03/31/2016 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HB253 | |
| HB286 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 253 | TELECONFERENCED | |
| += | HB 286 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
March 31, 2016
1:34 p.m.
MEMBERS PRESENT
Representative Benjamin Nageak, Co-Chair
Representative David Talerico, Co-Chair
Representative Bob Herron
Representative Craig Johnson
Representative Paul Seaton
Representative Andy Josephson
Representative Geran Tarr
Representative Mike Chenault (alternate)
MEMBERS ABSENT
Representative Mike Hawker, Vice Chair
Representative Kurt Olson
COMMITTEE CALENDAR
HOUSE BILL NO. 253
"An Act requiring the electronic filing of a tax return or
report with the Department of Revenue; establishing a civil
penalty for failure to electronically file a return or report;
relating to exemptions from the mining license tax; relating to
the mining license tax rate; relating to mining license
application, renewal, and fees; and providing for an effective
date."
- MOVED CSHB 253(RES) OUT OF COMMITTEE
HOUSE BILL NO. 286
"An Act relating to sport fishing, hunting, or trapping
licenses, tags, or permits; relating to penalties for certain
sport fishing, hunting, and trapping license violations;
relating to restrictions on the issuance of sport fishing,
hunting, and trapping licenses; creating violations and amending
fines and restitution for certain fish and game offenses;
relating to commercial fishing violations; allowing lost federal
matching funds from the Pittman - Robertson, Dingell -
Johnson/Wallop - Breaux programs to be included in an order of
restitution; adding a definition of 'electronic form'; amending
Rule 5(a)(4), Alaska Rules of Minor Offense Procedure; and
providing for an effective date."
- MOVED CSHB 286(RES) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 253
SHORT TITLE: ELCTRNC TAX RETURN;MINING LIC. TAX & FEES
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/19/16 (H) READ THE FIRST TIME - REFERRALS
01/19/16 (H) RES, FIN
02/15/16 (H) RES AT 1:00 PM BARNES 124
02/15/16 (H) Heard & Held
02/15/16 (H) MINUTE(RES)
02/17/16 (H) RES AT 1:00 PM BARNES 124
02/17/16 (H) Heard & Held
02/17/16 (H) MINUTE(RES)
02/19/16 (H) RES AT 1:00 PM BARNES 124
02/19/16 (H) Heard & Held
02/19/16 (H) MINUTE(RES)
02/23/16 (H) RES AT 1:00 PM BARNES 124
02/23/16 (H) Heard & Held
02/23/16 (H) MINUTE(RES)
02/24/16 (H) RES AT 8:30 AM BARNES 124
02/24/16 (H) Heard & Held
02/24/16 (H) MINUTE(RES)
03/28/16 (H) RES AT 1:00 PM BARNES 124
03/28/16 (H) Heard & Held
03/28/16 (H) MINUTE(RES)
03/30/16 (H) RES AT 1:00 PM BARNES 124
03/30/16 (H) Heard & Held
03/30/16 (H) MINUTE(RES)
03/31/16 (H) RES AT 1:00 PM BARNES 124
BILL: HB 286
SHORT TITLE: FISH & GAME: OFFENSES;LICENSES;PENALTIES
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/29/16 (H) READ THE FIRST TIME - REFERRALS
01/29/16 (H) RES, JUD
03/21/16 (H) RES AT 1:00 PM BARNES 124
03/21/16 (H) Heard & Held
03/21/16 (H) MINUTE(RES)
03/30/16 (H) RES AT 1:00 PM BARNES 124
03/30/16 (H) Scheduled but Not Heard
03/31/16 (H) RES AT 1:00 PM BARNES 124
WITNESS REGISTER
BRANDON SPANOS, Deputy Director
Tax Division
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: During the hearing of HB 253, answered
questions related to amendments.
ED FOGELS, Deputy Commissioner
Office of the Commissioner
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: During the hearing of HB 253, answered
questions related to amendments.
KEVIN BROOKS, Deputy Commissioner
Office of the Commissioner
Alaska Department of Fish & Game (ADFG)
Juneau, Alaska
POSITION STATEMENT: During the hearing of HB 286, on behalf of
the governor, reviewed Version E.
AARON PETERSON, Assistant Attorney General
Criminal Division
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: During the hearing of HB 286, answered
questions related to Version E.
BRUCE DALE, Director
Division of Wildlife Conservation
Alaska Department of Fish & Game (ADF&G)
Palmer, Alaska
POSITION STATEMENT: During the hearing of HB 286, on behalf of
the governor, answered questions related to Version E.
AL BARRETTE
Fairbanks, Alaska
POSITION STATEMENT: During the hearing of HB 286, suggested
potential amendments.
ACTION NARRATIVE
1:34:30 PM
CO-CHAIR DAVID TALERICO called the House Resources Standing
Committee meeting back to order at 1:34 p.m. [from recess at
3:00 p.m. on 3/30/16]. Representatives Seaton, Josephson, Tarr,
Herron, Johnson, Nageak, and Talerico were present at the call
to order. Representative Chenault (alternate) arrived as the
meeting was in progress.
HB 253-ELCTRNC TAX RETURN;MINING LIC. TAX & FEES
1:35:32 PM
CO-CHAIR TALERICO announced that the first order of business
HOUSE BILL NO. 253, "An Act requiring the electronic filing of a
tax return or report with the Department of Revenue;
establishing a civil penalty for failure to electronically file
a return or report; relating to exemptions from the mining
license tax; relating to the mining license tax rate; relating
to mining license application, renewal, and fees; and providing
for an effective date." [Before the committee was the proposed
committee substitute (CS) for HB 253, Version 29-GH2924\N,
Nauman, 3/17/16, adopted as the working document on 3/28/16.]
CO-CHAIR TALERICO advised that the committee will continue its
consideration of amendments to HB 253, Version N.
