Legislature(2017 - 2018)BARNES 124

02/28/2018 01:00 PM House RESOURCES

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01:03:10 PM Start
01:04:02 PM Presentation(s): Alaska Minerals Commission
01:56:29 PM HB355
02:36:59 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation: AK Minerals Commission by: TELECONFERENCED
- Lance Miller
- Bronk Jorgenson
- Rob Retherford
-- Testimony <Invitation Only> --
Heard & Held
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                       February 28, 2018                                                                                        
                           1:03 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Andy Josephson, Co-Chair                                                                                         
Representative John Lincoln, Vice Chair                                                                                         
Representative Harriet Drummond                                                                                                 
Representative Justin Parish                                                                                                    
Representative Chris Birch                                                                                                      
Representative DeLena Johnson                                                                                                   
Representative George Rauscher                                                                                                  
Representative David Talerico                                                                                                   
MEMBERS ABSENT                                                                                                                
Representative Geran Tarr, Co-Chair                                                                                             
Representative Mike Chenault (alternate)                                                                                        
Representative Chris Tuck (alternate)                                                                                           
COMMITTEE CALENDAR                                                                                                            
PRESENTATION(S):  ALASKA MINERALS COMMISSION                                                                                    
     - HEARD                                                                                                                    
HOUSE BILL NO. 355                                                                                                              
"An Act  relating to the  crime of criminally  negligent burning;                                                               
relating to protection  of and fire management  on forested land;                                                               
relating to prohibited acts and  penalties for prohibited acts on                                                               
forested land; and providing for an effective date."                                                                            
     - HEARD & HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 355                                                                                                                  
SHORT TITLE: FIRE;FOREST LAND; CRIMES;FIRE PREVENTION                                                                           
SPONSOR(s): REPRESENTATIVE(s) GUTTENBERG                                                                                        
02/16/18       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/16/18       (H)       RES, JUD                                                                                               
02/28/18       (H)       RES AT 1:00 PM BARNES 124                                                                              
WITNESS REGISTER                                                                                                              
LANCE MILLER PhD., Chair                                                                                                        
Alaska Minerals Commission                                                                                                      
Division of Economic Development                                                                                                
Department of  Commerce, Community  & Economic  Development; Vice                                                               
President, Natural Resources                                                                                                    
NANA Regional Corporation                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:     Co-provided  a  PowerPoint  presentation                                                             
entitled,  "Alaska  North to  Opportunity  Report  of the  Alaska                                                               
Minerals Commission," dated January 2018.                                                                                       
ROB RUTHERFORD, Member                                                                                                          
Alaska Minerals Commission                                                                                                      
Division of Economic Development                                                                                                
Department of Commerce, Community & Economic Development; Owner                                                                 
Alaska Earth Sciences                                                                                                           
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:     Co-provided  a  PowerPoint  presentation                                                             
entitled,  "Alaska  North to  Opportunity  Report  of the  Alaska                                                               
Minerals Commission," dated January 2018.                                                                                       
REPRESENTATIVE DAVID GUTTENBERG                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Speaking as the sponsor, introduced HB 355.                                                              
JOHN "CHRIS" MAISCH, State Forester; Director                                                                                   
Division of Forestry                                                                                                            
Department of Natural Resources                                                                                                 
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:   Testified in support during  the hearing of                                                             
HB 355.                                                                                                                         
ANNE NELSON, Senior Assistant Attorney General                                                                                  
Natural Resources Section                                                                                                       
Civil Division(Anchorage)                                                                                                       
Department of Law                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions  during the hearing of HB
ACTION NARRATIVE                                                                                                              
1:03:10 PM                                                                                                                    
CO-CHAIR  ANDY  JOSEPHSON  called the  House  Resources  Standing                                                             
Committee  meeting  to  order  at   1:03  p.m.    Representatives                                                               
Josephson, Birch, Drummond,  Johnson, Parish, Rauscher, Talerico,                                                               
and Lincoln were present at the call to order.                                                                                  
^PRESENTATION(S):  ALASKA MINERALS COMMISSION                                                                                   
          PRESENTATION(S):  ALASKA MINERALS COMMISSION                                                                      
1:04:02 PM                                                                                                                    
CO-CHAIR  JOSEPHSON announced  that the  first order  of business                                                               
would be a presentation by the Alaska Minerals Commission.                                                                      
1:04:15 PM                                                                                                                    
LANCE  MILLER  PhD.,  Chair, Alaska  Minerals  Commission  (AMC),                                                               
Division  of   Economic  Development,  Department   of  Commerce,                                                               
Community  &  Economic  Development, informed  the  committee  he                                                               
works for NANA Regional Corporation.                                                                                            
1:04:46 PM                                                                                                                    
ROB RUTHERFORD,  Member, AMC,  informed the  committee he  is the                                                               
owner of  Alaska Earth  Sciences, which is  a consulting  firm to                                                               
the minerals and energy industries.                                                                                             
DR.  MILLER   introduced  a  PowerPoint   presentation  entitled,                                                               
"Alaska  North  to  Opportunity Report  of  the  Alaska  Minerals                                                               
Commission."   He pointed out  all the members of  the commission                                                               
are  appointed  thus  the  commission   is  not  a  trade  group.                                                               
Further,  seats on  the commission  are dispersed  by region  and                                                               
industry, in order to provide  broad coverage of the industry and                                                               
its related issues.  The current  report covers the past year and                                                               
the membership of the commission has changed (slides 1 and 2).                                                                  
