Legislature(1993 - 1994)

02/09/1994 08:15 AM House RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
               HOUSE RESOURCES STANDING COMMITTEE                              
                        February 9, 1994                                       
                            8:15 a.m.                                          
  MEMBERS PRESENT                                                              
  Representative Bill Williams, Chairman                                       
  Representative Bill Hudson, Vice Chairman                                    
  Representative Con Bunde                                                     
  Representative Pat Carney                                                    
  Representative John Davies                                                   
  Representative David Finkelstein                                             
  Representative Joe Green                                                     
  Representative Eldon Mulder                                                  
  MEMBERS ABSENT                                                               
  Representative Jeannette James                                               
  OTHER LEGISLATORS PRESENT                                                    
  Representative Carl Moses                                                    
  COMMITTEE CALENDAR                                                           
  HJR 50      Relating to the North Pacific Fishery                            
              Management Council comprehensive                                 
              rationalization plan.                                            
              CSHJR 50(RES) ADOPTED AND PASSED OUT                             
              OF COMMITTEE WITH INDIVIDUAL                                     
  *HB 333    "An Act amending the Alaska Land Act to                           
              define the term `state selected land'                            
              for the purpose of recognizing mining                            
              locations, and giving retrospective                              
              effect to the amendment; and providing                           
              for an effective date."                                          
              CSHB 333(RES) ADOPTED AND PASSED OUT                             
              OF COMMITTEE WITH INDIVIDUAL                                     
  (* First public hearing)                                                     
  WITNESS REGISTER                                                             
  REPRESENTATIVE CARL MOSES                                                    
  Alaska State Legislature                                                     
  State Capitol, Room 204                                                      
  Juneau, Alaska   99801-1182                                                  
  Phone:  465-4451                                                             
  Position Statement:  Prime sponsor HJR 50                                    
  RICK LAUBER, Representative                                                  
  Pacific Seafood Processors Association                                       
  Chairman, North Pacific Fisheries Management Council                         
  321 Highland Drive                                                           
  Juneau, Alaska   99801                                                       
  Position Statement:  Supported HJR 50                                        
  OLE HARDER                                                                   
  1124 Rezanof Drive                                                           
  Kodiak, Alaska  99615                                                        
  Phone:  486-3448                                                             
  Position Statement:  Spoke on fishing industry                               
  JACK PHELPS, Aide                                                            
  Representative Pete Kott                                                     
  State Capitol, Room 409                                                      
  Juneau, Alaska   99801-1182                                                  
  Phone:  465-3777                                                             
  Position Statement:  Gave Rep. Kott's sponsor statement                      
  JERRY GALLAGHER, Director                                                    
  Division of Mining                                                           
  Department of Natural Resources                                              
  P.O. Box 107016                                                              
  Anchorage, Alaska   99510-7016                                               
  Phone:  762-2165                                                             
  Position Statement:  Supported CSHB 333                                      
  PREVIOUS ACTION                                                              
  BILL:  HJR 50                                                                
  SPONSOR(S): REPRESENTATIVE(S) MOSES                                          
  JRN-DATE     JRN-PG               ACTION                                     
  01/18/94      2097    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/18/94      2097    (H)   SPECIAL COMMITTEE ON FISHERIES,                  
  01/26/94              (H)   FSH AT 08:30 AM CAPITOL 17                       
  02/02/94      2214    (H)   FSH RPT  3DP                                     
  02/02/94      2215    (H)   DP:  OLBERG, MOSES, PHILLIPS                     
  02/02/94      2215    (H)   -ZERO FISCAL NOTE (H.FSH) 2/2/94                 
  02/02/94              (H)   FSH AT 08:30 AM CAPITOL 17                       
  02/02/94              (H)   MINUTE(FSH)                                      
  02/09/94              (H)   RES AT 08:15 AM CAPITOL 124                      
  BILL:  HB 333                                                                
  SPONSOR(S): REPRESENTATIVE(S)KOTT,Brice,Hudson,Phillips,                     
  JRN-DATE     JRN-PG               ACTION                                     
  01/03/94              (H)   PREFILE RELEASED                                 
  01/07/94      2014    (H)   COSPONSOR(S):  BRICE                             
  01/10/94      2014    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/10/94      2014    (H)   RESOURCES, FINANCE                               
  01/13/94      2054    (H)   COSPONSOR(S):  OLBERG, SANDERS                   
  01/14/94      2084    (H)   COSPONSOR(S):  TOOHEY                            
  01/19/94      2113    (H)   COSPONSOR(S):  GREEN                             
  02/09/94              (H)   RES AT 08:15 AM CAPITOL 124                      
  ACTION NARRATIVE                                                             
  TAPE 94-11, SIDE A                                                           
  Number 000                                                                   
  The House Resources Committee was called to order by                         
  Chairman Bill Williams at 8:18 a.m.  Members present at the                  
  call to order were Representatives Williams, Hudson, Bunde,                  
  Carney, Davies, Finkelstein, and Mulder.  Members absent                     
  were Representatives Green and James.                                        
  CHAIRMAN BILL WILLIAMS announced a quorum was present.  He                   
  told committee members they would take up HJR 50 and HB 333.                 
