Legislature(2003 - 2004)

03/01/2004 01:07 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         March 1, 2004                                                                                          
                           1:07 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Nancy Dahlstrom, Co-Chair                                                                                        
Representative Beverly Masek, Co-Chair                                                                                          
Representative Cheryll Heinze, Vice Chair                                                                                       
Representative Carl Gatto                                                                                                       
Representative Bob Lynn                                                                                                         
Representative Nick Stepovich                                                                                                   
Representative Kelly Wolf                                                                                                       
Representative Beth Kerttula                                                                                                    
Representative David Guttenberg                                                                                                 
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE CONCURRENT RESOLUTION NO. 28                                                                                              
Relating to the socioeconomic impacts of salmon harvesting                                                                      
cooperatives.                                                                                                                   
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
HOUSE BILL NO. 319                                                                                                              
"An Act relating to the disposal of state land by lottery; and                                                                  
relating to the disposal, including sale or lease, of remote                                                                    
recreational cabin sites."                                                                                                      
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
HOUSE BILL NO. 486                                                                                                              
"An Act  relating to reclamation bonding  and financial assurance                                                               
for  certain mines;  relating to  financial assurance  limits for                                                               
lode  mines; establishing  the mine  reclamation trust  fund; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED HB 486 OUT OF COMMITTEE                                                                                            
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HCR 28                                                                                                                  
SHORT TITLE: STUDIES OF SALMON HARVESTING COOPERATIVES                                                                          
SPONSOR(s): REPRESENTATIVE(s) SEATON BY REQUEST OF SALMON                                                                       
INDUSTRY TASK FORCE                                                                                                             
                                                                                                                                
01/28/04       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/28/04       (H)       EDT, RES                                                                                               
02/12/04       (H)       EDT AT 10:00 AM CAPITOL 120                                                                            
02/12/04       (H)       Moved Out of Committee                                                                                 
02/12/04       (H)       MINUTE(EDT)                                                                                            
02/19/04       (H)       EDT AT 10:00 AM CAPITOL 120                                                                            
02/19/04       (H)       Mvd Out of Committee w/new fiscal notes                                                                
02/23/04       (H)       EDT RPT 4DP                                                                                            
02/23/04       (H)       DP: MCGUIRE, CISSNA, CRAWFORD, HEINZE                                                                  
02/23/04       (H)       FIN REFERRAL ADDED AFTER RES                                                                           
03/01/04       (H)       RES AT 1:00 PM CAPITOL 124                                                                             
                                                                                                                                
BILL: HB 319                                                                                                                  
SHORT TITLE: REMOTE REC.CABIN SITE SALES/LOTTERY SALE                                                                           
SPONSOR(s): REPRESENTATIVE(s) FATE                                                                                              
                                                                                                                                
05/14/03       (H)       READ THE FIRST TIME - REFERRALS                                                                        
05/14/03       (H)       STA, RES, FIN                                                                                          
01/13/04       (H)       STA AT 8:00 AM CAPITOL 102                                                                             
01/13/04       (H)       Heard & Held                                                                                           
01/13/04       (H)       MINUTE(STA)                                                                                            
02/03/04       (H)       STA AT 8:00 AM CAPITOL 102                                                                             
02/03/04       (H)       Heard & Held                                                                                           
02/03/04       (H)       MINUTE(STA)                                                                                            
02/10/04       (H)       STA AT 8:00 AM CAPITOL 102                                                                             
02/10/04       (H)       Heard & Held                                                                                           
02/10/04       (H)       MINUTE(STA)                                                                                            
02/19/04       (H)       STA AT 8:00 AM CAPITOL 102                                                                             
02/19/04       (H)       Moved CSHB 319(STA) Out of Committee                                                                   
02/19/04       (H)       MINUTE(STA)                                                                                            
02/23/04       (H)       STA RPT CS(STA) 2DP 4NR 1AM                                                                            
02/23/04       (H)       DP: GRUENBERG, LYNN; NR: SEATON, HOLM,                                                                 
02/23/04       (H)       COGHILL, WEYHRAUCH; AM: BERKOWITZ                                                                      
03/01/04       (H)       RES AT 1:00 PM CAPITOL 124                                                                             
                                                                                                                                
BILL: HB 486                                                                                                                  
SHORT TITLE: MINING RECLAMATION ASSURANCES/FUND                                                                                 
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
02/16/04       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/16/04       (H)       RES, FIN                                                                                               
03/01/04       (H)       RES AT 1:00 PM CAPITOL 124                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE PAUL SEATON, Sponsor                                                                                             
by request of the Joint Legislative Salmon Industry Task Force                                                                  
Alaska State Legislature                                                                                                        
POSITION STATEMENT:  Presented HCR 28 as sponsor by request of                                                                  
the Joint Legislative Salmon Industry Task Force.                                                                               
                                                                                                                                
REPRESENTATIVE HUGH FATE, Sponsor                                                                                               
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 319 as sponsor.                                                                               
                                                                                                                                
JIM POUND, Staff                                                                                                                
to Representative Hugh Fate                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  During hearing on HB 319, provided                                                                         
information and answered questions.                                                                                             
                                                                                                                                
DICK MYLIUS, Deputy Director                                                                                                    
Division of Mining, Land and Water                                                                                              
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  During hearing on HB 319, provided                                                                         
information and answered questions.                                                                                             
                                                                                                                                
NANCY WELCH, Special Assistant                                                                                                  
Office of the Commissioner                                                                                                      
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  During hearing on HB 319, provided                                                                         
information and answered questions.                                                                                             
                                                                                                                                
BOB LOEFFLER, Director                                                                                                          
Division of Mining, Land and Water                                                                                              
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 486.                                                                            
                                                                                                                                
ROGER FEATHERSTONE, Campaign Director                                                                                           
Alaskans for Responsible Mining                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  During hearing on HB 486, expressed                                                                        
concerns about corporate guarantees.                                                                                            
                                                                                                                                
STEVE BORELL, Executive Director                                                                                                
Alaska Miners Association                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 486.                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 04-9, SIDE A                                                                                                             
Number 0001                                                                                                                     
                                                                                                                                
CO-CHAIR  NANCY DAHLSTROM  called  the  House Resources  Standing                                                             
Committee  meeting  to  order  at   1:07  p.m.    Representatives                                                               
Dahlstrom, Masek,  Gatto, Lynn,  Stepovich, Wolf,  and Guttenberg                                                               
were present  at the call  to order.  Representatives  Heinze and                                                               
Kerttula arrived as the meeting was in progress.                                                                                
                                                                                                                                
HCR 28-STUDIES OF SALMON HARVESTING COOPERATIVES                                                                              
                                                                                                                                
CO-CHAIR  DAHLSTROM announced  that the  first order  of business                                                               
would  be HOUSE  CONCURRENT RESOLUTION  NO. 28,  Relating to  the                                                               
socioeconomic impacts of salmon harvesting cooperatives.                                                                        
                                                                                                                                
Number 0130                                                                                                                     
                                                                                                                                
REPRESENTATIVE PAUL SEATON, Alaska  State Legislature, Sponsor by                                                               
request  of the  Joint  Legislative Salmon  Industry Task  Force,                                                               
testified.   He  explained that  HCR  28 was  recommended by  the                                                               
Joint Legislative  Salmon Industry  Task Force and  the industry.                                                               
It  involves  an  analysis  of the  Chignik  fishery,  which  was                                                               
established as  cooperative fishery  in the summer  of 2000.   He                                                               
said this  is the first  time there  has ever been  a cooperative                                                               
that was  actually allocated a share  of a resource.   This was a                                                               
restructuring program  that went  through the Board  of Fisheries                                                               
process.  He said  HCR 28 attempts to get a  better handle on the                                                               
social  and  economic  impacts.   The  economic  impacts  of  the                                                               
allocation co-op were  looked at, but the social  impacts and the                                                               
community impacts have  really not been looked at  in any detail.                                                               
He said the  Joint Legislative Salmon Industry  Task Force, while                                                               
looking  to address  some of  the public  policy issues  that are                                                               
impacted by an allocation cooperative,  found that it didn't have                                                               
the  background information  on  which to  do it.    He said  the                                                               
purpose of  this is to ask  the Institute of Social  and Economic                                                               
Research (ISER), a division of  the University of Alaska, to look                                                               
at these questions.                                                                                                             
                                                                                                                                
REPRESENTATIVE  SEATON  said   the  management  becomes  somewhat                                                               
controversial as  any restructuring does.   The proponents talked                                                               
about  the efficiency  that  this promotes  using  less boats  to                                                               
harvest the fish.  He said  working with the Alaska Department of                                                               
Fish  & Game  (ADF&G) improves  quality because  the fish  can be                                                               
taken in  a measured way over  a much longer period  of time only                                                               
harvesting what  can be processed  at that  point in time  to get                                                               
excellent quality.   It  decreases the  operating costs  to those                                                               
involved in harvesting  and is less competitive  and more relaxed                                                               
work.  He  said the opponents talk about the  decreased number of                                                               
jobs because there are fewer  boats, less deckhands employed, and                                                               
the possibility  of decreased dollars  flowing through  the local                                                               
economy caused by  a decrease in people going  to that particular                                                               
area.   He  noted  that there  is  non-participation from  public                                                               
resources.   Normally, he  said fisheries  require that  a permit                                                               
holder operates  his or  her own  gear.   However, this  allows a                                                               
fisherman who is  a member of the cooperative not  to be on board                                                               
harvesting  fish.    Representative  Seaton said  there  are  100                                                               
permits,  of  which  77  permit  holders  were  allocated.    The                                                               
opponents maintain that it  unfairly disadvantages the processing                                                               
sector, and there  are some questions of  fairness to independent                                                               
fishermen, he said.                                                                                                             
                                                                                                                                
REPRESENTATIVE SEATON  said these  are social  economic questions                                                               
that are "hard  to get to."  He said  the public policy questions                                                               
are about  non-participation and allocation of  a common property                                                               
resource  to a  group and  the structure  that promotes  industry                                                               
versus  a  structure  that  spreads  wealth  among  the  absolute                                                               
maximum number  of people.   Representative  Seaton said  ISER is                                                               
being asked to  look at the community aspects  so the legislature                                                               
and other groups  can address whether this  is good restructuring                                                               
or is something to get away from.   He said the fiscal note, from                                                               
University  of Alaska,  estimated  this project  to be  $100,000.                                                               
Representative  Seaton  explained   that  the  Joint  Legislative                                                               
Salmon Industry  Task Force has  money left over from  its budget                                                               
and  is looking  at  several  different things  to  do with  that                                                               
money.  He said this may be one  of the things that it may decide                                                               
to  do, but  that  decision hasn't  been made  yet.   He  brought                                                               
attention  to the  last page  of a  study contained  in the  bill                                                               
packet  entitled, "Effects  of  the  Chignik Salmon  Cooperative:                                                               
What  Permit Holders  Say," and  he noted  that ISER  is planning                                                               
several other studies of Alaska  salmon management as part of its                                                               
"Understanding Alaska" project."                                                                                                
                                                                                                                                
Number 0604                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  said it's not  as if ISER doesn't  know or                                                               
isn't considering that there is  further investigation that needs                                                               
to be done on restructuring  and the cooperative management tool.                                                               
He  said although  the $100,000  is listed  as the  price of  the                                                               
project, it  doesn't mean that  ISER may not be  investigating it                                                               
anyway.                                                                                                                         
                                                                                                                                