MR. RUTHERFORD added  the role of the commission  is primarily to                                                               
look  for  constraints,  or  other   problems  that  address  the                                                               
minerals system,  and to support  the efforts of  the legislature                                                               
and state agencies (slide 1).                                                                                                   
DR.  MILLER said  the topics  for discussion  would be  AMC's top                                                               
priority, state  priorities, federal priorities, and  an industry                                                               
overview  of projects  (slide  3).   The  first  priority is  the                                                               
establishment of  a stable state  fiscal policy, which  is needed                                                               
so that  businesses can attract capital  for long-term investment                                                               
in the  industry, and upon  which is based  AMC's recommendations                                                               
for action (slide 5).                                                                                                           
MR.  RUTHERFORD  stressed  all  industries  need  consistency  in                                                               
policies with  a long-term view  toward issues such as  taxes and                                                               
DR.  MILLER  continued  to  the   second  priority:    reallocate                                                               
portions of  the state mining  license tax to  communities, while                                                               
precluding  targeted   local  severance  taxes.     He  explained                                                               
communities need  to feel they  are benefitting  from development                                                               
within their jurisdiction,  and this can be  accomplished by [the                                                               
mining] company, or  by returning some of the  money collected in                                                               
mining  license taxes  to a  community  impacted by  development,                                                               
thereby avoiding local severance taxes (slide 6).                                                                               
1:10:09 PM                                                                                                                    
MR.  RUTHERFORD said  the third  priority is  to urge  for strong                                                               
legislative  support  for the  minerals  industry  and for  state                                                               
agencies.   He said the Department  of Environmental Conservation                                                               
(DEC),  the  Department of  Natural  Resources  (DNR), and  other                                                               
agencies, have excellent staff and  services.  Further, AMC urges                                                               
the administration to let large  companies know Alaska is open to                                                               
business (slide 7).                                                                                                             
REPRESENTATIVE JOHNSON directed attention  to the fourth priority                                                               
and read as follows [original punctuation provided]:                                                                            
      Encourage the Governor's Administration to challenge                                                                      
        ballot initiatives that seek to regulate natural                                                                        
     resource development                                                                                                       
REPRESENTATIVE JOHNSON asked whether AMC  has taken a position on                                                               
[HB 199, introduced in the Thirtieth Alaska State Legislature].                                                                 
DR.  MILLER explained  AMC believes  the [Yes  for Salmon  ballot                                                               
initiative] to be detrimental to  all rural economic development.                                                               
He  said AMC  applauds the  administration for  its challenge  of                                                               
said initiative, and questions whether  the initiative process is                                                               
the  correct   approach  for   making  natural   resource  policy                                                               
decisions, instead  of the  state relying  on state  agencies and                                                               
staff (slide 8).                                                                                                                
CO-CHAIR  JOSEPHSON advised  a change  in the  initiative process                                                               
requires changes to the Alaska State Constitution.                                                                              
DR. MILLER agreed, and continued  to the fifth priority:  address                                                               
key state  regulations governing water  use.  He said  a waterway                                                               
designated as Tier 3 water quality  - which is a waterway with no                                                               
degradation whatsoever  - should be recommended  by agencies, but                                                               
designated by  the legislature, in order  to "take it out  of the                                                               
hands  of other  special  interest  groups"; similarly,  instream                                                               
flow reservations  for water  should be granted  to the  State of                                                               
Alaska  and not  to a  nongovernmental  agency, or  to a  private                                                               
interest  group,  because  this  is  an  appropriation  of  state                                                               
resources (slide 9).                                                                                                            
1:15:10 PM                                                                                                                    
MR. RUTHERFORD remarked:                                                                                                        
     ... it's a  balance.  Obviously, at  times industry has                                                                    
     to be  constrained, so if  we wanted a[n]  ... instream                                                                    
     flow restriction, then  we could apply for  one, but as                                                                    
     a balancing act,  it seems like the  agencies should be                                                                    
     the ones who have the final say.                                                                                           
CO-CHAIR  JOSEPHSON  recalled  public  opposition  prevented  the                                                               
passage of [HB  77, introduced in the  Twenty-Eighth Alaska State                                                               
1:16:05 PM                                                                                                                    
DR. MILLER  pointed out the U.S.  Environmental Protection Agency                                                               
(EPA) is directing the state  to formulate specific water quality                                                               
standards  for about  96 elements  and chemicals;  national human                                                               
health criteria  limit the  amount of fish  that can  be consumed                                                               
per  day to  about  6.5  grams of  fish,  including  salmon.   He                                                               
explained metals  end up in  fish, and salmon and  marine mammals                                                               
are  included  in  the  amount  of fish  that  can  be  consumed,                                                               
although salmon live much of  their lives in saltwater, which may                                                               
make an  influence on the metal  intake of mammals and  fish.  He                                                               
     ... what it could mean to  water quality is that ... if                                                                    
     you higher the consumption rate  of the fish you intake                                                                    
     ...  if you  go  by these  specific  criteria, for  the                                                                    
     amount of, say  selenium, then you're going  to have to                                                                    
     lower ...  the detection  limits for the  water quality                                                                    
     standards, O.K?   It basically  may make  it impossible                                                                    
     to, to permit a wastewater treatment plant.                                                                                
DR.  MILLER  advised he  brought  the  issue to  the  committee's                                                               
attention   because   it   is  intertwined   with   the   [water]                                                               
antidegradation issue.                                                                                                          
MR. RUTHERFORD  urged for the  committee to regard  opinions from                                                               
DEC staff on this issue.                                                                                                        
DR. MILLER added, "The human  health criteria are really intended                                                               
to  protect  the public  from  chemical  uptake through  drinking                                                               