  CHAIRMAN WILLIAMS told committee members there is a draft                    
  Resources Committee Substitute (CS) in their folders.  The                   
  CS was drafted to correct a technical error in the original                  
  bill; page 2, line 12, in the whereas clause that states the                 
  amount of money the Alaska seafood processing industry has                   
  invested in shoreside processing plants.  He said in the                     
  original bill, the dollar amount was listed as one million                   
  dollars, but it should have read one billion dollars.                        
  Number 022                                                                   
  REPRESENTATIVE CARL MOSES, PRIME SPONSOR, HJR 50, said he                    
  introduced the resolution to address a potential problem for                 
  shore-based processors and the granting of Individual                        
  Fishing Quotas (IFQs) to individual fish harvesters.  He                     
  stressed if consideration is not given to shore-based                        
  processors, zero fish will be going to shore.                                
  REPRESENTATIVE ELDON MULDER referring to page 1, line 13,                    
  "WHEREAS the IFQ system would greatly reduce the volume of                   
  groundfish and crab sold to shore-based processors;" asked                   
  Representative Moses what basis he was using when saying the                 
  volume will definitely be reduced.                                           
  REPRESENTATIVE MOSES responded that conceivably all fish                     
  could be transferred to a mother ship off shore.                             
  Number 046                                                                   
  REPRESENTATIVE CON BUNDE inquired if there are tax                           
  considerations which encourage offshore processors not to                    
  come to shore.                                                               
  REPRESENTATIVE MOSES answered that was correct as many ports                 
  have a sales tax.                                                            
  REPRESENTATIVE BILL HUDSON said in reviewing page 2, it                      
  states the dollar value paid to fish harvesters is $1.4                      
  billion.  He felt the figure quoted was high and asked if it                 
  included salmon, groundfish and all types of crab, etc.                      
  REPRESENTATIVE MOSES replied that was correct.                               
  REPRESENTATIVE HUDSON asked what percentage of that figure                   
  is nonresident.                                                              
  REPRESENTATIVE MOSES said he did not know, but guessed that                  
  the majority was nonresident.  He stated the figure was                      
  taken from a resolution passed by the city of Unalaska.                      
  REPRESENTATIVE PAT CARNEY commented CSHJR 50(RES) contains                   
  many numbers and he hoped they are accurate.                                 
  Number 077                                                                   
  MANAGEMENT COUNCIL, said the council is considering a                        
  comprehensive rationalization of the groundfish and crab                     
  fishers off the coast of Alaska and IFQs or Individual                       
  Transferable Quotas (ITQs).  From research completed by                      
  several entities it was indicated that if an ITQ system is                   
  granted only to harvesters and factory trawlers, the shore-                  
  based industry in Alaska will go into a death spiral,                        
  lasting 5-7 years before they go bankrupt.  He said that                     
  statement has been reviewed by the scientific and                            
  statistical committee of the council and other economists                    
  and has been verified.                                                       
  MR. LAUBER stressed there are many reasons for the situation                 
  including the fact that the factory trawl fleet and the                      
  mother ship operation offshore operate at a lower price.                     
