. He indicated that the second turbine could
run and service the local market, which he didn't foresee
increasing above 20 megawatts. Therefore, there would be excess
generating capacity on the North Slope.
Number 2698
REPRESENTATIVE GREEN remarked that he didn't recall ever passing
a resolution that named a specific company as in HCR 17.
Therefore, he mentioned the possibility of on page 1, line 8,
deleting "Netricity, L.L.C., an Alaska limited liability company
is seeking to" and inserting, "there have been several expressed
interests". Such a language change would eliminate the state
predetermining an interest in a specific company. He asked if
that would be problematic.
MR. EVANS related his belief that there hasn't been other
expressions of interest to place an Internet data center on the
North Slope. Mr. Evans pointed out that HCR 17 is a resolution,
not legislation, and as such is merely an effort to suggest to
the administration that the legislature believes that this is an
opportunity to negotiate with Netricity in order to determine
the price. Therefore, Mr. Evans said that naming Netricity is
useful because it is the only company suggesting such a use and
desire to enter into negotiations with the state.
MR. EVANS pointed out that the problem of Internet data centers
not having enough energy in the Lower 48 is a problem begging
for a solution. The solution, in the form of HCR 17, is a
solution that he suggested Alaska move on relatively quickly.
He informed the committee that the Tennessee Valley Association
sees itself as a solution to the lack of energy for Internet
data centers in the Lower 48 as do other areas in the Lower 48.
Furthermore, the trapped gas in Canada is a potential solution
to this problem. Therefore, failing to move quickly in this
area may result in the lose of an opportunity.
REPRESENTATIVE GREEN said that rushing in at a rate that is
later found to be much higher would do a gross disservice to the
people of Alaska. Therefore, he was nervous with the notion of
grabbing it now or else it will be gone. Such a notion was
heard in relation to the merger, but it was "a bag of garbage."
In response to Mr. Evans' point that Netricity is the only
company that has come forward with such a proposal,
Representative Green suggested that his aforementioned language
change on page 1, line 8, be in the singular: "has had an
expressed interest". He maintained his concern with the state
specifying favor of a specific [company] in a resolution.
MR. EVANS turned to the price issue and pointed out that the
resolution doesn't contain anything about the price. Netricity
wants to negotiate with the state in order to reach an
appropriate price. In regard to [Representative Green's
language change], Mr. Evans left that to the committee's
discretion while pointing out that Netricity has made the effort
to come to Alaska in order to make this opportunity available to
themselves [as well as the state].
TAPE 01-40, SIDE B
MR. EVANS continued, "... to have the opportunity to at least
have some ownership of this notion as we talk about it in the
state."
CO-CHAIR MASEK announced that she was closing the public
discussion of HCR 17 and opening up committee discussion. She
inquired as to Representative Green's intent with his proposed
change.
REPRESENTATIVE GREEN explained that he was attempting to
determine whether the resolution had to include Netricity's
name. Now that the public discussion has been closed,
Representative Green announced that he would offer his previous
language change as an amendment.
CO-CHAIR MASEK announced that she is opposed to the amendment
because as Mr. Evans said, this is merely a resolution that
doesn't bind the legislature. Furthermore, whatever business
that results from this resolution will have to be worked through
the administration and the legislative body. Co-Chair Masek
noted her support of HCR 17 because it brings jobs and dollars
to the state and it opens new doors for the state.
REPRESENTATIVE FATE suggested that the concern could be resolved
by inserting "the concept of" on page 2, line 2, after
"supports".
CO-CHAIR MASEK, in response to Representative Stevens, clarified
that [Representative Green's] amendment is before the committee
to which she objected.
REPRESENTATIVE GREEN clarified his amendment as follows:
Page 1, line 8,
Delete "Netricity, L.L.C., an Alaska limited
liability company is seeking"
Insert, "there has been an expressed interest"
REPRESENTATIVE STEVENS said that he believes he understands
Representative Green's concern, which he shares. "I think it's
a little disingenuous to say we're ... going to throw this
company's name in there ..., but we don't really mean it.
That's not really the case. If we pass the resolution that has
the company's name in it, it has significance" he remarked.
Perhaps the amendment could be changed such that it uses
language that says "there have been companies such as Netricity
who are interested." Representative Stevens expressed the need
to direct the administration to review all firms that may be
interested.
Number 2729
REPRESENTATIVE FATE reiterated his suggestion that on page 2,
line 2, after "supports", the language "the concept of" could be
inserted in order to allow more "wiggle room."
REPRESENTATIVE GREEN said that still "smacks back to selling to
Netricity." He reiterated that he has never seen specific
companies specified in resolutions. He felt that language
imparting that the "DOG" of DNR is in favor of this would
strengthen this significantly and perhaps may be more important
than specifying a company.
MR. MEYERS remarked that he shared Representative Green's
concern. He identified the challenge as which gas is sold
first. When the netback from Chicago is reviewed in order to
calculate how $.37 is determined, then the value of that gas has
to be discounted well into the future. He used the following
example to illustrate how the $.37 was determined:
Suppose you were out to buy a new car and you went to
the car lot and there were ten brand new cars of the
same type sitting on the lot. And you negotiate with
the car salesman saying, "I'm not going to buy the car
that's going to sell this year. I know all those ten
cars, you're not going to sell one for five years.
Therefore, I'm going to give you a lot less value for
that car because that car isn't going off the lot for
five years."
MR. MEYERS pointed out that everyone would want to be in that
position, which is a challenge. He related his belief that if
the gas were sold at Netricity's heavily reduced rate, many
others would develop creative situations to purchase gas. Mr.
Meyers reiterated that he would have concerns if [the
resolution's language] is giving a clear indication that a
specific project has priority over another's because the full
evaluation necessary to [determine] the value hasn't been done.
He posed the question: "Does this legislation [HCR 17] give
them [Netricity] a competitive advantage on the North Slope in
purchasing royalty gas?"
Number 2365
CO-CHAIR MASEK announced that her staff would work with the
sponsor of HCR 17, which will be before the committee with some
positive amendments on Wednesday. This is an important issue
for the state. [HCR 17 was held.]
HB 249-AG REVOLVING LOAN FUND PROPERTY DISPOSAL
CO-CHAIR MASEK announced that the next order of business would
be HOUSE BILL NO. 249, "An Act relating to disposal of certain
property acquired by the agricultural revolving loan fund."
BARBARA COTTING, Staff to Representative Jeanette James, Alaska
State Legislature, pointed out that the committee packet should
include a copy of SLA 2000, Chapter 81, which is last year's HB
116. Ms. Cotting explained that HB 249 corrects an oversight in
last year's HB 116, which created the Board of Agriculture and
Conservation. Last Fall the board was selected and has been
meeting on a monthly basis ever since. The board and its
attorney from the Department of Law were in the second phase of
drafting regulations authorized by the new statute when they
discovered a problem. She directed the committee's attention to
the bottom of page 9 of SLA [2000 Chapter 81]. There the last
line says, "Disposal shall be conducted under regulations
approved by the commissioner." That language is changed in HB
249 to say, "Disposal shall be conducted under regulations
adopted by the board." This change would allow the Board of
Agriculture and Conservation to continue functioning in
accordance with original legislative intent.
Number 2180
REPRESENTATIVE JEANETTE JAMES, sponsor of HB 249, explained:
When we made the board be responsible for the
agricultural revolving loan fund that is under their
purview. And then when it comes to them disposing of
land that is in there because it's been repossessed
... so they have assets in this, that they should
determine the way that they would dispose of those as
they are managing the [agricultural] revolving loan
fund.
Representative James acknowledged that there is an argument that
the Department of Agriculture, under which the agricultural
revolving loan fund (ARLF) falls, should have some oversight by
the commissioner. She said that she is willing to work with the
department on that issue.
REPRESENTATIVE JAMES pointed out that the Director of
Agriculture is also the hired person for the Agricultural Board.
Representative James also pointed out, "It's very interesting to
note that this same money that they're supposed to be in control
over, we spend every year just to pay for the people who work in
the Division of Ag." Although this has been a sore spot with
many farmers, she didn't see any immediate future in moving
beyond that. Therefore, this will only work if there is
cooperation with everyone.