water,   fish  consumption,   and  other   exposure  routes   for                                                               
waterborne  chemicals.     And  the   focus  has  been   on  fish                                                               
REPRESENTATIVE JOHNSON  surmised fish  absorb more metals  in the                                                               
ocean and questioned whether this has been proven by science.                                                                   
DR. MILLER  expressed his understanding EPA's  original limit for                                                               
the daily  consumption of fish  was 175 grams,  including salmon,                                                               
and  the  limit was  reduced  due  to  the influence  of  special                                                               
interest groups.                                                                                                                
1:20:35 PM                                                                                                                    
REPRESENTATIVE  JOHNSON asked  whether mercury  levels are  not a                                                               
problem in Alaska salmon.                                                                                                       
DR. MILLER  explained the issue  is not the actual  metal content                                                               
but the level of fish consumption.                                                                                              
DR.  MILLER, in  response  to Representative  Drummond, said  the                                                               
current rate is 6.5 grams per person, per day, excluding salmon.                                                                
1:22:13 PM                                                                                                                    
REPRESENTATIVE DRUMMOND questioned the  validity of the "numbers"                                                               
and pointed  out 6.5 grams  is less than 0.25  of an ounce.   She                                                               
agreed  there are  minerals found  in fish,  seafood, breastmilk,                                                               
and  other  places, which  is  a  valid  concern, and  urged  for                                                               
further  review of  the  science by  representatives  of all  the                                                               
relevant   disciplines,  such   as   health  agencies,   minerals                                                               
producers, and others.                                                                                                          
REPRESENTATIVE   PARISH  inquired   as  to   research  into   the                                                               
correlation  between the  minerals found  in fish  and the  heavy                                                               
metals found in their stream of origin.                                                                                         
MR.  RUTHERFORD explained  the research  tends to  be focused  on                                                               
specific  areas because  of proposed  development, a  fishery, or                                                               
"an industrial thing going on."   For example, there is data from                                                               
the Red  Devil area  relative to mercury  in the  streams flowing                                                               
into  the Kuskokwim  River; however,  it is  rare that  a project                                                               
would  have baseline  data collected  prior to  development.   He                                                               
concluded there is insufficient data.                                                                                           
1:25:07 PM                                                                                                                    
MR.  RUTHERFORD continued  to  the sixth  priority:   ensure  the                                                               
state defends  the mining  reclamation bond  pool.   He explained                                                               
miners put  money into  a [State  of Alaska  DNR State  Wide Bond                                                               
Pool]  fund  which  covers  a  large group  of  miners  for  poor                                                               
performance on  reclamation.  The  bond pool was  established for                                                               
small mines  - such as placer  mines - and has  worked very well,                                                               
thus AMC seeks  to maintain the state bond pool  for small mines.                                                               
However, the U.S.  Bureau of Land Management  (BLM) has suggested                                                               
a different  method of bonding for  small mines.  He  pointed out                                                               
in the last  25 years, the bond pool has  covered several hundred                                                               
operations per  year, and there  has never been an  incident that                                                               
required use of the bond pool (slide 10).                                                                                       
REPRESENTATIVE RAUSCHER  asked whether funds are  returned if the                                                               
bond pool is not used.                                                                                                          
MR.  RUTHERFORD surmised  the  pool is  maintained  at a  certain                                                               
level thus  contributions are  adjusted each  year, but  money is                                                               
not returned to the individual miners.                                                                                          
DR.  MILLER opined  - because  Alaska contains  large amounts  of                                                               
federal  lands   and  wetlands   -  it   is  important   for  the                                                               
administration  and  the legislature  to  work  with the  federal                                                               
government.   He continued  to the seventh  priority:   waters of                                                               
the U. S. should be defined  in accordance with the intent of the                                                               
Clean  Water  Act  (CWA).    [AMC]  supports  monitoring  federal                                                               
legislation  that defines  Waters of  the United  States (WOTUS),                                                               
according to the Clean Water Act (slide 11).                                                                                    
MR. RUTHERFORD stated BLM Resource  Management Plans (RMPs) are a                                                               
concern to  AMC because during  the Obama  era, BLM used  RMPs to                                                               
close areas  to further development.   For example,  a management                                                               
tool within RMPs, Area of  Critical Environmental Concern (ACEC),                                                               
was  used  to  lock  up  additional land  in  the  Central  Yukon                                                               
Resource Management Plan, which  he characterized as overreaching                                                               
by BLM.   [AMC] seeks to ensure the state  recognizes this issue,                                                               
as does  the Alaska congressional delegation,  and stressed these                                                               
lands are multiple use areas  (slide 12).  He cautioned regarding                                                               
the  consideration of  outdated  public land  orders and  federal                                                               
land withdrawals [priorities 9 and  11], AMC recommends the state                                                               
negotiate with BLM  to "free those areas up  to whatever multiple                                                               
use[s]  they  may have.    In  many  areas there  is  substantial                                                               
mineral potential  so these areas,  [within] public  land orders,                                                               
currently locked up  in there, or within withdrawals  ... we need                                                               
to keep the pressure  on to BLM to free those  up" (slides 13 and                                                               
1:30:42 PM                                                                                                                    
DR. MILLER directed  attention to priority 10:   ensure the state                                                               
defends Alaska's navigable waters and  access corridors.  He said                                                               
it  is critical  to have  access to  state lands  and to  address                                                               
navigability  issues,  and  urged   the  administration  and  the                                                               
legislature  to continue  to secure  access  corridors to  public                                                               
land, and  to Native  corporation and  other private  land (slide                                                               
DR.  MILLER directed  attention to  a  slide of  a map  entitled,                                                               
"Mining Activity  in Alaska," which illustrated  producing mines,                                                               
advanced  exploration projects,  other exploration  projects, and                                                               
communities  with mining  industry  employees.   Alaska has  five                                                               
metal  mines  and  one  coal   mine,  and  he  said  7,000-15,000                                                               
evaluations of  prospects occurred  to advance  the six  mines in                                                               