  They are not burdened by the regulations which the shore-                    
  based industry face.  For example, if there are four people                  
  working at a shore-based plant, according to the laws of the                 
  state of Alaska, 240 square feet has to be provided for                      
  sleeping accommodations whereas aboard ship, only 64 square                  
  feet of floor space has to be provided.                                      
  MR. LAUBER pointed out that an ITQ is like a share of stock;                 
  it is owned, it can be transferred and it can be used as                     
  collateral.  If a person has an IFQ share for one million                    
  pounds of fish, a loan for 70 percent of the value of the                    
  share can be secured and used to purchase more quota shares.                 
  He said the real threat is from the factory trawl fleet.                     
  MR. LAUBER mentioned the figures used in CSHJR 50(RES) were                  
  prepared by Pacific Associates, a research group, and he                     
  thought all of the numbers are official government numbers                   
  received from various agencies.  He stressed in the state's                  
  traditional salmon and halibut fishing, the majority of                      
  fishermen are Alaskans.  However, in the offshore fisheries,                 
  all of the factory trawlers are based outside of Alaska with                 
  crews also from outside the state.  He noted the shore-based                 
  plants are all located in the state, paying local and state                  
  taxes.  When the Magnuson Act was passed in 1976, it was                     
  hoped there would be benefits to the United States and to                    
  the state of Alaska and to this point, there have been.                      
  MR. LAUBER stressed if the ITQ system, which only grants                     
  quota shares to harvesters, factory ships and factory                        
  trawlers is used, there is a dangerous risk that the                         
  economists are correct and within a few years, there will be                 
  no shore-based processing plants for groundfish and crab.                    
  He expressed support of CSHJR 50(RES).                                       
  Number 198                                                                   
  REPRESENTATIVE HUDSON asked if there should be language in                   
  one of the WHEREAS clauses relating to ITQs.                                 
  MR. LAUBER responded it is not necessary, since the council                  
  uses the terms IFQs and ITQs interchangeably and both are                    
  REPRESENTATIVE MULDER recalling the $1.4 billion going to                    
  out of state interests, asked if there are any steps the                     
  legislature can take to reverse the problem.                                 
  MR. LAUBER responded there are many things which can be                      
  done, none of which could immediately change the situation.                  
  It is a matter of capital.  There have been companies in                     
  Alaska, owned by Alaskans, who as they grew larger, found                    
  there was a need to compete which resulted in a need to move                 
  their corporate offices out of Alaska.  He gave several                      
  examples of companies and their situations.                                  
  MR. LAUBER told members what is important to remember is                     
  that those Alaskan-owned companies have an investment in                     
  Alaska, not where they may have their corporate offices.                     
  They are located in the state, they pay taxes here, they buy                 
  locally, and have a commitment in the state.  He said often                  
  there is a hostile attitude regarding the regulatory process                 
  in the state and gave examples of situations and large fines                 
  being assessed.  He felt that attitude often makes it                        
  difficult for these companies to invest, expand or add                       
  added-value facilities.                                                      
  Number 327                                                                   
  REPRESENTATIVE MULDER asked Mr. Lauber if he had seen the                    
  20/20 program on television showing problems with the                        
  seafood industry and if so, questioned if there are ways to                  
  insure the quality of the product.                                           
  MR. LAUBER stressed a television show like the 20/20 program                 
  does horrible damage to the seafood industry.  He said up                    
  until recently, the state was putting money into the Alaska                  
  Seafood Marketing Institute (ASMI) and currently, the                        
  industry is putting a substantial amount of money into the                   
  ASMI program.  He noted that most of the television program                  
  centered on the problem of what happens to the product after                 
  it leaves the fishing vessel and the processing plant.  The                  
  program focused on fish markets, consumer markets or the                     
  distribution point of seafood.                                               
  MR. LAUBER stated the standards which Alaska are held to are                 
  far higher than any other state but once the product leaves                  
  the state, it can be misused and there is not much the state                 
  can do about it.                                                             
  REPRESENTATIVE HUDSON mentioned he was distressed that the                   
  program used Alaska posters, when in reality the subject                     
  matter was not directly related to the product coming from                   
  the state.  He felt there needs to be a continued, expanded                  
  effort by ASMI to educate consumers and institutions on how                  
  to handle and use seafood as well as how to maintain the                     
  quality of the product.                                                      
  REPRESENTATIVE HUDSON asked if the study that Mr. Lauber                     
  referred to earlier which provided the figures in CSHJR
  50(RES) is available.                                                        
  MR. LAUBER said it is available probably through                             
  Representative Moses' office.  He stressed the seafood                       
  industry is interdependent.  The companies who operate in                    
  Alaska have a broad range of species and product forms which                 
  they purchase and sell.  What happens to companies in the                    
  salmon market affects their general business health.                         