Number 2032
CAROL CARROLL, Director, Division of Support Services,
Department of Natural Resources (DNR), acknowledged that
although DNR has not had much time to review HCR 17, she and
Representative James have been discussing the resolution. Ms.
Carroll mentioned that she had made some comments to
Representative James regarding the connections between the
executive branch boards and the regulations, the rule-making
body. She agreed on the importance to work jointly, which is
intended. Therefore, she and the department are looking into a
way to say such so that an agreement can be reached.
REPRESENTATIVE GREEN asked if Ms. Carroll viewed HB 249 as a
correction for an oversight [of HB 116].
MS. CARROLL answered that she wasn't certain that HB 249
corrects an oversight and thus she is present.
Number 1949
DEREK MORRIS, Hay Farmer, testified via teleconference and
mentioned that he wants to purchase a parcel at Point MacKenzie.
Mr. Morris announced that he is in support of HB 249. However,
he expressed concern with the language on page 1 that says, "The
regulations must ensure that the property is disposed of so as
to maximize the return to the state". He related his
understanding that possibly there are some request for proposals
(RFPs) for property for which the appraisals being used are four
years old. Therefore, it seems that if the state sells the
property based on those appraisals, the state won't receive its
proper return on their parcels. He said that the ARLF needs to
have those funds in order to have other agricultural activities.
Mr. Morris concluded by reiterating that he supports HB 249, but
he wants to ensure that the board obtains the maximum return to
the state.
GARY STROMBERG testified via teleconference. He informed the
committee that he has been a farmer at Point MacKenzie for 18
years. Mr. Stromberg expressed concern with the recent actions
with the RFP in which there have been attempts to designate who
receives properties with values that are different than market
value. Whatever rules are established must conform with state
law and thus maximize the return to the state. Mr. Stromberg
noted that he sent a letter to Representative James regarding
the problems there have been with the [Division] of Agriculture.
He felt that some rules have to be developed so that farmers
aren't turned against each other or it would be better not to
have a [Division] of Agriculture.
Number 1760
HARVEY BASKIN testified via teleconference and informed the
committee that he is one of the original farmers at Point
MacKenzie. Although he is a member of the Board of Agriculture
and Conservation, he is speaking as a farmer. Mr. Baskin noted
his support of HB 249 because it clarifies the intent of HB 116.
He related his understanding that the Board of Agriculture and
Conservation was appointed to manage, monitor, and have input on
all disposals of agricultural land. However, if part of that
authority lies in another state office, then it is difficult for
a buyer or board member to answer to two bosses. He inquired as
to which set of regulations would one abide by when making
decisions. Therefore, he stated that the authority to dispose
of state land with a maximum value is one of the primary
responsibilities of the board and the people who help supervise
the management of the land. Mr. Baskin related his belief that
outcry bidding is probably the fairest process.
Number 1619
ROBERT FRANKLIN, President, Alaska Farm Bureau, testified via
teleconference in support of HB 249. The original legislative
intent was for the board to control the entire fund, everything
that is included under the definition of property. Mr. Franklin
expressed concern with maximizing the return to the state. In
that regard, he agreed with Mr. Baskin that outcry bidding does
establish the value of it. However, the Point MacKenzie land
will probably be in a [price] range that exceeds [what one would
pay for] agricultural purposes.
Number 1498
RACHEL HECKER testified via teleconference and noted that
although she is the Mat-Su representative for the Alaska Farmers
Union, today she is speaking as the newest dairy farmer at Point
MacKenzie. Ms. Hecker expressed concern with the lease tracts
that were "given over" without due process, that is [farmers]
weren't allowed to bid on them. Since those weren't put out to
competitive bid, the state's return wasn't maximized. Ms.
Hecker informed the committee that she was told late last year,
early this year that she could bid on those lease properties in
the Spring just like everyone else. However, at the last board
meeting it was stated that there was no one interested in those
lease properties and thus it was in the board's best interest to
return the land to those that were leasing them. Therefore, Ms.
Hecker expressed her desire to sell the land in an open and
competitive bid process and the land that can't be sold yet,
should be leased to the highest bidder.
TODD HECKER testified via teleconference and agreed with his
wife that he would like to have the opportunity to bid on the
[Point MacKenzie] land, which was clearly brought forth at the
[board] meeting although [the board] didn't acknowledge it. Mr.
Hecker explained that he purchased his land, a bare piece of
property, for $400,000 and placed $.5 million worth in buildings
on the property because the state has "forced our hand to do
that." When he first moved to this location, he was told that
another place would be for sale, which has been the case for the
past four years. This is a piece of property for which [the
board] is planning on using an RFP. Those practices shouldn't
happen that way. He charged that there is much property being
held in order to justify jobs. Mr. Hecker said, "If the state's
going to maximize their benefits out of this and their price,
they should sell it now because the market is as good as it's
ever going to be down there and the last sales have proved
that."
Number 1230
MARK BROUILLET testified via teleconference. He began by saying
that he has been interested in acquiring some property at Point
MacKenzie, but he has run into some problems. Therefore, he
felt that HB 249 may help alleviate some of his concerns.
DAVID HECKER, Partner, Black Sun Farms, testified via
teleconference that he is interested in bidding on land at Point
MacKenzie. Mr. Hecker noted that during the last bidding
process he bid on Number 10, which was appraised at $240,000 and
sold to someone else for $305,000. That is money in the state's
pocket.
CRAIG TRYTTEN, Dairy Farmer, testified via teleconference. Mr.
Trytten stated his support of HB 249 so that the state could
receive the best return on its dollar. He agreed that the
appraised value [used for the RFP] is four years old; however,
those are "kind of a minimum bid." He said, "It also
discriminates against any other Alaskan without a dairy ability
from being held off from buying a farm." Furthermore, the
intent of the board was to obtain the maximum return for the
state. Mr. Trytten informed the committee that he just
completed building a new dairy farm and his barn cost as much as
the appraised value on the farm to be sold. If a deal is cut to
sell a $1 million piece of property for $.5 million, it is a
great loss to the state and it lowers the value of his property,
which is determined by the average sale price of the land. Mr.
Trytten expressed his desire to have an open public bid in which
the [highest bidder] takes the land. He emphasized the problems
that occurred when the government has the land at Point
MacKenzie.
CO-CHAIR MASEK closed public testimony on HB 249.
Number 0925
REPRESENTATIVE FATE moved to report HB 249 out of committee with
individual recommendations and the accompanying zero fiscal
note. There being no objection, HB 249 was reported from the
House Resources Standing Committee.
HB 244-RIGHT-OF-WAY TO DENALI BOR. FOR RR/UTIL.
CO-CHAIR MASEK announced that the next order of business would
be HOUSE BILL NO. 244, "An Act relating to a grant of state land
to the Denali Borough for a railroad and utility corridor and a
railroad development project; repealing provisions relating to a
grant of a right-of-way of land for a railroad and utility
corridor to the Alaska Industrial Development and Export
Authority; and providing for an effective date."
Number 0857
REPRESENTATIVE JEANETTE JAMES, Alaska State Legislature,
testified as the sponsor of HB 244. This legislation, HB 244,
would "undo" the authority Alaska Industrial Development and
Export Authority (AIDEA) has to bond to identify a corridor for
rail in the north access to Denali National Park. She pointed
out that the committee packet includes maps, which illustrate
this 90,000 acre piece of property that is next to Denali Park.
This property is state land and is also known as "Wolf
Township." Representative James explained that "we" are
attempting to gain other access into the park because the
current access is insufficient, at capacity, and in need of
improvement. Therefore, a second entrance to the park would be
valuable. However, she stressed that she doesn't favor a road
due to all the problems a road would create [in a park setting].
This proposal merely provides an opportunity for rail access to
only the state lands, which is about 40 miles from Healy.
Although there may be some interest in going farther, it would
require federal intervention and much work. Furthermore, the
group interested in putting in this 40 miles of rail indicates
that this is an opportunity to be a "paying proposition."
REPRESENTATIVE JAMES explained that HB 244 would identify a
swath from the 90,000 acre piece of land and give it to the
Denali Borough so that the borough could identify and survey a
route through the middle. The borough would have until 2006 to
identify and survey that route, after which the borough would
only own the route, which would be up to 3,500 acres. The
reality is that the corridor would require merely 1,500 acres.
