Legislature(1997 - 1998)
05/01/1997 01:15 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE May 1, 1997 1:15 p.m. MEMBERS PRESENT Representative Bill Hudson, Co-Chairman Representative Scott Ogan, Co-Chairman Representative Beverly Masek, Vice Chair Representative Fred Dyson Representative William K. ("Bill") Williams Representative Irene Nicholia Representative Reggie Joule MEMBERS ABSENT Representative Ramona Barnes Representative Joe Green COMMITTEE CALENDAR HOUSE BILL NO. 238 "An Act amending the program of exploration incentive credits for activities involving locatable or leasable minerals or coal deposits on certain land in the state; and providing for an effective date." - HEARD AND HELD * SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 243 "An Act delaying the repeal of the current law regarding subsistence use of fish and game; amending the effective date of secs. 3 and 5, ch. 1, SSSLA 1992; and providing for an effective date." - MOVED CSSSHB 243(RES) OUT OF COMMITTEE * HOUSE BILL NO. 255 "An Act relating to subsistence hunting and fishing; and providing for an effective date." - HEARD AND HELD (* First public hearing) PREVIOUS ACTION BILL: HB 238 SHORT TITLE: MINING EXPLORATION INCENTIVE CREDITS SPONSOR(S): REPRESENTATIVE(S) VEZEY, Foster, Ivan JRN-DATE JRN-PG ACTION 04/08/97 1025 (H) READ THE FIRST TIME - REFERRAL(S) 04/08/97 1025 (H) RESOURCES 04/17/97 (H) RES AT 1:00 PM CAPITOL 124 04/17/97 (H) MINUTE(RES) 04/23/97 1308 (H) COSPONSOR(S): FOSTER, IVAN 05/01/97 (H) RES AT 1:00 PM CAPITOL 124 BILL: HB 243 SHORT TITLE: EXTEND CURRENT SUBSISTENCE LAW SPONSOR(S): SPECIAL COMMITTEE ON FISHERIES JRN-DATE JRN-PG ACTION 04/10/97 1060 (H) READ THE FIRST TIME - REFERRAL(S) 04/10/97 1060 (H) RESOURCES 04/22/97 (H) RES AT 1:00 PM CAPITOL 124 04/22/97 (H) MINUTE(RES) 04/23/97 1293 (H) SPONSOR SUBSTITUTE INTRODUCED- REFERRALS 04/23/97 1293 (H) READ THE FIRST TIME - REFERRAL(S) 04/23/97 1293 (H) RESOURCES 04/29/97 (H) RES AT 1:00 PM CAPITOL 124 04/29/97 (H) MINUTE(RES) 05/01/97 (H) RES AT 1:00 PM CAPITOL 124 BILL: HB 255 SHORT TITLE: SUBSISTENCE HUNTING AND FISHING SPONSOR(S): REPRESENTATIVE(S) BARNES, Cowdery, Mulder, Austerman, Green, James, Hodgins, Ryan, Kohring JRN-DATE JRN-PG ACTION 04/18/97 1171 (H) READ THE FIRST TIME - REFERRAL(S) 04/18/97 1172 (H) RESOURCES, WTR 04/24/97 1332 (H) COSPONSOR(S): KOHRING 05/01/97 (H) RES AT 1:00 PM CAPITOL 124 WITNESS REGISTER REPRESENTATIVE AL VEZEY Alaska State Legislature Capitol Building, Room 13 Juneau, Alaska 99801 Telephone: (907) 465-3719 POSITION STATEMENT: Testified as sponsor of HB 238. REPRESENTATIVE IVAN IVAN Alaska State Legislature Capitol Building, Room 418 Juneau, Alaska 99801 Telephone: (907) 465-4942 POSITION STATEMENT: Testified as cosponsor of HB 238. RUDY VETTER P.O. Box 70342 Fairbanks, Alaska 99707 Telephone: (907) 457-5509 POSITION STATEMENT: Testified on HB 238. MILT WILTSE, Director Division of Geological and Geophysical Surveys Department of Natural Resources 794 University Avenue, Suite 200 Fairbanks, Alaska 99707-3645 Telephone: (907) 451-5005 POSITION STATEMENT: Provided department's position and answered questions regarding HB 238. BOB BARTHOLOMEW, Deputy Director Income and Excise Audit Division Department of Revenue P.O. Box 110420 Juneau, Alaska 99811-0420 Telephone: (907) 465-2320 POSITION STATEMENT: Provided department's position and answered questions regarding HB 238. DICK BISHOP, Executive Director Alaska Outdoor Council 211 Fourth Street, Suite 302A Juneau, Alaska 99801 Telephone: (907) 463-3830 POSITION STATEMENT: Testified on SSHB 238 and HB 255. MARY C. PETE, Director Division of Subsistence Department of Fish and Game P.O. Box 25526 Juneau, Alaska 99802-5526 Telephone: (907) 465-2066 POSITION STATEMENT: Provided department's position and answered questions regarding SSHB 243. MARK RIEHLE, Legislative Administrative Assistant to Representative Ramona Barnes Alaska State Legislature Capitol Building, Room 403 Juneau, Alaska 99801 Telephone: (907) 465-3438 POSITION STATEMENT: Presented sponsor statement for HB 255. THEODORE POPELY, Legislative Assistant to House and Senate Majority Alaska State Legislature Capitol Building, Room 116 Juneau, Alaska 99801 Telephone: (907) 465-3439 POSITION STATEMENT: Answered questions on HB 255. CARL JACK Rural Alaska Community Action Program 731 East 8th Avenue Anchorage, Alaska 99501 Telephone: (907) 279-2511 POSITION STATEMENT: Testified in opposition to HB 255. ART IVANOFF, Subsistence Coordinator Maniilaq Association P.O. Box 256 Kotzebue, Alaska 99752 Telephone: (907) 442-7690 POSITION STATEMENT: Testified in opposition to HB 255. DICK COOSE, Executive Director Concerned Alaskans for Resources and Environment P.O. Box 9266 Ketchikan, Alaska 99901 Telephone: (907) 247-9266 POSITION STATEMENT: Testified on HB 255. CALEB PUNGOWIYI, Subsistence Director Kawerak, Incorporated P.O. Box 948 Nome, Alaska 99762 Telephone: (907) 443-4728 POSITION STATEMENT: Testified in opposition to HB 255. GLORIA STICKWAN P.O. Box 264 Copper Center, Alaska 99573 Telephone: (907) 822-5241 POSITION STATEMENT: Testified on HB 255. ANGIE MORGAN P.O. Box 127 Aniak, Alaska 99557 Telephone: (907) 675-4384 POSITION STATEMENT: Testified in opposition to HB 255. ACTION NARRATIVE TAPE 97-48, SIDE A Number 0001 CO-CHAIRMAN BILL HUDSON called the House Resources Standing Committee meeting to order at 1:15 p.m. Members present at the call to order were Representatives Hudson, Ogan, Masek, Dyson and Williams. Representatives Joule and Nicholia arrived at 1:19 p.m. and 1:21 p.m., respectively. Also present at the table was Representative Ivan. Absent were Representative Green, who was chairing another meeting, and Representative Barnes, who was ill. HB 238 - MINING EXPLORATION INCENTIVE CREDITS Number 0077 CO-CHAIRMAN HUDSON announced the first item of business was House Bill No. 238, "An Act amending the program of exploration incentive credits for activities involving locatable or leasable minerals or coal deposits on certain land in the state; and providing for an effective date." The bill had been heard previously. Co-Chairman Hudson advised that the sponsor had a proposed committee substitute (CS), 0-LS0845\F, Chenoweth, 4/21/97. Number 0122 REPRESENTATIVE AL VEZEY, sponsor, came forward to testify. He said although the proposed CS looks like a substantial rewrite of the bill, it is not. It addresses concerns expressed by the Department of Natural Resources (DNR). Specifically, it provides a means of evaluating data, giving the DNR explicit authority to use consulting services paid for by the party wishing to have its data approved for a tax credit. In effect, it would give the DNR the necessary resources to accomplish the evaluation task. REPRESENTATIVE VEZEY advised there are minor changes taking into account written comments and those received at the previous hearing. The major change is that they moved a section to another part of the bill to make it easier to read. Number 