Number 0644                                                                                                                     
                                                                                                                                
CO-CHAIR DAHLSTROM asked Representative  Seaton to comment on the                                                               
amount  of  funds left  over  in  the [Joint  Legislative  Salmon                                                               
Industry Task Force's] budget.   She asked whether it would equal                                                               
the $100,000 fiscal note.                                                                                                       
                                                                                                                                
REPRESENTATIVE  SEATON said  the study  was done  on the  Chignik                                                               
cooperative  fishery and  the Joint  Legislative Salmon  Industry                                                               
Task Force felt [it was  appropriate for the University of Alaska                                                               
to be  involved] because it  has already  done some of  the work.                                                               
He said  there have  been some  suggestions that it  go out  to a                                                               
private bid;  however, it seemed  logical for the  legislature to                                                               
request  the  University of  Alaska  to  study this  and  provide                                                               
background data.   Representative Seaton said there  is more than                                                               
[$100,000]  left in  the Joint  Legislative Salmon  Industry Task                                                               
Force's  budget, but  there is  more  than one  project, such  as                                                               
studying the  Chignik restructuring and  looking at a  request to                                                               
investigate  several  different   methods  of  restructuring  the                                                               
salmon industry.   He said the determination of  where that money                                                               
would be  spent has not been  made, and he couldn't  say that the                                                               
money  would be  available.   He  said the  University of  Alaska                                                               
doesn't have to  do the study if  it doesn't have the  money.  He                                                               
noted that the initial report  indicated that further studies are                                                               
needed.                                                                                                                         
                                                                                                                                
Number 0831                                                                                                                     
                                                                                                                                
REPRESENTATIVE LYNN  asked if the  University of Alaska  had been                                                               
asked to conduct  the study and whether it is  necessary to use a                                                               
resolution for the request.                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON said the  Joint Legislative Salmon Industry                                                               
Task Force,  which was  appointed by  the legislature,  asked the                                                               
legislature to  request the University  of Alaska to  conduct the                                                               
study.  He  indicated that individual requests to can  be made to                                                               
the University of  Alaska, but it is not the  same as legislation                                                               
asking for the study to be conducted.                                                                                           
                                                                                                                                
Number 0921                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO asked  if the $100,000 needed  for the study                                                               
is within the normal range of the  usual costs for this kind of a                                                               
study, and whether a graduate student could do the study.                                                                       
                                                                                                                                
                                                                                                                                
REPRESENTATIVE SEATON  replied that  a social economic  study can                                                               
be  quite  involved  because  the   effects  of  a  mismanagement                                                               
strategy  on   villages,  processors,  and  employees   could  be                                                               
extensive.  Noting  that ISER had provided the  [fiscal note], he                                                               
said he  didn't know  the [amount of  funding] requested  for the                                                               
original study,  which was basically  a survey, but  this request                                                               
was something much more than that.                                                                                              
                                                                                                                                
REPRESENTATIVE GATTO  where the  money would go  and if  it would                                                               
sidestep the university's administration if it went to a group.                                                                 
                                                                                                                                
REPRESENTATIVE  SEATON   said  the   fiscal  note  is   from  the                                                               
University  of Alaska  and therefore  the process  would be  done                                                               
through it.  He said  it's Joint Legislative Salmon Industry Task                                                               
Force money; not something that the legislature itself controls.                                                                
                                                                                                                                
Number 1054                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO turned attention  to literature contained in                                                               
the bill packet  relating to the Chignik  salmon cooperative, and                                                               
he said  he expected that the  people in the co-op  would like it                                                               
and people outside  of the co-op would not like  it.  Noting that                                                               
it appeared that some people  outside of the co-op where involved                                                               
in a lawsuit, he asked how many  people are not in the co-op.  He                                                               
commented that it almost sounded like agriculture.                                                                              
                                                                                                                                
REPRESENTATIVE SEATON  explained that  of the 100  permit holders                                                               
in Chignik, 77 permit holders  joined the cooperative effort, and                                                               
23 did not.   He said the permit holders who did  not join do not                                                               
get paid  for not participating,  and are in a  competitive open-                                                               
access fishery.   He said an  equal share would be  1 percent, so                                                               
the  Board of  Fisheries allocated  nine-tenths of  a percent  to                                                               
each  fisherman in  the  co-op,  and if  the  co-op  had over  80                                                               
participants, the allocation  would be 1 percent.   He said there                                                               
was a little  more of a percentage left for  those permit holders                                                               
that didn't join  the co-op on an average basis  than were in the                                                               
co-op.                                                                                                                          
                                                                                                                                
REPRESENTATIVE SEATON said the [project]  has been conducted that                                                               
way  for two  years  and seems  to be  functioning  fine for  the                                                               
people that  are in the co-op,  but the people outside  the co-op                                                               
would like more access.  He  said the biggest problem is, with an                                                               
allocation of  fish, the  co-op has a  very slow  harvesting rate                                                               
over time  and has  a lot  of days  to fish,  whereas competitive                                                               
fishermen catch fish in  a hurry and get fewer days  to fish.  He                                                               
said [it  has been speculated]  that competitive  fishermen don't                                                               
get nearly as  much time, but the co-op fishermen  are catching a                                                               
maximum number  of fish per day,  rather than trying to  catch as                                                               
many fish  as possible.   He  said it  is definitely  a different                                                               
structure to the two fisheries.                                                                                                 
                                                                                                                                
Number 1225                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUTTENBERG said  the  Chignik co-op  is a  pretty                                                               
unique situation.   He said some permits were not  in use or were                                                               
about to be sold  and have now come into play  because of the co-                                                               
op.  He  said some of the  permit holders are not  from the area,                                                               
and it must have an economic impact.   He asked who will form the                                                               
questions that for the study.                                                                                                   
                                                                                                                                
REPRESENTATIVE SEATON said those are  the answers [are not known]                                                               
and it is the  purpose for the study.  He  said the University of                                                               
Alaska is being  asked to look at the other  social aspects, such                                                               
as about  all the crewmembers  who are  not hired under  this new                                                               
format, and  at the non-economic  effects.  He said  the question                                                               
is whether this restructuring makes  good sense for the state and                                                               
can be  weighed and balanced.   He said the University  of Alaska                                                               
will be  generating the questions  and is  being asked to  do the                                                               
study because people  within the university are  skilled in doing                                                               
this kind of research.                                                                                                          
                                                                                                                                
Number 1354                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUTTENBERG asked if,  regardless of the study, the                                                               
Joint  Legislative Salmon  Industry  Task Force  had developed  a                                                               
criteria of questions it wanted answered.                                                                                       
                                                                                                                                
REPRESENTATIVE SEATON said the  Joint Legislative Salmon Industry                                                               
Task Force  found it was  lacking social and community  data, and                                                               
[information related to]  effects on non-participatory fishermen.                                                               
He  said  this  would  cover  participatory  fishermen,  but  the                                                               
effects on  the community and  the effects  on how many  jobs are                                                               
held  locally  versus non-locally,  for  crewmembers  as well  as                                                               
permit  holders, are  things that  the  Joint Legislative  Salmon                                                               
Industry Task Force didn't have  information on, and is the whole                                                               
purpose of this resolution.                                                                                                     
                                                                                                                                
Number 1413                                                                                                                     
                                                                                                                                
REPRESENTATIVE WOLF asked if the  Chignik fishery cooperative had                                                               
developed a "branding program."                                                                                                 
                                                                                                                                
REPRESENTATIVE SEATON replied yes.                                                                                              
                                                                                                                                
REPRESENTATIVE WOLF expressed concern  regarding language on page                                                               
1,  lines 3-4,  and  he asked  why the  branding  program is  not                                                               
looking at it.   He said regional branding programs  are all over                                                               
the  state,  such  as  in  Cook  Inlet,  and  have  expanded  the                                                               
efficiency,   education,   and    quality   of   Alaska   salmon.                                                               
Representative Wolf  suggested the University of  Alaska would be                                                               
getting $100,000 to do the same thing the branding program does.                                                                
                                                                                                                                
REPRESENTATIVE SEATON said the branding  programs are basically a                                                               
marketing program  and puts certain  standards on fish  to ensure                                                               
it is  a certain  quality.  However,  he said it  is not  a basic                                                               
restructuring of  the industry, and hypothetically,  if there was                                                               
a  cooperative in  Cook Inlet,  half of  the boats  that are  now                                                               
participating  would not.    He  said other  boats  would go  out                                                               
everyday, harvest a certain number of  fish, and come in, so that                                                               
the flow  of fish is different.   He said Cook  Inlet would still                                                               
have a fishery that opens, people  would go out and catch as many                                                               
fish  as  they could  that  day,  and  it  would still  be  quite                                                               
competitive.                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  said the Chignik salmon  cooperative is no                                                               
longer competitive,  because ADF&G determines how  many fish will                                                               
be caught  each day, and since  it is no longer  competitive, the                                                               
participants are  seining the  fish and taking  them live  to the                                                               
processor.  He said there are  5 seiners harvesting for 77 permit                                                               
holders, so it  is not necessary to worry about  an over harvest.                                                               
Representative Seaton  said the increased efficiency  and quality                                                               
come  from   the  fact  that  fishermen   are  not  competitively                                                               
harvesting  and are  taking the  processing capabilities  of that                                                               
particular  day.     He  said  it  is  quite   different  than  a                                                               
competitive fishery that has a branding program.                                                                                
                                                                                                                                
REPRESENTATIVE  WOLF said  a third  of  the fleet  in Cook  Inlet                                                               
didn't fish  last year  because of price  restrictions.   He said                                                               
the  branding   program  is  already  restructuring   the  entire                                                               
industry in Cook  Inlet, and he agreed that  the branding program                                                               
has developed  a higher  quality branding,  but it  also expanded                                                               
the  educational  component.    He said  the  marketing  and  the                                                               
industry itself  are taking  that quality to  the next  level and                                                               
are able  to get a higher  brand.  Representative Wolf  asked why                                                               
this money needs  to be given to the University  of Alaska if the                                                               
industry and the branding program are doing it.                                                                                 
                                                                                                                                
Number 1697                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  said the difference  is that the  Board of                                                               
Fisheries has restructured the Chignik  fishery, and the study is                                                               
needed to understand the impacts  of that restructuring.  He said                                                               
if there  was a  co-op in Cook  Inlet, a few  boats would  go out                                                               
each day and catch a limited number  of fish.  If the fishing was                                                               
good, the  boats wouldn't  continue to fish,  only the  amount of                                                               
fish that the boat and the  processor could handle that day would                                                               
be fished, he  explained.  He said there wouldn't  be a situation                                                               
where 200,000  to 300,000 or 700,000  red salmon are caught  in a                                                               
day, which is what the drift  fleet can do in Cook Inlet, instead                                                               
there would  be a limited  number of boats  that went out  and it                                                               
would be  changed to so  those boats go out  every day.   He said                                                               
there is a  restructuring that's taken place by the  board in the                                                               
way the  fishery is  conducted.   Representative Seaton  said the                                                               
intention  is to  understand the  impacts to  the community  when                                                               
there is a change in the way the fishery is conducted.                                                                          
                                                                                                                                