Alaska to production; in fact,  the chance of an occurrence being                                                               
developed  into  a mine  is  less  than  1.0  percent.   A  slide                                                               
entitled,  "Alaska mineral  development  timelines &  investment"                                                               
listed  successful mines,  those  in process,  and  two that  are                                                               
closed.   He  pointed  out  the difference  between  oil and  gas                                                               
development and mining  development in Alaska is  that to advance                                                               
a project to a decision to  mine takes about sixteen years and an                                                               
investment of  $250 million to  $300 million.  A  slide entitled,                                                               
"Typical  project  stages"  illustrated  the  stages  of  mineral                                                               
development from  exploration to  construction, and he  said this                                                               
is why mining  companies must have a "long view."   He provided a                                                               
slide  entitled,  "Competing for  Capital  on  a global  stage  -                                                               
depends  upon project  stage"  and pointed  out  capital that  is                                                               
needed  at  the  exploration  level  is  high  risk/high  return,                                                               
funding is  erratic, and the political/regulatory  environment is                                                               
critical.   At  the final  feasibility stage,  return on  capital                                                               
becomes more predictable  and with lower risk,  financing is more                                                               
available,  and  the   political/regulatory  environment  remains                                                               
critical.   Two graphs  provided by Orion  Resource Partners  - a                                                               
private  equity  group  -  illustrated  significant  declines  in                                                               
global exploration  budgets, from a  high in 2012, and  a decline                                                               
in capital expenditures,  from a high in 2009.   In Alaska, total                                                               
exploration dollars decreased from $300  million in 2012, to less                                                               
than $50  million, and  currently are  at $90  million, following                                                               
the  global trend.    A slide  entitled,  "Commodity prices  over                                                               
time:"  illustrated the  cyclicity of  metals on  the chart  of a                                                               
commodity  index dated  from 1749  to  2009.   Dr. Miller  stated                                                               
markets  fluctuate; for  example, he  provided a  slide entitled,                                                               
"Nominal & Real 2017$Zinc Price:"  and noted zinc is an important                                                               
metal export  for Alaska.  Red  Dog Mine came into  production in                                                               
1989, and  since then there have  been three spikes in  price, so                                                               
because  of periods  of low  prices, Red  Dog Mine  took fourteen                                                               
years to pay back its  capital, even though its feasibility study                                                               
predicted the payback period would be three to seven years.                                                                     
1:36:47 PM                                                                                                                    
REPRESENTATIVE  RAUSCHER questioned  whether planing  for a  mine                                                               
could  include  the intervals  between  the  spikes and  lows  in                                                               
price, which follow a pattern.                                                                                                  
DR. MILLER  agreed that's a  good idea, when possible.   Overall,                                                               
cycles last  about eight years.   For example, when the  price of                                                               
zinc is  up, many explore  to fill  the deficit in  supply; after                                                               
mines expand  and new  mines open, the  supply increases  and the                                                               
price  goes  down.   Also,  the  timeline of  development,  metal                                                               
cycles,  availability  of  capital,  and  permitting  all  create                                                               
chaos.   An operator  searching for base  metals seeks  a deposit                                                               
that will produce through at least two cycles.                                                                                  
REPRESENTATIVE RAUSCHER inquired  as to the cause  of the highest                                                               
spikes in price.                                                                                                                
DR. MILLER  credited the fundamentals  of supply and  demand, and                                                               
sometimes the influence  of world events.   He directed attention                                                               
to a  slide entitled,  "Zn example-price/mental  inventory" which                                                               
illustrated  zinc  price  and   inventory,  noting  as  inventory                                                               
declined,  price increased.    In 2007,  metal  stocks were  low,                                                               
which explains  the spike in  price shown on the  previous slide.                                                               
A slide  entitled, "Global  Demand Growth  will Continue  Even at                                                               
Lower Rates"  was a pie chart  of the global demand  for zinc and                                                               
the global  zinc consumption rate.   He noted  global consumption                                                               
is  increasing;  the  per  capital  annual  consumption  of  zinc                                                               
worldwide is  four pounds.   Dr. Miller described types  of mines                                                               
and informed  the committee that  placer mines  collectively make                                                               
up the equivalent  of one other large mine in  Alaska, are mostly                                                               
gold    mines,    and    represent   a    family's    livelihood.                                                               
Characteristics of other mining companies in Alaska are:                                                                        
     Junior mining companies                                                                                                  
   • main explorers and discoverers of new deposits                                                                             
   • small market capitalization                                                                                                
   • dependent on equity markets                                                                                                
   • high risk                                                                                                                  
   • examples of junior mining companies are Nova Gold,                                                                         
       Trilogy Metals, Millrock, Solitario, Constantine,                                                                        
     International Tower Hill, and Northern Dynasty                                                                             
     Mid-tier mining companies                                                                                                
   • operators                                                                                                                  
   • fairly large market capitalization                                                                                         
   • have access to public money, debt financing banks, and                                                                     
     royalty firms                                                                                                              
   • examples of mid-tier mine companies are Hecla Mining,                                                                      
     Red Dog Mine, Greens Creek, Usibelli Coal, Hudbay, and                                                                     
     Major mining companies                                                                                                   
   • larger projects                                                                                                            
   • vertically integrated through transportation and                                                                           
     fabrication, such as smelting                                                                                              
   • large market capitalization                                                                                                
   • low-cost debt                                                                                                              
   • global                                                                                                                     
   • examples of major mining companies are TECK, Barrick,                                                                      
     Anglo, Rio Tinto, BHP, MMG, Glencore, and Kinross                                                                          
DR.  MILLER  said  AMC  is  not  making  suggestions  related  to                                                               