Representative James acknowledged that some are concerned with
the location of the corridor. Furthermore, the Department of
Natural Resources (DNR) would prefer authorizing the borough to
identify the corridor and return to DNR in order to ensure that
there are no existing uses, which would result in conflicts.
Once DNR approved the corridor, then the surveying could be
done, after which DNR could transfer the land to the Denali
Borough. Representative James clarified, "That is the amendment
that we're going to be working on to try to get a CS up to
Finance, but because we're on an extended timeframe here, we'd
like to move the bill out as it is today."
REPRESENTATIVE JAMES, in response to the concern regarding why
40,000 acres is necessary for this, pointed out that the route
would have to traverse the lay of the land and proceed such that
animal and habitat conflicts are avoided. Therefore, a wide
area is necessary. She then turned to the concern regarding the
possibility that the land is given to the Denali Borough, but no
railroad is built. Therefore, it was decided that this [the
corridor land] will be part of the borough's land selection.
Representative James informed the committee that the Denali
Borough Assembly is in support of this proposition, HB 244. She
noted that she would be in the area this summer working to
ensure that this corridor would not intrude on state park land.
Number 0382
REPRESENTATIVE JAMES informed the committee that U.S. Senator
Murkowski got $1.32 million appropriated by the federal
government to work on this issue. There was a park survey [by
the Park Service] who did support the northern access. The
state needs a match of $330 million, which she believes will be
included in this year's capital budget. Therefore, there will
be money to perform the environmental assessment and the
environmental impact study (EIS). Representative James said, "I
think the protection for the listening to the voices of the
folks is in there in the process and what we really need to do
is get it on the table and authorize somebody to go forward with
it and that's what this bill is intended to do." The committee
substitute (CS) has already been ordered, but wasn't available
in time for this meeting.
Number 0270
JOSEPH FIELDS, President, Kantishna Holdings, Inc., testified
via teleconference in support of HB 244. He said that HB 244
provides an expedited methodology to establish a right-of-way in
order to create something that has been endorsed by all the
boroughs and cities of the Railbelt. He recalled that the
legislature has passed two resolutions in support of this and
there was the AIDEA bill of 1998, which is essentially HB 244
save the change from AIDEA to the Denali Borough. Furthermore,
HB 244 does relieve the bonding authorization from AIDEA and
eliminates the transfer to AIDEA, which would be beneficial to
AIDEA. Mr. Fields informed the committee that there has been
federal movement [with] a new secretary reviewing the access as
found by the 1994 Denali task force. That task force, the
national public board that advises the National Parks Service,
called for a new access route to Wonder Lake. Therefore, Mr.
Fields was confident that with the passage of HB 244, the work
of identifying the specific right-of-way can begin. He noted
that the right-of-way will not take up the entire yellow
section, but will only take up something the size of the Parks
Highway and end up as a 300 foot right-of-way. He echoed
Representative James' earlier comments regarding the intention
to avoid habitat and features that are difficult for railroads.
Mr. Fields announced that Stampede Road is not really
appropriate for this. He hoped that the committee would move HB
244 forward so that the details could be worked out at the next
hearing, which [will produce] a good bill that will produce
about $.25 billion worth of private investment in the state as
well as possibly 900 jobs over the years. He concluded by
saying, "This is a rare opportunity for public-private
relationship to flourish and go forward. I hope you will move
it quickly."
TAPE 01-41, SIDE A
[Please note that approximately three minutes of Mr. Braun's
testimony was not recorded and thus was obtained from the
written testimony he read the committee.]
Number 0001
DAVID BRAUN, testifying via teleconference, read the following
testimony:
[I am opposed to House Bill 244. Public and private
land developers are trying to appropriate state land
in Denali Borough. They want to make the Wolf
Townships an extension of Denali National Park's
transportation system, and develop it for their own
financial gain.
On Thursday, April 19 [the] House Transportation
Committee quickly passed HB 244 out of committee
without providing for any public comment or public
hearing. The history of this bill is interesting. A
working draft of the bill distributed at the Denali
Borough Assembly meeting April 7th said, "The Denali
Borough shall identify and survey a railroad and
utility corridor ... from near the community of Healy
to the eastern boundary of Denali National Park and
Preserve." It also said, "The borough may retain not
more than 3,500 acres of the land granted to the
borough under this section." This land would be in
addition to the borough entitlement and is worth many
millions of dollars.] And I don't believe the
citizens of Alaska will ever be adequately compensated
for the loss of this public land.
A legislative staffer noted that having the Denali
Borough do the survey for a private enterprise put the
borough in the role of developer. The bill was then
changed so that Kantishna Holdings, Incorporated,
would identify and survey the railway, but the Denali
Borough would still get 3,500 acres to develop whether
the railroad was built or not. In my opinion, this
bill is an attempt to give valuable public land to
Denali Borough to sell, lease, or otherwise develop.
The ultimate use of any land conveyed to the borough
is completely unpredictable. The borough assembly has
been unwilling to regulate land use as charged by the
legislature.
Contrary to what some supporters of HB 244 say the
question is not whether development should occur but
where it should be. There are tens of thousands of
acres east of Panguingue Subdivision open to borough
land selection. Leaving the Wolf Townships as they
are encourages development that is independent of
Denali National Park and Preserve. People of the
state, I don't believe, wanted the Park Service to be
given to Wolf Townships and I don't believe they want
... the Wolf Townships, in any way, connected to the
park. Alaskans and tourists use this as an
alternative to the congestion and bureaucracy of the
park. It's worth noting that now travelers from all
over the globe are purposely coming exclusively to the
Wolf Townships as a result of Jon Krakaur's book Into
the Wild, the story of Chris McCandless's death. It
is shortsighted and absolutely impossible to try to
funnel all our visitors through Denali National Park.
We can learn from the mistakes made outside parks in
the Lower 48. Keeping Wolf Townships as they are is
good for economic development.
Also, I have to question the motives of those who are
hostile to the National Park Service that would have
the park encroach on our public land. I also think
that Kantishna Holdings, Incorporated, should reveal
the names of all those who will benefit financially
from this venture. ... I must state again that there
are no restrictions on land the Denali Borough might
sell or lease (indisc.).
Number 0303
NANCY BALE, President, Denali Citizens Council, testified via
teleconference. Ms. Bale specified that she is testifying on
behalf of herself and the Denali Citizens Council, a local
oversight group in the Denali area. She informed the committee
that she has lived and worked in Denali National Park since
1971. Furthermore, she has mushed and skied the Stampede area.
Ms. Bale pointed out that lands north of the Wolf Townships were
given to Denali National Park as part of the 1980 Alaska
National Interest Lands Conservation Act (ANILCA) settlement.
The purpose of all the northern additions was to provide
wildlife habitat, specifically for the Denali caribou herd. The
Stampede Trail is located on the open tundra that gently slopes
downward to some rolling hills. From her personal contact with
the Stampede Trail, she informed the committee that there are
many wetlands along the route as well as some major streams and
a small river. This area has already been regarded as important
as wildlife habitat by the state lands planning process. She
quoted the Tanana Basin Area Plan as saying, "State land in this
unit is to be retained in public ownership for multiple-use
management. The emphasis is on management of recreation and
maintaining fish and wildlife habitat."
MS. BALE related her belief that the importance of this land
necessitates any change in land management to go through the
already existing public process. Furthermore, the Wolf
Townships area is not identified as an area from which the
borough could select entitlements. Therefore, an amendment to
the Tanana Basin Area Plan would be required before it could be
deeded. However, HB 244 "shortstops" that process.
Additionally, whenever the state conveys land from state
ownership to another entity a best interest finding is generally
required, which is not included in this bill. Therefore, the
public process in determining the fate of this land is somewhat
sidestepped by HB 244.
MS. BALE then turned to the issue of due diligence. She
informed the committee that Kantishna Holdings, Inc., has
already had a chance for a right-of-way through the 1998 AIDEA
bill. However, Kantishna Holdings, Inc., has failed to show
AIDEA due diligence in the many intervening years. Thus she
wasn't sure that Kantishna Holdings, Inc., could show due
diligence to develop a cost effective railway in this area.