1:36:00 PM
REPRESENTATIVE JOSEPHSON moved to adopt Amendment 10, labeled
29-GH2924\N.4, Nauman, 3/29/16, which read:
Page 1, line 2, following "fees;":
Insert "relating to the computation of depletion
for purposes of the mining license tax;"
Page 2, following line 4:
Insert a new bill section to read:
"* Sec. 3. AS 43.65.010(e) is repealed and
reenacted to read:
(e) The allowance for depletion shall be
computed and deducted on the cost depletion basis
under 26 U.S.C. 612 (Internal Revenue Code)."
Renumber the following bill sections accordingly.
Page 2, following line 21:
Insert a new subsection to read:
"(c) The change made by the repeal and
reenactment of AS 43.65.010(e) by sec. 3 of this Act
applies to a tax year beginning on or after the
effective date of sec. 3 of this Act."
Page 2, line 28:
Delete "Section 6"
Insert "Section 7"
Page 2, line 29:
Delete "sec. 7"
Insert "sec. 8"
REPRESENTATIVE HERRON objected for discussion purposes.
1:36:15 PM
REPRESENTATIVE JOSEPHSON explained that one element of Amendment
10 would take the depletion allowance and change it to only
include a cost, not percent depletion. He paraphrased a portion
of the committee's hearing minutes of 2/17/16, page 14, wherein
Mr. Spanos indicated that the amount for percentage depletion
can actually exceed actual costs and called the depletion
allowance its own line item expense. Representative Josephson
then recalled that the committee's substitute for HB 247 stopped
gross value reduction (GVR) and net operating loss from being
combined to create a loss greater than the actual loss. Thus,
one element of the amendment to only include cost depletion, not
percentage depletion. He further recalled the department saying
it is complicated when it has returns where there is that switch
back and forth. Currently, the percentage depletion allowance
allows the producer to reduce gross income by 15 percent for
metal mines and a calculation of net income. Additionally,
mining companies may reduce gross income by actual cost
depletion. While the amendment would dispense with a percentage
depletion, he noted, there would still be cost depletion. Under
this regime it is not hard for companies to inflate expenses,
not deliberately but there is some concern because just as the
state is trying to contain costs as an institution, the
companies are containing and reducing costs. Companies can
inflate expenses or export revenue to report less net income,
using the depletion allowance the cost of these resources is
being expensed at far above the actual costs in some instances.
Although the concept of depletion allowance is consistent with
the mining industry and part of the mining culture, it should be
changed so that there would only be cost depletion and not
percentage depletion, and that is why he offers this amendment.
1:39:34 PM
BRANDON SPANOS, Deputy Director, Tax Division, Department of
Revenue, spoke at Co-Chair Talerico's request. He said there
are two methods of depletion in statute. Current statute reads
that a company must use percentage depletion unless cost
depletion exceeds percentage depletion and then the company must
use cost depletion. So basically the statute is saying that
percentage depletion is the standard for the expense against the
Alaska Mining License Tax, but it allows for the generic cost
depletion method in the case that that is a greater expense for
the company in that year. That mimics the federal depletion
which has similar language, although the reasons are different
for federal purposes; it has to do with selling an asset and the
capital gain recapture - making that part of ordinary income
rather than capital income. The federal statutes read that when
the asset is sold, there must be a calculation for either
allowed or allowable depletion; does not really apply in mining
license tax but the department did adopt similar language for
the depletion calculation.
MR. SPANOS confirmed that under the percentage depletion
calculation an asset can be depleted beyond its cost basis.
When there is a depletion expense the cost basis is reduced, and
under percentage the cost basis is reduced by that expense in
that year. So, over the life of the mine the operator would
eventually deplete the cost to zero. Under the cost depletion
method once the basis reaches zero, expenses against that can no
longer be taken because the asset has been fully depleted.
Under the percentage depletion method, the depletion can
continue to be taken beyond that cost basis or adjusted cost
basis, and the percentage is simply a percentage of the gross
value so that expense is given. There have been discussions as
to why the federal government chose to allow that percentage
depletion beyond the basis, and the best the department can
determine is that it is probably to encourage continued
development and give some sort of recognition that those assets
are of value even though the cost had been fully depleted.
1:42:25 PM
REPRESENTATIVE SEATON posited that switching back and forth
between years gets confusing. The state allows for cost
depletion or depreciation of the full value of the asset and not
beyond the full value of the asset when looking at industries
and personal property. He held that the legislature needs to go
back and advise that people can get depreciation for their
entire asset, but not beyond the entire asset which the
percentage depletion allows. He said he therefore supports the
amendment.
CO-CHAIR TALERICO asked what type of problem this has presented
to the division in administering the tax to date.
MR. SPANOS replied that depletion is a difficult calculation and
he wouldn't say that cost versus percentage makes it more
difficult. The percentage calculation is straight forward,
depending on the records of a company, although if the division
is in an audit situation it can become quite difficult to track
the adjusted basis of the asset. For example, should a company
state that this year its cost expense is greater than its
percentage expense and it wants to use the cost, the division
would then have to calculate the adjusted basis for that year,
which does become quite difficult if there are no records going
back because it may be the first time the division has audited
the company. It can become complicated, but if the division was
to go to just a simple cost depletion method it would probably
need to update some schedules in the tax return in order to have
companies report what that adjusted basis is so it can be
tracked. He supposed the division could do that now and have an
easier method, but most [companies] do take percentage depletion
and the division doesn't usually run into that issue. So, yes,
there are some complications with having both options available
but it's not insurmountable.
1:45:25 PM
REPRESENTATIVE SEATON surmised that if the depletion allows cost
to be reduced below the depreciable cost of the item that means
the state is losing mining license tax. He inquired whether the
division knows how much money the state is losing by allowing
people to depreciate more than the full value of the assets.