infrastructure,  but  wishes  to  provide  information  on  other                                                               
jurisdictions.    For  example,  Canada has  funded  three  large                                                               
initiatives:   Yukon  Infrastructure program,  at a  cost of  CAD                                                               
$360 million; BC  Hydro transmission line, at a cost  of CAD $737                                                               
million; Ontario road system, at a  cost of CAD $900 million.  He                                                               
explained the  foregoing projects  were in  support of  mining or                                                               
rural   development;  however,   in   Alaska,  mining   companies                                                               
typically self-fund  and build their own  infrastructure that has                                                               
public benefits, such as the  Copper River Railway and the DeLong                                                               
Mountain  Transportation System.   Other  mining activities  were                                                               
illustrated on two maps that showed  in 2012, there were over 120                                                               
communities with  mining industry  employees, and in  2014, there                                                               
were  over 50  communities with  mining industry  employees.   He                                                               
concluded the  mining industry  provides more  local jobs  to the                                                               
Interior than any other industry.   For an example of benefits to                                                               
the  state, he  related NANA  Regional Corporation  received $1.7                                                               
billion in  royalties, and as  of last year has  distributed over                                                               
$1 billion in  Alaska Native Claims Settlement  Act Sections 7(i)                                                               
and  7(j) natural  resource revenue  distributions  to the  other                                                               
Alaska Native corporations.                                                                                                     
1:45:12 PM                                                                                                                    
REPRESENTATIVE  PARISH  returned  attention to  communities  with                                                               
mining industry employees, and inquired  as to the percentages of                                                               
resident  and nonresident  mining employees  in each  community -                                                               
between 2012 and today - and how many jobs moved out of state.                                                                  
DR.  MILLER offered  to provide  the requested  information -  he                                                               
said  he was  sure the  number of  employees has  increased since                                                               
2014  - and  added the  percentages of  resident and  nonresident                                                               
employees vary between each mine.                                                                                               
MR. RUTHERFORD  said the Alaska's  Minerals Industry  2016 report                                                               
by the  Division of Geological  & Geophysical Surveys, DNR,  is a                                                               
good source of information.  He remarked:                                                                                       
     We  did,  earlier,  take  the  numbers  of  the  actual                                                                    
     production and  the actual exploration funds  and as so                                                                    
     ... I'm  not sure if  there is a good  correlation, but                                                                    
     obviously, the more work that's  done, the more dollars                                                                    
     changing hands,  the more people  are working.   So, it                                                                    
     looks  like in  the  last, say,  three-year period  ...                                                                    
     whereas exploration dollars have  bottomed out and come                                                                    
     back slightly, the production side  has leveled and ...                                                                    
     dropped  just a  little  bit, but  stayed fairly  high:                                                                    
     $2.5 billion ... for total dollars.                                                                                        
DR.  MILLER  turned  attention to  Alaska's  position  in  global                                                               
mining and  a slide  provided by  the Fraser  Institute entitled,                                                               
"Global  Mining  Investment  Attractiveness   Ranking."    Of  91                                                               
jurisdictions, Alaska  ranks 10th overall because  of its mineral                                                               
potential and geology, but when  rated on uncertainty of existing                                                               
regulations, Alaska  ranks 41st.   He said  AMC's recommendations                                                               
are  to  address  the  low ranking  on  uncertainty  of  existing                                                               
CO-CHAIR  JOSEPHSON   related  South   America  and   Africa  are                                                               
continents  that  were  exploited  in  some  ways  during  recent                                                               
history.   He  posited, because  of economic  pressure and  civil                                                               
war, both  continents would  be more  attractive to  industry for                                                               
exploration  and  development.   For  example,  a mine  in  South                                                               
Africa  may  be  less  regulated  than  a  mine  in  Alaska,  and                                                               
therefore more inviting.                                                                                                        
1:50:06 PM                                                                                                                    
DR.  MILLER  opined  from  his experience  in  South  Africa  and                                                               
Russia,  the  idea   a  mining  company  is   attracted  by  less                                                               
regulation  is not  valid  -  except possibly  by  an explorer  -                                                               
because a major  mining company has a global image  and its stock                                                               
may be  affected by  negative reports  in social  media; further,                                                               
the  cost  of  capital  may  be  affected  by  certain  practices                                                               
identified by  the Dow  Jones Sustainability  Index.   In further                                                               
response  to  Co-Chair  Josephson,  he explained  the  Dow  Jones                                                               
Sustainability Index is an index  of companies that are viewed as                                                               
engaged  in  best  practices,  and thereby  have  lower  cost  of                                                               
capital financing.                                                                                                              
CO-CHAIR JOSEPHSON  clarified for inclusion in  said index, [Teck                                                               
Resources] must have qualified certain standards.                                                                               
DR.  MILLER said  correct.    He gave  an  example  of a  company                                                               
terminating a  partnership after  being held responsible  for the                                                               
partner's transgression.   Turning to  a local story, he  told of                                                               
the  1982  Haines  Consensus   and  subsequent  legislation  that                                                               
created  the Chilkat  Bald Eagle  Preserve and  the Haines  State                                                               
Forest  Management   Area  in  Haines.     He  pointed   out  the                                                               
signatories of  the Haines Consensus  included a wide  variety of                                                               
interest  groups,  and concluded  working  together  to solve  an                                                               
issue can result in both development and preservation.                                                                          
CO-CHAIR  JOSEPHSON questioned  whether the  consensus is  abided                                                               
DR. MILLER said it is.   He stated the proposed Constantine Metal                                                               
[Palmer Project] mineral deposit, located  in the area, was known                                                               
at the time of the consensus,  and described the slow pace of the                                                               
REPRESENTATIVE   LINCOLN  asked   what  AMC   expects  from   the                                                               
legislature in response to its presentation.                                                                                    
DR. MILLER  was unsure.   The members  of AMC are  volunteers who                                                               
prepare its  report; he suggested legislators  contact members to                                                               
garner support regarding their issues of interest.                                                                              