0287 CO-CHAIRMAN SCOTT OGAN referred to Section 1 of the proposed CS, page 1, line 10, and asked whether the state would be giving more in credits than it would be getting back in revenue. Number 0323 REPRESENTATIVE VEZEY replied that the only change in Section 1 is adding item (5) on page 2, which clarifies that geological mapping is an allowable cost. To date, $38 million in potential credits have been filed. By way of comparison, about $700,000 a year in mining tax is collected; although Representative Vezey does not know the number of actual credits taken, it is small. The advantage to the state of these incentives is receiving a tremendous amount of leverage on its dollars. Representative Vezey said the state does not really lose any revenue. It grants a credit when a tax liability is incurred, and that is usually years after the credit accrues. Number 0401 CO-CHAIRMAN OGAN questioned the $700,000 worth of revenue per year, when the state grants millions in credits. REPRESENTATIVE VEZEY said $38 million in allowable credits have been certified by the department, but the number actually used is infinitesimally small in comparison. The credits are "simply sitting in the bank, waiting for an opportunity to use them." Number 0454 CO-CHAIRMAN OGAN asked: If only $700,000 in taxes is being collected in mining taxes, what problem are they trying to fix by giving additional credits? REPRESENTATIVE VEZEY stated that the purpose of this bill is two- fold. First, it adds geological mapping as an allowable expense for credits; that is a small "tweak" that probably could have been interpreted as allowed under existing law. Second, they are creating a new category of tax credits for geophysical, geochemical and geological surveying work released to the public. REPRESENTATIVE VEZEY said the current mineral exploration incentive tax credit only applies to exploration development on a piece of property. He explained, "In other words, if you do an exploration and development program over 1,000 square miles and you develop one square mile of that under the current program, only the cost associated with the one square mile that goes into development is an allowable tax credit. Now, the company will undoubtedly file all the other credits, in the event that they someday become eligible, but it might be 15 years, or never, that they become eligible for actual tax deductions. They're just simply filed and accepted; they're in the bank." Number 0599 REPRESENTATIVE VEZEY said the airborne geomagnetic survey program has unquestionably created an economic boom in Alaska, with only $300,000 to $400,000 in yearly expenditures by the state. As the legislature is unlikely to provide more money to expand the program, they had come up with a plan: If a private-sector company did geophysical surveying, geochemical surveying or geological mapping and released the data to the public, they would receive a tax credit for that work. REPRESENTATIVE VEZEY explained, "And there again, we're getting a tremendous amount of leverage, because it's not so much that we expect everybody will take all their data and try to put it in this bank and get a tax credit, because in the first place, until they have a tax liability, they have no incentive. What we're trying to do here is send out a message that `Hey, we are open for business, and we're going to offer this incentive to you. If you go out and do an exploration program and it turns up goose eggs, and in your opinion, the data is worthless, you can release it to the public and we'll give you a credit against your future mining tax or your future income tax, if you'll just make it available to the public.'" Representative Vezey emphasized that where one person might see no value, somebody else with a different background, training or objective may see real value. Number 0705 CO-CHAIRMAN OGAN referred to page 1, lines 10 and 11 of the proposed CS, which says credits are given "regardless of whether the land is state-owned land". He asked whether Representative Vezey believes it is advantageous to continue with that policy. For example, if exploration was done on private or federal lands, he assumed the state would not get the revenues. REPRESENTATIVE VEZEY said that is incorrect. He referred to the 90/10 revenue sharing agreement between the state and federal governments; mineral severance taxes; and corporate taxes as sources of revenue regardless of land ownership. REPRESENTATIVE VEZEY said they had debated that. If a company surveys private land, he would assume the owner of the land is interested in having it developed and would act like a prudent business manager. The company would have first priority to look this data over. If they do not want to use it, there is an incentive to make it public, which can be done at no cost to the department by providing a tax credit against a mining license tax or income tax. Once the information is public, anyone may evaluate it and talk to the owner of the land. Number 0849 CO-CHAIRMAN HUDSON suggested the option for incentives rests with entities wanting to explore for minerals or develop mineral properties. If they choose the incentive, they must give back to the state geological information, for example. He stated, "It doesn't cost us anything, because they have to come into production before there's a tax obligation." REPRESENTATIVE VEZEY concurred. He emphasized that the primary intent is to send a message. "And we can do that," he said. "There is no value to a tax credit if there's no taxable income. It doesn't mean they might have income from somewhere else that might be taxable. It's just this particular property may not have developed. And that's the big difference between this bill and the bill that we worked on two years ago, is that this bill, ... the property doesn't have to go into production. We're trying to expand this library that catalogs Alaska resources. Because we all say that we're a rich state, but I defy you to tell me what's here." Number 0942 REPRESENTATIVE IVAN IVAN, cosponsor of HB 238, said he comes from an undeveloped area, the Yukon-Kuskokwim delta region. They need to look at available resources, including possibilities for shallow gas wells that could provide cheaper fuel than the diesel currently used in communities. He believes this legislation will afford that. REPRESENTATIVE IVAN said his region contains 6.5 million acres of private land. Including state lands, it is the size of Oklahoma. He stated the hope that the incentive will be available for some of the small operators interested in production of shallow-well gas and for cataloging the resources. Number 1064 REPRESENTATIVE VEZEY said he would like to see the committee get the bill moving. Although he does not believe it will affect exploration this summer, he believes if the message goes out this summer, it may affect the amount of exploration activity in Alaska next year. Number 1146 RUDY VETTER testified via teleconference