  Therefore, it is true that ITQs on groundfish and crab might                 
  not directly impact the salmon or halibut industry but it                    
  does affect other industries.                                                
  REPRESENTATIVE HUDSON said there is some precedence, as a                    
  percentage of the allocation was previously granted to                       
  onshore processors.                                                          
  MR. LAUBER replied that was correct and noted they are                       
  currently operating under the inshore/offshore allocation                    
  and will do so through 1995.  The allocation includes:                       
  fishermen delivering to inshore operations receive 35                        
  percent; the offshore sector gets 75 percent; and 7 1/2                      
  percent goes to the community development quota (CDQ)                        
  program.  He noted that in the Gulf of Alaska, the onshore                   
  allocation is 100 percent.                                                   
  REPRESENTATIVE HUDSON asked Mr. Lauber if he envisioned an                   
  expansion of the CDQ program.                                                
  MR. LAUBER responded the only eligible communities in the                    
  current CDQ program on pollock are within 50 miles of the                    
  coast of the Bering Sea.  There are a number of communities                  
  that the state did not find eligible such as Dutch Harbor                    
  and Unalaska.                                                                
  Number 498                                                                   
  REPRESENTATIVE CARNEY made a motion to ADOPT the draft                       
  committee substitute for HJR 50 as CSHJR 50(RES).                            
  CHAIRMAN WILLIAMS asked if there were any objections.                        
  Hearing none, CSHJR 50(RES) was ADOPTED.                                     
  OLE HARDER, KODIAK, said he has been involved in Alaska                      
  fisheries since 1948 including all types of fish and                         
  canneries.  He felt the resources and the fishing business                   
  are in the worst condition ever.  He stressed a high                         
  percentage of the salmon industry will go broke this year.                   
  Unless $20-25 million is devoted to saving the second                        
  biggest industry in the state, it will go broke.  Mr. Harder                 
  emphasized this will be an even worse year for the industry.                 
  He favors additional taxes to save the industry.                             
  REPRESENTATIVE CARNEY asked if additional money is                           
  allocated, what it will be used for.                                         
  MR. HARDER responded additional efforts other than ASMI are                  
  needed.  He stressed there is a need for high line                           
  REPRESENTATIVE HUDSON wondered if Mr. Harder meant that the                  
  $25 million a year will expand the domestic market.                          
  MR. HARDER said that is correct.                                             
  Number 605                                                                   
  REPRESENTATIVE BUNDE made a motion to MOVE CSHJR 50(RES) out                 
  of committee with INDIVIDUAL RECOMMENDATIONS.                                
  CHAIRMAN WILLIAMS asked if there were any objections.                        
  Hearing none, the motion PASSED.                                             
  (CHAIRMAN WILLIAMS noted for the record that REPRESENTATIVE                  
  GREEN had joined the committee at 8:22 a.m.)                                 
  TAPE 94-11, SIDE B                                                           
  Number 000                                                                   
  HB 333 - MINING LOCATIONS ON STATE SELECTED LAND                             
  CHAIRMAN WILLIAMS advised members there was a draft                          
  committee substitute for HB 333 in their folders.                            
