Legislature(2005 - 2006)CAPITOL 124

05/02/2005 01:00 PM RESOURCES


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HCR 13 NATURAL GAS SPUR LINE CONSTRUCTION TELECONFERENCED
Moved CSHCR 13(RES) Out of Committee
*+ HJR 17 FEDERAL LANDS RECREATION ENHANCEMENT ACT TELECONFERENCED
Moved CSHJR 17(RES) Out of Committee
*+ HB 280 MINERALS TAX/PAYMENTS TO MUNIS IN LIEU TELECONFERENCED
Moved CSHB 280(RES) Out of Committee
+ SJR 16 STATES' RIGHT TO REGULATE HUNTING/FISHING TELECONFERENCED
Moved Out of Committee
+ HB 254 NAT. GAS SPUR LINE AND DISTRIBUTION GRID TELECONFERENCED
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                          May 2, 2005                                                                                           
                           1:48 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Jay Ramras, Co-Chair                                                                                             
Representative Ralph Samuels, Co-Chair                                                                                          
Representative Jim Elkins                                                                                                       
Representative Carl Gatto                                                                                                       
Representative Gabrielle LeDoux                                                                                                 
Representative Kurt Olson                                                                                                       
Representative Paul Seaton                                                                                                      
Representative Harry Crawford                                                                                                   
Representative Mary Kapsner                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 254                                                                                                              
"An Act  directing the Alaska  Natural Gas  Development Authority                                                               
to use money appropriated from  the Railbelt energy fund and from                                                               
other sources  for preliminary engineering  and related  work for                                                               
the  construction  of  pipeline facilities  to  transport  Alaska                                                               
North  Slope   natural  gas  to   the  Southcentral   Alaska  gas                                                               
distribution grid,  and amending  the definition of  'project' as                                                               
applied  to  the  work  of the  Alaska  Natural  Gas  Development                                                               
Authority; and providing for an effective date."                                                                                
                                                                                                                                
     - MOVED HB 254 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 280                                                                                                              
"An Act relating to the  taxation of mining property; relating to                                                               
contracts  approved by  municipalities  for payments  in lieu  of                                                               
taxes; and providing for an effective date."                                                                                    
                                                                                                                                
     - MOVED CSHB 280(RES) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 17                                                                                                   
Opposing the Federal Lands Recreation Enhancement Act.                                                                          
                                                                                                                                
     - MOVED HJR 17 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE CONCURRENT RESOLUTION NO. 13                                                                                              
Expressing the  legislature's support  for the construction  of a                                                               
natural gas spur pipeline between  Fairbanks and the Nenana Basin                                                               
and Southcentral  Alaska, commending the interest  and initiative                                                               
of the sponsors of that  project, and encouraging the appropriate                                                               
state resource agencies to lend support to those efforts.                                                                       
                                                                                                                                
     - MOVED CSHCR 13(RES) OUT OF COMMITTEE                                                                                     
                                                                                                                                
SENATE JOINT RESOLUTION NO. 16                                                                                                  
Supporting  legislation before  the United  States Congress  that                                                               
reaffirms  the  right  of  the states  to  regulate  hunting  and                                                               
fishing.                                                                                                                        
                                                                                                                                
     - MOVED SJR 16 OUT OF COMMITTEE                                                                                            
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 254                                                                                                                  
SHORT TITLE: NAT. GAS SPUR LINE AND DISTRIBUTION GRID                                                                           
SPONSOR(s): REPRESENTATIVE(s) ROKEBERG                                                                                          
                                                                                                                                
04/05/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/05/05       (H)       O&G, RES, FIN                                                                                          
04/21/05       (H)       O&G AT 5:00 PM CAPITOL 124                                                                             
04/21/05       (H)       -- Meeting Postponed to 4/26/05 --                                                                     
04/26/05       (H)       O&G AT 5:00 PM CAPITOL 124                                                                             
04/26/05       (H)       Bills Previously Heard/Scheduled                                                                       
04/28/05       (H)       O&G AT 5:00 PM CAPITOL 124                                                                             
04/28/05       (H)       Moved Out of Committee                                                                                 
04/28/05       (H)       MINUTE(O&G)                                                                                            
04/29/05       (H)       O&G RPT 2DP 5NR                                                                                        
04/29/05       (H)       DP: MCGUIRE, ROKEBERG;                                                                                 
04/29/05       (H)       NR:    KERTTULA,    GARDNER,    SAMUELS,                                                               
                         DAHLSTROM, KOHRING                                                                                     
05/02/05       (H)       RES AT 1:00 PM CAPITOL 124                                                                             
                                                                                                                                
BILL: HB 280                                                                                                                  
SHORT TITLE: MINERALS TAX/PAYMENTS TO MUNIS IN LIEU                                                                             
SPONSOR(s): RESOURCES                                                                                                           
                                                                                                                                
04/19/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/19/05       (H)       RES, FIN                                                                                               
05/02/05       (H)       RES AT 1:00 PM CAPITOL 124                                                                             
                                                                                                                                
BILL: HJR 17                                                                                                                  
SHORT TITLE: FEDERAL LANDS RECREATION ENHANCEMENT ACT                                                                           
SPONSOR(s): REPRESENTATIVE(s) ELKINS                                                                                            
                                                                                                                                
04/05/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/05/05       (H)       RES                                                                                                    
05/02/05       (H)       RES AT 1:00 PM CAPITOL 124                                                                             
                                                                                                                                
BILL: HCR 13                                                                                                                  
SHORT TITLE: NATURAL GAS SPUR LINE CONSTRUCTION                                                                                 
SPONSOR(s): REPRESENTATIVE(s) RAMRAS                                                                                            
                                                                                                                                
04/28/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/28/05       (H)       RES                                                                                                    
05/02/05       (H)       RES AT 1:00 PM CAPITOL 124                                                                             
                                                                                                                                
BILL: SJR 16                                                                                                                  
SHORT TITLE: STATES' RIGHT TO REGULATE HUNTING/FISHING                                                                          
SPONSOR(s): SENATOR(s) THERRIAULT                                                                                               
                                                                                                                                
03/21/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/21/05       (S)       RES                                                                                                    
04/04/05       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
04/04/05       (S)       Moved  SJR 16 Out of Committee                                                                         
04/04/05       (S)       MINUTE(RES)                                                                                            
04/05/05       (S)       RES RPT 5DP 2NR                                                                                        
04/05/05       (S)       DP: WAGONER, DYSON, SEEKINS, STEDMAN,                                                                  
                         STEVENS B                                                                                              
04/05/05       (S)       NR: GUESS, ELTON                                                                                       
04/22/05       (S)       TRANSMITTED TO (H)                                                                                     
04/22/05       (S)       VERSION: SJR 16                                                                                        
04/25/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/25/05       (H)       RES                                                                                                    
05/02/05       (H)       RES AT 1:00 PM CAPITOL 124                                                                             
                                                                                                                                
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE NORMAN ROKEBERG                                                                                                  
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified as the sponsor of HB 254.                                                                         
                                                                                                                                
HAROLD HEINZE, Chief Executive Officer                                                                                          
Alaska Natural Gas Development Authority                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified that ANGDA views HB 254 and its                                                                   
accompanying appropriation as a way to provide an additional                                                                    
funding source to look at other opportunities if necessary and                                                                  
testified in support of HCR 13.                                                                                                 
                                                                                                                                
WARREN KEOGH                                                                                                                    
Chickaloon, Alaska                                                                                                              
POSITION STATEMENT: During hearing on HB 254, expressed                                                                         
concerns.                                                                                                                       
                                                                                                                                
JIM POUND, Staff                                                                                                                
to Representative Jay Ramras                                                                                                    
Alaska State Legislature                                                                                                        
POSITION STATEMENT: Presented HB 280 and HCR 13 on behalf of                                                                    
Representative Ramras, sponsor.                                                                                                 
                                                                                                                                