from Fairbanks, agreeing this may provide increased incentive for exploration. He cited a local example that he believes may ultimately become a mine bigger than the Fort Knox Mine. He hopes this bill, over the long term, does not conflict with current law. He noted that it does not provide penalties nor is it mandatory. MR. VETTER thanked "all of you people who helped us get the airborne data that we've had." He emphasized that the mining industry does not want more taxes or state funding. He said, "Give us the freedom to operate and we can operate very well, and we can take care of all of our environmental factors that are necessary." Number 1320 MILT WILTSE, Director, Division of Geological and Geophysical Surveys, Department of Natural Resources, testified via teleconference from Fairbanks. They had reviewed the proposed committee substitute. While they agree wholeheartedly with the concept, they still have questions. For example, they see confusion as to what old data may be eligible. They also have questions on the definition of "substantial value." MR. WILTSE said Section 4 is particularly difficult to interpret. He stated, "It looked like part of that subsection voided some of the new credits and possibly impacted some of the former bill." It is also unclear whether the credit has a one-time statewide limitation for each applicant or would be for any one set of data. In addition, as the bill is written, he believes most material would be given to the DNR to evaluate, placing the department in a contractual situation. MR. WILTSE agreed with the concept of not building a bureaucracy within the DNR to evaluate submitted data. He believes this can be a private-sector-supported, efficient operation. They would like to work out questions with the sponsor and stakeholders in the mining industry. MR. WILTSE said some people had expressed concern, which he feels may be somewhat valid, that if this is not done correctly, there may be harm to the existing incentive, which is far from anybody's intent. He suggested the intent could be placed in a separate bill to avoid that possibility. He offered to work with others towards a "consensus-opinion bill to go forward in the next session, that we could all support with no reservation." MR. WILTSE stated his belief that the concept is excellent. It may go beyond anybody's expectations in terms of building a geologic data base of material that otherwise would not be available. He stated, "And I'd hate to see us act too much in haste and therefore create a situation that we don't want to create and maybe lose the opportunity of actually putting something like this in place for the long run." Number 1599 REPRESENTATIVE VEZEY responded, "I do think we have addressed his legitimate concerns. Some of his concerns just pertain to exactly what he's talking about. I mean, it takes a lawyer to read some of our statutes. I believe that the only reason to move this bill forward is to put the message out there, because people are making decisions now, and in the next six months, as to how they will spend money in 1998. And I think this would be a good incentive to have out there." REPRESENTATIVE VEZEY suggested a compromise for the "department folks that are nervous about this" would be simply changing the retroactive date to 1998 and making the effective date sometime in 1998. As he visualizes it, if the bill became law this year, it would not produce results for another year. Changing the dates would provide another year to work on the details, but the message would still be out there, loud and clear. Number 1679 CO-CHAIRMAN OGAN expressed concern about the fiscal note for approximately $260,000 to $270,000 per year. Referring to another bill, he pointed out the dive fishery was willing to pay costs to get that fishery going. He asked where this money would come from. He referred to the analysis section of the fiscal note, which is extensive, and advised that it discusses similar programs in Canada. Number 1753 REPRESENTATIVE VEZEY stated his belief that the fiscal note addresses the original bill, not the committee substitute. He stated, "It's assumed in this fiscal note that the DNR would be handling this data, evaluating it professionally and publishing it. The committee substitute spells out that it is a third-party consultant that will do the evaluation, paid for by the person wishing to take the tax credit, and that the person wishing to take the tax credit is responsible for the publication of the data. So it's zero cost. Really the cost is some of the director's time, because the director has total authority over whether or not to accept this information." REPRESENTATIVE VEZEY suggested it will come down to the relationship between the director and the third-party consultant. The director would basically either take the advice of the third- party consultant or not use that consultant. He stated, "So I believe that we've eliminated this, for all practical purposes, to a zero fiscal note." He asked Mr. Wiltse, who had prepared the fiscal note, to comment. Number 1808 MR. WILTSE responded, "What Representative Vezey says is partially true. And I'm sure that that is his intent." He said his own intent is that when the DNR finally puts a program like this into place, it will function along the lines that Representative Vezey is talking about. However, as the CS is written, it provides for an applicant to either submit material to the DNR or go the route that Representative Vezey has articulated. If they do the latter, the cost is theirs. But if they submit it to the DNR, the cost is the department's. The DNR had to prepare a fiscal note for the bill as written, even though they know the intent, as the language does not hit the intent. MR. WILTSE said Representative Vezey is correct that the DNR would seek outside review. What separates state data from other types of mining data is the former undergoes independent peer review. He envisioned initiating a procedure, for example, with a panel of certified reviewers that would meet criteria acceptable to all parties; it would be codified not in legislation but in some procedure equitable to everyone. Somebody submitting data for credit could select a panel, probably of at least three professionals, to review it and pass on a recommendation or summary of their findings to the director or someone else in the DNR. MR. WILTSE said Representative Vezey is also correct that under that scenario, the cost would not be borne by the state. The actual mechanism of retaining consultants, for example, can be worked out. However, the committee substitute leaves open the very real possibility that people would opt to put those costs on the DNR. That is why the amounts in the fiscal note are still there. Number 1969 CO-CHAIRMAN HUDSON said as he hears it, Mr. Wiltse believes this bill can be worked out so as not to harm the current exploration incentives program. However, they need additional time and effort