1:55:35 PM                                                                                                                    
REPRESENTATIVE PARISH  urged the members  of AMC to  advocate for                                                               
its top  priority:   the establishment of  a stable  state fiscal                                                               
REPRESENTATIVE BIRCH lauded AMC's efforts.                                                                                      
        HB 355-FIRE;FOREST LAND; CRIMES;FIRE PREVENTION                                                                     
1:56:29 PM                                                                                                                    
CO-CHAIR  JOSEPHSON announced  that the  final order  of business                                                               
would be  HOUSE BILL NO.  355, "An Act  relating to the  crime of                                                               
criminally negligent burning; relating  to protection of and fire                                                               
management  on forested  land; relating  to  prohibited acts  and                                                               
penalties  for prohibited  acts on  forested land;  and providing                                                               
for an effective date."                                                                                                         
1:57:12 PM                                                                                                                    
REPRESENTATIVE  DAVID   GUTTENBERG,  Alaska   State  Legislature,                                                               
sponsor  of  HB  355,  paraphrased  from  the  following  sponsor                                                               
statement [original punctuation provided]:                                                                                      
     Most  of   the  current   Division  of   Forestry  fire                                                                    
     prevention laws  were enacted in  1961. HB  355 updates                                                                    
     and  modernizes   the  wildland  fire   prevention  and                                                                    
     enforcement  statutes,   with  the  ultimate   goal  of                                                                    
     reducing the  number of human  caused fires  in Alaska.                                                                    
     This bill  reduces risks to  human life, loss  of homes                                                                    
     and  structures, extensive  property  damage, and  fire                                                                    
     suppression costs.                                                                                                         
     Current burning offenses  are unclassified misdemeanors                                                                    
     that  require  a  mandatory court  appearance  and  are                                                                    
     punishable by a fine of  between $100-$1,000 or 10 days                                                                    
     to  6  months  imprisonment.   The  bill  replaces  the                                                                    
     current   system   with   a   tiered   prevention   and                                                                    
     enforcement  structure,   similar  to  fish   and  game                                                                    
     violations.  Violations  of regulations  adopted  under                                                                    
     the  bill  that  would  be  "bail  schedule"  offenses,                                                                    
     allowing  DOF prevention  officers  to issue  citations                                                                    
     for violations  of these offenses. The  bill also gives                                                                    
     state  fire  prevention  officers more  flexibility  in                                                                    
     responding  to  burning  violations  and  investigating                                                                    
     wildland  fires.  "Knowing"   violations  of  the  bill                                                                    
     provisions  would   be  a  class  A   misdemeanor,  and                                                                    
     resolution would require a mandatory court appearance.                                                                     
     The  bill  also  addresses   enforcement  gaps  in  the                                                                    
     existing   arson  and   criminally  negligent   burning                                                                    
     statutes  in  AS  11.46,  makes  technical  changes  to                                                                    
     clarify the right of state  fire prevention officers to                                                                    
     enter   land   to   investigate   wildland   fire   and                                                                    
     establishes a  misdemeanor offense of  interfering with                                                                    
     this   right  of   access,  and   corrects  potentially                                                                    
     conflicting statutory provisions ..                                                                                        
     Over  the last  15 years,  the length  of the  wildland                                                                    
     fire  season and  amount of  acreage burned  each year-                                                                    
     especially  in   and  near   communities-has  increased                                                                    
     dramatically. The  statutes and regulations  that guide                                                                    
     our prevention and management of  wildland fire need to                                                                    
     keep pace  with these changes  which is why I  hope you                                                                    
     will join me in supporting this bill.                                                                                      
REPRESENTATIVE RAUSCHER  asked how  provisions in the  bill would                                                               
affect access to private land.                                                                                                  
REPRESENTATIVE GUTTENBERG deferred to legal counsel.                                                                            
1:59:53 PM                                                                                                                    
JOHN  "CHRIS" MAISCH,  State Forester  and Director,  Division of                                                               
Forestry  (division),  Department  of  Natural  Resources  (DNR),                                                               
expressed  his  support for  HB  355,  which would  reduce  human                                                               
caused  wildland  fires and  human  risk.   The  bill  modernizes                                                               
existing statute in  two areas:  to allow firefighters  to have a                                                               
tiered approach  to enforcement  when needed,  and to  expand the                                                               
education aspect of  the division's fire prevention  program.  He                                                               
explained Fire Prevention Officers  are firstly firefighters and,                                                               
secondly,  wildland fire  investigators who  determine the  cause                                                               
of, and  responsibility for,  a wildland  fire and  assess fiscal                                                               
recovery -  when appropriate -  through criminal and  civil legal                                                               
proceedings.  Fire Prevention Officers  do not carry guns and are                                                               
trained  to  withdraw when  necessary  and  seek assistance  from                                                               
Alaska State Troopers, Department of  Public Safety.  In response                                                               
to Representative Rauscher,  he said the division  already has in                                                               
statute the  right to  enter land  for the  suppression, control,                                                               
and prevention of  wildland fire, thus the bill  seeks to clarify                                                               
that  the  division  also  has   the  right  to  enter  land  for                                                               
investigative  purposes.   For example,  after a  fire starts  on                                                               
private land, part of the  control and suppression efforts are to                                                               
enter  the land  to  determine  the point  of  origin, which  may                                                               
include following the  path of the fire to other  private land to                                                               
investigate the source  and cause.  Mr. Maisch said  HB 355 would                                                               
clarify "that investigative piece  is included in the terminology                                                               
that we used in the previous statute."                                                                                          
REPRESENTATIVE  RAUSCHER  expressed  his understanding  the  bill                                                               
would mean  private property owners  give up their right  to give                                                               
permission to the division to investigate [on their property].                                                                  
MR. MAISCH  stated AS 41.15.040  provides the division  the right                                                               
to enter  land to prevent,  suppress, or control a  wildland fire                                                               