REPRESENTATIVE WOLF suggested  he'd seen a change  in Cook Inlet,                                                               
and  he   added  that  the   Board  of  Fisheries   has  forcibly                                                               
restructured  Cook Inlet  over the  years and  there has  been no                                                               
social economic study.                                                                                                          
                                                                                                                                
REPRESENTATIVE  HEINZE asked  how  much money  [U.S. Senator  Ted                                                               
Stevens] has  brought to Alaska  for marketing fish  and studying                                                               
the socio-economic impacts.                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON said an amount  of money [was provided] for                                                               
salmon marketing but he was not sure  how much that is, and it is                                                               
totally different  from this money.   Representative  Seaton said                                                               
this study  is looking at  the restructuring of the  industry and                                                               
at the effects  of the restructuring.  He said  this study is not                                                               
looking  at marketing  the  fish or  at the  value  of the  fish,                                                               
instead it is looking at  the social impacts of the restructuring                                                               
of the industry,  which made it so a few  fishermen could harvest                                                               
many  fishermen's fish.    He  said it  is  quite different  than                                                               
marketing.                                                                                                                      
                                                                                                                                
Number 1857                                                                                                                     
                                                                                                                                
REPRESENTATIVE HEINZE  asked if the  $100,000 for the  study will                                                               
be taken from [federal money].                                                                                                  
                                                                                                                                
REPRESENTATIVE  SEATON  replied that  the  money  from the  Joint                                                               
Legislative Salmon  Industry Task  Force has  nothing to  do with                                                               
[federal]  money.   He said  some  money allocated  to the  Joint                                                               
Legislative Salmon Industry  Task Force is left in  that pool for                                                               
operation of the task force  and may be designated for conducting                                                               
the study.                                                                                                                      
                                                                                                                                
Number 1906                                                                                                                     
                                                                                                                                
REPRESENTATIVE STEPOVICH said  he had no problem  with the money,                                                               
but he did  have a problem with  the concept.  He  said the words                                                               
"fishermen" and "independent" seem to  be the same, and "any time                                                               
you strike the  word cooperative" it makes him wonder  if that is                                                               
a  part of  the  free market  system.   Representative  Stepovich                                                               
asked if  people who are  a part  of the cooperative  that aren't                                                               
fishing or don't catch fish can still make money.                                                                               
                                                                                                                                
REPRESENTATIVE  SEATON  said  yes;   one  of  the  public  policy                                                               
questions that  the Joint Legislative Salmon  Industry Task Force                                                               
was trying  to address was  the non-participatory  utilization by                                                               
fishermen  that  have  a  permit and  don't  participate  in  the                                                               
fishery and receive  the benefit from that.  He  said that is one                                                               
of the major  questions being looked at, and one  of the problems                                                               
in  addressing this  whole issue  was  that there  wasn't a  good                                                               
handle on  the real and  whole effect of this  restructuring that                                                               
the Board of Fisheries was legally able to adopt.                                                                               
                                                                                                                                
REPRESENTATIVE STEPOVICH  asked if the  number of jobs  and money                                                               
in the  community will decrease because  of the co-op.   He noted                                                               
that    free   markets    are   based    on   self-determination,                                                               
individualism, and entrepreneurship.   He asked if Representative                                                               
Seaton  felt   that  the  cooperatives   are  the  only   way  to                                                               
efficiently harvest  the fish and  why cooperatives  weren't used                                                               
before.                                                                                                                         
                                                                                                                                
Number 2025                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON said there  are cooperatives across Alaska,                                                               
but the difference in this  cooperative, established by the Board                                                               
of Fisheries,  is that it receives  an allocation.  He  said many                                                               
cooperatives occur  that fishermen  get together  and participate                                                               
in, but are done in a  competitive fishery in which fishermen are                                                               
pooling their resources  and efforts.  He said this  is the first                                                               
cooperative that has  been allocated a percentage  of the harvest                                                               
of an area.  Representative  Seaton said this resolution does not                                                               
support or  oppose the cooperatives;  rather it is an  attempt to                                                               
understand the effect  of the cooperative.  He  said [the purpose                                                               
of the  study] is  to understand the  effects on  the communities                                                               
and  the  people  of  the   region  of  the  establishment  of  a                                                               
cooperative, which has  been challenged in court and  found to be                                                               
a  constitutional  use of  [the  Board  of Fisheries]  powers  to                                                               
restructure  the fisheries  in this  way.   Representative Seaton                                                               
clarified  that  his  bringing forward  this  resolution  is  not                                                               
supporting or expanding cooperatives.                                                                                           
                                                                                                                                
Number 2107                                                                                                                     
                                                                                                                                
CO-CHAIR MASEK asked  Representative Seaton what the  cost to the                                                               
state was for forming the  Joint Legislative Salmon Industry Task                                                               
Force.                                                                                                                          
                                                                                                                                
REPRESENTATIVE SEATON said the  Joint Legislative Salmon Industry                                                               
Task  Force   was  formed  the   year  before  he  came   to  the                                                               
legislature.   He said he  believed the cost was  $650,000, which                                                               
was  designated federal  money,  but he  couldn't  say for  sure.                                                               
Representative Seaton  said he thought  there was  about $375,000                                                               
left  from   the  initial  phase,   which  was  the   amount  the                                                               
legislature  authorized  the  Joint Legislative  Salmon  Industry                                                               
Task Force to continue with last year.                                                                                          
                                                                                                                                
CO-CHAIR MASEK  asked why the  Joint Legislative  Salmon Industry                                                               
Task Force doesn't do the study with the remaining funds.                                                                       
                                                                                                                                
REPRESENTATIVE SEATON said the  Joint Legislative Salmon Industry                                                               
Task  Force is  trying to  go forward  with the  study, which  is                                                               
looking  at  the Board  of  Fisheries  process, so  the  decision                                                               
makers can  weigh these subjects.   He  said there is  no request                                                               
for funding in this resolution, it  simply asks for a study to be                                                               
done.  He explained that  the university has identified that this                                                               
study  may  cost  $100,000,  and  he didn't  know  if  the  Joint                                                               
Legislative  Salmon Industry  Task  Force was  going to  dedicate                                                               
some of its remaining funds to this study.                                                                                      
                                                                                                                                
CO-CHAIR MASEK said  she thought it was important  to know [where                                                               
the funding for this study  would come from] before the committee                                                               
takes any action with this resolution.   She noted that the Joint                                                               
Legislative Salmon  Industry Task Force already  has the [funding                                                               
needed  for this  study].   She said  the [fiscal  note] for  the                                                               
resolution  specifies  that  the  money would  come  out  of  the                                                               
general fund.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  SEATON  said  the   [fiscal  note]  is  from  the                                                               
University of Alaska, which has  indicated it would like $100,000                                                               
from the general fund to conduct this study.                                                                                    
                                                                                                                                
CO-CHAIR MASEK suggested that  Representative Seaton clarify that                                                               
the [the resolution]  is requesting that the money  come from the                                                               
general  fund, "rather  than having  some hopes"  that the  money                                                               
would  come out  of the  Joint Legislative  Salmon Industry  Task                                                               
Force funds.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON  replied  that this  resolution  does  not                                                               
request  any  money  to  be  appropriated,  rather  it  asks  the                                                               
university to conduct  this study.  He noted  that the university                                                               
had  indicated during  the  previous study  that  is planning  to                                                               
perform  additional studies  to  understand the  full effects  of                                                               
restructuring in Alaska.   He reiterated that  this resolution is                                                               
a request  to do  the study,  but does  not put  an appropriation                                                               
forward for the study.                                                                                                          
                                                                                                                                
Number 2324                                                                                                                     
                                                                                                                                
CO-CHAIR MASEK said the study is  dated for November 1, 2004, and                                                               
she  asked  what will  happen  to  the  study  once it  has  been                                                               
produced.   She said she didn't  want to see $100,000  spent on a                                                               
study if it was going to sit on a shelf and collect dust.                                                                       
                                                                                                                                
Number 2345                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON explained  that  the study  will form  the                                                               
basis  for the  Board of  Fisheries  and for  the legislature  to                                                               
weigh the positives and negatives  of this kind of restructuring.                                                               
He said the restructuring is in  the Board of Fisheries, which is                                                               
legally allowed to do these things,  and has done it in the past.                                                               
He  noted it  has been  approved by  the courts.   Representative                                                               
Seaton said the legislature may look  at this and say the social-                                                               
economic impacts are  great and take the authority  away from the                                                               
Board  of Fisheries,  but right  now [the  legislature] does  not                                                               
have the  information to  say what  those impacts  are.   He said                                                               
some  people come  forward and  say it's  great, and  others come                                                               
forward and say it's bad, but  there isn't really any social data                                                               
to show what those impacts are.                                                                                                 
                                                                                                                                
CO-CHAIR  MASEK referred  to the  last paragraph  of the  sponsor                                                               
statement, which read, "Yet, this  isolated coastal community and                                                               
the  salmon cooperative  have become  the center  of a  statewide                                                               
controversy."    She asked  for  more  information regarding  the                                                               
statement.                                                                                                                      
                                                                                                                                
REPRESENTATIVE SEATON explained that  the House Special Committee                                                               
on Fisheries held  an overview of the  Chignik cooperative, which                                                               
has been  heard twice  by the  Board of Fisheries.   He  said the                                                               
controversy lies around those people  in the co-op and those that                                                               
decided  not to  join the  co-op; the  amount of  time that  each                                                               
group gets to fish; and also  the public policy issues of whether                                                               
someone that  is not  physically there  operating gear  should be                                                               
able  to  benefit  from  the   fishery  by  putting  his  or  her                                                               
allocation into  the co-op  and having that  fish harvested.   He                                                               
said Chignik  is very  unique because there  are 100  permits and                                                               
basically  all of  them were  fished every  year, which  is quite                                                               
different than most other areas,  and it's also a very controlled                                                               
situation because the fish come  in, are counted, and the [amount                                                               
to be  caught is  designated].   Representative Seaton  said that                                                               
kind  of thing  can't be  done  in most  areas, such  as in  Cook                                                               
Inlet.  He  said the applicability of co-ops to  other regions of                                                               
the state  is not known  yet, and  indicated the impacts  of this                                                               
style of management,  even in a place as  confined and controlled                                                               
as Chignik, is what needs to be figured out.                                                                                    
                                                                                                                                
Number 2508                                                                                                                     
                                                                                                                                
REPRESENTATIVE HEINZE said the  Joint Legislative Salmon Industry                                                               
Task Force  puts a lot  of thought and  work into any  request it                                                               
puts  forward.   She indicated  she  has a  lot of  trust in  the                                                               
individuals  that sit  on the  Joint Legislative  Salmon Industry                                                               
Task  Force  [board] and  applauds  their  work.   Representative                                                               
Heinze asked about the sunset date.                                                                                             
                                                                                                                                
REPRESENTATIVE SEATON replied that the  sunset date is at the end                                                               
of this session.                                                                                                                
                                                                                                                                
Number 2537                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HEINZE  referred  to Co-Chair  Masek's  point  of                                                               
ensuring that the study is utilized once it is completed.                                                                       
                                                                                                                                