CATHY WASSERMAN                                                                                                                 
Alaska Municipal League                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in opposition to the original HB
280, and had questions about the committee substitute.                                                                          
                                                                                                                                
STEVE VAN SANT, State Assessor                                                                                                  
Division of Community Advocacy                                                                                                  
Department of Commerce, Community and Economic Development                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Answered questions regarding HB 280.                                                                        
                                                                                                                                
STEVE BORELL, Executive Director                                                                                                
Alaska Miners Association                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of HB 280.                                                                             
                                                                                                                                
JAMES FUGUE                                                                                                                     
Donlin Creek mine                                                                                                               
Council of Alaska Producers                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Characterized HB 280 as bringing about                                                                      
certainty to the tax structure in the unorganized borough.                                                                      
                                                                                                                                
BRETT FRIED, Economist                                                                                                          
Department of Revenue                                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Answered questions regarding HB 280.                                                                        
                                                                                                                                
JENNIFER BAXTER, Staff                                                                                                          
to Representative Jim Elkins                                                                                                    
Alaska State Legislature                                                                                                        
POSITION STATEMENT: Presented HJR  17 on behalf of Representative                                                               
Jim Elkins, sponsor.                                                                                                            
                                                                                                                                
DAVID STANCLIFF, Staff                                                                                                          
to Senator Gene Therriault                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:  Presented  SJR  13  on  behalf  of  Senator                                                               
Therriault, sponsor.                                                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CO-CHAIR  RALPH  SAMUELS  called  the  House  Resources  Standing                                                             
Committee  meeting  to  order at  1:48:33  PM.    Representatives                                                             
Elkins, Kapsner,  Samuels, Seaton and  Gatto were present  at the                                                               
call  to  order.  Representative Ramras,  LeDoux,  Crawford,  and                                                               
Olson arrived as the meeting was in process.                                                                                    
                                                                                                                                
HB 254-NAT. GAS SPUR LINE AND DISTRIBUTION GRID                                                                               
                                                                                                                                
REPRESENTATIVE   NORMAN  ROKEBERG,   Alaska  State   Legislature,                                                               
Juneau,  said HB  254 is  a grubstake  bill, and  it expands  the                                                               
scope of  work for the  Alaska Natural Gas  Development Authority                                                               
(ANGDA).  There  is a companion bill to provide  an additional $8                                                               
million to  ANGDA to study  spur line  projects, he said,  and it                                                               
provides for the review of a  bullet line from the North Slope to                                                               
Cook Inlet.  He  added that it looks at two  other routings.  The                                                               
governor  vetoed  $2.5 million  for  funds  for the  right-of-way                                                               
acquisition from  Glennallen to  Matanuska-Susitna, he said.   He                                                               
stated that the Cook Inlet  tribal council, in concert with North                                                               
Star LLC,  has a  $3 million  federal grant  to review  the Parks                                                               
Highway area.   "The authority  shall agree to cooperate with the                                                               
federal   grantees,  so   any  other   monies   that  have   been                                                               
appropriated by the federal government  to study spur lines, this                                                               
bill  specifically indicates  they would  cooperate," he  stated.                                                               
"The  funding that's  in the  companion appropriation  bill comes                                                               
from the  $28 million railbelt  energy fund--$8 million  of which                                                               
goes  to ANGDA  for the  study and  $20 million  for the  current                                                               
existing southern intertie repair and maintenance," he added.                                                                   
                                                                                                                                
1:53:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG said grubstake  is an old Alaska concept,                                                               
and  this issue  is so  important, the  Department of  Energy has                                                               
indicated that  by 2012 the Cook  Inlet area will not  be able to                                                               
provide consumer natural gas no matter what the price.                                                                          
                                                                                                                                
REPRESENTATIVE  SEATON suggested  putting  cost  recovery in  the                                                               
title.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  ROKEBERG   said  titles  are  for   senators  and                                                               
minority members to play with.  It is not necessary, he added.                                                                  
                                                                                                                                
1:55:22 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SAMUELS said the sponsor statement clarifies HB 254.                                                                   
                                                                                                                                
1:55:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO referred  to a news article  that stated two                                                               
companies buy  two thirds of Cook  Inlet's gas, and if  they stop                                                               
buying gas, the price will go through  the roof.  He said if they                                                               
keep buying  gas, it  will run out  and the price  will go  up as                                                               
well.  He suggested it was a no-win situation.                                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG said gas shortages  will still be felt in                                                               
2012 unless new gas is found.   "Even if we shut the plants down,                                                               
we're going to still come up short," he said.                                                                                   
                                                                                                                                
REPRESENTATIVE GATTO  asked how that  can be if those  two plants                                                               
are two thirds of the consumption.                                                                                              
                                                                                                                                
REPRESENTATIVE ROKEBERG answered:                                                                                               
                                                                                                                                
     The  export  license  for Conoco  Phillips  plant  goes                                                                    
     through 2009,  so if we  have a finite amount  of gas--                                                                    
     we've had new  discoveries on the Kenai.   The Kachemak                                                                    
     pipe  line  that goes  down  near  the Ninilchik  area,                                                                    
     going  toward Homer.   And  there  are some  additional                                                                    
     fields down  there.  But  I'm not sure, I  can't recall                                                                    
     the  exact quantities  of the  discovery  ... They  are                                                                    
     adding  to our  stocks, and  there are  certainly other                                                                    
     potential  gas in  the  Cook Inlet  basin  area.   This                                                                    
     legislature, for the  last decade, has gone  out of its                                                                    
     way  to try  to  incent  development, particularly  the                                                                    
     Cook  Inlet area.    We've had  some  success ...  this                                                                    
     committee in  the last legislature passed  a tax credit                                                                    
     bill for gas  pipe lines, which has been,  I think, was                                                                    
     instrumental with  the Kachemak pipe  line development,                                                                    
     which was quite expensive.                                                                                                 
                                                                                                                                
                                                                                                                                
REPRESENTATIVE   ROKEBERG  continued   that  despite   the  known                                                               
demands, the  area could ultimately  have a shortage of  gas, and                                                               
questioned  how others  can  be encouraged  to  explore for  gas.                                                               
"That's why it  is important to look  at the use of  the gas, the                                                               
size of  the spur line, and  ultimately how we are  to use that."                                                               
He  said there  is  no question  in  his mind  that  "we have  to                                                               
absolutely  stay   completely  focused  on  natural   gas.    Any                                                               
diversion of alternate/other types  of energies will diminish the                                                               
ability to afford and  put in a gas pipe line."  He added wind or                                                               
coal generation   "should absolutely  be a policy that  should be                                                               
discouraged by the legislature."                                                                                                
                                                                                                                                
2:00:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG  said  the legislature  should  stay  on                                                               
target and  stay on natural  gas.  To  justify the capacity  of a                                                               
gas line,  "we're going to  have other green  field developments,                                                               
from Dow  Chemical to  petro-chemical type  utilization.   And we                                                               
need to make those industrial  sites available at tidewater."  He                                                               
noted that one of  the issues is the price.   He said natural gas                                                               
prices have doubled in the past two years.                                                                                      
                                                                                                                                
2:01:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO  asked if the  bill is separate  from moving                                                               
North Slope gas to Chicago.                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG said  it is  a further  addition to  the                                                               
scope of  work and  routing for  a spur line  off the  Chicago or                                                               
Valdez  route,  because it  adds  the  Parks Highway  Y-off  from                                                               
Fairbanks.  It also calls for  a bullet line from the North Slope                                                               
to Cook Inlet, he added.                                                                                                        
                                                                                                                                