to ensure nothing harms that. MR. WILTSE agreed and stated, "I think a safer way to do it would be in a separate bill. I think if there's a lot of effort put into it, we can probably not do any damage to the original bill." Number 2025 BOB BARTHOLOMEW, Deputy Director, Income and Excise Audit Division, Department of Revenue, came forward to testify. He indicated he had provided questions to the sponsor on issues needing clarification. He agreed the dollar impact is small initially, although it may grow in the future. This bill is for costs of an activity that never goes into production, but there are time lags. Something may not go into production for eight years. He asked: What happens if a company takes credits currently and the mine goes into production? MR. BARTHOLOMEW said these are technicalities. However, if put into law, these technicalities are what the private industry must work with when their tax advisors decide what to do. He cautioned, "And so, if you put it out before it's ready, and you risk a bill getting through next year to correct the technicalities, you may be living with those; you may not get a correction through." MR. BARTHOLOMEW indicated his intention of having the sponsor and the DNR resolve the program. Then the Department of Revenue could say what works on the tax schemes, helping to achieve the goals. He does not believe the tax schemes should drive the legislation. "And so we really haven't taken a position other than there are some issues now that have not been worked out on how the current tax credit would work and how the new program would ferret into that," he explained. "And I think what DNR has been saying is you may want to do it in a completely separate section of the tax code. You may just want to say, `Do it this way' and not merge them." Number 2146 CO-CHAIRMAN HUDSON said he was looking at the concerns of both Mr. Wiltse and Mr. Bartholomew. He asked them whether it was possible to do any rapid determination with the prime sponsor to clean this up. "But absent that, I'm not inclined to move this bill forward," he stated. He asked for input from the committee. Number 2187 CO-CHAIRMAN OGAN commented that the state is not currently saying it is unfriendly to mining. He expressed support for the concept of this legislation. He asked Mr. Wiltse how the fiscal note relates to the committee substitute. Number 2229 MR. WILTSE explained, "The note that is attached to the bill right now is one that I drafted up yesterday. I went back to the original one that we had drawn up, put dollar figures to it and left it the same, because the way the bill is written, this would apply right now. And the reason for that is because there is the choice, you know; there is a choice that people can submit their data right to the department." Number 2248 CO-CHAIRMAN HUDSON announced he was holding HB 238 over. He said he sensed vagueness on the part of testifiers, not displeasure with the bill. He suggested if the departments could meet with Representative Vezey about their major concerns, it would give him a better feeling for the legislation. (Note: The proposed committee substitute was not adopted as a work draft.) CO-CHAIRMAN HUDSON turned the gavel over to Co-Chairman Ogan. SSHB 243 - EXTEND CURRENT SUBSISTENCE LAW CO-CHAIRMAN OGAN announced the next order of business was Sponsor Substitute for House Bill No. 243, "An Act delaying the repeal of the current law regarding subsistence use of fish and game; amending the effective date of secs. 3 and 5, ch. 1, SSSLA 1992; and providing for an effective date." He said this bill simply extends the existing subsistence law. Number 2301 REPRESENTATIVE ALAN AUSTERMAN, Chairman of the House Special Committee on Fisheries, which sponsored the bill, came forward to testify. He said Co-Chairman Ogan had stated the extent of this bill, in that it extends the effective date of the subsistence laws to 1999. Number 2317 CO-CHAIRMAN OGAN said he has concerns about "piece-mealing" the subsistence issue and somewhat side-stepping it. However, until there is a cohesive plan, it may behoove them to move this. Number 2357 REPRESENTATIVE BILL WILLIAMS noted that extending the 1992 law is something the legislature has done for the past two sessions. This just gets them through for the next two years. Number 2376 REPRESENTATIVE REGGIE JOULE indicated he has heard that the majority is working on the larger subsistence issue. He suggested extending the current law is probably necessary until something else is done. Otherwise, it reverts to the 1986 law. He asked: Would we be able to repeal this if we came to a resolution? CO-CHAIRMAN OGAN affirmed they could do so, provided they had the votes. He asked whether Representative Joule is comfortable with the 1992 subsistence law as it was written. REPRESENTATIVE JOULE asked whether that question specifically related to SSHB 243. CO-CHAIRMAN OGAN said yes. REPRESENTATIVE JOULE stated, "I would be in favor of extending this. In terms of the larger issue of subsistence, of course, I think that's a whole different discussion. But in context of this particular extension, yeah, ... I think we can go ahead and extend this bill." Number 2461 CO-CHAIRMAN OGAN noted that the bill sunsets October 1. TAPE 97-48, SIDE B Number 0006 REPRESENTATIVE IRENE NICHOLIA suggested taking this up after the proposed special session. CO-CHAIRMAN OGAN responded that although he agrees in principle, he is worried that if there is no special session and the law sunsets, they will go back to the old law. He asked whether they should consider repealing the old law and staying with the more current one. Number 0034 REPRESENTATIVE FRED DYSON suggested there are too many variables to count on this being unnecessary. Unless they want to go to the "significantly monumental task of rewriting or repealing," the only question is: Do we want the 1986 subsistence rules to go into effect in October, or do we want to do this? Number 0110 DICK BISHOP, Executive Director, Alaska Outdoor Council, came forward to testify. He said the council supports SSHB 243. He said, "The whole matter of how to address the subsistence issue is certainly in a state of flux, as you know better than most. While a new strategy is being sought, we think it is essential that state law retain the statutory provisions regulating subsistence and nonsubsistence uses that were enacted in 1992. Principal among these includes the nonsubsistence areas, the definition of `reasonable opportunity' as it relates to subsistence uses, a systematic process by which the Boards of Fisheries and Game decide upon subsistence use and other use regulations, and the definitions of `customary and traditional' and `customary trade.' Those were important provisions that were put in the '92 law, and we feel they should remain." MR. BISHOP stated, "We support HB 243 even though, as the discussion has already indicated, we recognize that the existing state law relating to