Number 2550                                                                                                                     
                                                                                                                                
CO-CHAIR  DAHLSTROM said  her  original intent  was  to move  the                                                               
resolution  today, but  the  fiscal note  has  changed since  she                                                               
first  heard  the  resolution,  and  that  there  are  a  lot  of                                                               
questions  and some  apprehensions from  committee members.   Co-                                                               
Chair Dahlstrom  said she would  like to  hold the bill  and have                                                               
Representative Seaton  meet with  committee members to  "hash out                                                               
this stuff"  to get a better  understanding, and to get  the work                                                               
done in committee rather than on the floor.                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  said he appreciates the  committee's time.                                                               
He noted  that because  of the fiscal  note, the  resolution will                                                               
receive a House Finance Committee  referral to look at the fiscal                                                               
note and the date the [study  is scheduled to begin on], which is                                                               
November  1.   He said  if money  isn't allocated  for this,  the                                                               
Joint Legislative Salmon Industry Task  Force will meet to figure                                                               
out where the money  is going to be designated from.   He said if                                                               
there  isn't money  designated  for [the  study],  the date  will                                                               
probably be  moved back  in the House  Finance Committee,  so the                                                               
university can conduct the study on it's own schedule.                                                                          
                                                                                                                                
CO-CHAIR  DAHLSTROM asked  Representative  Seaton  to touch  base                                                               
with her in the next few days.   She said the resolution would be                                                               
rescheduled   back  in   committee  once   Representative  Seaton                                                               
addressed the items that had been discussed.                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON  said  he   thought  the  fiscal  note  is                                                               
something  that's  going  to  require a  decision  by  the  Joint                                                               
Legislative Salmon  Industry Task  Force, and he  doesn't control                                                               
that process.  He asked  which questions the committee would like                                                               
him to address.                                                                                                                 
                                                                                                                                
CO-CHAIR DAHLSTROM  said she would  provide him with a  couple of                                                               
short questions.                                                                                                                
                                                                                                                                
REPRESENTATIVE SEATON said that would be great.                                                                                 
                                                                                                                                
[HCR 28 was held over.]                                                                                                         
                                                                                                                                
HB 319-REMOTE REC.CABIN SITE SALES/LOTTERY SALE                                                                               
                                                                                                                                
CO-CHAIR  DAHLSTROM announced  that  the next  order of  business                                                               
would be HOUSE BILL NO. 319,  "An Act relating to the disposal of                                                               
state land  by lottery; and  relating to the  disposal, including                                                               
sale or lease, of remote recreational cabin sites."                                                                             
                                                                                                                                
Number 2719                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HEINZE  moved  to adopt  the  proposed  committee                                                               
substitute (CS),  labeled 23-LS0477\S,  Bullock, 2/25/04,  as the                                                               
work draft.   There being no  objection Version S was  before the                                                               
committee.                                                                                                                      
                                                                                                                                
Number 2740                                                                                                                     
                                                                                                                                
REPRESENTATIVE HUGH  FATE, Alaska State Legislature,  speaking as                                                               
sponsor,  characterized   the  bill  as  another   tool  for  the                                                               
Department   of  Natural   Resources  (DNR)   to  allow   private                                                               
individuals  or other  individuals, after  nomination and  at the                                                               
discretion of  the commissioner,  to finally secure  private land                                                               
from  public land  in  Alaska.   He  said  with  the hundreds  of                                                               
thousands of  acres available in  the state, he hopes  there will                                                               
never again  be an  excuse [for  not allowing]  this opportunity.                                                               
He said this  bill will provide that opportunity,  and noted that                                                               
the  bill has  gone through  several iterations.   Representative                                                               
Fate said  the present  iteration of the  bill has  been received                                                               
well by the  Alaska Miners Association (AMA),  although there are                                                               
still some "hurdles" to go over  with respect to the fiscal note.                                                               
He said  there are  timeline issues  [regarding the  fiscal note]                                                               
that have  to be worked out.   Representative Fate said  it is an                                                               
important bill that has been needed in Alaska.                                                                                  
                                                                                                                                
Number 2839                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA noted that  the bill is now discretionary                                                               
and had a lot  of work done to it.  She  turned attention to page                                                               
2, lines 27-31, and page 3, lines 1-3, which read:                                                                              
                                                                                                                                
     Filing of  a claim for  relief by an owner  against the                                                                
     state  or  a   person  entering,  opening,  developing,                                                                
     drilling, and working mines or  wells on these or other                                                                
     lands,  not based  on physical  damage  to the  owner's                                                                
     land,  that hampers  these  reservations constitutes  a                                                                
     breach  of   this  contract  and  will   result  in  an                                                                
     immediate assessment  against the  owner for  a penalty                                                                
     equal to 150 percent of  the current appraised value of                                                                
     the   land,  including   the  value   of  improvements.                                                                
     Failure  to   pay  this   assessment  will   result  in                                                                
     foreclosure proceedings by the state.                                                                                  
                                                                                                                                
REPRESENTATIVE  KERTTULA asked  why this  was put  in this  bill.                                                               
She said it is in the broader section  of the Lands Act, so it is                                                               
going  to apply  "across  the  board."   She  said  she has  real                                                               
concerns about it.                                                                                                              
                                                                                                                                
Number 2888                                                                                                                     
                                                                                                                                
JIM  POUND,  Staff  to Representative  Hugh  Fate,  Alaska  State                                                               
Legislature, testified.  Mr. Pound  said this incident deals with                                                               
contractual law in statute, which  this whole section essentially                                                               
is.    He  said  as  far  as Section  2  is  concerned,  this  is                                                               
contractual language that  was basically put in the  bill to take                                                               
care of  some technical errors.   Mr.  Pound said one  change was                                                               
made in  addition to the  contractual language.   He said  he and                                                               
Representative Kerttula's  staff had discussed Section  3, and he                                                               
thought that could be fixed.                                                                                                    
                                                                                                                                
REPRESENTATIVE KERTTULA  said she  didn't understand  because the                                                               
[bill  contains]  the  reservations   section  of  reserving  the                                                               
mineral  rights of  the state  for subsurface,  which is  correct                                                               
after statehood,  but this  section sounds as  if filing  a claim                                                               
alone is the  breach of contract.  She said  she didn't like that                                                               
and it concerns her.  She asked what the justification is.                                                                      
                                                                                                                                
MR.  POUND said  there have  been situations  in the  news lately                                                               
about surface and  subsurface rights.  He said  this is basically                                                               
to assure that  that confusion does not take place  from the very                                                               
beginning.  Mr.  Pound said for some reason people  don't tend to                                                               
read that  the State of  Alaska maintains subsurface rights.   In                                                               
this particular case, he said if  a situation does occur in which                                                               
a  remote recreational  cabin  site ends  up  being valuable  for                                                               
subsurface  rights, the  [cabin owner]  is not  in a  position to                                                               
immediately start filing  a cause of action because  the state or                                                               
government  is  going  drill  or   mine  underneath  his  or  her                                                               
property.                                                                                                                       
                                                                                                                                
TAPE 04-9, SIDE B                                                                                                             
                                                                                                                                
REPRESENTATIVE  KERTTULA asked  if that  section would  be better                                                               
left to other pieces of  legislation, rather than bringing issues                                                               
raised in the coal bed methane situation into this bill.                                                                        
                                                                                                                                
MR. POUND said he questions why  contractual law is being done in                                                               
statute.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  KERTTULA indicated  she  would offer  a clean  up                                                               
amendment at some point.                                                                                                        
                                                                                                                                
Number 2958                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO  asked if a  neighbor would be subject  to a                                                               
penalty  for  complaining  about drilling  or  mining  activities                                                               
occurring on adjacent property.                                                                                                 
                                                                                                                                
MR. POUND answered correct.                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO said  the term  "peaceful enjoyment  of the                                                               
owner's property"  had been used  in a  different bill.   He said                                                               
this would certainly violate peaceful enjoyment.                                                                                
                                                                                                                                
MR.  POUND  suggested  that  the   peaceful  enjoyment  of  one's                                                               
property is probably unconstitutional.                                                                                          
                                                                                                                                
REPRESENTATIVE GATTO said he  didn't think that constitutionality                                                               
question  could  be addressed  in  the  House Resources  Standing                                                               
Committee.   He said the  language wasn't invented in  Alaska; it                                                               
comes  from  other  states,  and   he  is  suspicious  about  the                                                               
constitutionality    or    the   unconstitutionality    of    it.                                                               
Representative  Gatto  mentioned  that  the  issue  of  coal  bed                                                               
methane has  been at  the [forefront], and  four bills  have been                                                               
introduced to address  it.  He said residents feel  that maybe it                                                               
shouldn't be  done in  concentrated areas or  in areas  where the                                                               
water  could   be  contaminated,   and  residents   have  several                                                               
justifiable reasons to be concerned.  He remarked:                                                                              
                                                                                                                                
     We are  trying to  address those  reasons and  it looks                                                                    
     like this  ... just did a  reversal on all of  that, in                                                                    
     this  regard, for  this  land, to  bring  all of  those                                                                    
     thoughts   and   statements  and   considerations   and                                                                    
     legislative attempts back to  ground zero by saying you                                                                    
     don't have any rights.                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO asked if that is  the intent.  He said if he                                                               
bought five acres  of wilderness area, he wouldn't want  it to be                                                               
next to the Red Dog Mine.                                                                                                       
                                                                                                                                
MR. POUND  said he used the  example of coal bed  methane because                                                               
it  is obviously  the one  subject that  has been  on everybody's                                                               
minds.  He said this is  basically language that will go into the                                                               
contractual  agreement   between  DNR  and  the   buyer  [of  the                                                               
property], and  should eliminate  concerns that have  been taking                                                               
place  with coal  bed methane  by addressing  it in  the contract                                                               
right up front.                                                                                                                 
                                                                                                                                
Number 2825                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO  asked if  that  is  done by  the  [Alaska]                                                               
Statehood Act.                                                                                                                  
                                                                                                                                
MR. POUND  said if  that were  the case,  he didn't  believe [the                                                               
state] would have the coal bed methane problem it has now.                                                                      
                                                                                                                                
REPRESENTATIVE GATTO said  that is exactly the point.   He said a                                                               
number of people to file lawsuits,  and [the bill would create] a                                                               
big penalty just for filing the lawsuit.                                                                                        
                                                                                                                                
MR. POUND said  it is the intent because  that question continues                                                               
without going back to coal bed  methane, which is not the impetus                                                               
for this.   He said it is to ensure  that ownership of subsurface                                                               
rights are known up front.                                                                                                      
                                                                                                                                
Number 2785                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HEINZE said  less  than one  percent of  Alaska's                                                               
land is in  "private hands," and [she supports]  moving more land                                                               
into  private  hands.   She  asked  what dispute  resolution  the                                                               
department has if two parties nominate the same land.                                                                           
                                                                                                                                
REPRESENTATIVE FATE  said the commissioner  has the  authority to                                                               
nominate    the   land;    the   nomination    isn't   automatic.                                                               
Representative Fate said  the commissioner has the  final say and                                                               
there is also  a public process.  He  said constitutionally there                                                               
has to  be a public notice  and a process for  [providing] public                                                               
notice.  Representative Fate said  there is ample opportunity for                                                               
any withdrawal for that, including  the designation as to mineral                                                               
content.  He  said even though that possibility may  exist, it is                                                               
very remote  by the  very nature that  this bill  embodies, which                                                               
makes  it very  difficult for  that to  happen.   Furthermore, he                                                               
said there are also regulations  in place, which were passed last                                                               
year, that  if a permitting  process is in place,  the likelihood                                                               
for an  injunction, for example, has  not been negated.   He said                                                               
there  are  several  things  in  place  that  will  mitigate  the                                                               
problem, although  there is  never 100  percent assurance  that a                                                               
property  owner won't  file a  cause of  action for  some reason.                                                               
Representative Fate said there are  other ways, after nomination,                                                               
to determine whether land can be disposed of.                                                                                   
                                                                                                                                