MR. SPANOS answered that the division has not performed a
calculation on that. He offered that with the older mines it
could be assumed that they have already fully depleted the basis
of the asset, and it could be assumed that any depletion would
be above and beyond what they would be allowed under cost. A
newer mine may be taking cost in lieu of percentage now.
CO-CHAIR TALERICO presumed there is not currently an analysis of
where the state is actually sitting today.
MR. SPANOS confirmed the division does not presently have an
analysis, although based on the age of the mine the division
could try to analyze it and give a rough estimate.
1:47:07 PM
REPRESENTATIVE JOSEPHSON posited that in some instances it
appears the companies prefer cost depletion and if they prefer
it then it must be to their financial benefit. But at the same
time the companies should not be allowed to take beyond the cost
basis when they are getting depletion and also enjoying other
deductions for purposes of calculating a net profit tax, which
is why he has offered Amendment 10.
1:47:44 PM
REPRESENTATIVE HERRON maintained his objection.
A roll call vote was taken. Representatives Seaton, Josephson,
and Tarr voted in favor of Amendment 10. Representatives
Herron, Chenault, Johnson, Talerico, and Nageak voted against
it. Therefore, Amendment 10 failed to be adopted by a vote of
3-5.
1:48:45 PM
REPRESENTATIVE JOSEPHSON withdrew Amendment 11, labeled 29-
GH2924\N.9, Nauman, 3/29/16.
1:48:56 PM
REPRESENTATIVE JOSEPHSON moved to adopt Amendment 12, labeled
29-GH2924\N.10, Nauman, 3/29/16, which read:
Page 1, line 1, following "Act":
Insert "relating to the limitation on the
exploration incentive credit;"
Page 1, following line 4:
Insert a new bill section to read:
"* Section 1. AS 27.30.050 is amended to read:
Sec. 27.30.050. Limit on application of credit.
An exploration incentive credit for a mining operation
may not exceed $20,000,000 and must be applied within
seven [15] tax years or royalty payment periods after
the taking of the credit is approved under
AS 27.30.020(2), but the tax years or royalty payment
periods in which the credit is applied need not be
(1) the tax year or royalty payment period
in which the person first incurs liability for payment
of tax or royalty based on the person's activity that
is the basis of the claim of the exploration incentive
credit; or
(2) consecutive periods."
Page 1, line 5:
Delete "Section 1"
Insert "Sec. 2"
Renumber the following bill sections accordingly.
Page 2, line 17:
Delete "sec. 1"
Insert "sec. 2"
Page 2, line 18:
Delete "sec. 1"
Insert "sec. 2"
Page 2, line 19:
Delete "sec. 2"
Insert "sec. 3"
Page 2, line 21:
Delete "sec. 2"
Insert "sec. 3"
Page 2, following line 21:
Insert a new subsection to read:
"(c) AS 27.30.050, as amended by sec. 1 of this
Act, applies to a credit accrued on or after the
effective date of sec. 1 of this Act."
Page 2, line 28:
Delete "Section 6"
Insert "Section 7"
Page 2, line 29:
Delete "sec. 7"
Insert "sec. 8"
REPRESENTATIVE HERRON objected for discussion purposes.
1:49:23 PM
REPRESENTATIVE JOSEPHSON explained Amendment 12. He noted that
the law reads that the mining exploration incentive credit can,
essentially, cover 3.5 calendar years. The committee substitute
(CS) reduces that to 3 years. The administration would like to
dispense with the credit altogether, and he made arguments about
the need to do that during periods of production. Amendment 12
would shorten the period in which it could be exercised to 7
years rather than 15 years. It may have the salutary effect of
incentivizing production because it doesn't benefit exploration
and development, it benefits production. The amendment says to
get to production if the company is going to get there, and if
the company doesn't get there the credit would be lost. So, it
is another way of looking at reform of this very long period of
incentive credits which has existed since 1951 and which needs
another consideration.
REPRESENTATIVE HERRON related his understanding that this
amendment was within Amendment 4, which was passed, and the only
difference is that there was a 15 year time limit for an
exploration incentive credit, and the amendment would change it
to 7 years. He asked why 7 years and not 10 or 5 years.
REPRESENTATIVE JOSEPHSON replied that he consulted with the Tax
Division and is trying to strike a middle ground.
1:52:13 PM
REPRESENTATIVE HERRON asked whether someone is available to
speak to the amendment being an incentive and whether it would
be an advantage to miners or a complication for miners.
ED FOGELS, Deputy Commissioner, Office of the Commissioner,
Department of Natural Resources (DNR), explained that the once a
company has built up some exploration and incentive credits and
then starts production, the company has up to 15 years to cash
in those credits; Amendment 12 would reduce it to 7 years. The
issue is what the company's tax liability would be in any given
year for those first 7 years and whether the company could use
up all $20 million if it had accumulated the maximum amount. It
is hard to say whether that would be a net positive for the
state's treasury or some kind of a disadvantage to the
individual miner because it would depend upon the particular
project and the project's tax liability year to year.
REPRESENTATIVE HERRON related that he is seeking an answer as to
whether he should vote for this amendment because it benefits
the mining operation or unfairly harms the mining operations.
MR. FOGELS surmised that the longer time period a mining company
has to utilize its credits the more advantageous it would be for
the company.
REPRESENTATIVE HERRON asked whether there is an analysis and
whether it means more money in the treasury. He said he wishes
he knew that answer before making a policy decision.
CO-CHAIR TALERICO responded he is unsure that anyone has the
ability to answer that question. He recalled that DOR Deputy
Commissioner Burnett testified that one of the particular things
in the bill was the exemption which didn't seem to be a hot
ticket item for the administration because there isn't anything
on the immediate horizon that is going to get underway.
MR. FOGELS noted that as far as the 3.5 year exemption, DNR does
not see any mines coming on line in the immediate future that
would be affected by this. That would be down the road far
enough where it is out of the range of the department's fiscal
analysis. So, he said, he thinks that for that particular
provision there would be no immediate fiscal impact to the
return to the state down the road.