subsistence uses of fish and game is imperfect, and you are looking at possible changes. We see the extension of provisions of the '92 law as necessary for conservation and reasonable allocation while the whole issue is undergoing yet another review." MR. BISHOP continued, "The Alaska Outdoor Council strongly supports personal consumptive uses of fish and game and subsistence lifestyles. However, we have stated that we do not believe that a constitutional or statutory priority is necessary to adequately provide for subsistence uses, and we have consistently opposed an arbitrary and discriminatory closed-class priority based on zip code, culture or ethnicity. Nevertheless, the council has been willing to compromise in order to support ... Governor Hickel's bill in 1992 and again, recently, in support of HJR 21. As you know, Governor Hickel's bill did not pass the legislature due to opposition from the Alaska Federation of Natives." MR. BISHOP concluded, "In summary, the council is willing to support SSHB 243 as an interim measure while needed changes to federal law and, if necessary, to state law or our constitution, are considered. However, a one-year extension is probably preferable to the two-year that is listed in the bill, just to keep it kind of warm. Frankly, the council continues to be perplexed and frustrated by the widespread apparent indifference to the constitutional provisions providing for equal rights and equal protection with respect to fish and game uses. That indifference to the protection of individual rights, upon which the United States and the state of Alaska were founded, tests our patience and our willingness to consider compromises which diminish or revoke those provisions in Alaska's constitution. Although this issue addresses uses of fish and game, it is in fact an issue of civil rights, and we don't know how long we're willing to continue to be willing to compromise on these issues that are so basic to people's individual rights and protections." Number 0262 CO-CHAIRMAN OGAN asked whether the committee had questions for Mary Pete from the Division of Subsistence or Ron Somerville, technical consultant to the leadership of the House and Senate. Both Ms. Pete and Mr. Somerville came forward to the witness table. REPRESENTATIVE DYSON requested their opinions on whether this bill should pass. Number 0287 MARY C. PETE, Director, Division of Subsistence, Department of Fish and Game (ADF&G), stated support for SSHB 243. She said as committee discussion shows, unless there is another way to address subsistence, this bill would keep consistency in how the subsistence law is implemented. It retains important provisions relating to nonsubsistence use areas, as well as definitions that the public has become accustomed to and that have eased the board's work in managing subsistence hunting and fishing. Number 0324 REPRESENTATIVE BEVERLY MASEK asked Ms. Pete to expound on the issue of what the public has become accustomed to. She asked whether that is dealing with customary, traditional or cultural aspects, for example. Number 0331 MS. PETE said definitions put in place by the 1992 law are key in implementing subsistence hunting and fishing; one is "customary and traditional" and the other is "customary trade and barter." She believes the stricter definitions of the latter in the 1992 bill provide a wider sense of comfort regarding subsistence statewide, primarily in the commercial fishing industry. Number 0364 REPRESENTATIVE MASEK asked for clarification about what the public has become accustomed to. MS. PETE said if this bill did not pass, on October 1, 1997, the state would revert to the 1986 law, parts of which are unconstitutional under the state constitution. She said, "The flip-flop that the state has taken in terms of subsistence management, especially since 1986, I think has frustrated users in the state, because some years, it's rural residency; some years it isn't. Some years, we have nonrural areas; some years we don't. And the 1992 law established nonsubsistence areas, which essentially mirror the nonrural areas prior to ... 1992. And another flip-flop, I think, will just lead the public to assume that the state really can't manage subsistence, that there's been so much flux and unrest regarding subsistence, that, you know, this is just another example of where we haven't been able to maintain consistency until the issue is resolved." MS. PETE advised that the Governor has a resolution, HJR 10, to provide a constitutional amendment ballot to put the constitution in line with ANILCA, which is one option for the legislature. She said the other option is the Lieutenant Governor's three-tiered package. Number 0455 REPRESENTATIVE MASEK responded that Governor Hickel had worked on a plan, to which the Alaska Federation of Natives (AFN) said no. In addition, the AFN stand on Lieutenant Governor Ulmer's plan was a "no-net loss policy." Representative Masek mentioned HJR 21, which she sponsored and which would divert the problem back to ANILCA, where the problem began. She said right now, the state does not have control over defining customary, traditional or rural preference. She asked what Ms. Pete envisions as a way of resolving this. Number 0521 REPRESENTATIVE NICHOLIA stated what was in front of the committee was to extend the 1992 law, not to discuss visions for resolving the subsistence question. Number 0539 CO-CHAIRMAN OGAN called a brief at-ease at 2:17 p.m. He called the meeting back to order at 2:18 p.m., saying he would allow Representative Masek some latitude. REPRESENTATIVE DYSON suggested witnesses should feel free to opt out when questions are expanded beyond the exact bill on the table. Number 0610 REPRESENTATIVE MASEK asked Ms. Pete's opinion on how to resolve this problem if the bill did not pass. MS. PETE said state law defines "customary and traditional" and "customary trade and barter." She explained, "And as you well know, we can't enact rural preferences, so we did have a definition of `rural' as well, prior to the McDowell decision. So the state has defined those terms, and we've used those definitions to implement the law. You know, certainly, the federal government, they manage subsistence on federal lands; they have their own definitions. But we have defined those terms." Number 0681 CO-CHAIRMAN OGAN read from state statute, saying, "Customary and traditional means noncommercial, long-term and consistent taking of, use of and reliance on fish and game". He noted it goes on from there. He said, "Customary trade, a limited noncommercial exchange for minimal amounts of cash, as restricted by the appropriate board of fish and game resources." He said it does not go into birds or fur-bearers. Co-Chairman Ogan noted that HJR 21 calls for Alaskans to decide what those definitions are. He asked Ms. Pete whether, under current law, she finds that residents using subsistence are comfortable with these definitions and whether these