MS. BALE recalled Representative James' remark that she prefers
a railway because it's more environmentally friendly. However,
Ms. Bale pondered whether the 3,500 acres, if not developed by
rail because of the lack of due diligence would end up having a
road through them. She informed the committee that SB 3
nominates some funds to study other rail or road
[possibilities], which creates conflict. Although Ms. Bale
agreed with Representative James that a road in this area would
not be appropriate, she didn't believe that a rail would be cost
effective or a "good for Alaskans" way to promote tourism.
There are dozens of alternatives to this that will be discussed
during a panel discussion by the Denali Citizens Council in
early June. Ms. Bale indicated that the committee should have
her full written testimony.
LINDA PAGANELLI testified via teleconference. She informed the
committee that although she is a member of the Northern Alaska
Environmental Center as the Denali Watch Coordinator, she is
testifying on her own behalf. She noted that the committee
should have her written testimony, which she read as follows:
I am a long time resident of the Denali Borough living
on the Stampede Trail in the Panguingue Creek
Subdivision. This coming summer will mark my 20th
season driving a bus on the Denali National Park road
for the park's concessionaire. While I do support
efforts to assess possible solutions to park access
issues, I do not support the North Access solution as
put forth in HB 244 based on the following.
Determinations made by the Alaska State Department of
Natural Resources, the National Park service, and the
United States Congress are unanimous in their findings
that the area in question, the Wolf Townships, serves
as an important habitat for wildlife, particularly for
park caribou and wolf populations. These lands should
remain in public ownership for the purposes of
maintaining wilderness recreation opportunities for
local, regional, and statewide users and protecting
fish and wildlife habitat.
In 1986 the Denali Subsistence Resource Commission
conveyed, to the Secretary of the Interior, their
strong opposition to any construction of new roads or
railroads in Denali National Park and Preserve. The
commission has reiterated their opposition to
development of roads a number of times. Any activity
that impairs the overall health of an ecosystem,
natural processes or resource availability has the
potential to adversely impact the customary and
traditional activities practiced by subsistence users.
The Wolf Townships, retained in state ownership, will
continue to serve to protect the natural ranges of
large park mammals from incompatible development and
will thus, better ensure the continuance of the
subsistence lifestyle.
I am concerned with the stipulation contained in this
bill that grants over 45,000 acres of prime public
land to the Denali Borough. I am in agreement with
the Department of Natural Resources, "that a more
efficient and equally effective approach would be for
the borough and Kantishna Holdings, Inc., to identify
the corridor first, then DNR transfer the land, or
Kantishna Holdings, Inc., simply apply for a ROW from
DNR."
I am also in agreement with their assessment that this
deal should not come down to a "give away" to a
private developer and that the citizens of the state
receive adequate compensation for granting private
exclusive use of thousands of acres of state land.
This bill grants sole rights of project development to
one company, Kantishna Holdings, Inc., without the
opportunity for a competitive bid process. On this
basis, the bill may be unconstitutional. Although I
am far from being a constitutional law expert, I
request that the committee deliberate the following
questions: What's the legislative purpose behind
granting Kantishna Holdings, Inc., a sweetheart deal
and a legislatively mandated seat at the planning
table? Where's the state's common interest in
bestowing this deal on Kantishna Holdings, Inc.?
An unreasonable fix date for the transfer of lands
from the state to the borough fails to encourage or
even allow public input on the consideration of
whether or not these lands should transfer. Impacts
to homeowners, sport and subsistence hunters, local
guiding businesses, and other local, regional, and
statewide users will consequently be ignored.
Transfer to the municipality should not be approved
until the recommended changes to the Tanana Basin Area
Plan have been publicly reviewed through the amendment
and reclassification processes as defined by the
appropriate Alaska statutes.
The Denali Borough government boasts a "do nothing"
policy towards guiding growth and development in the
borough. It's shortsighted approach towards planning
...
Number 1174
JOAN FRANKEVICH, Regional Staff, Alaska Regional Office,
National Park Conservation Association (NPCA), testified via
teleconference and explained that NPCA is a national nonprofit
group dedicated to protecting the National Park System. Of
NPCA's over 450,000 members over 1,000 live in Alaska. Ms.
Frankevich stated that NPCA has opposed the north Denali route
since it was first proposed. Furthermore, NPCA opposes HB 244
for the following reasons. There is little benefit or purpose
of this railroad to park visitors. Having worked in the park
for five summers, Ms. Frankevich is very familiar with the area,
visitors, travel patterns, and with the needs of the visitors.
She noted that she is also familiar with the northern area where
the railroad would be placed. Ms. Frankevich said, "For Denali
visitors, the primary attraction is wildlife viewing." Besides
Katamai National Park and McNeil State Park, Denali is the
easiest and most predictable location to view grizzly bears as
well as a variety of other wildlife. She informed the committee
that wildlife in the park is seen mainly in the middle third of
the park road, which is roughly from Igloo Canyon to Eielson
Visitors Center. The entrance area and the Wonder Lake area are
forested and thus it is more difficult to view wildlife here.
The northern route is similar and thus the chance for wildlife
viewing from the railroad would be fairly minimal.
Additionally, the north route scenery isn't as dramatic as along
the park road. The proposed site of the railroad on the north
side, the low range blocks views of the high peaks and the
glaciers of the Alaska Range. Furthermore, the [northern] area
has never been glaciated and thus none of the dramatic broad
glaciated valleys and views like those on the park road. On the
proposed route there are occasional views of Mt. McKinley at
high points and once Wonder Lake is reached the scenery is
spectacular, which may make the ride worth it. She pointed out
that Mt. McKinley is the highest peak in North America and as
such it generates its own weather. Therefore, even when clear
elsewhere, the mountain is often shrouded in clouds. She noted
that she worked at Eielson Visitors Center, which tracks the
visibility of the mountain as is done every year. In general,
the mountain is visible 30 percent of the time.
MS. FRANKEVICH stated that compared to the park road, the north
rail route offers poor wildlife viewing, less spectacular
scenery, and infrequent views of Mt. McKinley similar to the
park road. Therefore, [NPCA] doesn't see this proposed rail
route being a benefit for park visitors nor in demand by park
visitors. Furthermore, there is a misperception that large
numbers of potential visitors are turned away from riding the
park buses every year. This is incorrect. After speaking with
National Park Service staff today, Ms. Frankevich was informed
that in 2000 there were over 363,000 visitors to Denali with a
bus ridership composing about 76 percent of that total. About
2,000 people were turned away from the [buses], which amounts to
less than 1 percent of the total visitors. The other visitors,
such as climbers to Mt. McKinley, Ruth Glacier landings,
etcetera, account for the rest of the numbers. This
misperception is probably due to the presence of visitation
counters on the highway prior to 1996. Those counters counted
everyone on the park's highway and thus it was interpreted that
only a small percentage were able to ride the bus. However,
that is inaccurate. Furthermore, the current bus system has a
high level of satisfaction as supported by a 1998 survey by the
University of Idaho in which 88 percent of the visitors rated
the bus system as good or excellent and that wildlife
observations were the greatest single factor in contributing to
visitor satisfaction.
MS. FRANKEVICH concluded by saying that this project makes
little sense to her. "A railroad that starts just 17 miles
north of the park road is very expensive and ends in the same
place - where demand is low, where they won't see a bear, and
over 50 percent of the riders won't see Mt. McKinley - seems to
serve little purpose," she said. Moreover, she echoed prior
concerns regarding giving this land to the Denali Borough, which
is a young borough with no road powers. The borough has done
virtually no land planning, which it abhors. Therefore, the
borough seems a highly unlikely choice to receive a state right-
of-way.
Number 1500
REPRESENTATIVE CHENAULT recalled Ms. Bale's testimony regarding
the Denali Borough's lack of road powers and her belief that it
shouldn't have the land. He asked if Ms. Bale would favor
transferring state land to the hands of a local community.
MS. BALE answered that the way the state has agreed to manage
this land per the Tanana Basin Area Plan has addressed the
general purposes for wildlife management and the general needs
for subsistence use of the locals. Therefore, she favored the
retention of ownership in the state's hands.
CO-CHAIR MASEK closed the public testimony and inquired as to
the will of the committee.
Number 1595
REPRESENTATIVE McGUIRE moved to report HB 244 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 244 was reported from the
House Resources Standing Committee.
CO-CHAIR MASEK called a brief at-ease at 3:10 p.m. and handed
the gavel to Co-Chair Scalzi.