CO-CHAIR TALERICO remarked it could be a good topic for the
working group.
1:56:40 PM
REPRESENTATIVE JOSEPHSON held that this is a hot ticket item for
the administration in that the original bill dispensed with the
credit altogether. He therefore surmised the administration's
position is that it does not want this credit.
MR. FOGELS agreed that that provision is in the governor's bill,
and Deputy Commissioner Burnett said it is something the
administration is willing to discuss as the bill moves forward.
REPRESENTATIVE SEATON referred to the statement that right now
nothing is seen on the immediate horizon so the issue could wait
until a later time. He posited that it would be advisable to
have changes the industry is aware of rather than waiting until
a project is about to come online.
MR. FOGELS agreed and clarified he is not advising the committee
to rule on that provision one way or the other, he is just
pointing that if the tax exemption is deleted there won't be any
real immediate benefit to the state's treasury in the near term.
REPRESENTATIVE SEATON stated this should be an issue the working
group contemplates to be certain the legislature has those
decisions in place before a mine is coming close to production.
MR. FOGELS agreed it would be advisable and would be a good
topic for the working group along with all of the other
components in the fiscal picture for a mining operation.
1:59:20 PM
REPRESENTATIVE HERRON noted the administration wanted to remove
this and it is back in, his colleague wants to reduce it from 15
years to 7 years, and the advantage or harm that the reduction
could cause is unknown. He asked Co-Chair Talerico whether this
committee could request an analysis so it is there for the House
Finance Committee to review. Even if the amendment passes, it
would be important for the next committee to understand what it
means. Responding Co-Chair Talerico, he clarified that his
request is for the co-chair's office to send a note along for
the House Finance Committee to seek analysis on this question.
CO-CHAIR TALERICO agreed to do so.
MR. SPANOS clarified that the exploration incentive credit and
the 3.5 year exemption often get confused. The administration
was trying to remove the 3.5 year exemption in the bill.
Therefore, he is unsure whether the administration has a
position on the credit.
2:01:07 PM
REPRESENTATIVE HERRON maintained his objection to Amendment 12.
A roll call vote was taken. Representatives Tarr and Josephson
voted in favor of Amendment 12. Representatives Herron,
Chenault, Johnson, Seaton, Talerico, and Nageak voted against
it. Therefore, Amendment 12 failed to be adopted by a vote of
2-6.
2:02:03 PM
REPRESENTATIVE JOSEPHSON moved to adopt Amendment 13, labeled
29-GN2924\N.11, Nauman, 3/29/16, which read:
Page 1, following line 9:
Insert a new bill section to read:
"* Sec. 2. AS 43.65.010(a), as amended by sec. 1 of
this Act, is amended to read:
(a) A person prosecuting or attempting to
prosecute, or engaging in the business of mining in
the state shall obtain a license from the department.
[ALL NEW MINING OPERATIONS ARE EXEMPT FROM THE TAX
LEVIED BY THIS CHAPTER FOR THREE YEARS AFTER
PRODUCTION BEGINS.]"
Renumber the following bill sections accordingly.
Page 2, following line 14:
Insert a new bill section to read:
"*Sec. 6. AS 27.30.030(b)(2), AS 43.65.010(b), and
43.65.060(4) are repealed."
Page 2, following line 18:
Insert a new subsection to read:
"(b) AS 43.65.010(a), as amended by sec. 2 of
this Act, applies to a mining operation that begins
production on or after the effective date of sec. 2 of
this Act."
Reletter the following subsection accordingly.
Page 2, line 19:
Delete "sec. 2"
Insert "sec. 3"
Page 2, line 21:
Delete "sec. 2"
Insert "sec. 3"
Page 2, line 28:
Delete "Section 6"
Insert "Section 8"
Page 2, following line 28:
Insert a new bill section to read:
"* Sec. 10. Sections 2 and 6 of this Act take
effect January 1, 2020."
Renumber the following bill section accordingly.
Page 2, line 29:
Delete "sec. 7"
Insert "secs. 9 and 10"
CO-CHAIR TALERICO objected for discussion purposes.
2:02:17 PM
REPRESENTATIVE JOSEPHSON explained Amendment 13. He noted the
administration would like to collect taxes in every year and end
what he calls "the tax holiday" for hard rock mines. The
committee has so far rejected that, although the committee
reduced from 3.5 years to 3 year the term of the exemption.
Amendment 13 would remove that exemption in 2020. As heard from
the deputy commissioner, there's probably no one known, and
there are only really six or seven players, who in the near term
are probably in their exempt profile. If there is any concern
about that, they would be captured in this window and would
continue to enjoy the exemption for another 3 years 8 months.
However, as pointed out by Representative Seaton, vested
interests could grow during that span under anticipation that
the tax holiday would be there for them. Those interests would
know now at the outset that it would not be there for them.
Therefore, the amendment is designed to offer some amount of
comfort to both sides, and also put the state in a position
where the maximum benefit is arrived to the people from the
"taxation scheme that we have."
2:04:22 PM
REPRESENTATIVE HERRON asked whether the new bill section,
Section 2, proposed by Amendment 13 is a business license that
shall be obtained.
REPRESENTATIVE JOSEPHSON responded yes, the amendment was
written so that it attaches itself to the mining tax statute,
which is the mining license tax. It uses the language "business
of mining" in the narrative at line 5 of the amendment, but he
thinks this part of the mining license tax. It would repeal the
reprieve from tax effective January 1, 2020.
MR. SPANOS clarified the mining license is in lieu of a business
tax. So, a person only in the business of mining can obtain a
mining license through the Tax Division, and a business license
would be unnecessary.
CO-CHAIR TALERICO surmised that a typical business license is
not required for mining due to the mining license.
MR. SPANOS replied correct. If mining is the only business then
obtaining a business license is not required; if a person is
building roads and mining, a business license would be required.