definitions of "rural" and "customary and traditional" work. Number 0731 MS. PETE said they work in that the ADF&G has not heard of problems with them. There has been no public outcry as the boards have used those definitions in managing fish and game, although probably not everyone is happy with them. Number 0754 CO-CHAIRMAN HUDSON made a motion to adopt SSHB 243 for discussion and asked unanimous consent. There being no objection, it was so ordered. Number 0795 CO-CHAIRMAN HUDSON made a motion to amend SSHB 243 on page 1, line 7, by changing "1999" to "1998". He said that would place responsibility on the current legislature to conclude the work on this issue to the extent practical and possible. He asked unanimous consent. REPRESENTATIVE AUSTERMAN advised that he had no problem with it. Number 0856 REPRESENTATIVE WILLIAMS asked whether it would need to be brought up again in 1998, then. CO-CHAIRMAN HUDSON said absolutely; that is his intention. He stated, "If we don't amend this, if we leave it to 1999, it essentially gives this legislature an opportunity to walk away from the subject. If we put it in 1998, it forces this legislature to deal with it in the next session, and I believe that that is our responsibility." Number 0894 CO-CHAIRMAN OGAN concurred. He asked if there was any objection to the motion. There being none, the amendment was adopted. Number 0919 CO-CHAIRMAN HUDSON made a motion to move SSHB 243, as amended, from the committee with individual recommendations and zero fiscal note. He asked unanimous consent. CO-CHAIRMAN OGAN asked if there was an objection. There being none, CSSSHB 243(RES) moved from the House Resources Standing Committee. HB 255 - SUBSISTENCE HUNTING AND FISHING Number 0943 CO-CHAIRMAN OGAN announced the next item of business was House Bill No. 255, "An Act relating to subsistence hunting and fishing; and providing for an effective date." He advised that he had no intention of moving the bill that day, as the sponsor was absent due to illness, but would take brief public testimony after the bill was presented. Number 0980 MARK RIEHLE, Legislative Administrative Assistant to Representative Ramona Barnes, read the sponsor statement into the record: "House Bill 255 was crafted using Alaska's constitution as its basis. "As you know, the legislature is mandated by the constitution to provide for the utilization, development and conservation of all natural resources belonging to the state, including the land and waters, for the maximum benefit of the people. "Further, wherever occurring in their natural state, the fish, wildlife and waters of the state are reserved to the people for common use. "Under the Alaska constitution, no exclusive right or special privilege of fishery shall be created or authorized in the natural waters of the state. "The laws and regulations which govern the use or disposal of natural resources under the constitution, the state constitution, shall apply equally to all persons similarly situated with reference to the subject matter and purpose to be served by the law or regulation. "Replenishable resources belonging to the state shall be utilized, developed and maintained on a sustained yield basis, subject to preferences among beneficial users. "HB 255 would establish an allocation mechanism and ensure the allocation for the various uses of the fish and game resources, including subsistence use, to be consistent with the principles of sustained yield and will be the result of decisions by the respective boards of fish and game. "The boards are empowered to adopt criteria upon which to base the allocation decisions, including the allocation for subsistence. The boards will provide regulations to determine who may participate in subsistence hunting and fishing during times of abundance as well as of shortage. "The subsistence allocation will be determined as a percentage of the stock or population that is available, based upon sustained yield. The percentage must provide a preference to satisfy subsistence use. "The boards of fish and game shall distinguish among those provided a subsistence use on the basis of need, customary use and one's ability to obtain food by other means, should restrictions become necessary. "Under the provisions of HB 255, commercial sale of subsistence- taken fish or game is prohibited; however, customary trade, barter or sharing for personal use or family use is authorized." Number 1106 CO-CHAIRMAN OGAN stated that "customary trade and barter" is defined in state law. He asked how this bill changes that. MR. RIEHLE deferred to Ted Popely. Number 1157 THEODORE POPELY, Legislative Assistant to House and Senate Majority, came forward to testify. He stated, "I don't believe that HB 255 does change the existing definition of customary and traditional, the '92 law." Number 1176 REPRESENTATIVE WILLIAMS asked, "How does it stand up to ANILCA?" MR. POPELY replied that the problem with the state law complying with ANILCA is the rural preference provision. He said, "What HB 255 attempts to do, in a nutshell, is to redefine the priority from one that is based on rural residency, as dictated through ANILCA, to one that is based on actual dependence on the resource for family food consumption. Specifically, there are two factors used generally: the customary and direct dependence on the resource for human consumption and the ability to obtain food if subsistence use is restricted or eliminated." MR. POPELY continued, "I certainly can't speak for the court as to how this would be viewed in light of ANILCA's requirement for rural preference. I suspect that there is an argument to be made that the result of the application of [HB] 255 would be to restrict subsistence preference to a rural resident priority. I suspect that's probably part of the intent. I can't speak for the sponsor on that. And as to whether or not that resulting rural preference, sort of a de facto rural preference, would satisfy the requirements of ANILCA, I cannot say." Number 1254 REPRESENTATIVE WILLIAMS asked whether, other than "rural," all other areas in the bill are pretty close to ANILCA's interpretation. Number 1283 MR. POPELY said he understood the question to be a comparison between the bill and ANILCA. He said, "Of course, as a state statutory provision, it doesn't affect ANILCA per se, as federal legislation. It can't change ANILCA, as a state statute. There are a number of provisions that are not addressed that ANILCA includes. The definitions section, of course, provides a number of different problems. You've discussed `customary and traditional,' `customary trade.' There is a provision in ANILCA that may be of some interest to those sponsoring the bill, dealing with the federal court oversight that has been raised over and over as a problem, with some proponents. That's not addressed in this bill." Number 1349 REPRESENTATIVE WILLIAMS asked whether Mr. Popely was saying the bill does not come too close to ANILCA's