REPRESENTATIVE HEINZE asked if the  commissioner has the right of                                                               
refusal.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  FATE  said  first   rights  of  refusal  are  not                                                               
uncommon and  are not prohibited  in the constitution,  and there                                                               
is already  statute law giving  first right of refusal  to people                                                               
who are already leaseholders in Alaska.   He said those laws have                                                               
been on the books for years,  and there is nothing that prohibits                                                               
that first right  of refusal, but equal  opportunity is something                                                               
different.                                                                                                                      
                                                                                                                                
Number 2627                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUTTENBERG expressed  concerns, and  he said  the                                                               
Bureau of Land Management (BLM)  had been talking about surveying                                                               
the state  and the prohibitive  costs.   He said he  is wondering                                                               
about the actual  value of a piece of property  or remote parcel,                                                               
besides the fair market value,  and about adding an appraisal and                                                               
a survey  cost to  that.  Representative  Guttenberg asked  if an                                                               
analysis had been done on the  costs of an [appraisal and survey]                                                               
for 10 acres of property.                                                                                                       
                                                                                                                                
REPRESENTATIVE FATE said  his staff, Jim Dieringer, did  a lot of                                                               
the fiscal  work, and did  an exhausting analysis.   He suggested                                                               
that [the costs are not]  prohibitive and most people are willing                                                               
to pay them  if certain they can get fee  simple to the property.                                                               
He  suggested  that  the person  purchasing  the  property  would                                                               
determine what's  prohibitive.  He  added that the cost  will not                                                               
accrue to the State of Alaska.                                                                                                  
                                                                                                                                
REPRESENTATIVE  STEPOVICH said  he is  under the  impression that                                                               
the commissioner has full discretion  over who is nominated, what                                                               
that person is  being nominated for, and whether  that person can                                                               
have the land.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  FATE  said  it is  basically  correct  that  [the                                                               
commissioner makes] the final [determination].                                                                                  
                                                                                                                                
Number 2522                                                                                                                     
                                                                                                                                
REPRESENTATIVE   STEPOVICH   said   there   are   some   inherent                                                               
difficulties in the point that  people competing for the land are                                                               
going  to  be  competing  for   the  nomination.    He  said  the                                                               
constitution  calls for  the highest  yield possible,  and talked                                                               
about destroying  the whole concept  of Alaskans owning  land for                                                               
recreation as well as for the resource value.                                                                                   
                                                                                                                                
REPRESENTATIVE FATE asked for clarification.                                                                                    
                                                                                                                                
Number 2485                                                                                                                     
                                                                                                                                
REPRESENTATIVE  STEPOVICH said  the commissioner  has full  power                                                               
over the nominations, and the  people who want the land, Alaskans                                                               
and  businesses  working  within  Alaska,  are  going  to  be  in                                                               
competition for  the nomination.   He  said it  kind of  puts the                                                               
commissioner in a "sticky" position.                                                                                            
                                                                                                                                
REPRESENTATIVE  FATE said  it may  or  may not  be; it  may be  a                                                               
parcel  of land  that has  been used  for a  single purpose,  and                                                               
there may or may not be  competition.  He indicated that there is                                                               
equal  opportunity to  compete for  the  land, and  said part  of                                                               
equal opportunity  is to allow people  to do this.   The assessed                                                               
evaluation  will be  the final  judgment in  what the  state will                                                               
receive  and how  much  it  will cost  the  person  who wins  the                                                               
lottery.   He said it is  not as though people  will be competing                                                               
or bidding  on a  price; there  would be  a determination  of the                                                               
parcel's value,  and when the  value is fixed, somebody  will pay                                                               
that value.   He said unless there is an  open bid, which usually                                                               
isn't done,  it is  done on a  lottery basis  or over-the-counter                                                               
sales "when it's not done in the other direction,"                                                                              
                                                                                                                                
REPRESENTATIVE   FATE   remarked,   "When   you   maximize   this                                                               
opportunity, you  maximize the land  available, so that  you have                                                               
more  money that  accrues to  the State  of Alaska  through these                                                               
sales."   He said there has  been a determination as  to what the                                                               
lowest value of  property is, what a low median  is, and what the                                                               
highest  evaluations  of  property  are.   He  said  very  little                                                               
property with  high value  is sold in  the state,  either through                                                               
lottery or anything  else.  He said much of  [the property value]                                                               
is low  and only about  40 percent of  it is successful.   Noting                                                               
that the  land ends  up in  over-the-counter sales,  he suggested                                                               
the  present lottery  system isn't  that  successful for  various                                                               
reasons.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  FATE suggested  that  privatizing  the land  will                                                               
maximize  the  sales  to  the  benefit of  the  state,  in  those                                                               
instances that don't maximize a sale.                                                                                           
                                                                                                                                
REPRESENTATIVE  STEPOVICH said  Representative Fate's  efforts to                                                               
privatize land are much needed.   He said he thinks a land reform                                                               
is one  of the  biggest issues  that will face  the state  in the                                                               
future with the  lack of privately owned land.   He said he could                                                               
still see  the inherent  problems that the  state already  has in                                                               
its leasing process  with competitive leasing.   He remarked, "If                                                               
you want to call  it a true lottery, it has to go  all the way to                                                               
the end; there has  to be a lucky break for  the Alaskan right up                                                               
to getting the land itself."   Representative Stepovich suggested                                                               
that  the ability  of  the  commissioner to  pick  who [gets  the                                                               
parcel] ruins the chance for Alaskans heavily.                                                                                  
                                                                                                                                
REPRESENTATIVE  FATE said  he thought  the  leasing programs  the                                                               
state  has come  under  different statutes,  provisions, and  are                                                               
completely different  than some  of the other  leases envisioned.                                                               
For example,  he said  private leases to  individuals in  which a                                                               
person can  have a  leasehold for some  kind of  a "manufacturing                                                               
side" or "something  like this."  He said the  oil and gas leases                                                               
or the  mineral leasing, even  itself under the mining  laws, are                                                               
far  different than  the leases  being discussed.   He  remarked,                                                               
"We're not talking  leasing ... here; we're  talking outright fee                                                               
simple ownership."                                                                                                              
                                                                                                                                
Number 2216                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUTTENBERG,  inquiring  about  the  current  land                                                               
disposal program, asked what is  wrong with [the program] and why                                                               
land is not getting out to the public.                                                                                          
                                                                                                                                
Number 2198                                                                                                                     
                                                                                                                                
NANCY  WELCH,  Special  Assistant, Office  of  the  Commissioner,                                                               
Department of  Natural Resources, testified.   She explained that                                                               
the   remote  recreation   parcel   program   is  offered   quite                                                               
differently;  it was  redesigned  through  statutory change  from                                                               
some of the  programs that were offered in the  early 1980s.  Ms.                                                               
Welch said the department has  gained quite a bit of efficiencies                                                               
in the last few years that  it has offered under this new program                                                               
in which  an area is  designated and  a determination is  made of                                                               
how  many people  can stake  in the  area.   She said  before the                                                               
sale, the surveyor  provides a proposal of the costs  to have the                                                               
survey done.   That cost  is spread  uniformly across all  of the                                                               
numbers that will  be offered, so that people know  up front what                                                               
the costs are that are going to be, she explained.                                                                              
                                                                                                                                
MS.  WELCH added  that the  actual survey  and appraisal  cost is                                                               
borne by the  applicant.  The survey  cost is a part  of the fair                                                               
market value  price.  She said  it is set in  regulation that the                                                               
state will receive no less than  $1,000.  In the old program, she                                                               
said it was found that the  state was almost giving the land away                                                               
and not getting any return to the  state at all.  She said it was                                                               
felt that  the state should at  least receive a minimum  price on                                                               
that.   She said she knows  that the complaint has  been that the                                                               
state  is not  offering larger  blocks of  land.   She said  [the                                                               
state] is  working with  a lot of  municipalities, some  of which                                                               
have  limitations  on what  parcel  sites  [the state]  can  have                                                               
without  having  to do  capital  improvements  such as  roads  or                                                               
power.  She  said the five acre rule, in  the municipalities, may                                                               
be a problem; 20 acres is  the current maximum amount that can be                                                               
staked,  and the  average  staked by  individuals  is about  13.5                                                               
acres.                                                                                                                          
                                                                                                                                
REPRESENTATIVE GUTTENBERG  asked if  parcels are  still available                                                               
over-the-counter.                                                                                                               
                                                                                                                                
Number 2020                                                                                                                     
                                                                                                                                
DICK  MYLIUS,  Deputy  Director,  Division of  Mining,  Land  and                                                               
Water, Department of Natural Resources,  testified.  He explained                                                               
that there  are parcels for  sale over-the-counter,  although not                                                               
in  the remote  recreation  program, which  is  when parcels  are                                                               
basically awarded  through a lottery  at an annual offering.   He                                                               
said the parcels available  over-the-counter are subdivision lots                                                               
for the most part.                                                                                                              
                                                                                                                                
REPRESENTATIVE  GUTTENBERG  asked  if   this  bill  represents  a                                                               
process that  is significantly different  than what  is currently                                                               
being done.                                                                                                                     
                                                                                                                                
MR.  MYLIUS indicated  that the  most  significant difference  is                                                               
that  the  areas  and  the  amount of  that  can  be  staked  are                                                               
identified up  front.  He said  six or seven areas  are offered a                                                               
year.   One best interest finding  and public notice is  done for                                                               
all  of  those   areas,  and  one  appraiser   and  surveyor  are                                                               
contracted with  to do the  appraisal.  Under the  proposed bill,                                                               
he said  hundreds of  individual applications  would come  in and                                                               
have  to be  processed separately.    He said  the best  interest                                                               
finding,  public   notice,  surveys,   and  appraisals   are  all                                                               
separate.                                                                                                                       
                                                                                                                                
CO-CHAIR  MASEK said  CSHB 319(STA)  is accompanied  by a  fiscal                                                               
note.   She asked if  the current CS  is accompanied by  a fiscal                                                               
note.                                                                                                                           
                                                                                                                                
MR.  POUND said  he  believes  the fiscal  note  for $433,000  is                                                               
really  comparable and  may go  up only  slightly.   He remarked,                                                               
"However, we do  dispute the source of the revenue;  this goes to                                                               
revenue (indisc.) receipts; not from the general fund."                                                                         
                                                                                                                                
Number 1902                                                                                                                     
                                                                                                                                
REPRESENTATIVE HEINZE  asked Ms.  Welch if  she is  familiar with                                                               
the Commonwealth North asset study that was just completed.                                                                     
                                                                                                                                
MS. WELCH said she'd heard about it but had not read it.                                                                        
                                                                                                                                
REPRESENTATIVE  HEINZE explained  that it  was a  six-month study                                                               
that  recommended  increasing  the  financial  portfolio  of  the                                                               
state.  She  said a large amount  of that was for  doing a better                                                               
management  job with  the state's  land.   Representative  Heinze                                                               
asked Ms. Welch if she thought  this bill would aid in increasing                                                               
that financial portfolio.                                                                                                       
                                                                                                                                