  JACK PHELPS, AIDE, REPRESENTATIVE PETE KOTT, explained that                  
  HB 333 is a simple measure which inserts a definition into                   
  Title 38 with respect to selected lands.  The definition is                  
  important because a large amount of the state is covered by                  
  land selections, many which are mineralized.  He said there                  
  are federal claims on many of the lands.  A federal claim,                   
  unless it has been patented, is often in question as to                      
  whether it is a valid claim.  Federal requirements for a                     
  valid claim include a marketability standard.  When there is                 
  a state selection over the top of a federal claim, it is not                 
  known if the federal claim is valid.  He stated if the claim                 
  is valid, it is a federal inholding and has no capability of                 
  being conveyed to the state.  If it is an invalid federal                    
  claim, there is a state selection over the top of it.                        
  MR. PHELPS said the Minerals Commission reviewed the problem                 
  and felt the way to solve it was to define state selected                    
  lands so that a selection is considered a selection for                      
  mining claim purposes, regardless of the validity or the                     
  effect on any particular piece of the land within that                       
  selection.  For the purpose of staking a claim, the land is                  
  considered selected whether it is validly selected or a                      
  MR. PHELPS said a person with a federal mine claim might                     
  want to convert it to a state claim once the land is                         
  patented to the state.  That is important to the state                       
  because it gets rid of the little pockets of federal                         
  inholdings throughout the state selections.  He pointed out                  
  that the benefits of HB 333 accrue not only to the mining                    
  industry but also to the state.                                              
  Number 080                                                                   
  MR. PHELPS explained the committee substitute was introduced                 
  because there were concerns expressed by the Department of                   
  Natural Resources (DNR) and Native corporations as to how HB
  333 will affect their operations.  The Native corporations                   
  were concerned how HB 333 would affect their Alaska Native                   
  Claims Settlement Act (ANCSA) topfilings or selections.  In                  
  many cases, there are state selections and ANCSA selections                  
  which overlap.                                                               
  MR. PHELPS explained to solve the problem, subsection (b)(2)                 
  was added.  It says if there is a pending selection of an                    
  ANCSA corporation, it is exempted.  This raised new                          
  questions.  What if a person already has an at-risk claim on                 
  land which is both selected by the state and ANCSA?  That                    
  question led the sponsor to add Section 2 of the bill, which                 
  says even though ANCSA selections are exempted from the new                  
  definition of state selected lands, any existing at-risk                     
  claims lying in those areas are not affected.  He said if                    
  the ANCSA selection goes away, if the state selection                        
  attaches by conveyance, etc. the person who has an at-risk                   
  claim becomes the first (indiscernible).                                     
  Number 108                                                                   
  MR. PHELPS continued that Section l, subsection (c), lines                   
  five and six, were added because of legitimate concerns                      
  expressed by the Division of Land regarding the division's                   
  ability to decide which lands will be tentatively approved                   
  to the state.                                                                
  REPRESENTATIVE JOE GREEN said it was his understanding that                  
  in the Statehood Act, land conveyed to the state for the                     
  purpose of making the state solvent had to convey land in                    
  fee and the state had to maintain the mineral rights.  He                    
  asked if there is an attachment on the mineral rights                        
  through a prior federal claim, can land selected be conveyed                 
  with that encumbrance.                                                       
  MR. PHELPS responded that land with a federal claim is not                   
  conveyed to the state and continues to be a federal                          
  inholding as long as the miner maintains the claim.                          
  REPRESENTATIVE GREEN questioned if a person holding a                        
  federal mining claim does not want to convert it to a state                  
  claim, could there be legal ramifications at a later date.                   
  MR. PHELPS responded that could happen.  However, the claims                 
  being discussed are very small, 1500 by 660 feet.  He said                   
  realistically it will be a very long time before the state's                 
  land selections are settled.  He added that the longer it                    
  takes, the more likely that the more valuable mineralization                 
  areas will be identified.                                                    
  REPRESENTATIVE GREEN said he was concerned that a judge may                  
  rule the land cannot be conveyed as long as it is federal                    
  and at some time, the person might lose his claim.                           
  MR. PHELPS responded that once a mechanism is provided for a                 
  miner to convert from a federal to a state claim, the                        
  likelihood for him doing that is increased.                                  