definitions. MR. POPELY said that is a difficult question. "There are so many definitions provided in ANILCA," he commented. REPRESENTATIVE WILLIAMS handed Mr. Popely a copy of the ANILCA provisions and noted that Mr. Popely is an attorney. He asked the differences between ANILCA today "as it is written in front of you there" and HB 255. CO-CHAIRMAN OGAN advised that Mr. Popely was testifying on short notice. Number 1407 MR. POPELY said he would be glad to try to address that. REPRESENTATIVE WILLIAMS said he would be happy to wait. Number 1431 REPRESENTATIVE NICHOLIA asked whether HB 255 eliminates the sunset provisions adopted earlier that day in CSSSHB 243(RES). MR. POPELY replied, "Yes, I believe it does, in Section 12 of the bill." Number 1463 CO-CHAIRMAN OGAN asked whether this allows out-of-state hunters to practice subsistence hunting. MR. POPELY referred to page 4, lines 15 and 16, 20 and 21, and 25 and 26, under Sections 8 through 10, items (30), (31) and (32). He said looking at the definitions section, technically it allows nonresidents to partake in subsistence activities by eliminating language referring to residents. Number 1545 CO-CHAIRMAN OGAN asked whether Mr. Riehle knew the motivation behind that. MR. RIEHLE said he would have to defer to the sponsor. Number 1595 CARL JACK, Rural Alaska Community Action Program, testified via teleconference from Anchorage in opposition to HB 255. He said the only legal protection for subsistence users is ANILCA. The trade- offs proposed in HB 255 will be far too great because it would completely dismantle the current status and replace it with an economic-based and individual-based, welfare-type program that would require individuals to demonstrate significant dependence for direct and family consumption. The eligibility criteria would be set by the boards, which would have total discretion and would "impose this very questionable allocation on some kind of percentage to take care of those needs." He said this allocation would not necessarily require all subsistence uses to be fully satisfied before other consumptive uses are allowed. MR. JACK said the bill completely ignores the cultural aspect of subsistence, effectively repealing the requirement that "customary and traditional" subsistence use be given priority. He said looking at implementation of the individual permitting system and given how the majority has substantially reduced the budget for the Division of Subsistence, it will be next to impossible to enforce the permitting system. MR. JACK said finally, the bill does nothing to bring state subsistence into compliance with ANILCA or forestall the federal takeover of subsistence fishing effective October 1, 1997. He stated, "If anything, this bill will only increase the deep difference that already exists between the federal and state law." Number 1827 REPRESENTATIVE MASEK asked whether Mr. Jack could provide an example or further define why he feels his legal protection is greater under ANILCA than if the state had authority over its fish and game. MR. JACK replied, "I think while we would like to see the return of fish and game management to the state of Alaska, the court decisions in certain cases have proven that, for the most part, the subsistence users have to rely on the ANILCA provisions as the only means to find it legal to continue the way of life that they have lived for thousands of years." Number 1950 REPRESENTATIVE MASEK said she grew up in the bush, in Anvik on the Yukon River, although now she lives in Willow and is unable to hunt or fish because of problems with the subsistence issue. She said, "And it seems to me that trying to create the hunting and fishing rights for where you live and what race you are, there are so many Native people that live out of the rural areas, how are they going to be able to hunt and fish and continue their customary and traditional way of life?" Number 2003 MR. JACK said he is also an Alaska Native, born and raised in Kipnuk but residing in Anchorage. He said he would be more than willing to give that up so those with no other means of supporting themselves could harvest fish and game to meet their subsistence needs. He suggested in rural Alaska, people live 70 percent off the land and sea and 30 percent through cash. He discussed the high cost of living. Number 2111 REPRESENTATIVE MASEK said she knew of no case in Alaska where a Native had been denied the right to hunt or fish. She said she was trying to find out more about protection for subsistence hunting and fishing. "Because the state could offer the same as what the federal law is doing," she commented. Number 2169 CO-CHAIRMAN OGAN referred to page 4, line 23, under Section 10, which states that "`subsistence uses' means the noncommercial, customary and traditional uses of wild, renewable resources by an individual who significantly depends on the resource". He said that seems to fit people in rural Alaska and elsewhere. He noted that barter and trade are also discussed in that section. He did not see this as a threat of lesser protection. MR. JACK replied, "I think further review should be given, at least on the part of those that promote or feel that the provisions of ANILCA gives us that protection. Since you have just adopted [HB] 243 and this bill would sunset what you have acted on, I would ... recommend that you not move this bill out of the committee." He noted there had been talk about a special session and suggested that might be a time to look at this. Number 2361 DICK BISHOP, Executive Director, Alaska Outdoor Council, came forward to testify, saying the council has no position on HB 255. However, based on initial review, there were several factors to be considered by the legislature. The principle, critical difference between this bill, or the 1992/1986 bill, and the federal ANILCA law is that state law does not have "rural" in it. MR. BISHOP said worthy aspects of this bill include that it does not eliminate most of the critical definitions in existing law, such as "customary and traditional," "customary trade" and "reasonable opportunity." It does redefine subsistence, with which the council agrees, putting the subsistence priority on an individual basis. TAPE 97-49, SIDE A Number 0006 MR. BISHOP referred to the Alaska residency requirement; he suggested that was inadvertently omitted and should be put back in. This bill does not arbitrarily discriminate on the basis of zip code or "some other closed-class criteria," which he believes is important. He stated, "We think it probably has the potential of significantly reducing the difficulties with the Tier 2 provisions under existing law, and that may be something to consider in the whole mix of options that the legislature may be looking at." MR. BISHOP said another major difference between existing state law and HB 255 is that many responsibilities and definitions currently outlined in statute would be transferred to the Board of Fisheries and the