CONFIRMATION HEARINGS
Board of Fisheries
CO-CHAIR SCALZI called the meeting back to order. He announced
the committee would consider two nominees for the Board of
Fisheries. He asked Dr. White to speak first.
Number 1721
DR. JOHN R. WHITE, Appointee, Alaska State Board of Fisheries,
testified via teleconference. He thanked the House Resources
Standing Committee for hearing his testimony and offered to
answer any questions regarding his resume [included in the
committee packet]. Dr. White stated he was compelled to serve
again on the Board of Fisheries for the benefit of continuity
and to continue to work on the development of the "sustainable
fishery salmon policy," within regulation, until it "best
reflects the interests of the salmon resource for the State of
Alaska." He continued:
Finally, Mr. Chairman, I [am] very interested in
serving again, because I see a great need in the
state, at this time - considering the salmon crises in
Western Alaska - to have continuity brought to bear
between different funding agencies engaged in the
research that needs to be done on stocks in Western
Alaska that are failing so dramatically at this time,
and have that continuity brought to the Board of
Fisheries. And I hope to be able to do that by being
an advisor to the North Pacific Anadromous Fish
Commission, and be able to bring high seas research
back to the state body and try to find continuity
between those bodies and how that research is
accomplished.
Number 1874
REPRESENTATIVE CHENAULT asked Dr. White what his agenda would be
over the next three years were he to be confirmed. He clarified
that Dr. White may answer as to his "personal" agenda or to the
agenda of the Board of Fisheries.
DR. WHITE answered that the issue of paramount importance was
finding some regulatory means to address the crises in Western
Alaska, among other areas, where there are "de minimus" stocks
that need the attention of the state. His two highest
priorities, for the Board of Fisheries, would be to continue to
take public testimony and to "nurture the maturity of the
sustainable salmon fisheries policy."
Number 1962
REPRESENTATIVE CHENAULT asked Dr. White what his agenda would be
regarding stocks of the Cook Inlet.
DR. WHITE responded he thought the Board [of Fisheries] had made
a request of [ADF&G] that it "try to get" management plans for
all the stocks - specifically chum and pink salmon stocks - in
[Cook] Inlet. He hoped [ADF&G] would bring that information to
the Board of Fisheries before it's next meeting. He indicated
that he would not "carry an agenda in any way, into the Cook
Inlet meeting, other than the information that was brought to
bear, and the proposals that were put before [the board]."
Number 2009
REPRESENTATIVE FATE commented that the split public opinion on
Dr. White's reappointment seemed to be divided between "the blue
water fishermen and those other fishermen on the rivers and
other waterways." He asked Dr. White how he accounted for the
divisiveness between those who supported him and those who did
not.
DR. WHITE answered he has been a strong advocate for Western
Alaska fisheries for over 25 years and, during his time served
on the Board of Fisheries, has spoken "forcefully" for the
following: conservation of the failing Western Alaskan,
Kuskokwim, Yukon River, and Norton Sound stocks; conservation
measures within his sport and subsistence fisheries on the
Kuskokwim, Yukon, and Norton Sound; and the introduction of Tier
II fisheries in Norton Sound, because of the "grave nature of
conservation concerns that involved those stocks." He said,
"The farther you reach out of our region to try to conserve
stocks, the more people don't think they have a responsibility
for what's wrong with the conditions of our stocks."
DR. WHITE stated:
I've been a forceful spokesperson in the international
settings in trying to minimize Japanese take of
Western Alaskan stocks. I've been a strong advocate
in the federal fisheries, in the trawl fisheries for
minimizing the interception of Western Alaska stocks.
And I've tried to hold all parties accountable within
statute and regulation for the conservation of those
same stocks, within the confines of the mixed-stock
fishery and the Sustainable Salmon Fisheries Policy,
so that everyone, hopefully, shared the conservation
burden equally. That's how I voted. That's what I
did. And there will be people who strongly disagree
that I tried to hold that ... "burden-sharing"
equally.
Number 2170
REPRESENTATIVE FATE mentioned the fact that the salmon catch was
"manifestly" larger than it was 15 to 20 years ago. He cited a
possible reason for the increase: "fisheries introducing more
fish into an environment that's competing with the wild stock."
He suggested that might be the cause of the problem in the
Yukon/Kuskokwim drainage and asked Dr. White how he would
propose to solve the problem.
DR. WHITE replied the research of the North Pacific Anadromous
Fish Commission and of PICES [North Pacific Marine Science
Organization] is "about a year or two out" and will be coming
back to the [Board of Fisheries]; however, the preliminary
research "demonstrates grave concerns for the carrying capacity
of the Bering Sea and the North Pacific Ocean." He detailed:
"Preliminary indicators are that there is 'inter-specific'
competition between different species of salmon, and there's
also 'intra-specific' competition between individual species
from different areas."
DR. WHITE stressed the need for Alaska to be part of an ongoing
"mature, well-thought-through forum," for purposes of deciding
how much out-migrant stock can be put in the ocean. He
predicted that future [research] would show that there is a
carrying-capacity problem. Dr. White said, "The Canadians feel
this pretty vehemently at the present time; there's a conference
that's going to be held on that soon." He recommended that all
fishermen in the State of Alaska "sit down and have a reasonable
discussion" when the research information becomes available.
Number 2300
REPRESENTATIVE McGUIRE stated that she had received more POMs
[public opinion messages] on this issue, than any other during
this session, and she noted two overriding concerns: there
isn't a blue water, commercial fishermen on the Board [of
Fisheries], and there should be; and the [Board of Fisheries] is
collectively responsible for the collapse of the Yukon and
Kuskokwim fisheries and the destruction of the "Area M" and
Upper Cook Inlet fisheries. She asked Dr. White to give his
opinion on those public comments.
DR. WHITE responded thus:
First of all, I don't think there's a catastrophic
collapse of many of those fisheries. The Western
Alaska fisheries have been literally closed and shut
down for several years; that's a commercial fishery
collapse. A subsistence fishery collapse is when you
have a ... Tier II fishery in the known subdivision.
The other fisheries have been limited and they've been
changed. There have been difficult allocation
decisions. There have been contentious issues between
users.
... Representative [McGuire], I've tried to be fair
and I've tried to share the burdens equally, between
different parties. "Allocative" decisions are not
popular, but I have always tried to be a board member
that would listen and weigh fairly the information
before "you." And I think my record reflects that.
DR. WHITE said that the idea that there was no blue-water
commercial fisherman on the Board of Fisheries was wrong. He
cited Mr. Grant Miller, from Sitka, as having extensive blue-
water fishery experience as a troller, seiner, and in herring
fisheries. Dr. White emphasized that having representation from
blue-water commercial fishermen on the Board of Fisheries was
important, because [Alaska] has some of the most important blue-
water fisheries in the world, including shellfish, finfish, and
bottomfish fisheries. He added that the Board of Fisheries has
been "diligent" in its attention to the needs of those blue-
water fisheries.
REPRESENTATIVE McGUIRE clarified that she had thought the public
opinion to be relatively one-sided and her intent in asking Dr.
White questions was to give him a chance to "provide another
side of the story."
DR. WHITE told Representative McGuire that some of those emails
about "the action alert" to oppose his appointment were
forwarded to him and thanked her for giving him the opportunity
to "get the factual record straight on this."
Number 2563
REPRESENTATIVE KAPSNER welcomed Dr. White and informed her
colleagues that she could gather three times as many emails in
support of him. She pointed out that the subject of many of the
negative emails was shallow, including complaints about Dr.
White's length of term on the Board of Fisheries.
Representative Kapsner said it takes time to "get a handle on"
the great variety of fisheries and resources the state has. She
stated she has known Dr. White "all her life" and he has done an
"exceptional" job in this position, defending people who depend
on the fish resource for their income and for subsistence.
Number 2650
REPRESENTATIVE FATE, in response to an announcement by Co-Chair
Scalzi that this issue would be heard again in the House Special
Committee on Fisheries, pointed out that not all the members of
the House Resources Standing Committee were also on the other
committee. He also stated that the House Special Committee on
Fisheries was primarily made up of blue-water fishermen. He
said he hoped that there was another viewpoint heard at the
House Resources Standing Committee meeting that would be taken
to and expressed at the House Special Committee on Fisheries
meeting.