If just mining, the mining tax license is in lieu of a business
license; the Tax Division administers that and when a person
gets a license the person must then file a tax return.
REPRESENTATIVE SEATON offered that Section 2 refers to a person
obtaining a license, and Section 10 reads that it takes effect
after January 1, 2020. He asked whether page 2, line 13, of the
amendment means that people do not need to get a mining license
until January 1, 2020, because Version N, [page 1, lines 6-7,
states, "(a) a person prosecuting or attempting to prosecute or
engaging in the business of mining in the state shall obtain a
license from the department."
2:08:00 PM
The committee took an at-ease from 2:08 p.m. to 2:14 p.m.
2:14:20 PM
REPRESENTATIVE SEATON said the construction of Amendment 13 is
confusing. He understood that the [amendment] reinserts the
original bill language that the three year tax exemption goes
away, but starting in 2020. He further understood that Section
6 of the amendment would not apply to current mines. It simply
says to stay with the three year exemption until 2020 and then
the tax exemption will go away.
REPRESENTATIVE JOSEPHSON held that Amendment 13 captures a
couple of concerns. One is that in the near term there probably
will not be anyone who would be affected in regard to tax
exemptions. He reminded the committee of testimony on various
bills regarding resource development that it is important not to
pull the rug out and disrupt something and make it less viable.
This amendment allows that if a company is in the early phase of
development, the company knows before making serious investment
that there has been a change in the 65-year-old policy. He
recalled that in HB 247 the committee looked at the
affordability of tax credits. He pointed to a discussion of the
Pebble Mine from Mr. [Brune] of receiving $200 million, which
included all sorts of revenue and not solely the mining license
tax. Amendment 13 would achieve some balance between the
administration's position, which was a more abrupt end, and a
nearly four year extension of the exemption.
2:17:03 PM
REPRESENTATIVE HERRON maintained his objection.
A roll call vote was taken. Representatives Josephson, Tarr,
and Seaton voted in favor Amendment 13. Representatives Herron,
Johnson, Talerico, and Nageak voted against it. Therefore,
Amendment 13 failed to be adopted by a vote of 3-4.
2:18:08 PM
CO-CHAIR TALERICO clarified for the record that Amendment 3,
labeled 29-GH2924\N.8, Shutts/Nauman, 3/29/16, had been adopted
[at the previous hearing]. That amendment established a
legislative working group to study the tax structure for mining.
REPRESENTATIVE JOSEPHSON noted that Amendment 4, labeled 29-
GH2924\N.16, Nauman, 3/30/16, had also been adopted [at the
previous hearing]. That amendment was in regard to deductions
of the credit against royalty.
2:19:02 PM
CO-CHAIR TALERICO opened committee discussion.
REPRESENTATIVE SEATON related his appreciation for the adoption
of a working group because mining taxes are complex and the goal
is to align the industry's needs with the needs of the state and
broad based taxes. He reiterated that the amount of revenue
being generated from all of the different industries, such as
tobacco and alcohol at $40 million and the fishing industry at
$13 million. The committee is discussing many things and the
state does not have as much new revenue to try to balance the
state's books from this industry as the state receives from
other industries. In moving forward, he is hoping the working
group can help the legislature balance between the industry as
well as the broad-based taxes.
REPRESENTATIVE JOSEPHSON offered his appreciation for the
committee taking some of the governor's positions - reducing the
exemption by six months and increasing the mining license tax by
a percentage point. Even though he gained enormously from
visiting the Fort Knox Mine, he related, part of this relates
back to the legislative research Minerals Extraction Report,
which said the resource value, for example in 2009, was just a
hair under $2.5 billion, and the state received as government
revenues a percentage of the $2.5 billion at 2.76 percent. That
appears to be a small number, but obviously the committee has to
remove itself from the oil and gas industry because even though
that is capital intensive, this is really capital intensive and
they are just different animals. He said he is glad the
legislature intends to continue to study this issue.
CO-CHAIR TALERICO said the committee will forward Representative
Herron's request to the bill's next committee of referral.
2:22:32 PM
CO-CHAIR NAGEAK moved to report the proposed committee
substitute for HB 253, Version 29-GH2924\N, Nauman, 3/17/16, as
amended, out of committee with individual recommendations and
the accompanying fiscal notes. There being no objection, CSHB
253(RES) was passed from the House Resources Standing Committee.
2:23:01 PM
The committee took an at-ease from 2:23 p.m. to 2:26 p.m.
HB 286-FISH & GAME: OFFENSES;LICENSES;PENALTIES
2:26:42 PM
CO-CHAIR TALERICO announced that the final order of business is
HOUSE BILL NO. 286, "An Act relating to sport fishing, hunting,
or trapping licenses, tags, or permits; relating to penalties
for certain sport fishing, hunting, and trapping license
violations; relating to restrictions on the issuance of sport
fishing, hunting, and trapping licenses; creating violations and
amending fines and restitution for certain fish and game
offenses; relating to commercial fishing violations; allowing
lost federal matching funds from the Pittman - Robertson,
Dingell - Johnson/Wallop - Breaux programs to be included in an
order of restitution; adding a definition of 'electronic form';
amending Rule 5(a)(4), Alaska Rules of Minor Offense Procedure;
and providing for an effective date."
2:27:09 PM
CO-CHAIR NAGEAK moved to adopt the proposed committee substitute
(CS) for HB 286, version 29-GH2958\E, Bullard, 3/30/16, as the
working document.
CO-CHAIR TALERICO objected for discussion purposes.
