Legislature(1993 - 1994)
02/09/1994 08:15 AM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 RECOMMENDATIONS *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 RECOMMENDATIONS (* 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 SHORT TITLE: NPFMC COMPREHENSIVE RATIONALIZATION PLAN 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, RES 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 SHORT TITLE: MINING LOCATIONS ON STATE SELECTED LAND SPONSOR(S): REPRESENTATIVE(S)KOTT,Brice,Hudson,Phillips, James,Olberg,Sanders,Toohey,Green 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. HJR 50 - NPFMC COMPREHENSIVE RATIONALIZATION PLAN 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 RICK LAUBER, REPRESENTATIVE, PACIFIC SEAFOOD PROCESSORS ASSOCIATION, AND CHAIRMAN, NORTH PACIFIC FISHERIES 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 understood. 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 marketing. 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 topfiled. 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 JERRY GALLAGHER, LEGISLATIVE LIAISON, DEPARTMENT OF NATURAL 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 claim. 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. ANNOUNCEMENTS CHAIRMAN WILLIAMS announced the committee will meet Friday, February 11 at 8:15 a.m. to take up SB 153. ADJOURNMENT There being no further business to come before the House Resources Committee, Chairman Williams adjourned the meeting at 9:25 a.m.