CO-CHAIR SCALZI informed the committee that both Representatives
Fate and Chenault wouldn't be able to attend the [House Special
Committee on Fisheries] meeting, taking place in a couple hours.
He stated that the presentation would go before the House
Special Committee on Fisheries and the House Resources Standing
Committee again, separately, on Wednesday [April 25, 2001], and
before the "full body" on the following Monday; subsequently,
there would be no final decisions made in the meeting at hand.
Number 2725
REPRESENTATIVE McGUIRE clarified the procedure allowed each
individual committee, to which the confirmation had been
referred, to have the opportunity to confirm or deny the
appointees.
CO-CHAIR SCALZI clarified that, in the interest of expediency,
he would be holding all his questions until the House Special
Committee on Fisheries meeting, so that those representatives
who were not in both committees could have time to speak now.
In response to a question from Representative Green, he said the
appointees would be invited back for Wednesday's meeting. He
mentioned the great amount of public response received and
public testimony still to be heard on this issue.
Number 2835
RUSSEL NELSON, Appointee, Alaska State Board of Fisheries,
testifying via teleconference, expressed his "desire" to serve
another term on the Board of Fisheries. He stated, during his
past three-year term, he worked hard to understand the issues of
all Alaska's fisheries and to "make fair decisions for the
conservation and development of these fisheries."
MR. NELSON highlighted two policies he supported: the
Sustainable [Salmon] Fisheries Policy, which ensures that ADF&G
and the Board of Fisheries are "proactive in preserving our
fisheries resources"; and the "committee process," which gives
the public and the Board of Fisheries committee members "a more
interactive method of solving contentious proposals that come
before the Board [of Fisheries]."
Number 2925
PAUL A. SHADURA II, Self-appointed Board of Fisheries nominee,
began his testimony in opposition to Dr. White.
CO-CHAIR SCALZI asked Mr. Shadura to limit his testimony to his
position as a "potential nominee" and to save his testimony on
[Dr. White and Mr. Nelson] until the House Special Committee on
Fisheries meeting.
TAPE 01-41, SIDE B
MR. SHADURA outlined his family's long history of fisheries
experience, stating his family has lived in the Cook Inlet area
for 100 years, processing fish and operating traps. He listed
his experience as: a fish buyer who operates 21 locations; a
member of the Kenai River Special Management Area who is very
concerned with the conditions of the river; a representative for
the Cook Inlet area in the Cook Inlet Aquaculture Association
for 20 years; and a member of the Cook Inlet Region Citizen
Advisory Council - "the oil watchdog in Cook Inlet" - for 5
years. He also said, "I have a setnet fisherman."
MR. SHADURA emphasized he is an Alaskan fisherman who believes
in Alaskans and wants to serve on the Board of Fisheries, to
"listen to the people of this state and affect change." He
expressed frustration with the [lack of] cooperation and
communication [from] the Board of Fisheries members over the
last six years. He added, "I have been denied access to them.
I have been ridiculed publicly [by] them - and particularly,
John White."
Number 2849
REPRESENTATIVE GREEN mentioned the assumption that when the
[fishing] nets [are activated], the fishing "dries up" in the
Kenai River and when the nets [are no longer in use], then "the
next day" there are fish in the [Kenai] River for the sport-
fishermen. He asked Mr. Shadura how he felt about the effect of
subsistence and commercial fishing on "personal use" and sport
fishing.
MR. SHADURA replied, "I think the recipe is to sustain a high
return - as close to maximum sustainable yield, as possible."
He said the sport and personal use fisheries make up a small
component of the return, particularly as pertains to the Kenai
River, whereas the commercial fishery "takes the burden of both
those other[s], and maybe rightfully so." Mr. Shadura projected
the returns of the future will be "seriously diminished from the
particular plans that are in effect at this point." He
reiterated his involvement with the community - mentioning
friends who are guides or subsistence users - and stated his
preference for a "balancing act." He added, "In the Kenai, we
are very strong economically throughout the state, because we
are balanced. What we do object to is interference that creates
instability in that economy."
Number 2750
REPRESENTATIVE GREEN stated that if [the Board of Fisheries]
does not arrive at the balance of which Mr. Shadura spoke, then
many personal-use fishermen would be affected. He suggested
that "five percent off commercial" might supply "more than
enough for all the personal use."
MR. SHADURA stated a point of consideration that the State [of
Alaska] has come a long way since it took over the management of
the fisheries in 1959. He emphasized that [Alaska] cannot
survive without its commercial fisheries, saying "it's the
abundance numbers that bring people to Alaska to fish on the
Kenai River." Subsequently, when there are reports of a poor
year, people don't go to the Kenai River to fish. He stressed
that the "commercial fishery is not out there to exclude
individuals."
Number 2650
REPRESENTATIVE FATE mentioned the fishermen on the Yukon and
Kuskokwim Rivers who have depended on their fisheries for years,
but had no commercial season last year and will have none this
year. He asked Mr. Shadura to comment on possible solutions for
those people.
MR. SHADURA admitted that he had not been involved with those
areas, but assured the committee he would dedicate himself to
finding a solution. He emphasized that he lives "this business"
every day, reading textbooks and doing all he can to understand
what it takes to "perpetuate the fisheries wherever I am."
Number 2579
JUDE HENZLER, Executive Director, Bering Sea Fishermen's
Association (BSFA), representing commercial and subsistence
"fishers" in Western and Interior Alaska, testified via
teleconference, in support of the reappointment of Dr. White and
Mr. Nelson [to the Board of Fisheries].
Number 2519
ROBERT WILLIAMS spoke on behalf of the Kenai [Peninsula]
Fisherman's Association (KPFA), an organization of approximately
250 to 300 people. He explained KPFA represents much of the
setnet fishing that takes place in the Cook Inlet Basin. He
stated that KPFA is opposed to the legislative confirmation of
Dr. John White to the Board of Fisheries. Mr. Williams said
KPFA feels a real need for a "bona fide" commercial fisherman on
the Board of Fisheries, saying "as of now we only have one -
that's Grant Miller." He added that the governor had not
appointed any [fishermen] to the Board of Fisheries in seven
years. He continued:
In Cook Inlet, in the basin, we have three board
members on this board, that ... are from our area:
one's an attorney, one's a saltwater guide, and the
third is a retired sport-fish biologist. So, we have,
literally, no representation and this creates a large
imbalance when our issues are voted on.
MR. WILLIAMS stated his opinion that Dr. White has "maybe been
on the Board [of Fisheries] too long" and has a difficult time
"dealing with" and listening to the public and hearing its
concerns, capabilities that Mr. Williams expressed should be a
prerequisite for serving on the Board of Fisheries. He
mentioned Dr. White's length of term on the Board of Fisheries
and said KPFA has been concerned about [Dr. White] "developing
agendas."
MR. WILLIAMS also stated that Dr. White does not "take heed" of
the biological studies provided to him by ADF&G's research
biologists. He added, "Lately this board has just been
disregarding [the studies], and going [its] own way, with some
... 'wacky' science that really scares me." Mr. Williams noted
that escapements have been raised to the point where "[the Board
of Fisheries is going for sustained [yield], rather than for
maximum sustained [yield]." He added that "down cycles" were
also to blame. Mr. Williams concluded, saying [KPFA] had no
objection to the reappointment of Russell Nelson to the Board of
Fisheries.
Number 2385
REPRESENTATIVE KAPSNER asked Mr. Williams how he could say Dr.
White was not a "bona fide" fisherman.
MR. WILLIAMS defined a fisherman qualified to serve on the Board
of Fisheries as someone who fishes all year round and is
involved in a variety of fisheries - perhaps in crab and cod -
and has a "wider spectrum" on what's happening in the fisheries.
Based on those guidelines, Mr. Williams admitted he would not
consider himself a good candidate for the position.
MR. WILLIAMS said, "Our representation right now, basically, has
no commercial fishing from our area on it." He remarked that
the Board of Fisheries was supposed to hold a meeting every
three years, but has met five or six times in the last six or
seven years. He said, "If we're going to get all this
attention, I really feel like we need to have somebody [who]
represents our area."
REPRESENTATIVE KAPSNER asked Mr. Williams to clarify whether his
opposition was "not as much personal against Dr. White," as it
was a "geographic preference."