2:03:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR RAMRAS said he is  a big supporter of alternative energy                                                               
and wants to recognize that  conventional hydro-carbon energy can                                                               
co-exist with  innovative forms of  energy without adding  to the                                                               
costs.   He said he is  of the opinion that  the port authority's                                                               
program  is not  viable, and  he saw  a news  article today  that                                                               
undermines one of  the partners in Sempra.  He  noted the sponsor                                                               
statement  suggests  the  state  will allocate  some  of  the  $8                                                               
million to a route that he  doesn't think is viable, and he asked                                                               
Representative  Rokeberg  if  he  would accept  an  amendment  to                                                               
delete lines 22-29 on page 3 of the bill.                                                                                       
                                                                                                                                
2:04:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG said  that would gut the bill.   "I share                                                               
your concern  about the Port  Authority," he noted.   The trouble                                                               
with  deleting  the  Glennallen  to Cook  Inlet  route  would  be                                                               
counter productive, "because even if  we had a highway route, you                                                               
could  go  two different  ways.    I  mean  in terms  of  routing                                                               
analysis,  you can  come from,  even the  highway route,  you can                                                               
come down the Richardson highway to  the Glen highway and go that                                                               
route.  Or  come down the Parks highway, so  that debate needs to                                                               
take place."                                                                                                                    
                                                                                                                                
CO-CHAIR  RAMRAS  said  he  meant  just line  25  to  delete  "to                                                               
tidewater at a point on Prince William Sound".                                                                                  
                                                                                                                                
REPRESENTATIVE  ROKEBERG said  he is  very reluctant.   The  bill                                                               
came  from  an  initiative  from  the people  of  Alaska  in  the                                                               
formation of ANGDA  itself, he said.  The original  charge was an                                                               
all-Alaska pipeline  from the  North Slope  to Valdez,  he added,                                                               
and  if the  highway route  falls apart,  "we close  the door  on                                                               
ANGDA's charge to compete with the Port Authority project."                                                                     
                                                                                                                                
2:07:09 PM                                                                                                                    
                                                                                                                                
HAROLD  HEINZE,  Chief  Executive  Officer,  Alaska  Natural  Gas                                                               
Development  Authority,  said  the  bill  provides  a  number  of                                                               
options.  He emphasized that  ANGDA has done screening studies of                                                               
different routes for  getting North Slope gas to  Cook Inlet, and                                                               
"frankly it  is clear  that at a  screening level,  economics are                                                               
not going to dictate some of the  choices that need to be made if                                                               
they are made at  all."  If there is a line  going from the North                                                               
Slope to  Valdez, it is logical  to look at bringing  gas to Cook                                                               
Inlet from  Glennallen, he stated.   If it goes down  the highway                                                               
to Chicago, then  from Delta to Cook Inlet via  Glennallen and or                                                               
direct to  Cook Inlet are both  possible, he said.   When looking                                                               
at all the elements, it is  very unclear which is the best route,                                                               
he stated, and the bill expands what ANGDA can examine.                                                                         
                                                                                                                                
2:10:29 PM                                                                                                                    
                                                                                                                                
MR.  HEINZE   said  ANGDA  has   looked  at  the  bill   and  its                                                               
accompanying  appropriation as  a  way to  provide an  additional                                                               
funding source to  look at other opportunities if  necessary.  He                                                               
said it  is not necessary  now, but it could  be in the  next few                                                               
months  as   negotiations  with   the  producers  end   up  being                                                               
successful or not.   "If we were  to use this funding,  it is our                                                               
position  that we  would do  it in  the context  of intending  to                                                               
repay, at  some point,  the railbelt energy  fund," he  said, and                                                               
ANGDA will not pursue it if it will not be successful.                                                                          
                                                                                                                                
2:11:41 PM                                                                                                                    
                                                                                                                                
WARREN  KEOGH, Chickaloon,  Alaska,  said he  is concerned  about                                                               
ANGDA receiving money  because they spent "about  $500,000 in the                                                               
past  six  months  for contracted  services  and  ANGDA's  recent                                                               
action, which  is a submission  of a right-of-way  application to                                                               
the Alaska  Department of Natural  Resources for a  300-foot pipe                                                               
line  right-of-way from  Glennallen  to Palmer."   He  questioned                                                               
additional state  funds because  ANGDA has not  provided adequate                                                               
public notice  in public  meetings, and  its public  outreach has                                                               
been inadequate.   He  said landowners had  no idea  the pipeline                                                               
was  routed  through  their  private property.    The  spur  line                                                               
engineering  report  alerts ANGDA  to  fault  lines crossing  the                                                               
route, which  require extensive  field investigations  for proper                                                               
design of  the pipe  line, and  Mr. Keogh  said that  those field                                                               
evaluations should be  done prior to final route  selection.  "My                                                               
question is  why has a  route been selected and  the right-of-way                                                               
application  been  submitted  prior to  these  recommended  field                                                               
studies?"  He also noted a  similar problem with fish streams and                                                               
wetlands.   He said his community  will be traversed by  20 miles                                                               
of the  pipe line, and  it was not  advised before the  route was                                                               
selected.  Furthermore, ANGDA reported  it did public outreach to                                                               
the  community,   which  merely  consisted  of   talking  to  one                                                               
Chickaloon  resident   who  happens  to  manage   a  natural  gas                                                               
development firm.   The community council passed  a resolution to                                                               
ask  ANGDA to  suspend  its right-of-way  and permit  acquisition                                                               
process, he said.                                                                                                               
                                                                                                                                
2:15:53 PM                                                                                                                    
                                                                                                                                
MR.  KEOGH  said  ANGDA  has  moved too  hastily  and  made  some                                                               
mistakes.  He understands the  urgency and he supported the ANGDA                                                               
initiative,  but said  it would  be better  to slow  down and  do                                                               
things right before spending $8 million of railbelt funds.                                                                      
                                                                                                                                
2:16:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO  said, "You  did mention  that there  was no                                                               
notification of  a pipe line  routed down  Trunk Road, and  ... I                                                               
haven't been home for four months  but I'm certainly not aware of                                                               
any notification to that degree."                                                                                               
                                                                                                                                
MR. KEOGH  said on the joint  pipe line office website  where the                                                               
application  is posted,  the  right-of-way  application route  is                                                               
shown on 20  maps including the routes that  cross private lands.                                                               
He said the right-of-way application  is only for state lands but                                                               
it also shows where the route crosses private lands.                                                                            
                                                                                                                                
2:17:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO said  there  are recent  issues with  power                                                               
line construction from MEA who  received agreements with property                                                               
owners,  but  this  line  is  scheduled  to  go  through  without                                                               
landowner approval.                                                                                                             
                                                                                                                                
MR. KEOGH  said landowners  on the  route did  not know  the pipe                                                               
line was intended to go through their property.                                                                                 
                                                                                                                                
2:18:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG  said he  is mystified  why Mr.  Keogh is                                                               
not  supporting this  legislation,  because it  would provide  an                                                               
alternative to the  right-of-way through Chickaloon.   "I guess I                                                               
am a little bit baffled," he said.                                                                                              
                                                                                                                                
MR. KEOGH  said when  a state  entity plans  a pipeline  route he                                                               
would expect meaningful input from  the impacted communities.  No                                                               
matter  where it  is,  "folks  along the  way  need  to be  well-                                                               
apprised  and have  significant input."   He  said the  people of                                                               
ANGDA might  not be aware that  Chickaloon has a land  plan.  "In                                                               
the scramble to find  the best way to get natural  gas out of the                                                               
state and  along whatever  route, [it's  important] that  you pay                                                               
close and  careful consideration to  the interests and  needs and                                                               
the  priorities of  the citizens  of the  local communities,"  he                                                               
explained.                                                                                                                      
                                                                                                                                
2:20:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG  said he can't really  disagree, "but for                                                               
him to oppose  legislation that doesn't speak to  those issues is                                                               
disappointing."                                                                                                                 
                                                                                                                                
2:21:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON moved  to report HB 254, version  F, out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes.                                                                                                                   
                                                                                                                                