or  a destructive  agent.   Further, AS  41.15.950 allows  police                                                               
officers,  and  any  DNR  employees who  are  authorized  by  the                                                               
commissioner, to  request a warrant  from an officer or  court of                                                               
competent jurisdiction.   He restated  in an  immediate situation                                                               
during a fire, the division has  the right to enter private land;                                                               
after control of  a fire, the division must request  a warrant to                                                               
2:05:09 PM                                                                                                                    
REPRESENTATIVE RAUSCHER  surmised after a  fire is out,  the bill                                                               
allows access without seeking permission through a court order.                                                                 
MR. MAISCH clarified  after the fire is  controlled, the division                                                               
does not have authority to  enter land without permission, and if                                                               
access were  denied by the  landowner, a search warrant  would be                                                               
necessary.   In further response  to Representative  Rauscher, he                                                               
said  the  foregoing statement  applies  to  current statute  and                                                               
after the  change proposed by  HB 355.   In response  to Co-Chair                                                               
Josephson, he said the clarification  occurs in the bill [on page                                                               
2,  line  14]  in  Section  3, with  the  addition  of  the  word                                                               
REPRESENTATIVE  GUTTENBERG  gave an  example  of  a situation  in                                                               
which  an investigator  was not  present  during a  fire and  was                                                               
denied permission  for access  afterward:  A  warrant or  a court                                                               
order would be necessary.                                                                                                       
REPRESENTATIVE   RAUSCHER  asked   who  currently   completes  an                                                               
MR. MAISCH  said Division  of Forestry  employees are  trained to                                                               
investigate wildland fire origin  and cause; for more complicated                                                               
fires and those involving structures,  investigators are aided by                                                               
the office  of the Alaska  State Fire  Marshal/Director, Division                                                               
of  Fire and  Life Safety,  Department  of Public  Safety.   Fire                                                               
investigators staff each of the division's area offices.                                                                        
REPRESENTATIVE RAUSCHER  restated his question as  to the purpose                                                               
of proposed Section 3.                                                                                                          
MR.  MAISCH further  explained the  purpose is  to clarify  "that                                                               
investigating a  fire's cause  and origin  is also  covered under                                                               
this statute."  He deferred to the Department of Law (DOL).                                                                     
2:10:03 PM                                                                                                                    
ANNE   NELSON,  Senior   Assistant   Attorney  General,   Natural                                                               
Resources  Section, Civil  Division(Anchorage), DOL,  advised the                                                               
proposed  bill  would  not impact  the  constitutional  law  that                                                               
applies to  investigative searches  and privacy  protections, but                                                               
clarifies  the  activities  undertaken  by the  division  in  the                                                               
investigation of a fire, or when responding to an active fire.                                                                  
REPRESENTATIVE RAUSCHER restated his question.                                                                                  
MR. MAISCH further  explained the investigation aspect  - that is                                                               
implied in the  prevention language of the existing  statute - is                                                               
REPRESENTATIVE   BIRCH   expressed   his   understanding   if   a                                                               
firefighter  is  fighting a  fire  on  property and  views  items                                                               
perceived  to be  the cause  of the  fire, the  bill would  allow                                                               
those  items to  be  used in  court  at a  later  date, which  is                                                               
reasonable.    He opined  the  bill  is reasonable  and  provides                                                               
REPRESENTATIVE  LINCOLN questioned  whether the  bill applies  to                                                               
fires that  have been suppressed,  or only when  firefighters are                                                               
actively  fighting a  fire.   He  asked, "but  is  this also  the                                                               
expectation  that once  a fire  is suppressed,  and you're  going                                                               
back to  the scene  to investigate further,  at that  point would                                                               
you need to get the, a prior approval or a warrant ...?"                                                                        
2:13:49 PM                                                                                                                    
MR. MAISCH  answered after a fire  is out, when the  division has                                                               
permission   from  the   landowner,  it   can  proceed   with  an                                                               
investigation; if  not, it would  seek a warrant to  continue the                                                               
investigation.    Mr.  Maisch continued  to  the  most  important                                                               
aspect  of the  bill, which  provides the  division a  three-tier                                                               
enforcement  tool  to  address violations  of  burn  regulations.                                                               
Currently,  the  process  to  deal   with  minor  infractions  is                                                               
cumbersome,  therefore, the  division  typically issues  warnings                                                               
except  for the  most egregious  offenses.   HB 355  provides the                                                               
division with three  tiers of responses:  firstly,  a ticket with                                                               
a  predetermined bail  schedule  for an  infraction; secondly,  a                                                               
class A  misdemeanor offense; thirdly,  B and C  felony offenses.                                                               
In  addition,  the  bill  clarifies  two  types  of  firefighting                                                               
techniques - more  commonly referred to as  burnouts or backburns                                                               
- under the civil immunity statute.                                                                                             
2:16:41 PM                                                                                                                    
CO-CHAIR  JOSEPHSON  asked whether  a  lawsuit  has been  brought                                                               
against the division or against firefighters.                                                                                   
MR.   MAISCH   recalled   there   was   a   lawsuit   challenging                                                               
discretionary immunity  related to the Miller's  Reach Fire [that                                                               
burned near  Houston, from  6/2/96 to 6/15/96].   He  added, "So,                                                               
since that  time we've  never had any  specific challenge  on the                                                               
discretionary immunity  ... unless we do  something that's beyond                                                               
our training  or knowledge base, and  then, of course, we  can be                                                               
held negligent, just like anybody  else."  Returning attention to                                                               
the bill,  he noted  the bill also  seeks to  replace terminology                                                               
that is  no longer in use,  and brings the statute  into a modern                                                               
REPRESENTATIVE GUTTENBERG assured the  committee a property owner                                                               
would  not  lose any  constitutional  rights;  after a  fire,  an                                                               
investigator still needs permission, or  a court order, to access                                                               
[private] property.  He reviewed other aspects of HB 355.                                                                       
CO-CHAIR JOSEPHSON pointed  out AS 41.15.150 -  which imposes one                                                               
to ten years  of imprisonment in the case of  malicious or wanton                                                               