  CHAIRMAN WILLIAMS asked Mr. Phelps to again speak to Section                 
  2 and questioned the date of April 14, 1966, contained in                    
  that section.                                                                
  MR. PHELPS said Section 1, subsection (b)(2) exempts                         
  anything which has a pending ANCSA selection over it.  If HB
  333 passes, there will be no ability for a person to go into                 
  an ANCSA selected land until the Native corporation is                       
  satisfied.  He noted the date April 14, 1966, is used                        
  because that is the date AS 38.05.275 was effective.  He                     
  stressed that under CSHB 333(RES), all land which is under a                 
  pending ANCSA selection is protected.                                        
  Number 220                                                                   
  REPRESENTATIVE CARNEY made a motion to ADOPT the committee                   
  substitute for HB 333.                                                       
  CHAIRMAN WILLIAMS asked for objections to the motion and,                    
  hearing none, CSHB 333(RES) was ADOPTED.                                     
  Number 230                                                                   
  REPRESENTATIVE CARNEY made a motion to ADOPT the proposed                    
  amendments to CSHB 333(RES).                                                 
  CHAIRMAN WILLIAMS read the proposed amendments:                              
  1.  page 1, lines 7-11, delete all material and insert:                      
         "(1) means land for which the state has filed a                       
      selection application with the United States under                       
      Sec. 6 of the Alaska Statehood Act, as amended,                          
      regardless of the validity or effect of the application,                 
      if the selection described in the application has not                    
      been rejected or relinquished;"                                          
  2.  page 1, line 14 - page 2, line 1, delete all material                    
      and insert:                                                              
      "corporation organized under 43 U.S.C. 1607(a), as                       
      amended, a Native group corporation that qualifies for                   
      a land conveyance under 43 U.S.C. 1613(h)(2), as                         
      amended, or a Native urban corporation that qualifies                    
      for a land conveyance under 43 U.S.C. 1613(h)(3), as                     
      amended, has"                                                            
  3.  page 2, line 11:                                                         
      delete [AS 27.10 or AS 38.05.195]                                        
      insert "AS 38.05.185 - 38.05.275 or in the manner                        
             described in AS 27.10"                                            
  4.  page 2, line 16:                                                         
      delete [AS 27.10.050 or AS 38.05.195]                                    
      insert "AS 38.05.185 - 38.05.275 or in the manner                        
             described in AS 27.10"                                            
  Number 245                                                                   
  CHAIRMAN WILLIAMS asked if there were any objections to the                  
  motion.  Hearing none, the AMENDMENTS were ADOPTED.                          
  Number 257                                                                   
  RESOURCES, AND DIRECTOR, DIVISION OF MINING, stressed HB 333                 
  is simple and straightforward.  He expressed support of CSHB
  333.  It allows a miner who has federal mining claims to                     
  change over to state mining claims without having a gap of                   
  time in his title.  He said currently if a person owns a                     
  federal mining claim and the state has topfiled it with a                    
  land selection, that land selection is not real because the                  
  state can only select vacant, unappropriated land.  If a                     
  miner has a federal claim and wants to convert it to a state                 
  claim, that person has to go to the Bureau of Land                           
  Management (BLM), and give them a relinquish document.  Then                 
  the person has to go back out in the field and stake a state                 
  mining claim.  Mr. Gallagher emphasized that CSHB 333(RES)                   
  allows a person to stake a state mining claim on a federal                   
  Number 308                                                                   
  REPRESENTATIVE HUDSON made a motion to MOVE CSHB 333(RES) as                 
  amended with INDIVIDUAL RECOMMENDATIONS and a zero fiscal                    
  note.  CHAIRMAN WILLIAMS asked if there were any objections                  
  to the motion.  Hearing none, the MOTION PASSED.                             
  CHAIRMAN WILLIAMS announced the committee will meet Friday,                  
  February 11 at 8:15 a.m. to take up SB 153.                                  
  There being no further business to come before the House                     
  Resources Committee, Chairman Williams adjourned the meeting                 
  at 9:25 a.m.                                                                 

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