MS. WELCH  said she  wasn't sure she  could answer  that question                                                               
without  reading   the  study.     She   said  one   concern  the                                                               
commissioner had  expressed is that  the bill would  allow random                                                               
staking  without really  consolidating  the land  disposals in  a                                                               
particular area, so it could  have an adverse effect on potential                                                               
development.   She remarked, "You  have to balance not  only what                                                               
we can ...  transfer as part of our  responsibility of settlement                                                               
of our lands for individuals,  but also having an economic return                                                               
to the  state on the  resources that are  available to us,  so in                                                               
that respect it could have a chilling affect."                                                                                  
                                                                                                                                
REPRESENTATIVE FATE  said the "old  thinking" has always  been to                                                               
condense  those  properties   into  a  subdivision-type  setting;                                                               
however,  the [purpose]  of the  remote  recreational cabin  site                                                               
bill is to  get remote parcels into private hands.   He remarked,                                                               
"This is  not under  the concept  where you  take land  under one                                                               
large setting,  have it all  surveyed at  the same time  into one                                                               
subdivision where  you have your  neighbor right next door."   He                                                               
noted that  buffer zones are embodied  in the bill.   He said too                                                               
many people  talk about trying  [to buy] the place  where they've                                                               
either hunted or  fished or just want some  quiet recreation, and                                                               
can't  get  the piece  of  property.    He  said this  [bill  was                                                               
intended] to fill those desires.                                                                                                
                                                                                                                                
REPRESENTATIVE  HEINZE  suggested  that  the bill  backs  up  the                                                               
Commonwealth North  study and provides  for better  management of                                                               
the  state's  financial  portfolio.    She  noted  that  it  also                                                               
provides Alaskans with remote cabin sites.                                                                                      
                                                                                                                                
Number 1720                                                                                                                     
                                                                                                                                
CO-CHAIR DAHLSTROM  said [the  committee] was  in the  process of                                                               
setting up a  briefing to review the study  by Commonwealth North                                                               
to become  aware of and educated  with the findings of  the study                                                               
and it  pertains to the  different issues  being worked on.   She                                                               
said her  intent is  to hold  the bill  in committee  for further                                                               
discussion.  She noted her  understanding that an amendment would                                                               
be brought forward, and asked the  maker of the amendment to work                                                               
with  Representative Fate's  office to  see if  the amendment  is                                                               
friendly.   She said noted  that after the amendment  is reviewed                                                               
the committee would move forward.                                                                                               
                                                                                                                                
[CSHB 319(RES) was held over.]                                                                                                  
                                                                                                                                
HB 486-MINING RECLAMATION ASSURANCES/FUND                                                                                     
                                                                                                                                
CO-CHAIR  DAHLSTROM announced  that the  final order  of business                                                               
would  be HOUSE  BILL NO.  486, "An  Act relating  to reclamation                                                               
bonding and  financial assurance  for certain mines;  relating to                                                               
financial assurance limits for lode  mines; establishing the mine                                                               
reclamation trust fund; and providing for an effective date."                                                                   
                                                                                                                                
The committee took an at-ease from 2:22 p.m. to 2:25 p.m.                                                                       
                                                                                                                                
Number 1597                                                                                                                     
                                                                                                                                
BOB  LOEFFLER,  Director, Division  of  Mining,  Land and  Water,                                                               
Department of  Natural Resources (DNR), testified.   Mr. Loeffler                                                               
explained that reclamation is the  process in which mined land is                                                               
put back  [in its original  state] after being disturbed  for the                                                               
[extraction] of minerals.  Initially,  he said the mining company                                                               
puts  up  a bond  for  the  disturbance,  and should  the  mining                                                               
company  fail  to  reclaim the  land  or  to  put  it back  to  a                                                               
productive state, the  state can seize the bond and  get the work                                                               
done to protect  the citizens.  When  current statutory framework                                                               
was  established  in  1991, Alaska  had  mostly  a  placer-mining                                                               
industry, which is  very different from the placer  and hard rock                                                               
industry the state has today.   He said when this was established                                                               
in 1991, the  Red Dog Mine was just starting  and Fort Knox Mine,                                                               
True  North,  Pogo  Project,  and Greens  Creek  Mine  [were  not                                                               
operating].     The  state's   statutory  framework   was  really                                                               
appropriate for placer mining, he said.                                                                                         
                                                                                                                                
Number 1436                                                                                                                     
                                                                                                                                
MR. LOEFFLER said  there is a $750 per acre  cap on bonds charged                                                               
to companies for  reclaiming the land.  He suggested  that may or                                                               
may not be close to appropriate  for placer mines, but most large                                                               
hard rock mines,  for example, the Pogo Project or  Red Dog Mine,                                                               
can't reclaim  the land for  anywhere near  that.  The  bonds are                                                               
expected  to be  $24-26 million  for the  Greens Creek  Mine, $26                                                               
million for  the Pogo  Project, and $50-100  million for  the Red                                                               
Dog Mine,  he explained.  He  said for $750 per  acre he couldn't                                                               
charge a bond that is  appropriate for the large mining industry;                                                               
an industry that  he hopes is growing.  Mr.  Loeffler said HB 486                                                               
removes the  $750 per  acre cap  on lode  mines, which  are large                                                               
mines.  For  placer mines exploration, he said  DNR will maintain                                                               
the current system, and for  the large mines with big reclamation                                                               
expenses,  DNR will  charge the  full and  reasonable cost  for a                                                               
bond.    Secondly, he  said  the  bill broadens  the  instruments                                                               
companies can use  to satisfy the state's requirements.   He said                                                               
it  includes  such  things  as letters  of  credit,  surety  bond                                                               
insurance, certificates  of deposit,  and corporate  guarantees -                                                               
things of that nature.                                                                                                          
                                                                                                                                
MR. LOEFFLER said  he would imagine that  each individual company                                                               
will end up using a different  suite of those things depending on                                                               
the size of the bond and  the situation, and the suite may change                                                               
over the  life of the mine.   Mr. Loeffler said  [DNR] would have                                                               
the  ability  to charge  more,  but  would  also have  a  greater                                                               
repertoire companies  can use  to satisfy  the requirements.   He                                                               
said the  mine reclamation  trust fund is  a voluntary  fund that                                                               
companies  can use  to satisfy  the reclamation  obligation.   He                                                               
said [DNR] frequently has  long-term reclamation obligations, for                                                               
example,  Red  Dog  Mine  may  require  water  quality  treatment                                                               
forever.  He explained that [the  state] has asked Fort Knox Mine                                                               
to leave the  freshwater lake as a recreation  site for Alaskans.                                                               
He said  the Fort Knox  Mine will leave  a bond, but  to maintain                                                               
the dam in  perpetuity, unless the state can use  the interest on                                                               
that in  perpetuity, it doesn't  really have a  reclamation fund.                                                               
He said  unless [the  state] can  keep the  interest on  the bond                                                               
that  the Red  Dog  Mine  provides, [the  state]  doesn't have  a                                                               
perpetual reclamation mechanism.                                                                                                
                                                                                                                                
MR. LOEFFLER  said in place  is a 30-year  monitoring requirement                                                               
for Illinois Creek  Mine, and if a mining company  has to come up                                                               
with a bond  for 30 years, it  is easier if [the  state] can keep                                                               
the interest.  The reclamation trust  fund is a way for the state                                                               
to  deal  with  long-term   reclamation  bonding  obligations  or                                                               
perpetual, he  said.  He said  it has a couple  of advantages for                                                               
[the state], one  of which is it allows the  state to accommodate                                                               
the large industry,  which often has long-term  requirements.  He                                                               
said while  a company  can use  a variety of  suites, "this  is a                                                               
mechanism that  the state could hold  the cash."  He  said that's                                                               
best  from the  state's perspective.   He  said if  a company  is                                                               
putting money  aside for long-term  reclamation, it  is expecting                                                               
to  use the  interest, which  is  taxable.   The state  is not  a                                                               
taxable  entity,  and  if  the  state holds  the  money  for  the                                                               
company, that  interest accumulates  tax-free, he explained.   He                                                               
said there is  an advantage for the companies  should they choose                                                               
to use  this voluntary  mechanism of letting  the state  hold the                                                               
money, and noted that there are some other tax advantages.                                                                      
                                                                                                                                
Number 1147                                                                                                                     
                                                                                                                                
REPRESENTATIVE  STEPOVICH asked  if the  $750 per  acre cap  only                                                               
applied to lode mines.                                                                                                          
                                                                                                                                
MR. LOEFFLER said  currently, the cap applies  to all reclamation                                                               
and would only be eliminated for lode mines.                                                                                    
                                                                                                                                
REPRESENTATIVE STEPOVICH  asked why  it would only  be eliminated                                                               
for lode mines.                                                                                                                 
                                                                                                                                
MR. LOEFFLER  said it  is believed that  the placer  industry and                                                               
exploration are operating just fine.                                                                                            
                                                                                                                                
REPRESENTATIVE  STEPOVICH asked,  "Once they  see the  lode mines                                                               
getting this break do you think they will be just fine?"                                                                        
                                                                                                                                
MR. LOEFFLER said the cap is  not [the state's] ability to charge                                                               
mining  companies for  reclamation,  rather it  is [the  state's]                                                               
ability to  require mining companies to  put up a bond.   He said                                                               
he didn't foresee  the placer industry [volunteering]  to "put up                                                               
more money."                                                                                                                    
                                                                                                                                
REPRESENTATIVE  STEPOVICH remarked,  "They exclude  the operation                                                               
that generates acid; is that obvious."                                                                                          
                                                                                                                                
MR. LOEFFLER  replied yes.   He said the placer  mining community                                                               
really doesn't put  up a bond; they go into  a placer mining pool                                                               
in which all  of their assets are co-mingled.   Mr. Loeffler said                                                               
mining  operations that  are too  big  for the  placer bond  pool                                                               
would  be excluded,  including  mining  operations that  generate                                                               
acid.  He said while large  hard-rock mines have the potential to                                                               
create acid, placer mines do not.                                                                                               
                                                                                                                                
REPRESENTATIVE  STEPOVICH turned  attention to  page 4,  line 20,                                                               
and he  said of the  two statutes on  this line, one  pertains to                                                               
minerals, and the other pertains to  coal.  He asked how the fund                                                               
would work.                                                                                                                     
                                                                                                                                
MR. LOEFFLER said it's in the  reclamation trust fund and it says                                                               
the trust fund can be  used whether the reclamation obligation is                                                               
under AS  27.19, which is used  for metal mines, or  whether it's                                                               
under coal.   He  said this  trust fund  is available  for either                                                               
opportunity.                                                                                                                    
                                                                                                                                
REPRESENTATIVE   STEPOVICH   directed   attention  to   page   5,                                                               
paragraphs  (1)-(7),  and  he  asked  how  those  activities  are                                                               
currently paid for.                                                                                                             
                                                                                                                                
MR.  LOEFFLER said  the  company  has the  obligation  to do  the                                                               
reclamation and the  [bill] doesn't change that; it  says if [the                                                               
company gives the state] the money  to hold, it can reimburse the                                                               
company  if it  does any  of the  [activities in  paragraphs (1)-                                                               
(7)].   He said the  company would still have  the responsibility                                                               
to reclaim the mine.                                                                                                            
                                                                                                                                