setting of  a fire -  is deleted by the  bill.  He  asked whether                                                               
this sort of misconduct is  still addressed [within provisions of                                                               
HB 355].                                                                                                                        
MR. MAISCH  said yes; that type  of offense would be  raised to a                                                               
felony  or  arson charge,  or  a  misdemeanor, depending  on  the                                                               
gravity  of  the  offense.    In  further  response  to  Co-Chair                                                               
Josephson, he confirmed there is  still a differentiation between                                                               
accidental and wanton/malicious offenses.                                                                                       
REPRESENTATIVE PARISH directed  attention to the bill  on page 2,                                                               
beginning on  line 30  and continuing  to page  3, line  1, which                                                               
read as follows [in part]:                                                                                                      
     Sec.  41.15.060. Permits.  The  commissioner shall,  by                                                                    
     regulation, prescribe the conditions  of and the manner                                                                    
     for obtaining  a permit for  the setting of  fires, use                                                                  
     of burning  devices, and other  activities and  uses of                                                                  
     land that increase fire danger  [.FAILURE TO OBTAIN THE                                                                  
     REQUIRED  PERMIT, OR  VIOLATION OF  A CONDITION  OF THE                                                                    
     PERMIT IS A MISDEMEANOR].                                                                                                  
REPRESENTATIVE PARISH  asked whether fires  in a burn  barrel are                                                               
affected by the foregoing change.                                                                                               
2:21:44 PM                                                                                                                    
MR.  MAISCH said  no;  however, burn  barrels  and other  outdoor                                                               
fires  are required  to have  a  permit during  fire season,  and                                                               
permittees must contact  the division to verify it is  a safe day                                                               
for open burning in their area.                                                                                                 
CO-CHAIR JOSEPHSON noted  failure to get a permit  is currently a                                                               
misdemeanor, and questioned how this is changed by the bill.                                                                    
MR. MAISCH stated currently, one  who is burning without a permit                                                               
would get  a warning, except  for a  repeat offender, who  may be                                                               
issued  a violation  at  the option  of  the prevention  officer.                                                               
After passage  of HB  355, burning  without a  permit would  be a                                                               
minor offense listed on the  bail schedule, and a repeat offender                                                               
could  be issued  a citation.   In  further response  to Co-Chair                                                               
Josephson,  he said  a misdemeanor  would  be issued  for a  more                                                               
serious offense.  He deferred to Ms. Nelson.                                                                                    
CO-CHAIR JOSEPHSON surmised HB 355  reduces a penalty because the                                                               
offense is more manageable through a bail schedule.                                                                             
2:25:08 PM                                                                                                                    
MS.  NELSON  added  violations  of any  of  the  provisions  from                                                               
Section  6  through   new  Section  41.15.140,  are   a  class  A                                                               
misdemeanor or either  a bail schedule offense -  resolved by the                                                               
payment of a fine -  or a mandatory court appearance misdemeanor.                                                               
For  example, Section  6 would  make burning  without a  permit a                                                               
misdemeanor; however,  depending on regulations and  the proposed                                                               
bail  schedule, sentences  could be  resolved by  the payment  of                                                               
bail and would not be criminal in nature.                                                                                       
REPRESENTATIVE  TALERICO suggested  the intent  of changing  from                                                               
violations  to  a  noncriminal bail  schedule  is  so  prevention                                                               
officers can  respond appropriately to  an offense; in  fact, the                                                               
maximum punishment  for a class A  misdemeanor can be 30  days in                                                               
jail and a fine of $25,000.                                                                                                     
MS. NELSON  agreed.  She said  the bail schedule in  the bill has                                                               
an upper limit of $5,000,  and a violation approaching a criminal                                                               
penalty would require  a mandatory court appearance.   Ms. Nelson                                                               
characterized  bail  schedule  offenses  as  the  first  tier  of                                                               
prevention  and   "light  enforcement"   in  response   to  minor                                                               
CO-CHAIR  JOSEPHSON questioned  whether  the  court system  added                                                               
violations of the fire code to the bail schedule.                                                                               
MS.  NELSON  advised  the Alaska  Supreme  Court  needs  specific                                                               
statutory legislative  authority to  establish the  bail schedule                                                               
found in Section 21, subsection (b), of the bill.                                                                               
2:30:20 PM                                                                                                                    
REPRESENTATIVE PARISH  asked whether  tundra would  be considered                                                               
forested land.                                                                                                                  
MR. MAISCH  said the bill  defines forested land as  any burnable                                                               
organic material.  In further  response to Representative Parish,                                                               
he said the definition of  forested land is AS 41.15.170(3) which                                                               
       "forested land" includes all land on which grass,                                                                        
      brush, timber, and other natural vegetative material                                                                      
REPRESENTATIVE  PARISH suggested  that  definition would  include                                                               
farmland, tideland beach grass and seaweed.                                                                                     
MR. MAISCH said correct.                                                                                                        
2:33:45 PM                                                                                                                    
The committee took a brief at-ease.                                                                                             
CO-CHAIR JOSEPHSON set  the deadline for amendments to  HB 355 at                                                               
5:00 p.m. on 3/1/18.                                                                                                            
[HB 355 was held over.]                                                                                                         
2:36:59 PM                                                                                                                    
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 2:36 p.m.                                                                 

Document Name Date/Time Subjects
HB 355 Sectional Analysis 2.21.18.pdf HRES 2/28/2018 1:00:00 PM
HRES 2/28/2018 6:00:00 PM
HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355
HB 355 Sponsor Statement 2.21.18.pdf HRES 2/28/2018 1:00:00 PM
HRES 2/28/2018 6:00:00 PM
HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355
HB 355 Supporting Document- Expanded One Pager 2.21.18.pdf HRES 2/28/2018 1:00:00 PM
HRES 2/28/2018 6:00:00 PM
HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355
HB 355 Ver A 2.21.18.pdf HRES 2/28/2018 1:00:00 PM
HRES 2/28/2018 6:00:00 PM
HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355
DNR Fiscal Note, HB 355.pdf HRES 2/28/2018 1:00:00 PM
HRES 2/28/2018 6:00:00 PM
HRES 3/5/2018 1:00:00 PM
HB 355
Law Fiscal Note, HB 355.pdf HRES 2/28/2018 1:00:00 PM
HRES 2/28/2018 6:00:00 PM
HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355
Alaska Minerals Commission 2018 Report.pdf HRES 2/28/2018 1:00:00 PM
HRES Alaska Minerals Commission Presentation 2.28.18.pdf HRES 2/28/2018 1:00:00 PM
HB 355 Supporting Document- Alaska Fire Chiefs Letter of Support 2.28.18.pdf HRES 2/28/2018 1:00:00 PM
HRES 2/28/2018 6:00:00 PM
HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355