2:27:36 PM
KEVIN BROOKS, Deputy Commissioner, Office of the Commissioner,
Alaska Department of Fish & Game (ADFG), explained the changes
in Version E. Drawing attention to the title, page 1, line 5,
he advised that a semi-colon has been added that creates an
exemption from payment of restitution for certain unlawful
takings of big game animals. Referring to Section 3, page 2,
line 21, he noted that the words "tag or permit" were removed
from an item that can be correctable, and also removed is a
reference to the court. This change thereby allows a person to
correct a violation at any office of the Department of Public
Safety (DPS). He explained that the words "tag and permit" were
deleted after a Senate Resources Standing Committee hearing
wherein there was a fair amount of discussion about the ability
to fix a license, but a tag or permit have different purposes
such as recording harvest, and it appeared most appropriate to
remove the words tag and permit.
MR. BROOKS said the third change is in Section 17 on page 5,
line 6, where the words, "and (c) of this section," are added.
This comes into play in Section 18 as the changes are worked out
to AS 16.05.925. He turned to the fourth change, page 5, lines
14-25, and said those reflect changes that Co-Chair Talerico's
office recommended to the bill on the restitution amounts. The
fifth change is to page 5, line 26, where Section 17 was deleted
from the previous bill because there was a typo and it was a
redundant section. The sixth change on page 5, lines 26-31,
creates a new section that provides that a court may not order
restitution under Section 17 of this bill in a case where the
defendant voluntarily turns themselves in and is charged with a
violation offense. It also provides that a person must
voluntarily and immediately report to the Alaska Department of
Fish & Game or the Department of Public Safety the violation
that he/she committed in order to qualify for this affirmative
defense. This change is in response to testimony that was heard
and questions that were received about the bill. The seventh
change is on page 6, lines 21-22, and is a correction to a
typing error in the drafting. The eighth change is to page 7,
line 7, which deletes Section 27 of the original bill that
referenced a court rule. Through consultation with the court
system this was deemed unnecessary and so it was deleted.
2:31:43 PM
REPRESENTATIVE JOSEPHSON referred to Section 6 [page 3, lines
12-21], and said it appears that commercial fishing violations
would no longer be jailable offenses. He inquired as to why the
possibility of jail for a commercial fisheries violation was
altered.
MR. BROOKS deferred to Aaron Peterson, Department of Law.
AARON PETERSON, Assistant Attorney General, Criminal Division,
Department of Law (DOL), responded that there was not a
possibility of jail under AS 16.05.722 previously. There was
and still remains in AS 16.05.723 misdemeanor commercial fishing
penalties up to imprisonment for not more than one year or a
fine of up to $15,000, and that does still remain and is not
affected by the change in AS 16.05.722.
REPRESENTATIVE JOSEPHSON referred to Section 8, page 3, lines
25-29, and the taking a brown or grizzly bear within one-half
mile of a solid waste disposal facility. He noted the bill
removes the potential criminality of that action, and asked
whether it instead imposes a fine without culpable mental state.
MR. PETERSON answered that it takes out "with criminal
negligence" because the default mental state in Title 16
offenses is civil negligence. The Alaska Supreme Court found
that under State v. Rice, which was reaffirmed by the Court of
Appeals in 1999. To say that something required a mental state
of criminal negligence would actually raise the burden because
it is misdemeanors being talked about here. It's a Class A
misdemeanor and would be treated as such which carries a
potential jail sentence of up to one year. There is a potential
that it could be charged with a violation but, if it is charged
with a misdemeanor then it does carry a potential penalty of up
to one year.
2:35:59 PM
REPRESENTATIVE JOSEPHSON noted that the bill reads that hunting
violations within an X feet or yards from the Yukon to the
Arctic will no longer be jailable. He asked why that policy
decision is good, bad, or indifferent. He said Section 12 of
the original bill treated that type of offense in that
geographic region as a violation only, and Version E appears to
keep it at a misdemeanor.
MR. BROOKS offered that the prior Section 12 is now Section 13
in Version E.
REPRESENTATIVE JOSEPHSON concurred, and said the question
remains.
MR. BROOKS explained that it retains the original language and
adds this option so that law enforcement has the opportunity to
charge it as one or the other, it does not replace it but rather
adds the option.
2:37:46 PM
REPRESENTATIVE JOSEPHSON referred to Sections 15, 19, and 20, of
the original bill, and surmised that Section 15 makes it less of
a penalty to interfere with a salmon stream and it would no
longer be a jailable penalty. He asked what the bill does about
the criminality of interfering or deterring anadromous streams
in regard to the above sections.
MR. BROOKS replied that the bill is trying to make consistent
the charges for all of these infractions, and provide for the
opportunity to charge them in a more severe manner when there is
a culpable mental state. He deferred to Mr. Peterson.
MR. PETERSON responded that the entire purpose of most of these
changes is to add the ability to charge with violations where
appropriate. For example, under Section 15 the Department of
Public Safety and Department of Law would retain the ability to
charge and prosecute a Class A misdemeanor for AS 16.05.831. It
gives flexibility where necessary. Specifically, with respect
to Sections 15 and 20, it actually just changes the specific
penalties previously in place. For example, in Section 20 it
was previously a fine of not less than $100 and not more than
$500. Version E deletes that language and replaces it with the
standard Class A misdemeanor range which is a fine of up to
$10,000 and jail time up to one year. It allows uniformity in
prosecuting what would be expected from a Class A misdemeanor,
in addition to changing some of the other penalties and adding
in the ability to be charged where appropriate as a violation.
He reiterated it is already available in many of the charges in
Title 16 and in the Administrative Code, but for whatever reason
there was not that flexibility in several of the statutes and
that is what is being addressed here.
2:41:09 PM
REPRESENTATIVE JOSEPHSON noted the original bill provided that
if a person commits a violation, restitution may be imposed;
under Version E, if the person tells the authorities the person
may be shown some pity. He asked why, if the public understood
that, people would not just do that in record numbers.