Board of Game, including setting of standards. That has both positive and negative aspects. For example, it may spawn a whole new cycle of debate over terms, issues or definitions. MR. BISHOP concluded by saying the Alaska Outdoor Council recommends consideration of HB 255 along with other alternatives in looking at the whole subsistence picture. They believe it has certain strong elements from the standpoint of maintaining the potential of conforming to the Alaska constitution and the supreme court observation that "a definition of subsistence uses that went to individuals was much more likely to be consistent with the constitution than something like `rural'." Number 0187 REPRESENTATIVE NICHOLIA asked Mr. Bishop whether he believes this bill regains state management of federal lands. MR. BISHOP replied, "No, I don't see where it would." CO-CHAIRMAN OGAN asked Mr. Popely whether he could confirm that opinion. Number 0280 MR. POPELY said, "My professional opinion is that it probably would not. I agree with Dick Bishop that the user preference that is provided in the bill would not satisfy the rural preference that's dictated by ANILCA. But I wouldn't foreclose that there's a reasonable argument and that reasonable minds could disagree about that." Number 0351 ART IVANOFF, Subsistence Coordinator, Maniilaq Association, testified via teleconference from Kotzebue, saying he opposes HB 255 for reasons cited by Carl Jack. He said the bill is based on economics and focuses on a welfare-type program, not taking into consideration cultural aspects of the Native people in rural Alaska. Furthermore, there is no opportunity for people to participate in policy decisions, as it gives the Board of Game and the Board of Fisheries discretionary authority. MR. IVANOFF responded to Representative Masek's question to Carl Jack about whether the state had denied anyone the opportunity to subsistence hunt or fish. He cited Moses Point and the Nome River as examples where, "based on politics," the Board of Fisheries has not allowed people to fish, based on "an interception problem we have" in Area M. He said scientific data indicates 60 percent of the chum salmon caught are destined for Northwest Alaska, identified as stretching from the Arctic to Bristol Bay. He said 60 percent of 700,000 chum is nearly 420,000, a significant number when talking about small rivers. Number 0544 DICK COOSE, Executive Director, Concerned Alaskans for Resources and Environment (CARE), testified via teleconference from Ketchikan. He said CARE is a grass-roots organization that addresses loss of access to public resources. With others, they are forming a statewide coalition that wants the legislature, the Governor and the congressional delegation to act immediately to prevent federal takeover of state fisheries management and return management of game to the state. MR. COOSE acknowledged solutions will not be easy. While CARE has no position for or against HB 255, they would like to see the bill achieve their goal of full and effective state management of fish and game. He said the federal government is slowly but surely destroying "the livelihood and economy of Alaska." They have divided the state into classes of user groups and then implemented restrictions to the point that a user group or business is no longer viable; he cited destruction of the Southeast Alaska timber economy as an example. He said the question is whether Alaskans will unite and prevent federal takeover of fisheries management, or whether they will allow the federal government to take over and destroy commercial and sport fisheries, as well as the related local economies, followed by possible loss of tourism and mining. Number 0839 REPRESENTATIVE OGAN commented that it appears the whole idea behind federal intervention is to turn Alaska into a "big eco-tourist park." He suggested if some of the problems with ANILCA are not resolved, especially the commercial sale of fish, the very existence of commercial fishing will be threatened, which he believes is in no one's best interest. He called commercial fishing "the biggest employer in the bush." Number 0893 CALEB PUNGOWIYI, Subsistence Director, Kawerak, Incorporated, testified via teleconference from Nome in opposition to HB 255. He suggested it would require an enormous amount of administrative work to implement. Referring to requirements for qualifying for subsistence, he stated, "I think it's also very demeaning and perhaps, in a way, sickening." He suggested it would be a law enforcement nightmare. He said he is getting to where he no longer cares whether the state gets management of fish and game back. He concluded by questioning whether there is intelligent life in the legislature. Number 1056 GLORIA STICKWAN testified via teleconference from Glennallen, saying she wanted to reiterate Carl Jack's comments; she did so. In response to Representative Masek's conversation with Mr. Jack, she briefly discussed a lawsuit filed against the state, which resulted from fishing being closed except for weekends in 1976, and the time for moose hunting being reduced to five days one year. She said the state was not providing protection. CO-CHAIRMAN OGAN suggested when seasons and bag limits are reduced, it protects the resource for future use. He asked whether Ms. Stickwan was saying subsistence use of those resources had been cut back or whether it was general hunting and fishing seasons. MS. STICKWAN said yes to the latter. The people of Copper River had filed a lawsuit against the state because of it. CO-CHAIRMAN OGAN asked what the outcome was. MS. STICKWAN said she believes they got the fishing back. She said the state does not really protect them. She does not see it as protection when they cannot fish, which they depend on for a living. CO-CHAIRMAN OGAN commented that he does not know the exact particulars of that case; however, many of those are resource management decisions rather than allocative decisions towards groups. Number 1311 ANGIE MORGAN testified via teleconference from Aniak in opposition to HB 255. She said much of what she wanted to say was already stated by Carl Jack, Art Ivanoff and "all the others that were opposing it." She said the river is a highway for people living in the villages. For example, right now, everyone is anxious for the ice to move so they can get fresh fish. They also use the river as a highway in the winter to enable them to hunt moose. In addition, people feel that House bills are "always against subsistence users here." In her area, people look at subsistence as their lifestyle. She had lived in Anchorage before; now living in Aniak, she is beginning to see the importance of keeping the customary and traditional lifestyle. Number 1494 CO-CHAIRMAN OGAN asked if anyone else wished to testify, then concluded the hearing. (House Bill 255 was held over.) ADJOURNMENT Number 1504 CO-CHAIRMAN OGAN adjourned the House Resources Standing Committee meeting at 3:15 p.m.