MR. WILLIAMS did not agree, stating that he does not agree with
the way Dr. White has conducted himself on the Board of
Fisheries. He reiterated his previous statements that many
people find Dr. White to be unapproachable and unreceptive to
the best biological information. In regard to the latter
statement, Mr. Williams also mentioned Chairman [Dan] Coffey.
MR. WILLIAMS, in response to Representative Kapsner, responded
that although it was probably not too long for a legislator to
serve for six years, the same amount of time on a volunteer
board was too long. He explained that many of the issues on the
Board of Fisheries are "contentious," and a board member gets
involved in them and, understandably, wants to see them through,
but inevitably picks up "baggage" and "gets too much of an
agenda going."
REPRESENTATIVE KAPSNER said Dr. White was very open-minded, and
she was sorry that Mr. Williams' experiences with him had not
been as good.
Number 2249
REPRESENTATIVE GREEN said he had presumed that the members of
the Board of Fisheries were "neutral" and would "weigh things,"
but Mr. Williams' use of the words, "agenda," "location," and
"association" made him think that Mr. Williams thought there
might be bias among the Board of Fisheries members.
MR. WILLIAMS replied he could only "speak for his area." He
said:
Our fisheries ...in the [Cook] Inlet [have] pretty
much been dismantled in the last seven years. We
didn't expect the runs to be as high as they were in
the late eighties forever and the price to stay as
high. ... we always knew we were going to come off a
"cloud" for awhile, but basically, ... with the raise
in escapement levels, it keeps us out of the water.
We only fish two days a week. So, there's five days a
week that fish are all in the river. If the peak of
the run comes in when the timing is right, we may get
an extra week in July.
... We don't fish [coho salmon] any longer. That
season's curtailed completely; we're out of the water
by August 7. ... Some people in Cook Inlet start July
10 and they're done August 5. I mean, we're talking
about a ... four- to five-week window here with no
fishing time available for us. I don't know what else
to say. Other than a real large return, we're so
limited on fishing time.
We've lost our maximum sustained yield on the Kenai
River, basically. And we had it before, and we ...
also had a sustained yield on the other smaller
tributaries, so it's not like we just worried about
the Kenai and forgot about the rest - that was never
the board's intent.
REPRESENTATIVE GREEN said "you're out of the water" and asked
Mr. Williams if he was a setnetter.
MR. WILLIAMS said yes.
Number 2147
REPRESENTATIVE McGUIRE asked if Mr. Williams could objectively
say what would have happened to subsistence and sport fish users
if the escapement level had not been raised.
MR. WILLIAMS answered there are very few subsistence users in
the [Cook Inlet] area at this time. He stated that a few
educational permits are allowed for fishing in the river, and
"they" have been very good about not fishing when there's no
escapement. Mr. Williams said the condition of "maximum
sustained yield" is created, by deciding "what window of
escapement is going to bring back the most fish to the river."
He continued:
What's happened since then is we went from an MSY
[maximum sustained yield] to an OEG [optimum
escapement goal]. In other words, it's going to
sustain a fishery, but it's going to take into
consideration the socio/economic factors in the river,
[for instance]: guides [and] the public. And we've
never had a problem with that. We just never found
any common ground, ... it's always been one way or the
other.
Dipnetters, basically, are able to fish two to three
weeks [and] harvest anywhere from 150,000 to 300,000
sockeye in the Cook Inlet basin. Sport fishermen, at
best, can only harvest 2 out of 10 fish that go up the
river. So what happens is we let so many fish in the
river ... get harvested. We put over a million fish
in the Kenai [River], and the return suffers for it.
During Exxon Valdez that happened -- four or five
other years. If you get a biological escapement goal,
up in that area, that means take out all the fish that
have been caught. It will actually make the spawning
escapement -- Our department brought forth the numbers
they thought best, roughly, a BEG of 300,000 to
500,000 is what brought back our best funds.
REPRESENTATIVE GREEN questioned being up to 800,000.
MR. WILLIAMS answered, "Actually, 1.2 million (indisc.) account,
which would bring [900,000] to [950,000]. He clarified he was
not blaming the actions of the Board [of Fisheries] for
statewide poor runs, but was concerned with [the numbers].
Number 1997
DR. WHITE responded to the last statements by Mr. Williams,
saying, "Reasonable people differ in their interpretations of
the data." He said he respectfully disagreed with Mr. William's
presentation, which was based solely upon the Kenai River. Dr.
White stated the higher escapement goals improved the total
nutriment of the system and were better, not only for the target
species of red salmon, within the Kenai River drainage, but for
the "healthy carrying capacity" of the ecosystem for all species
in the Kenai River. He mentioned rainbow trout, Dolly Varden,
Coho, and other red salmon in the Russian River. Dr. White
pointed out Mr. Williams neglected to address that increased
escapement also allowed for greater escapement on "the west
side" and into the northern rivers in the Anchorage Basin:
Turnagain Arm, Knik Arm, and the Susitna [River].
CO-CHAIR SCALZI asked Dr. White to clarify that [what he just
stated] was contrary to the recommendations of ADF&G.
DR. WHITE responded he did not agree with that. He said, "The
Board [of Fisheries] has the authority to have optimal sustained
yield, which may be above or below an escapement level
determined for one specie." He emphasized that [the Board of
Fisheries] worked with [ADF&G] at length "to stay within the
confines of sustainable yields for all species." He said there
was a concurrence. Dr. White allowed that a possible
interpretation might be that there was a difference in the
maximum sustained yield, only for Kenai red salmon.
Number 1835
REPRESENTATIVE KAPSNER, regarding Dr. White's statement about
higher escapement goals improving the nutriment of the system,
mentioned an article from the Anchorage Daily News that said the
greater the number of spawning fish that eventually decompose,
the better it is for the ecosystem of the fish fry.
CO-CHAIR SCALZI added that there is a difference of opinion on
"how much fish you can put in a river." He mentioned that
Coghill Lake was dead for 10 years after over-escapement. He
pointed out Carl Rosier was in the room from ADF&G.
Number 1748
KEN LARSON, a charter boat operator "out of Valdez, Alaska" and
member of the Valdez Charter Boat Association (VCBA), testified
via teleconference in support of the reappointment of Mr. Nelson
and Dr. White to the Board of Fisheries. Regarding the subject
of length of term in office, Mr. Larson said, "I don't like
going back to the beginning, if there's a body of knowledge out
there that can be used and should be used."
Number 1707
VIRGIL UMPHENOUR, former member of the Board of Fisheries,
testified via teleconference in support of Mr. Nelson and Dr.
White. He worked with Dr. White and, contrary to the statement
made in previous testimony, said Dr. White always goes out of
his way to make himself available to the public.
Number 1669
PATRICK BOOKEY, representing himself and "Luck of the Irish
Charters," out of Valdez, Alaska, testified via teleconference
in support of the reappointment of Dr. White and Mr. Nelson to
the Board of Fisheries. He stated both appointees are
experienced and have shown their "capacities" and "abilities" in
the past.
Number 1636
GEORGE YASKA, testified via teleconference, on behalf of the
Tanana Chief's Conference and its president, Steve Guiness (ph),
in support of the reappointment of Dr. White and Mr. Nelson to
the Board of Fisheries. He stated both appointees have been
"good conservators of the resource on the Yukon [River] and
throughout Alaska."
Number 1566
CARL ROSIER, President, Alaska Outdoor Council (AOC), read the
following testimony, [available in the committee packet]:
As many of you know the Alaska Outdoor Council is an
association of 45 outdoor recreation groups supporting
conservation and wise use of Alaska's fish and
wildlife resources, protection of public access, fair
allocation of resources, and equal protection of the
constitutional rights of all Alaskans to use our
natural resources.
The Alaska Outdoor Council is a strong supporter of
the Alaska Board regulatory system. During the nearly
30 years of my career with the Alaska Department of
Fish & Game, I have had the opportunity to observe and
participate in a significant number of Board of
Fisheries regulatory sessions with a variety of board
members. Alaska's system is the most publicly open
process in the nation and when one views the generally
good condition of our fish resources it is a system
that has served the state well. A significant part of
the board's effectiveness has been the quality and
continuity of many dedicated individuals that have
served on what we consider to be the toughest
regulatory appointment in the state.