MR. BROOKS answered that this amendment came from previous
testimony and it is trying to put the current practice into the
law. Currently, there is self-reporting which the Department of
Public Safety encourages, such that if a person takes a moose
and finds the rack is one-half inch too small to be legal, if
the person immediately takes action to self-report, the
department wants to recognize that action. That person will
still pay a fine and lose the moose, but the person would not be
punished to lose his/her weapons or other things that might have
happened under a different circumstance. It is absolutely meant
to act as an incentive to self-report where an accidental
violation has occurred.
BRUCE DALE, Director, Division of Wildlife Conservation, Alaska
Department of Fish & Game (ADF&G), said another requirement is
that the person must salvage and care for the meat and deliver
the meat to the state because it is property of the state, and
then the meat is put to use. So that is another reason that
restitution might not be required.
REPRESENTATIVE JOSEPHSON asked whether from a citizen's
standpoint there would be greater vulnerability in reporting
because now the Alaska Department of Fish & Game (ADFG) and
Department of Public Safety (DPS) would ask where the citizen
was located, would come to the citizen, and that person could
now be charged, theoretically jailed, and civilly fined. He
said that perhaps that strikes the proper balance in that
restitution would not be charged, the civil fine, and probably a
suspended jail sentence could be imposed.
MR. BROOKS replied that the person in the above scenario would
pay a fine and lose the animal, and not have anything more; so
it is trying to strike that balance being referred to.
2:44:52 PM
CO-CHAIR TALERICO commented that he understands what
Representative Josephson means when someone is pulled over at
1:30 a.m. headed down the highway with an illegal moose in the
back and the person's first response is that he was headed to
law enforcement to advise of the taking of the illegal moose.
He opined that there was a lot of judgement from the
municipality he previously served in as it had issues a few
times. He pointed out that the Department of Public Safety is
good at determining how accurate those statements might be.
CO-CHAIR TALERICO drew attention to page 5, lines 14-25, which
includes changes made by his office and commented that he had
thought about the actual meat values of some of these animals.
He pointed out that if the state is to discourage people from
doing this, the state should be closer to charging them full
value rather than a discount rate on volume.
2:46:47 PM
REPRESENTATIVE TARR observed that in comparison to the original
version of the bill almost all of the fines increased except the
black bear and wolverine. She asked the rationale.
CO-CHAIR TALERICO said he has seen poaching situations happen
where he lives and generally the black bear and wolverines are
not "hot items," whereas moose is the "big ticket item." He
posited that the general increases serve as a deterrent for
people to poach animals.
REPRESENTATIVE HERRON pointed out that in his district there is
no closed season on black bear, every Alaskan can take five, and
this species has actually become a nuisance to the moose calves.
The wolverine is hard to catch anywhere.
2:48:42 PM
CO-CHAIR TALERICO removed his objection to adopting Version E as
the working document. There being no further objection, Version
E was before the committee.
CO-CHAIR TALERICO opened public testimony on HB 286, Version E.
2:49:17 PM
AL BARRETTE related that he would like to see the word "sport"
removed from the words sport fishing. He commented that the
state has subsistence fishermen not required to have a license
to engage in subsistence fishing. Therefore, tens of thousands
of Alaskans are not paying in to the system and it falls upon
other users, such as sport fish and commercial fish, to make up
that loss of revenue. He then referred to Section 5, page 3,
lines 7-11, which read:
(d) In addition to any penalty imposed under (a)
or (b) of this section, a person may be ordered to pay
restitution to the state equal to the amount of any
lost state or federal matching funds from the Pittman
- Robertson, Dingell - Johnson/Wallop - Breaux
programs incurred from the person's violation of AS
16.05.330 - 16.05.420 or a regulation adopted under
this chapter, AS 16.20, or AS 16.40.
MR. BARRETTE suggested that instead of the money going to the
general fund, it go to the fish and game fund because that is
where money from those acts goes.
MR. BARRETTE turned to Section 6, page 3, lines 17-20, and noted
the fines were doubled for the first two convictions and did not
quite double for the third conviction. In Section 17, page 5,
lines 14-25, regarding restitution, he noted that bison, deer,
elk, goat, and moose are all over two times the original amount.
He asked why fish convictions are only doubled while several big
game species are more than two times the original amount.
2:51:13 PM
REPRESENTATIVE TARR requested the department to respond to Mr.
Barrette's suggestion of deleting "sport" from sport fish. She
understood that subsistence fishing is managed differently than
sport fishing or commercial fishing.
MR. BROOKS confirmed that the three types of fisheries certainly
are managed differently. Sport fishing has been in statute for
many years, he said. The department recognizes the different
types of fishing, such as sport, personal use, commercial, and
it is not a change the department would advocate.
MR. BROOKS addressed Mr. Barrette's other suggestions. He
clarified that the fines currently go into the fish and game
fund. There is a distinction between civil and criminal, but
they would go into the fish and game fund. He recalled previous
testimony by Major Chastain regarding how the fines were set,
and explained there was an attempt to tie those to [consumer
price index (CPI)] increases. Referring to the fines in Section
6, he explained that commercial fishing, as well as the original
restitution amounts, were tied to CPI adjustments.
CO-CHAIR TALERICO thanked Mr. Barrette for his testimony.
MR. BARRETTE referred to Section 18, page 5, line 29, which
states, "voluntarily and immediately reported the taking to the
department", and suggested a definition be given for how much
time is meant by "immediately" self-reporting.
CO-CHAIR TALERICO closed public testimony after ascertaining
that no one else wished to testify.
2:54:11 PM
REPRESENTATIVE JOSEPHSON moved to adopt Amendment 1, labeled 29-
GH2958\E.1, Bullard, 3/31/16, which read:
Page 5, following line 28:
Insert a new paragraph to read:
"(1) had the license, tag, and permit
required by AS 16.05.340 for the species of animal
taken;"
Renumber the following paragraphs accordingly.
[CO-CHAIR TALERICO objected to the amendment.]