There being no objection, HB 254 was passed out of committee.                                                                   
                                                                                                                                
2:21:40 PM                                                                                                                    
                                                                                                                                
HB 280-MINERALS TAX/PAYMENTS TO MUNIS IN LIEU                                                                                 
                                                                                                                                
CO-CHAIR RAMRAS announced  that the next order  of business would                                                               
be  HOUSE BILL  NO. 280    "An Act  relating to  the taxation  of                                                               
mining    property;   relating    to   contracts    approved   by                                                               
municipalities for payments  in lieu of taxes;  and providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
CO-CHAIR SAMUELS  moved to adopt  CSHB 280,  version 24-LS0933\F,                                                               
Kurtz, as a working document.                                                                                                   
                                                                                                                                
There being no objection, it was so ordered.                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON asked if the intent was to hold the bill.                                                                 
                                                                                                                                
CO-CHAIR RAMRAS said the intent is to get it rolling.                                                                           
                                                                                                                                
2:23:11 PM                                                                                                                    
                                                                                                                                
JIM  POUND,  Staff to  Representative  Jay  Ramras, Alaska  State                                                               
Legislature, said HB 280 was  proposed by the industry to provide                                                               
stability  to  the  mining industry,  especially  in  unorganized                                                               
boroughs.   It  will create  a 4-mill  property tax  on mines  in                                                               
unorganized boroughs that  will go to the state  and is suggested                                                               
to  be  used  for  education,  he  said.    Under  the  committee                                                               
substitute (CS),  when a  borough "is  organized, provided  it is                                                               
organized  currently, it  will allow  that local  municipality to                                                               
personal property tax the mine  at whatever the personal property                                                               
tax is that's established within that  borough."  If it annexes a                                                               
mine, it will move the personal  property tax levy up to be equal                                                               
with others  in that borough.   The bill will  restrict severance                                                               
taxes on the actual minerals being  extracted, and the term is 15                                                               
years after  production begins, then  the community can  levy its                                                               
tax.  Facilities that the public  use will not be taxed, under HB
280, he concluded.                                                                                                              
                                                                                                                                
2:25:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAPSNER asked which mines this is directed at.                                                                   
                                                                                                                                
MR. POUND said for now it is for Pogo and Donlin Creek.                                                                         
                                                                                                                                
REPRESENTATIVE KAPSNER asked the life expectancy of the mines.                                                                  
                                                                                                                                
MR. POUND said he thinks Pogo is 20 years and Donlin is longer.                                                                 
                                                                                                                                
REPRESENTATIVE KAPSNER said she thought it was 15 years.                                                                        
                                                                                                                                
REPRESENTATIVE GATTO  noticed that mines producing  less than $10                                                               
million are  exempt, and he  asked if a  large, new mine  will be                                                               
exempt until the day it produces at that minimum.                                                                               
                                                                                                                                
MR. POUND said the legislation is written to help small mines.                                                                  
                                                                                                                                
REPRESENTATIVE GATTO repeated his question.                                                                                     
                                                                                                                                
MR.  POUND  said  they  will  not  pay  taxes  until  they  start                                                               
producing $10 million worth of minerals.                                                                                        
                                                                                                                                
2:27:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX said  this also  applies to  boroughs that                                                               
already are incorporated.                                                                                                       
                                                                                                                                
MR. POUND said, "It does if they decide to annex a mine."                                                                       
                                                                                                                                
REPRESENTATIVE LEDOUX said Section  3 says municipalities may not                                                               
impose a  severance tax other  than a tax imposed  before January                                                               
1, 2006.  Suppose they already have  a mine but they don't have a                                                               
severance tax, even  if they are an organized borough.   Can they                                                               
impose a severance tax? she asked.                                                                                              
                                                                                                                                
MR. POUND said only if they impose it before January 1, 2006.                                                                   
                                                                                                                                
2:28:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON asked about current severance tax rates.                                                                  
                                                                                                                                
MR. POUND said he didn't know.                                                                                                  
                                                                                                                                
REPRESENTATIVE SEATON asked if the  bill relates only to personal                                                               
and not real property.                                                                                                          
                                                                                                                                
MR. POUND said it is real and tangible personal property.                                                                       
                                                                                                                                
2:29:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  asked, "So the exclusion  from taxation or                                                               
the ability for  the municipalities to impose taxes,  up to their                                                               
limit, is  that on personal  property, but they're  excluded from                                                               
putting their current rate on real property?"                                                                                   
                                                                                                                                
MR. POUND said municipalities should be  able to tax the same way                                                               
they tax  any business within  the borough.  The  assessment will                                                               
be done by the state, he added.                                                                                                 
                                                                                                                                
2:30:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  asked if a  mine within a  current borough                                                               
will now be assessed by the state.                                                                                              
                                                                                                                                
MR.  POUND said  in  an existing  borough a  mine  will still  be                                                               
assessed  by the  municipality, and  he gave  the example  of the                                                               
Fort Knox mine in Fairbanks.                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON  said  the  only  reduction  in  tax  that                                                               
Fairbanks will see for the Fort  Knox mine will be the limitation                                                               
on imposing severance taxes.                                                                                                    
                                                                                                                                
MR.  POUND said  that  was correct,  unless  Fairbanks imposes  a                                                               
severance tax before January.                                                                                                   
                                                                                                                                
2:30:54 PM                                                                                                                    
                                                                                                                                
CATHY WASSERMAN, Alaska Municipal League  (AML), said she has not                                                               
seen the latest copy of HB  280.  She thanked the mining industry                                                               
for  talking to  AML about  it.   The municipal  league was  very                                                               
concerned  about  the state  making  deals  with an  industry  on                                                               
taxing that  would take place  in a  potential new borough.   She                                                               
said she needs to look at  the CS and its severance tax addition,                                                               
but she is glad that the cap for the new borough was removed.                                                                   
                                                                                                                                
2:32:35 PM                                                                                                                    
                                                                                                                                
CO-CHAIR RAMRAS  said he  had the same  concern as  the municipal                                                               
league.  His  North Star Borough has the Fort  Knox mine, and the                                                               
Pogo mine  is 80-90 miles  from the  borough, and there  has been                                                               
some talk  of annexing it.   He said he  is in favor of  the self                                                               
assessment tax of  4 mills where there is no  tax now being paid.                                                               
He said 6  mills in an organized borough was  a concern because a                                                               
mine might go  to court to try to lower  their existing mill rate                                                               
to the 6-mill  rate.  There is  now no mechanism to  use the bill                                                               
to get out of  taxes, he said.  If a place like  Pogo mine was at                                                               
6 mills, in the original HB  280 the community of Delta could not                                                               
raise it if it  annexed it, so it could have  ended up lower than                                                               
the other commercial businesses for fifteen years, he said.                                                                     
                                                                                                                                
2:35:14 PM                                                                                                                    
                                                                                                                                
CO-CHAIR RAMRAS  said those  are the concerns  that he  had while                                                               
redrafting the bill, and he asked if AML is more comfortable.                                                                   
                                                                                                                                
MS. WASSERMAN  said it is better  but AML wants to  look over the                                                               
severance  tax  provision.    If  the mine  is  annexed  into  an                                                               
organized borough,  would that mine  be paying less  than another                                                               
mine that was already in the borough, she asked?                                                                                
                                                                                                                                
CO-CHAIR  RAMRAS  said there  shouldn't  be  any lack  of  parity                                                               
within  an  borough.   He  said  the  concern is  precluding  the                                                               
development of  a mine because a  community of 25 people  makes a                                                               
borough in order to get the mine to pay for the community.                                                                      
                                                                                                                                
2:36:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON asked  if Ms.  Wasserman is  familiar with                                                               
the Deltana Borough charter commission  and its letter saying the                                                               
purpose of the bill is to prevent borough formation.                                                                            
                                                                                                                                