Your committee has before it two very dedicated and
capable individuals that are truly deserving of being
confirmed for another term on the Board of Fisheries.
The current Board of Fisheries operates as a
consensus-building entity that has established
efficient processes to bring opposing views to the
table for resolution among the stakeholders and
further enlightenment of the board. If the
stakeholders cannot reach consensus, the board has the
last and best information on which to make the final
decision on a given issue. Much of this system has
been arrived at through the leadership of Dr. White.
The present board leaves no question about science and
conservation of the resource being priority
considerations in the regulatory decision process. In
this arena the Board of Fisheries has completed the
initial development of a sustainable fisheries policy
for the state and is now making application to the
various fisheries statewide. Development of the
policy has occurred in conjunction with stakeholder
groups and the technical support of ADF&G. This
policy is now providing guidance to the public, the
department, and future boards on decision making to
assure continued sustained yield of our fisheries
resources. In our view, [it is] a good piece of work
under the leadership ... of Dr. White and one that
will go far in assuring the health of our fishery's
resources.
Balance in regard to decisions affecting a variety of
user groups by the current board is probably the best
I have observed in a fish board. No one interest
group dominates the board as we have frequently
observed in the past. It is AOC's view that the
present Board gives true consideration of public
demands, whether you are [a] commercial, subsistence,
personal-use, or sport [user]. As a participant, you
may not like a decision, but you have every
opportunity to make your case and know that the board
is listening and fairly evaluating your view.
All members of the current board come to the meetings
well prepared and it is obvious by the debates within
the board that the reams of material produced for the
board's edification is indeed being used to support
the board's decisions.
The two members before you for confirmation have grown
in their knowledge and understanding of the various
complex fisheries in our state. Both of these
individuals have become an integral part of a well
functioning regulatory board that is important to all
Alaskans. The system is functioning well and the
Alaska Outdoor Council urges you to support
confirmation of Dr. John White and Mr. Russell Nelson
for another term on the Board of Fisheries.
Thank you for the opportunity to testify.
Number 1287
REUBEN HANKE, owner/operator of a guide business on the Kenai
River, testified via teleconference in support of the
reappointment of Dr. White and Mr. Nelson to the Board of
Fisheries. Regarding both appointees, he listed the following
considerations: they served well on the Board of Fisheries;
they were very approachable; and they displayed impartiality
between commercial fishing, sport fishing, personal use, or
subsistence fishing, in decisions affecting those groups.
Number 1231
JOE HANES, an Alaskan resident for 39 years and Kenai River
guide for the past 22 years, testified via teleconference in
support of the reappointment of Dr. White and Mr. Nelson to the
Board of Fisheries. He reminded the House Resources Standing
Committee that there are two primary, harvestable wild stocks
left in the United States, which are located in the Cook Inlet
and the Bering Sea. He said, "And yet, in the history of
mankind, we have yet to save -- and have a sustainable fishery,
both commercial and sport. And this board makes very tough
decisions, in an attempt, for the first time ever, to accomplish
that goal."
MR. HANES mentioned fishing time that's been lost by himself,
drifters, and setnetters, and reiterated that Mr. Nelson and Dr.
White must make tough decisions on the board. He said:
I'd just like to see them continue. And, hopefully we
can ... make some of these other decisions that affect
all of us here in Cook Inlet, some of which you don't
all have control over, but -- for instance, 1/2
million pounds of pollock was harvested 15 years ago
and last year they harvested 3 billion pounds.
Number 1095
DREW SPARLIN, testifying via teleconference, mentioned he had
submitted written testimony, [included in the committee packet],
and stated his opposition of the reappointment of Dr. White to
the Board of Fisheries. He said Dr. White had not served the
commercial industry well, or fairly. Mr. Sparlin noted his own
experience of 37 years in the industry, as a "drifter." He
mentioned his observation of "fish politics" throughout those
years, working with many boards and many people involved with
those boards. Mr. Sparlin indicated an escapement problem that
occurred last year, when the drift fleet and set nets were
restricted for a "great length of time." He mentioned coho
[salmon], sockeye [salmon], the Kenai River, and "20 million
pinks swimming up the Cook Inlet." He continued:
We asked the department to open the fishery, as early
as August 4, and we asked them to enact emergency
orders, so that they could conduct a reasonable
fishery. There [were] 150,000 "humpies" caught last
year, and 21 million, by the Department of Fish &
Game's estimate of 21 million, that swam into the Cook
Inlet. At the same time we were here in Soldotna,
considering declaring the area a disaster. We have
canneries that are closing. Processing plants are
leaving, right and left. We need to understand that
we have to have a stable industry, and we have to have
an opportunity to be able to participate in surplus
... stocks, so that this can be economically passed
throughout our community, and therefore benefit the
State of Alaska.
MR. SPARLIN recognized he expressed the minority opinion from
those who had previously testified, but urged the House
Resources Standing Committee to "seriously investigate some of
these issues." He stated it is wrong when not one person on the
Board [of Fisheries] derives "a significant portion of their
income" from commercial fishing.
Number 0901
REPRESENTATIVE KAPSNER asked Mr. Sparlin to clarify his
statement about the qualifications of Board of Fisheries
members.
MR. SPARLIN reiterated that there should be better commercial
fisheries representation on the Board of Fisheries, considering
how important commercial fisheries are to the State of Alaska.
He added that Dr. White is a dentist, and doesn't do a lot of
commercial fishing and the other two members [of the Board of
Fisheries] who have permits are "very marginal commercial
fishermen," in terms of their income derived from fishing.
REPRESENTATIVE KAPSNER responded:
This summer we had just a handful of openings, and
most people who fished, didn't make enough money to
reimburse the cost of gas, or their crew. One guy
from Kasigluk went out fishing and I heard him on the
radio saying that he had enough money after that
"opener" to buy his kids a half-gallon of ice cream.
We just don't have a fishery there anymore and I don't
think that's the fault of the Board of Fisheries.
It's just not there. And I'm sure that if we did have
a fishery, I'd see Dr. White fishing every "opener."
MR. SPARLIN replied he appreciated Representative Kapsner's
statement and sympathized with the "severe situation," but
pointed out that the issues being discussed have been ongoing
during Dr. White's terms on the Board of Fisheries.
Number 0702
AUSTIN AHMASUK, Subsistence Specialist, Kawerak, Inc., testified
via teleconference. Mr. Ahmasuk mentioned testifying before the
Board of Fisheries on several occasions, as well as attending "a
significant portion of the month-long January meeting in
Anchorage this year." He stated:
The Board of Fisheries has the very difficult task of
developing fisheries regulations that must answer to
wide interests and reasoned scientific understanding.
Dr. John White and Russell Nelson both represent
voting records on important fishery regulations that
favor Western Alaskan salmon and non-salmon stocks
that have seen disastrous returns. Their
participation in the Board of Fisheries actions in
past years has brought to light some of the biological
concerns that our region has been pointing to for the
last 10 years. Though Dr. White and Mr. Nelson have
voted favorably in past years on important fishery
issues for Western Alaska, they understandably must
make decisions on other fish stocks throughout all of
Alaska. Having seen firsthand the rationale within
the Board of Fisheries, I'm happy to recommend Dr.
White and Mr. Nelson for confirmation to the Board of
Fisheries, [because of] their high level of calculated
and thoughtful efforts in this state's Board of
Fisheries regulatory process.
DON STILES, Fishery Specialist, Kawerak, Inc., testified via
teleconference, on behalf of Kawerak's 22 tribal organizations
and over 6,000 residents throughout the Bering Straits region,
in support of the reappointment of Dr. White and Mr. Nelson to
the Board of Fisheries. He stated:
During ... the candidates' tenure on the Board, they
have acted as responsible stewards for the fisheries
of Alaska, and [have] well-represented all the user
groups - subsistence, commercial, and sport - involved
in the board process. Both Mr. Nelson and Dr. White
go out of their way to ensure that they fully
understand the issues before the Board [of Fisheries]
and weigh the often-conflicting public viewpoints to
arrive at well-balanced and rational decisions.
Number 0502
CO-CHAIR SCALZI announced the end of public testimony and said
the confirmation hearings would continue on Wednesday, April 25,
2001.
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 4:29 p.m.
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