REPRESENTATIVE JOSEPHSON explained Amendment 1. He said his
concern with affirmative defense, which allows someone to
voluntarily and immediately report an illegal taking to avoid
restitution, is that there should be the simple screen that the
person is already licensed, tagged, and permitted under Title 16
for the species taken. Otherwise, the committee is saying the
person can be in violation of fundamental Title 16 provisions.
He posited that a hunter without the license, tag, or permit
should be penalized because he/she is not playing fair or by the
social contract. Amendment 1 would create a new paragraph (1)
at page 5, after line 29, because coming to the plate and having
not followed the requirements is not worthy of restitution.
CO-CHAIR TALERICO clarified that he objected to Amendment 1. He
requested ADF&G to speak to the amendment.
MR. BROOKS explained that the department's interpretation of how
it would work is that if a person self-reported and didn't have
a license or tag, that person would have many other problems
besides the taking of an illegal animal. The department
believes it is implied and so the amendment is unnecessary, but
the amendment cannot hurt anything either.
2:57:12 PM
REPRESENTATIVE JOHNSON posited that someone hunting without a
license is unlikely to self-report anyway and so he does not see
a real need for the amendment.
REPRESENTATIVE HERRON described the amendment as a belts and
suspenders amendment and he thinks it is fine.
REPRESENTATIVE TARR understood that within this section a
defendant may not be ordered to pay restitution. She surmised
that through that process the person would not be charged with
an illegal taking if the person had a license, tag, or permit.
MR. BROOKS replied that a person could be guilty of an illegal
taking and not having a license, there would be multiple
infractions. He pointed out the word is "may" and so there is
that discretion. He reiterated that it would not be the
practice to provide for this if the person didn't already have
the appropriate license and tag.
REPRESENTATIVE SEATON stated he is not sure that this is a "may"
because Version E states "may not" and a "may not" does not have
flexibility as defined in the statutes. A "may not" means that
a person cannot be required to pay restitution if the person
fulfills these things. He said Amendment 1 ascertains that a
person has the required documentation because otherwise the
person could be required to pay restitution. The amendment
doesn't harm anything and does help.
2:59:52 PM
REPRESENTATIVE TARR posed a scenario in which the hunter has a
license, tag, or permit but takes an animal out-of-season or an
illegal female. She asked whether that would be a circumstance
where the person would potentially have to pay restitution.
MR. BROOKS answered that if a person is appropriately licensed
and takes an illegal animal, but then takes steps to immediately
report, that person would not be subject to restitution. He
advised that often someone has been in the field for a couple of
days tracking an animal and realizes it's an illegal animal, but
then someone else comes in and shoots it in front of them and
the first hunter will call it in. So, other people in the field
will report and there is cell phone coverage in many parts of
the state. There are ways the troopers have in determining the
effort taken to immediately report, such as whether the troopers
received a call from someone else before receiving a call from
the person who illegally took the animal and these things would
be factored in.
REPRESENTATIVE TARR surmised that a person would have to possess
the required license, tag, and permit, and also immediately
voluntarily report the taking to the department, and also
surrender to the department. She therefore inquired whether the
bill language needs to include the word "and" so that all
requirements are met and not an either or requirement.
MR. BROOKS asked whether Representative Tarr is suggesting an
amendment to the amendment to add the word "and".
REPRESENTATIVE SEATON pointed out that in sentence construction
if "or" is at the last then they are all "or"; if "and" is at
the last then they are all "and". So, in this case, all three
requirements would have to be met.
3:02:42 PM
CO-CHAIR TALERICO removed his objection to Amendment 1, saying
he thinks it would provide some clarity. There being no further
objection, Amendment 1 was adopted.
3:03:05 PM
REPRESENTATIVE JOHNSON asked how these proposed fines align with
other states in terms of the Interstate Wildlife Violators
Compact; for example, whether other states charge the same
amount or the same kind of parallels.
MR. DALE related that after the previous hearing, the department
investigated that issue and found that many western states have
restitution fees even higher than these. However, he continued,
there was enough variation that the department did not feel
comfortable having a defensive statement because, as of yet, not
many states have been polled.
REPRESENTATIVE JOHNSON suggested that while polling those states
the department might want to also ask how another state would
treat a resident violator from Alaska, and also consider how
Alaska would treat an out-of-state violator, because a lot of
discrepancy is given to the states in the Interstate Wildlife
Violators Compact.
3:05:01 PM
CO-CHAIR NAGEAK moved to report CSHB 286, Version 29-GH2958\E,
Bullard, 3/30/16, [as amended], out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSHB 286(RES) was reported out of the House
Resources Standing Committee.
3:05:35 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 3:05 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CS HB 253 Amendments Ver. N Packet.PDF |
HRES 3/31/2016 1:00:00 PM |
HB 253 |
| CSHB 253 Version N.pdf |
HRES 3/31/2016 1:00:00 PM |
HB 253 |
| HB 253 Legal Memo.pdf |
HRES 3/31/2016 1:00:00 PM |
HB 253 |
| CS HB 286 Ver E 3 30 2016.pdf |
HRES 3/31/2016 1:00:00 PM |
HB 286 |
| HB0286 Fiscal Note -2-2-012916-DPS-N.PDF |
HRES 3/31/2016 1:00:00 PM |
HB 286 |
| HB0286 Fiscal Note-1-2-012916-DFG-N.PDF |
HRES 3/31/2016 1:00:00 PM |
HB 286 |
| HB286 - Sectional Analysis.pdf |
HRES 3/31/2016 1:00:00 PM |
HB 286 |
| HB286- Fiscal Note F&G-CO-2-2-16.pdf |
HRES 3/31/2016 1:00:00 PM |
HB 286 |
| HB286 Sponsor Statement - Governor's Transmittal Letter.pdf |
HRES 3/31/2016 1:00:00 PM |
HB 286 |
| HB286 ver A.pdf |
HRES 3/31/2016 1:00:00 PM |
HB 286 |