MS. WASSERMAN said  AML has not addressed that  issue and focused                                                               
on the point  that taxes should be a local  decision.  The letter                                                               
has good points that could lead into good discussions, she said.                                                                
                                                                                                                                
2:38:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON asked if the  state assessor can comment on                                                               
the Deltana Borough charter commission letter.                                                                                  
                                                                                                                                
STEVE VAN  SANT, State Assessor, Division  of Community Advocacy,                                                               
Department  of  Commerce,  Community, and  Economic  Development,                                                               
Anchorage, said the  department worked on this  bill with Senator                                                               
Therriault without any  public input.  He said he  is an assessor                                                               
so everything is  black and white.  He stated  that he "looked at                                                               
not  having  one  entity  shouldering the  entire  burden  for  a                                                               
community."   "The severance  tax issue was  an issue,"  he said.                                                               
He  added that  resources are  the property  of the  residents of                                                               
Alaska, so if  a severance tax is levied, it  should be levied by                                                               
the state, and it should be  consistent.  He said it appears that                                                               
some communities  use the  severance tax  to hold  mines hostage.                                                               
"We made recommendations based on the good of the state."                                                                       
                                                                                                                                
2:40:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON asked Mr. Van  Sant if he is proposing that                                                               
fishing communities do the same with their severance tax.                                                                       
                                                                                                                                
MR. VAN  SANT said the CS  is only referring to  minerals.  There                                                               
are only  two communities that  have a severance tax,  Kodiak and                                                               
Denali, he stated.                                                                                                              
                                                                                                                                
2:41:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAPSNER asked average mill rates.                                                                                
                                                                                                                                
MR. VAN  SANT said  it is  15.226 in Fairbanks  and 6.61  for the                                                               
Greens Creek mine in Juneau.                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON said  Juneau has a rate of 6.61  for a mine                                                               
in a roadless area, and 11.5 if it is within the road system.                                                                   
                                                                                                                                
2:43:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON asked if a new  mine is limited to 4 mills,                                                               
and  then  it became  connected  to  the  road system,  could  it                                                               
increase?                                                                                                                       
                                                                                                                                
2:44:21 PM                                                                                                                    
                                                                                                                                
MR. VAN SANT said, "If a  new borough is formed, they're going to                                                               
pay 4 mills, unless  a local property tax is levied.   So if they                                                               
levy a  local property  tax ...  that's local  determination, the                                                               
state has nothing to  do with that.  I know we  have two or three                                                               
communities in the state that  have varying mill rates because of                                                               
lack of  access to  certain services  ... It would  be up  to the                                                               
local  community to  determine what  services they  are going  to                                                               
provide and whether or not  they're going to go with differential                                                               
tax zones in those areas."                                                                                                      
                                                                                                                                
REPRESENTATIVE SEATON  said if the borough  had differential mill                                                               
rates dependant on services available,  under this bill would the                                                               
tax structure still be allowed.                                                                                                 
                                                                                                                                
MR. VAN SANT said this bill would not touch a tiered mill levy.                                                                 
                                                                                                                                
CO-CHAIR RAMRAS  said there  is a storm  around certainty  of oil                                                               
and gas  taxes.   He said  his understanding  is that  the mining                                                               
industry just  wants to  bring some certainty,  and there  is "no                                                               
devil" in  this CS.   He said  it is a  forthright effort  by the                                                               
industry who  has come forward  with a self-assessment.   He said                                                               
the CS  brings stability  to an  industry that  we are  trying to                                                               
nurture along.                                                                                                                  
                                                                                                                                
MR. VAN  SANT said he thought  the first bill was  a problem, and                                                               
he was  incensed.   He said  it has  changed radically,  and, the                                                               
bill says now  "we will pay the same taxes  everybody else pays."                                                               
He said it  is good there is  an industry willing to  pay 4 mills                                                               
where it is paying none now.   He said, "Most of those exemptions                                                               
that were  there in the  first place, pretty much  exempted every                                                               
tax a  municipality could  levy.   It doesn't  read that  way any                                                               
more."   He said the  property tax will  be the same  as everyone                                                               
else, as well as the fees and excise taxes.                                                                                     
                                                                                                                                
2:49:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX asked  if a  municipality could  raise its                                                               
mill rate if it already has a severance tax.                                                                                    
                                                                                                                                
MR.  VAN  SANT said  he  is  not sure,  but  there  are only  two                                                               
municipalities levying a severance tax.                                                                                         
                                                                                                                                
REPRESENTATIVE LEDOUX  said that the  Lake and Pen Borough  has a                                                               
severance tax.                                                                                                                  
                                                                                                                                
MR. VAN SANT said they do not to his knowledge.                                                                                 
                                                                                                                                
2:50:15 PM                                                                                                                    
                                                                                                                                
STEVE  BORELL,  Executive  Director, Alaska  Miners  Association,                                                               
said it is  unique when an industry volunteers to  pay a new tax.                                                               
That tax  would be  a property  tax on  large mines  operating in                                                               
unorganized boroughs only, and it  would have a constant rate for                                                               
the first  15 years after production,  he said.  He  listed taxes                                                               
the  industry already  pays to  the  state.   In the  unorganized                                                               
borough,  there  is no  municipal  tax,  and  this is  where  the                                                               
industry is  proposing a  new tax,  he said.   He noted  that the                                                               
industry often complains of  uncertainty regarding prices, taxes,                                                               
and  regulations.   This  bill removes  the  tax uncertainty,  he                                                               
claimed.   "Given the  short time remaining  in this  session, we                                                               
urge  you  to  pass  this  bill  out  of  committee  as  soon  as                                                               
possible," he concluded.                                                                                                        
                                                                                                                                
2:53:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO  asked what the  benefits are to  the mining                                                               
industry.                                                                                                                       
                                                                                                                                
MR. BORELL  said stability.   He  said a mine  might look  like a                                                               
cash cow, and companies fear investing in the state.                                                                            
                                                                                                                                
2:55:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KAPSNER  said   4  mills   sounds  really   low,                                                               
especially since it is over 15 in Fairbanks.                                                                                    
                                                                                                                                
CO-CHAIR RAMRAS said to note the mines that are paying zero now.                                                                
                                                                                                                                
REPRESENTATIVE ELKINS said the bill goes to finance next.                                                                       
                                                                                                                                
2:56:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAPSNER asked how 4 mills was derived.                                                                           
                                                                                                                                
MR. BORELL said it is the school contribution amount.                                                                           
                                                                                                                                
REPRESENTATIVE GATTO said,  "The 4-mill giveback is  based on the                                                               
true and  real value of  personal property throughout  the entire                                                               
borough, and this would only be  four mills based on the property                                                               
of  a mining  operation providing  it had  $10 million.  That's a                                                               
pretty wide distinction, isn't it?"                                                                                             
                                                                                                                                
MR.  BORELL answered:  "If the  assessed value  is more  than $10                                                               
million--and the  purpose of that  was to make the  assessors job                                                               
significantly easier  because you don't  have to worry  about the                                                               
mom  and pops."   He  added that  right now,  the other  entities                                                               
within the organized boroughs pay nothing at all.                                                                               
                                                                                                                                
REPRESENTATIVE  GATTO  asked  if Delta  Junction  is  considering                                                               
incorporating.                                                                                                                  
                                                                                                                                
MR. BORELL said it is.                                                                                                          
                                                                                                                                
REPRESENTATIVE  GATTO  said  Delta Junction  has  been  extremely                                                               
resistant to incorporating.  "What  is bringing about this change                                                               
of attitude," he asked.                                                                                                         
                                                                                                                                
2:58:59 PM                                                                                                                    
                                                                                                                                
MR. BORELL said he doesn't know.                                                                                                
                                                                                                                                