REPRESENTATIVE STEPOVICH asked if this  [bill] is an incentive or                                                               
a savings.                                                                                                                      
                                                                                                                                
MR. LOEFFLER said he believes it  will be both an incentive and a                                                               
savings for  companies that need  to accumulate cash in  order to                                                               
do the  reclamation later.  It  is an incentive for  companies to                                                               
give the state  cash and it will be a  savings to those companies                                                               
because some of that cash can be held tax-free, he said.                                                                        
                                                                                                                                
Number 0909                                                                                                                     
                                                                                                                                
REPRESENTATIVE HEINZE  said she thinks  this is a good  bill, but                                                               
the corporate guarantee is a concern.   She asked Mr. Loeffler to                                                               
explain the Alaska Bond Pool program.                                                                                           
                                                                                                                                
MR. LOEFFLER,  noting that  the Alaska Bond  Pool program  is for                                                               
placer mines,  said if  small "mom  and pop"  [mining operations]                                                               
couldn't come  up with a  full bond, it  would join a  bond pool.                                                               
For each acre that is disturbed  by mining, the placer mine gives                                                               
the state  $150, of  which [75  percent] or  $112.50 per  acre is                                                               
refunded upon [approval  of the reclamation].   He explained that                                                               
the state  has the ability to  pull the full amount  of money for                                                               
each  operation's reclamation  from the  bond pool  if necessary.                                                               
Mr. Loeffler said it's like  an insurance pool [for participating                                                               
operations] that can be used to pay for any default.                                                                            
                                                                                                                                
REPRESENTATIVE  HEINZE asked  Mr.  Loeffler to  elaborate on  the                                                               
corporate guarantee.                                                                                                            
                                                                                                                                
MR.  LOEFFLER said  the purpose  of a  corporate guarantee  is to                                                               
guarantee that  the mining company  has the money to  perform the                                                               
work,  although  if  the company  goes  bankrupt,  the  corporate                                                               
guarantee  is  of  no  value.   He  said  the  coal  program  has                                                               
corporate  guarantees  in  that  the   state  puts  a  series  of                                                               
financial tests  together to  ensure that the  company is  not in                                                               
any danger  of going bankrupt.   He said the company  has to have                                                               
"four  times the  assets to  liabilities ratio"  and a  number of                                                               
financial  tests.    Mr.  Loeffler   said  [the  state]  hires  a                                                               
consulting  firm  to  go  through   Usibelli  Coal  Mine,  Inc.'s                                                               
[financial records]  each year to assure  the state that it  is a                                                               
"good risk" and  that it meets the state's regulations.   He said                                                               
he expects that  the state will be writing  regulations to ensure                                                               
that it  doesn't accept corporate guarantees  from companies that                                                               
are bad risks.                                                                                                                  
                                                                                                                                
Number 0720                                                                                                                     
                                                                                                                                
MR. LOEFFLER  said he also expects  that the state would  be more                                                               
likely to  accept corporate  guarantees from a  mine that  has to                                                               
come up with  a lot of money  over 20 to 30 years  to reclaim it.                                                               
He said  in the  first part of  the mine life  there is  a little                                                               
less risk because  there's less disturbance, and  the state might                                                               
have  some amount  of actual  cash and  some amount  of corporate                                                               
guarantees.   He said as "it  gets to the end"  where the [state]                                                               
would need  cash, it would  probably want  to change the  mix, so                                                               
"we  have less  guarantee, less  risk" that  if the  company went                                                               
bankrupt,  "citizens would  be  holding  the bag."    He said  he                                                               
expects  that   corporate  guarantees   would  be  used   as  one                                                               
instrument in some  locations, and would only be  used where [the                                                               
state] has done financial testing  to ensure that the company's a                                                               
good risk.  [Corporate guarantees]  would not necessarily be used                                                               
in all  parts of the  mine life, he added.   He said  typically a                                                               
corporate  guarantee  is  done with  a  parent  corporation,  for                                                               
example, the  Red Dog Mine  is run by  Teck Cominco Limited.   He                                                               
said  there is  a  parent  corporation with  mines  all over  the                                                               
world, and a corporate guarantee is  a way to bring some of those                                                               
assets to bear to guarantee the Alaskan operation.                                                                              
                                                                                                                                
MR.  LOEFFLER,  in response  to  a  question from  Representative                                                               
Heinze, said  if a company  wished to use a  corporate guarantee,                                                               
[the state] would probably go towards that.                                                                                     
                                                                                                                                
Number 0515                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA asked whether  the [state] has drawn from                                                               
the bonding pool in the past, and how much was drawn out of it.                                                                 
                                                                                                                                
MR. LOEFFLER said this year  [the state] seized about $4,000 from                                                               
the bonding pool  for placer mines.  He said  [the state] managed                                                               
to reclaim two or three sites  in the Petersville area and one in                                                               
the "forty mile"  [area], and received a lot of  help from mining                                                               
communities that  donated a  lot of  time.   Mr. Loeffler  said a                                                               
bond  for $1.5  million was  seized in  1999 from  Illinois Creek                                                               
Mine, which was a large mine that was not in the bonding pool.                                                                  
                                                                                                                                
REPRESENTATIVE  KERTTULA  asked  if  Illinois Creek  Mine  was  a                                                               
company that went bankrupt.                                                                                                     
                                                                                                                                
MR. LOEFFLER  said yes, and  Illinois Creek  Mine was not  in the                                                               
bond pool.                                                                                                                      
                                                                                                                                
REPRESENTATIVE KERTTULA  asked what  type of bond  Illinois Creek                                                               
Mine had given the state.                                                                                                       
                                                                                                                                
MR. LOEFFLER said the company had cash  in the bank.  He said the                                                               
state wrote  a letter [to  the bank] and  much to his  surprise a                                                               
check appeared  3 days later.   He said he  was told that  is not                                                               
the usual situation.                                                                                                            
                                                                                                                                
REPRESENTATIVE KERTTULA asked if  the corporate guarantee will be                                                               
done  "up front"  when the  agreement is  made or  if "they  roll                                                               
over."   She  remarked,  "I'm  just wondering  how  you get  from                                                               
having guarantee to having cash."                                                                                               
                                                                                                                                
MR.  LOEFFLER said  he  expects  that the  state  will [put  into                                                               
place]  regulations  that  will  require  a  relatively  detailed                                                               
financial test,  and the  company must  meet that  financial test                                                               
yearly.    He said  he  also  expects  [the  state] will  have  a                                                               
reclamation   agreement  up   front  that   would  set   out  the                                                               
reclamation expectations  for the life  of the mine,  but knowing                                                               
that mines  and conditions change  and that that  agreement would                                                               
be revisited on a regular and periodic basis.                                                                                   
                                                                                                                                
REPRESENTATIVE KERTTULA  if other states do  something similar to                                                               
this.                                                                                                                           
                                                                                                                                
MR. LOEFFLER  said he  believes that  the reclamation  trust fund                                                               
itself is  somewhat innovative,  and he  doesn't know  that other                                                               
states  do anything  exactly like  it.   He said  the concept  of                                                               
reclamation agreements, full and  reasonable costs, and corporate                                                               
guarantees  are all  done nationally.    He said  internationally                                                               
there are  some states that  have outlawed  corporate guarantees.                                                               
He  said some  states use  corporate guarantees  and the  federal                                                               
government uses them in some situations.                                                                                        
                                                                                                                                
REPRESENTATIVE KERTTULA asked  what the policy reason  is for not                                                               
having corporate guarantees.                                                                                                    
                                                                                                                                
MR.  LOEFFLER said  the reason  is that  if the  corporation goes                                                               
bankrupt,  the  guarantee  is meaningless.    He  said  corporate                                                               
guarantees  should only  be used  in those  situations where  the                                                               
risk is  low or where  there is a  plan to use  it as part  of an                                                               
instrument to  put aside money.   Mr. Loeffler said given  a full                                                               
reclamation  and a  very large  [amount  of money]  needed for  a                                                               
multi-million  dollar  bond,  he expects  there  situations  will                                                               
arise in  which a  corporate guarantee  is an  absolute necessity                                                               
for at least some  period of time.  He said  he expects the state                                                               
will   have  regulations   to  ensure   that  it   is  not   used                                                               
inappropriately.                                                                                                                
                                                                                                                                
Number 0195                                                                                                                     
                                                                                                                                
REPRESENTATIVE STEPOVICH  asked who  is opposed  to the  bill the                                                               
bill.                                                                                                                           
                                                                                                                                
MR. LOEFFLER  said he believed  he should let those  people speak                                                               
for themselves.                                                                                                                 
                                                                                                                                
REPRESENTATIVE STEPOVICH asked if he knows who those people are.                                                                
                                                                                                                                
MR. LOEFFLER  said he  believes this makes  the world  better for                                                               
reclamation.  Mr.  Loeffler, noting his belief  that Alaskans for                                                               
Responsible  Mining  was  present,  said  whether  [Alaskans  for                                                               
Responsible Mining]  opposes the bill or  not is up to  them, but                                                               
he couldn't speak for them.                                                                                                     
                                                                                                                                
REPRESENTATIVE  STEPOVICH asked  if  anyone had  been in  contact                                                               
with him.                                                                                                                       
                                                                                                                                
MR. LOEFFLER  said he had  talked extensively with  [Alaskans for                                                               
Responsible Mining] and  there are parts of [the  bill] they like                                                               
and  parts they  are not  sure  about, but  he was  uncomfortable                                                               
voicing their opinion.                                                                                                          
                                                                                                                                
REPRESENTATIVE STEPOVICH clarified  that he is not  asking for an                                                               
opinion,  rather  he is  asking  who  contacted Mr.  Loeffler  in                                                               
opposition to this bill.                                                                                                        
                                                                                                                                
MR. LOEFFLER  said he  didn't know that  anybody was  against the                                                               
bill  as a  whole, and  any concerns  about corporate  guarantees                                                               
would only be from the environmental community.                                                                                 
                                                                                                                                
REPRESENTATIVE STEPOVICH said he is  trying to get a more rounded                                                               
look at  some of these issues.   He remarked, "I've  been hearing                                                               
that  people who  are writing  the  bills are  bringing them  in;                                                               
they're the  ones that  are the only  ones we get."   He  said he                                                               
figured the proponents would know who the opponents are.                                                                        
                                                                                                                                
MR. LOEFFLER said he is often able to unify.                                                                                    
                                                                                                                                
Number 0037                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO  said  the traditional  opponents  are  the                                                               
Sierra Club and the Friends Of The Earth.                                                                                       
                                                                                                                                
MR.  LOEFFLER  said  he  believes   this  bill  strengthens  [the                                                               
state's] position with reclamation.   He said currently companies                                                               
give the state  a voluntary reclamation bond and  this bill would                                                               
make it a requirement.                                                                                                          
                                                                                                                                
TAPE 04-10, SIDE A                                                                                                            
                                                                                                                              
REPRESENTATIVE GATTO  asked why miners  are against it.   He said                                                               
the bill is forcing miners to go from voluntary to compulsory.                                                                  
                                                                                                                                
MR. LOEFFLER deferred the question to [the mining industry].                                                                    
                                                                                                                                