JAMES  FUGUE,   Donlin  Creek  Project  and   Council  of  Alaska                                                               
Producers, said this bill is  about bringing certainty to the tax                                                               
structure in  the unorganized  borough.  He  said his  company is                                                               
facing an  investment decision with  Donlin Creek mine,  and with                                                               
an unknown tax structure, it  can't refine its investment models.                                                               
He  noted that  the bill  has generated  important dialogue.   He                                                               
said mill rates  across Alaska are very variable,  and for Donlin                                                               
Creek, 1 mill on  a $1 billion project is $1 million.   A $4 mill                                                               
property tax  would start out  at $4 million  per annum, and  a 6                                                               
mill property tax  would be of the order of  $6 million, and that                                                               
is what the Red Dog mine is paying, he declared.                                                                                
                                                                                                                                
REPRESENTATIVE KAPSNER asked the life expectancy of Donlin.                                                                     
                                                                                                                                
MR. FUGUE said 15 years is the number the company uses.                                                                         
                                                                                                                                
3:02:23 PM                                                                                                                    
                                                                                                                                
CO-CHAIR RAMRAS  asked what the  assessed value will be  after 15                                                               
years if it remains unorganized.                                                                                                
                                                                                                                                
MR.  VAN SANT  said after  fifteen years  this tax  goes away  if                                                               
there is no organized municipality.                                                                                             
                                                                                                                                
REPRESENTATIVE SEATON said the bill  states there can be no taxes                                                               
measured on  the gross or  net income from the  taxable property,                                                               
and he asked if it precludes the state corporate income tax.                                                                    
                                                                                                                                
3:03:58 PM                                                                                                                    
                                                                                                                                
BRETT  FRIED, Economist,  Department of  Revenue, said  he hasn't                                                               
had a chance to read the CS.                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON  said  he  also   wants  to  know  if  the                                                               
transportation  of minerals  and mining  transportation companies                                                               
would be  free of taxation.   He said he  wants to make  sure the                                                               
substitution  of   taxes  only  includes  taxes   that  would  be                                                               
authorized by a municipality and not taxation by the state.                                                                     
                                                                                                                                
3:05:46 PM                                                                                                                    
                                                                                                                                
MR. FRIED said he doesn't know.                                                                                                 
                                                                                                                                
CO-CHAIR  SAMUELS  said  the  way  he  reads  the  severance  tax                                                               
provision is  that if it  exists now, it  will stay.   Other than                                                               
that, only  the state has that  right, he stated.   "I agree with                                                               
the bill on the  whole.  Someone who is going to  go in and spend                                                               
tens of millions  of dollars, and the local  government just sits                                                               
and waits and  waits, till you can't get your  money back out and                                                               
it  goes click.   It  is  almost a  game of  gotcha, because  you                                                               
cannot take  your equipment and go  anywhere else."  He  said the                                                               
amount  can be  argued,  but the  state still  has  the right  to                                                               
impose a severance tax, so he thinks it is a good compromise.                                                                   
                                                                                                                                
3:07:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ELKINS  said there are some  unanswered questions,                                                               
but this late in the session it should be moved on.                                                                             
                                                                                                                                
REPRESENTATIVE SEATON said  the direction of the CS  is good, but                                                               
there are questions  that need to be answered.   He said he wants                                                               
to know about taxes imposed before January 1, 2005.                                                                             
                                                                                                                                
CO-CHAIR RAMRAS said the first draft  was a Trojan horse with the                                                               
devil inside.   The references on lines 12-14 relate  to the Pogo                                                               
and Fort Knox mines, and any  other existing mine operations.  "I                                                               
did not want an  ability for someone with a Fort  Knox to be able                                                               
to use  this vehicle to  go back and skinny  their way out  of an                                                               
existing tax.   The date was selected because as  of now, Pogo is                                                               
not in a borough, and Fort Knox  already is, so it puts a pivotal                                                               
date whereby Pogo is not in a borough and Fort Knox is.                                                                         
                                                                                                                                
3:10:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  said she feels uncomfortable  with Section                                                               
3.  People know the mill rate can  go up when they buy a house or                                                               
a lodge, so the municipality should retain that prerogative.                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO said  gravel extracted  in his  district is                                                               
not taxed, and Section 3 takes away  the ability to levy a tax on                                                               
the gravel after January.                                                                                                       
                                                                                                                                
CO-CHAIR RAMRAS  said the  gravel pit land  is probably  taxed at                                                               
the current mill rate.                                                                                                          
                                                                                                                                
3:12:33 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SAMUELS said the borough  has property tax, but if there                                                               
isn't  a  severance  tax  provision,  it  will  keep  mines  from                                                               
entering an unoccupied  borough.  "Once the  municipality has it,                                                               
and they  wish to change the  mill rate, that's up  to the people                                                               
of that community."  It will affect all property owners equally.                                                                
                                                                                                                                
3:13:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX said  Section  3 relates  to the  boroughs                                                               
that  are already  organized, so  there would  be those  sorts of                                                               
controls.                                                                                                                       
                                                                                                                                
REPRESENTATIVE SEATON  asked if a  rate change is precluded  on a                                                               
severance tax.   He wants  that question  answered.  He  asked if                                                               
the bill  only applies to the  $10 million mines or  on the small                                                               
ones.                                                                                                                           
                                                                                                                                
3:15:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR RAMRAS  said the  intention is to  protect "the  dad and                                                               
the kid that are mining" from a 4-mill tax.                                                                                     
                                                                                                                                
REPRESENTATIVE KAPSNER said  she is in favor of  the Donlin Creek                                                               
mine  but  her neighbors  upriver  are  talking about  forming  a                                                               
borough, and  the bill might preclude  that.  In order  to form a                                                               
borough state law  requires a 4 mill-school rate  and the borough                                                               
would need  to bond  for new  schools for  the children  from the                                                               
mining community.   It is also required to provide  for roads and                                                               
public safety, she explained.  Except  for this mine, there is no                                                               
way to cover those cost, and  she said she is concerned about the                                                               
upriver people  wanting to  set taxes,  but the  bill sets  it in                                                               
stone for the next 15 years.                                                                                                    
                                                                                                                                
CO-CHAIR  RAMRAS  said,  "It  is  4  mills  until  a  borough  is                                                               
organized,  and   if  those  communities  you're   talking  about                                                               
organized a  borough, and then they  set a mill rate  at 10, then                                                               
the  mine would  rise to  that mill  rate within  that area.   It                                                               
would rise to the prevailing mill  rate.  That was the difference                                                               
between  the 280  and  the  CS for  280;  it clarifies  precisely                                                               
that."                                                                                                                          
                                                                                                                                
REPRESENTATIVE KAPSNER said she was looking at the last version.                                                                
                                                                                                                                
3:20:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON said  if he  had  had the  CS earlier,  he                                                               
wouldn't need  to ask  so many  questions.  He  said he  wants to                                                               
address the Pebble mine with regard to  page 6, line 20.  He said                                                               
it looks like property used  for transportation of minerals could                                                               
be exempt from the tax.                                                                                                         
                                                                                                                                
MR. VAN SANT  said, "This is the exact same  question we asked in                                                               
the  Senate Community  and Regional  Affairs Standing  Committee.                                                               
The language changed a little  bit, and under this, nothing would                                                               
be  taxable, so  obviously  there's a  typo here."    He said  he                                                               
thinks  it was  meant to  say, "that  is located  in municipality                                                               
organized before January  1, 2005."  He said,  "Obviously we need                                                               
to change this one ... I don't know where it came from."                                                                        
                                                                                                                                
3:22:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON  said with  this  language,  the dock  and                                                               
transportation facilities for the Pebble mine wouldn't be taxed.                                                                
                                                                                                                                
MR.  VAN SANT  said the  intent is  that the  facilities open  to                                                               
public use would  be exempt from this tax, which  doesn't need to                                                               
be in the bill because the department wouldn't assess it anyway.                                                                
                                                                                                                                
3:23:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  said he would like  a conceptual amendment                                                               
to fix it before it leaves the committee.                                                                                       
                                                                                                                                
The committee took an at-ease from 3:24 to 3:25.                                                                                
                                                                                                                                
3:25:39 PM.                                                                                                                   
                                                                                                                                
REPRESENTATIVE SEATON  offered conceptual  Amendment 1  to delete                                                               
lines 20 - 21 on Page 6.                                                                                                        
                                                                                                                                
REPRESENTATIVE CRAWFORD objected and asked what that would do.                                                                  
                                                                                                                                
REPRESENTATIVE SEATON  explained that the CS  reads that property                                                               
or dock facilities  used for transportation and  located within a                                                               
city or  municipality are  not taxable,  and Amendment  1 deletes                                                               
that language,  so that  those properties  will be  assessed just                                                               
like all private facilities.                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD  withdrew his  objection; there  being no                                                               
further objection, Amendment 1 carried.                                                                                         
                                                                                                                                
3:27:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO  requested  a  clarification  on  severance                                                               
taxes referred to  in Section 3, Page  2.  If there  is a minimal                                                               
tax  currently  imposed,  he  asked,  will  the  municipality  be                                                               
restricted from raising it?                                                                                                     
                                                                                                                                
3:28:30 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   SAMUELS  said   he  reads   that  a   municipality  is                                                               
grandfathered in if it has a tax, and it can raise it.                                                                          
                                                                                                                                
REPRESENTATIVE LEDOUX suggested asking legal services.                                                                          
                                                                                                                                
CO-CHAIR RAMRAS said the House Finance Committee can do that.                                                                   
                                                                                                                                
REPRESENTATIVE SEATON said  he asked for that  question to follow                                                               
the bill, so it will be answered in the next committee.                                                                         
                                                                                                                                
3:29:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAPSNER  moved  to  report HB  280,  labeled  24-                                                               
LS0933\F,  Kurtz,  3/2/05  as  amended,  out  of  committee  with                                                               
individual recommendations and the accompanying fiscal notes.                                                                   
                                                                                                                                
There being no objection, CSHB 280(RES) passed out of committee.                                                                
                                                                                                                                
3:29:57 PM                                                                                                                    
HJR 17-FEDERAL LANDS RECREATION ENHANCEMENT ACT                                                                               
                                                                                                                                
CO-CHAIR RAMRAS announced  that the next order  of business would                                                               
be  HOUSE JOINT  RESOLUTION NO.  17   Opposing the  Federal Lands                                                               
Recreation Enhancement Act.                                                                                                     
                                                                                                                                
JENNIFER  BAXTER,  Staff  to Representative  Jim  Elkins,  Alaska                                                               
State  Legislature,  said  HJR   17  opposes  the  Federal  Lands                                                               
Recreational Enhancement  Act, which  allows the  forest service,                                                               
park  service,  bureau  of land  management,  fish  and  wildlife                                                               
service,   and  bureau   of  reclamation   to  charge   fees  for                                                               
recreational use of  federally managed land by the  public.  Once                                                               
enacted,  fees will  be  required to  access  certain lands,  she                                                               
said.  She  noted that the federal government  manages two thirds                                                               
of Alaska  lands, and  a fee  would be  regressive and  impose an                                                               
undue burden  on rural people  who use  these lands.   She listed                                                               
other states that have suggested similar resolutions.                                                                           
                                                                                                                                
3:32:26 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SAMUELS  said he  buys a  sticker to  go to  the Chugach                                                               
State Park, so  he asked why the federal  government shouldn't do                                                               
the same thing.                                                                                                                 
                                                                                                                                
MS. BAXTER said it would be an  additional fee on top of what our                                                               
state already charges.                                                                                                          
                                                                                                                                
CO-CHAIR SAMUELS asked if there is a charge now.                                                                                
                                                                                                                                
MS. BAXTER said she doesn't believe so.                                                                                         
                                                                                                                                
CO-CHAIR  SAMUELS moved  to adopt  the committee  substitute (CS)                                                               
for HJR 17, labeled 24-LS0847\Y, as a work draft.                                                                               
                                                                                                                                
3:33:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SAMUELS  asked if a person  has to pay to  use a federal                                                               
park, like to raft in the Arctic National Wildlife Refuge.                                                                      
                                                                                                                                
MS. BAXTER  said, "The National  Park Service, right  now--one of                                                               
our  national forests  is the  Tongass National  Forest, and  our                                                               
state  isn't  charging access  fees,  currently,  to use  certain                                                               
lands,  and  I  don't  believe that  the  federal  government  is                                                               
charging fees  to use, like  the national forest service,  as far                                                               
as in Southeast that I know of."                                                                                                
                                                                                                                                
REPRESENTATIVE  LEDOUX   asked  if   the  policy  in   Alaska  is                                                               
different, because she recalls user fees for Yellowstone.                                                                       
                                                                                                                                
MS. BAXTER said she doesn't know.                                                                                               
                                                                                                                                
REPRESENTATIVE  GATTO mentioned  the federal  government's Golden                                                               
Eagle Pass for national parks.                                                                                                  
                                                                                                                                
MS. BAXTER said the federal resolution proposes an annual pass.                                                                 
                                                                                                                                
REPRESENTATIVE  GATTO said  HJR 17  tells the  government not  to                                                               
charge  for the  use of  federal  lands, but  it already  charges                                                               
through the Golden Eagle Pass, and  he asked if the resolution is                                                               
asking for an exemption.                                                                                                        
                                                                                                                                
MS.  BAXTER said,  "I believe  that  this is  an additional  fee.                                                               
What this  resolution would enact,  an additional fee to  what we                                                               
already pay the federal government for the use of public lands."                                                                
                                                                                                                                
REPRESENTATIVE  ELKINS  said this  is  about  all federal  lands.                                                               
"They  don't  charge you  today  to  go  hunting in  the  Tongass                                                               
National Forest, but they could."                                                                                               
                                                                                                                                
3:36:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX asked if the resolution exempts parks.                                                                    
                                                                                                                                
MS. BAXTER said it includes the National Park Service.                                                                          
                                                                                                                                
REPRESENTATIVE SEATON  said, "We have  been trying to  get people                                                               
that utilize  the woods for  -- the  greenies -- the  people that                                                               
are using  them for other  than hunting,  and that we've  had the                                                               
complaints that  only hunters pay  for the maintenance  of trails                                                               
and all these other  things.  Is the intent of  this to mean that                                                               
only hunters  will pay ...  through the hunting license  fees for                                                               
any of the  maintenance and everything on all  the federal lands,                                                               
recreational lands in Alaska?                                                                                                   
                                                                                                                                
MS. BAXTER asked  if Representative Seaton is asking if  it is in                                                               
addition to fees for a hunting license.                                                                                         
                                                                                                                                
REPRESENTATIVE  SEATON clarified  that  if recreationists  aren't                                                               
charged, only hunters will pay for federal lands.                                                                               
                                                                                                                                
MS. BAXTER  said,   "What these fees  would impose--they  say the                                                               
federal government  would--the tax  would go toward  that certain                                                               
site for maintenance, but our city  and borough taxes pay for the                                                               
facilities and  upkeep, as is.   So this would be  in addition to                                                               
what  we   are  already  paying   for  the  maintenance   of  the                                                               
facilities.  And it wouldn't just be restricted to hunters."                                                                    
                                                                                                                                
REPRESENTATIVE  ELKINS  said  his   hunting  fee  never  went  to                                                               
maintain any federal lands.                                                                                                     
                                                                                                                                
3:40:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  said he misspoke,  he didn't  mean hunting                                                               
licenses, but duck stamps and federal permits.                                                                                  
                                                                                                                                