Number 0046                                                                                                                     
                                                                                                                                
CO-CHAIR  MASEK  directed attention  to  a  handout in  the  bill                                                               
packet entitled "Alaskans for Responsible  Mining," which read in                                                               
part  [original punctuation  provided],  "Another  mine that  was                                                               
part  of the  Alaska Bond  Pool  Program is  also bankrupt,  with                                                               
clean-up  costs likely  to exceed  $250,000 (Nixon  Fork)."   She                                                               
asked Mr. Loeffler if he cared to comment.                                                                                      
                                                                                                                                
MR. LOEFFLER, noting  that the mind was on federal  land, said he                                                               
expects the  mine to reopen  again with  a new operator,  and did                                                               
not expect  there would be any  clean-up costs.  He  said nothing                                                               
has been  taken from the bond  pool for that mine,  and he didn't                                                               
expect [any bond money] would have to  be taken.  He said it will                                                               
fully reclaim itself.                                                                                                           
                                                                                                                                
Number 0137                                                                                                                     
                                                                                                                                
ROGER FEATHERSTONE,  Campaign Director, Alaskans  for Responsible                                                               
Mining, testified.   He said Alaskans for  Responsible Mining had                                                               
not taken  a position  on the bill,  although there  things about                                                               
the  bill that  the coalition  likes and  things it  has concerns                                                               
about.    He  said  in  general,  he  thought  the  coalition  is                                                               
supportive of  removing the cap, which  was put in to  place at a                                                               
time when mining was substantially  different in Alaska.  He said                                                               
with large  mines coming on  line, it's clearly not  adequate for                                                               
the business  of mining responsibly.   Mr. Featherstone  said the                                                               
trust fund  is intriguing and  he was  not sure if  the coalition                                                               
has come up with a position yet  on that portion of the bill.  He                                                               
said his "gut feeling" is that  if [the bill] brings in money and                                                               
fully reclaims  the mines;  protects the  air and  water, salmon,                                                               
and everything  else; and  most importantly,  if the  state isn't                                                               
left "holding the bag," then it's probably a good thing.                                                                        
                                                                                                                                
MR. FEATHERSTONE  expressed concerns about  corporate guarantees,                                                               
and  he referred  to the  aforementioned handout,  which outlines                                                               
those  concerns.   He said  with companies  going in  and out  of                                                               
business, the  potential of bankruptcy  does make  [the corporate                                                               
guarantees] not  worth a  whole lot of  money.   Mr. Featherstone                                                               
said he  is hopeful that  if corporate guarantees do  happen, the                                                               
parent  companies  [will  be  held  responsible].    He  said  in                                                               
[bankruptcy situations]  often "you're  chasing after  the person                                                               
that owns the license," but the  parent company has tons of money                                                               
and doesn't  put anything  into reclamation or  clean up,  and he                                                               
hopes that can be avoided.                                                                                                      
                                                                                                                                
MR.  FEATHERSTONE  said  Alaskans for  Responsible  Mining  feels                                                               
there  are other  forms of  financial assurances  that aren't  so                                                               
risky, and would  like to ensure that those  are utilized instead                                                               
of going  with something that might  be a problem in  the future.                                                               
He said Alaskans for Responsible  Mining is interested in looking                                                               
at the possibilities  on these courses of action.   He noted that                                                               
large mines are  a fact in Alaska  and are not going  to go away,                                                               
and  remarked, "We  ...  need  to make  sure  that  when they  do                                                               
happen, ... they're done right and  there is enough money left to                                                               
make sure that they're reclaimed at the end safely ...."                                                                        
                                                                                                                                
REPRESENTATIVE KERTTULA asked what  kinds of assurances the state                                                               
should consider that would be less risky.                                                                                       
                                                                                                                                
MR. FEATHERSTONE  said the Alaskans  for Responsible Mining  is a                                                               
coalition, so  coming to a  consensus on everything  is sometimes                                                               
difficult.  He remarked:                                                                                                        
                                                                                                                                
     The two things that we  have the problems with, if any,                                                                    
     are corporate  guarantees, and  ... although  it's been                                                                    
     explained somewhat  by Mr.  Loeffler, sinking  funds or                                                                    
     any other  form of  financial insurance seems  a little                                                                    
     vague  to us.    ... We  would hope  ...  if this  bill                                                                    
     should  pass,  that  when  it  comes  time  to  do  the                                                                    
     regulations that  those things at least  can be defined                                                                    
     a little more,  so it's not quite so much  an open door                                                                    
     policy.                                                                                                                    
                                                                                                                                
REPRESENTATIVE HEINZE  said Jerry  Gallagher was the  director of                                                               
the Division  of Mining when the  $750 cap was put  into place in                                                               
the  1990s.   She asked,  "From that  point ...  until now,  when                                                               
we're looking at  this bill before us, do you  think we're almost                                                               
there?"   Representative Heinze asked Mr.  Featherstone how happy                                                               
he is with this bill on a scale of 1 to 10.                                                                                     
                                                                                                                                
MR. FEATHERSTONE  said it depends on  what parts of the  bill are                                                               
being looked at;  "we're right up there" with  regard to removing                                                               
the cap; "we're probably pretty  close to that as well" regarding                                                               
the trust;  and "we're probably  on the  lower end of  the scale"                                                               
regarding corporate guarantees.                                                                                                 
                                                                                                                                
REPRESENTATIVE HEINZE asked  if was fair to say  that [this bill]                                                               
is a "leap forward."                                                                                                            
                                                                                                                                
MR.  FEATHERSTONE said  it is  not a  leap forward.   He  said he                                                               
thought the intent of this bill  is good, but "the devil's in the                                                               
details."  He remarked:                                                                                                         
                                                                                                                                
     A lot  of it will  depend on what the  regulations say.                                                                    
     A  lot of  it  will depend  on the  nuts  and bolts  of                                                                    
     enforcement.  A  lot of it will depend  on people being                                                                    
     responsible citizens  - ...  from the  mining companies                                                                    
     making  really  good faithed  effort  to  ... meet  the                                                                    
     intent  that, ...  perhaps, ...  DNR's looking  at, and                                                                    
     not just the minimum that you'd  buy.  ... All of those                                                                    
     things will  make a huge  difference whether this  is a                                                                    
     great leap forward or whether it's ... a good start.                                                                       
                                                                                                                                
REPRESENTATIVE   KERTTULA  asked   if  federal   regulations  are                                                               
applicable to  mines in  addition to  state regulations,  and she                                                               
indicated that Mr.  Loeffler had responded no.  She  asked if the                                                               
reclamation is [entirely] the state's responsibility.                                                                           
                                                                                                                                
MR. FEATHERSTONE said he is  the "policy person" and is dependant                                                               
on coalition members for technical expertise.                                                                                   
                                                                                                                                
Number 0784                                                                                                                     
                                                                                                                                
STEVE  BORELL,  Executive  Director,  Alaska  Miners  Association                                                               
(AMA), testified.   He stated that  AMA is in support  of HB 486.                                                               
He  said  this  bill  will  make  several  important  changes  to                                                               
requirements  for  mining  and  financial  assurance  for  mining                                                               
operations.  He  said some of the changes clarify  and define the                                                               
procedures and  the requirement that  DNR had been  following for                                                               
several  years  regarding  large   mines.    Other  changes  will                                                               
providing  for  a  sinking  fund or  trust  account  approach  to                                                               
collect  funds over  the life  of a  project to  ensure that  the                                                               
monies  are  in  place  with   the  state  when  long-term  water                                                               
treatment or  environmental monitoring  or other related  work is                                                               
needed after  the mine has  been reclaimed  and closed.   He said                                                               
the current statute requiring financial  assurance for mining was                                                               
sponsored by the  late Senator Betty Fahrenkamp in  1990, and the                                                               
statute and  the approach  it established  has served  Alaska and                                                               
the mining industry  well for almost 14 years.   However, he said                                                               
the statute has had some questions raised about it.                                                                             
                                                                                                                                
MR. BORELL said  it was focused primarily on  small family placer                                                               
mines.  Since that time it  has become clear that some changes to                                                               
statute  are   needed  to   effectively  address   the  financial                                                               
assurances needed  for large load  mines, he explained.   He said                                                               
the mining  industry has  been discussing  this need  for several                                                               
years, and over the past six  months the industry has worked with                                                               
DNR and  the Department of Environmental  Conservation (DEC), and                                                               
participated in  coming up with  this approach.  Mr.  Borell said                                                               
[the bill]  has been  through many iterations  to ensure  that it                                                               
works for  the state and  the industry,  and "we believe  we have                                                               
found that in this."  He remarked:                                                                                              
                                                                                                                                
     I appreciate the  questions about corporate guarantees,                                                                    
     and  not  just  corporate guarantees,  but  the  entire                                                                    
     reclamation  topic.   It's far  more  important to  the                                                                    
     mining industry  than it is  to any  individual stream,                                                                    
     ...  any  individual  environmental  group  or  anybody                                                                    
     else, because  if somebody  goes out  and makes  a mess                                                                    
     and it  isn't corrected and  there isn't an  ability to                                                                    
     do that  properly, it's the  mining industry  that gets                                                                    
     the   bloody   nose;   it's   not   the   environmental                                                                    
     organization that gets a bloody nose.                                                                                      
                                                                                                                                
     It's me and  my membership that get the  problem and so                                                                    
     it's  extremely important  that  a corporate  guarantee                                                                    
     not allow  somebody to just  walk away and not  be able                                                                    
     to cover  it or any of  the other mechanisms.   We look                                                                    
     at these  not just from  the standpoint of how  can ...                                                                    
     some mining operator get out  of something, not at all.                                                                    
     ... It's far  more important to the  industry that this                                                                    
     be done right than it is to any other group at all.                                                                        
                                                                                                                                
MR. BORELL urged  the committee to move the bill  at the earliest                                                               
possible date.                                                                                                                  
                                                                                                                                
Number 1061                                                                                                                     
                                                                                                                                
CO-CHAIR  DAHLSTROM,  upon  determining  no one  else  wished  to                                                               
testify, closed public testimony.                                                                                               
                                                                                                                                
REPRESENTATIVE  GUTTENBERG turned  attention to  page 6,  line 5,                                                               
and he  asked if that  [language] was normal.   He said  it seems                                                               
like this is going to be a "regulation heavy" statute change.                                                                   
                                                                                                                                
MR. LOEFFLER said that sentence  only pertains to the reclamation                                                               
trust fund.   He said he believes the  critical regulations about                                                               
corporate guarantee  are regulations under  AS 27.19, and  are in                                                               
the existing regulatory authorities.   He said he could guarantee                                                               
that [DNR] would be adopting regulations.                                                                                       
                                                                                                                                
REPRESENTATIVE KERTTULA asked how quickly that would be done.                                                                   
                                                                                                                                
MR. LOEFFLER  said he thought  that would  be started as  soon as                                                               
the bill passes.                                                                                                                
                                                                                                                                
REPRESENTATIVE KERTTULA  asked if [DNR] had  any [personnel] left                                                               
to do it.                                                                                                                       
                                                                                                                                
Number 1180                                                                                                                     
                                                                                                                                
CO-CHAIR  MASEK moved  to report  HB  486 out  of committee  with                                                               
individual  recommendations and  the  accompanying fiscal  notes,                                                               
and asked  for unanimous consent.   There being no  objection, HB                                                               
486 was reported from the House Resources Standing Committee.                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 2:58 p.m.                                                                 

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