REPRESENTATIVE OLSON moved to report HJR 17, labeled 24-                                                                        
LS0847\Y, out  of committee  with individual  recommendations and                                                               
the accompanying fiscal notes.                                                                                                  
                                                                                                                                
There being no objection, CSHJR 17(RES) passed out of committee.                                                                
                                                                                                                                
HCR 13-NATURAL GAS SPUR LINE CONSTRUCTION                                                                                     
                                                                                                                                
CO-CHAIR RAMRAS announced  that the next order  of business would                                                               
be   HOUSE  CONCURRENT   RESOLUTION  NO.   13     Expressing  the                                                               
legislature's support for the construction  of a natural gas spur                                                               
pipeline between Fairbanks and the  Nenana Basin and Southcentral                                                               
Alaska, commending  the interest  and initiative of  the sponsors                                                               
of that  project, and encouraging the  appropriate state resource                                                               
agencies to lend support to those efforts.                                                                                      
                                                                                                                                
JIM  POUND,  Staff to  Representative  Jay  Ramras, Alaska  State                                                               
Legislature, said HCR  13 would encourage the  development of the                                                               
stranded gas  in the Interior.   He  added that early  testing in                                                               
the  Nenana  region  indicates  there  could be  as  much  as  10                                                               
trillion cubic feet  of natural gas, and if it  pans out, it will                                                               
be stranded  until a pipeline  can be  built.  He  said Fairbanks                                                               
would have a difficult time consuming  that much gas, so the idea                                                               
is  for the  pipeline  to go  north  and south.    He noted  that                                                               
several companies  are working on  this project, and HCR  13 asks                                                               
the resource agencies to work with them.                                                                                        
                                                                                                                                
The committee took an at-ease from 3:43:50 PM to 3:43:58 PM.                                                                
                                                                                                                                
MR. POUND recommended  the following changes: on page  1, line 8,                                                               
delete "to  15 trillion" because  the actual estimate is  only 10                                                               
trillion; on Page 2, line 8,  insert ", LLC, Usibelli Energy LLC,                                                               
Arctic Slope Regional  Corporation";  and on Page 2,  line 9, add                                                               
"who have worked together and  Enstar has secured partial federal                                                               
funding".                                                                                                                       
                                                                                                                                
3:45:42 PM                                                                                                                    
                                                                                                                                
HAROLD  HEINZE,  Chief  Executive  Officer,  Alaska  Natural  Gas                                                               
Development Authority  (ANGDA), said  he supports  the resolution                                                               
and  has  suggestions.   He  said  on  line  6  and 9,  the  word                                                               
"reserves"   is  used,   which  implies   they  are   well-known,                                                               
discovered,   and  found,   so  he   suggests  using   "potential                                                               
reserves", "resource  base", or  "reserve base".   He  said there                                                               
are  no reserves  at  this  time in  the  Nenana  basin, and  the                                                               
reserves on the  North Slope at most are 35  trillion cubic feet.                                                               
He  added  that on  line  12,  page  2,  the term  "fastest  most                                                               
efficient" should not be used because that is unknown.                                                                          
                                                                                                                                
3:47:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO suggested striking  the word "reserves", and                                                               
use 35 trillion  instead of 100 trillion.  He  said he will offer                                                               
that as conceptual Amendment 1.                                                                                                 
                                                                                                                                
REPRESENTATIVE  CRAWFORD   said  he   objected  and   offered  an                                                               
amendment to  conceptual Amendment  1.  He  said 100  trillion is                                                               
the potential, and he  would like to keep it.   He said there are                                                               
35 trillion  cubic feet  of reserves, so  "take the  reserves out                                                               
and put resources, and we can say 100."                                                                                         
                                                                                                                                
REPRESENTATIVE  GATTO objected  to  the  amendment to  conceptual                                                               
Amendment  1 because  the number  "35" is  used extensively,  and                                                               
anyone  could say  there  is up  to 100  million,  but those  are                                                               
potential.                                                                                                                      
                                                                                                                                
REPRESENTATIVE CRAWFORD said "Or you  can leave the 'reserves' in                                                               
there and say  '35', but to take 'reserves' out  and just say '35                                                               
trillion potential resource' is a misnomer."                                                                                    
                                                                                                                                
3:50:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO said change the '35' and keep 'reserves'.                                                                  
                                                                                                                                
CO-CHAIR SAMUELS said, "If we use the word 'reserves', we have                                                                  
to use the '35'.  If we want to use '100', then we use the word                                                                 
'resource'."                                                                                                                    
                                                                                                                                
3:51:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD withdrew the amendment to conceptual                                                                    
Amendment 1.                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO restated conceptual Amendment 1 to read:                                                                   
delete "100" and add "35".                                                                                                      
                                                                                                                                
There being no objection, conceptual Amendment 1 carried.                                                                       
                                                                                                                                
3:52:32 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SAMUELS offered Amendment 2, as follows:                                                                               
                                                                                                                                
     Page 1, line 8, following "estimated 10"                                                                                   
          Delete "to 15"                                                                                                        
     Page 1, line 9,                                                                                                            
          Delete "reserves"                                                                                                     
          Insert "resources"                                                                                                    
                                                                                                                                
There being no objection, Amendment 2 carried.                                                                                  
                                                                                                                                
CO-CHAIR RAMRAS offered Amendment 3, as follows:                                                                                
                                                                                                                                
     Page 2, line 8, following "Andex Resources"                                                                                
          Insert ", LLC, Usibelli Energy, LLC,"                                                                                 
                                                                                                                                
     Page 2, line 9, following "ENSTAR Natural Gas Company"                                                                     
          Delete ","                                                                                                            
          Insert "Arctic Slope Regional Corporation"                                                                            
                                                                                                                                
     Page 2, line 9, following "who have"                                                                                       
          Insert "worked"                                                                                                       
                                                                                                                                
     Page 2, line 9, following "together"                                                                                       
          Insert "and ENSTAR has"                                                                                               
                                                                                                                                
There being no objection, Amendment 3 carried.                                                                                  
                                                                                                                                
3:54:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ELKINS  moved  to  report  HCR  13,  labeled  24-                                                               
LS0943\Y,   as  amended,   out  of   committee  with   individual                                                               
recommendations and the accompanying fiscal notes.                                                                              
                                                                                                                                
There being no objection, CSHCR 13(RES) passed out of committee.                                                                
                                                                                                                                
SJR 16-STATES' RIGHT TO REGULATE HUNTING/FISHING                                                                              
                                                                                                                                
CO-CHAIR RAMRAS announced that the  final order of business would                                                               
be SENATE JOINT RESOLUTION NO.  16  Supporting legislation before                                                               
the  United  States Congress  that  reaffirms  the right  of  the                                                               
states to regulate hunting and fishing.                                                                                         
                                                                                                                                
DAVID  STANCLIFF,  Staff  to  Senator  Therriault,  Alaska  State                                                               
Legislature, said SJR 16 goes to  the heart of a conflict "that's                                                               
existed  in Alaska  for a  number  of years."   He  said over  50                                                               
percent  of  the prime  hunting  areas  have been  eliminated  in                                                               
Alaska through various resource designations.   He noted that the                                                               
courts  told Arizona  it couldn't  have  differential access  for                                                               
resident and  non-resident hunters.  The  resolution supports two                                                               
bills  before   Congress  that  clarify   that  states   do  have                                                               
management  authority  and  the right  to  differentiate  between                                                               
residents  and  non-residents.    He  opined  that  this  is  not                                                               
divisive between  rural and urban  users, but  it is a  matter of                                                               
state sovereignty.                                                                                                              
                                                                                                                                
3:57:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  OLSON moved  to report  SJR 16  out of  committee                                                               
with individual recommendations and accompanying fiscal notes.                                                                  
                                                                                                                                
There being no objection, SJR 16 passed out of committee.                                                                       
3:58:41 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 3:58 p.m.                                                                 
                                                                                                                                
                                                                                                                                

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