Legislature(1993 - 1994)
02/09/1994 08:15 AM House RES
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE
February 9, 1994
8:15 a.m.
MEMBERS PRESENT
Representative Bill Williams, Chairman
Representative Bill Hudson, Vice Chairman
Representative Con Bunde
Representative Pat Carney
Representative John Davies
Representative David Finkelstein
Representative Joe Green
Representative Eldon Mulder
MEMBERS ABSENT
Representative Jeannette James
OTHER LEGISLATORS PRESENT
Representative Carl Moses
COMMITTEE CALENDAR
HJR 50 Relating to the North Pacific Fishery
Management Council comprehensive
rationalization plan.
CSHJR 50(RES) ADOPTED AND PASSED OUT
OF COMMITTEE WITH INDIVIDUAL
RECOMMENDATIONS
*HB 333 "An Act amending the Alaska Land Act to
define the term `state selected land'
for the purpose of recognizing mining
locations, and giving retrospective
effect to the amendment; and providing
for an effective date."
CSHB 333(RES) ADOPTED AND PASSED OUT
OF COMMITTEE WITH INDIVIDUAL
RECOMMENDATIONS
(* First public hearing)
WITNESS REGISTER
REPRESENTATIVE CARL MOSES
Alaska State Legislature
State Capitol, Room 204
Juneau, Alaska 99801-1182
Phone: 465-4451
Position Statement: Prime sponsor HJR 50
RICK LAUBER, Representative
Pacific Seafood Processors Association
Chairman, North Pacific Fisheries Management Council
321 Highland Drive
Juneau, Alaska 99801
Position Statement: Supported HJR 50
OLE HARDER
1124 Rezanof Drive
Kodiak, Alaska 99615
Phone: 486-3448
Position Statement: Spoke on fishing industry
JACK PHELPS, Aide
Representative Pete Kott
State Capitol, Room 409
Juneau, Alaska 99801-1182
Phone: 465-3777
Position Statement: Gave Rep. Kott's sponsor statement
JERRY GALLAGHER, Director
Division of Mining
Department of Natural Resources
P.O. Box 107016
Anchorage, Alaska 99510-7016
Phone: 762-2165
Position Statement: Supported CSHB 333
PREVIOUS ACTION
BILL: HJR 50
SHORT TITLE: NPFMC COMPREHENSIVE RATIONALIZATION PLAN
SPONSOR(S): REPRESENTATIVE(S) MOSES
JRN-DATE JRN-PG ACTION
01/18/94 2097 (H) READ THE FIRST TIME/REFERRAL(S)
01/18/94 2097 (H) SPECIAL COMMITTEE ON FISHERIES,
RES
01/26/94 (H) FSH AT 08:30 AM CAPITOL 17
02/02/94 2214 (H) FSH RPT 3DP
02/02/94 2215 (H) DP: OLBERG, MOSES, PHILLIPS
02/02/94 2215 (H) -ZERO FISCAL NOTE (H.FSH) 2/2/94
02/02/94 (H) FSH AT 08:30 AM CAPITOL 17
02/02/94 (H) MINUTE(FSH)
02/09/94 (H) RES AT 08:15 AM CAPITOL 124
BILL: HB 333
SHORT TITLE: MINING LOCATIONS ON STATE SELECTED LAND
SPONSOR(S): REPRESENTATIVE(S)KOTT,Brice,Hudson,Phillips,
James,Olberg,Sanders,Toohey,Green
JRN-DATE JRN-PG ACTION
01/03/94 (H) PREFILE RELEASED
01/07/94 2014 (H) COSPONSOR(S): BRICE
01/10/94 2014 (H) READ THE FIRST TIME/REFERRAL(S)
01/10/94 2014 (H) RESOURCES, FINANCE
01/13/94 2054 (H) COSPONSOR(S): OLBERG, SANDERS
01/14/94 2084 (H) COSPONSOR(S): TOOHEY
01/19/94 2113 (H) COSPONSOR(S): GREEN
02/09/94 (H) RES AT 08:15 AM CAPITOL 124
ACTION NARRATIVE
TAPE 94-11, SIDE A
Number 000
The House Resources Committee was called to order by
Chairman Bill Williams at 8:18 a.m. Members present at the
call to order were Representatives Williams, Hudson, Bunde,
Carney, Davies, Finkelstein, and Mulder. Members absent
were Representatives Green and James.
CHAIRMAN BILL WILLIAMS announced a quorum was present. He
told committee members they would take up HJR 50 and HB 333.
HJR 50 - NPFMC COMPREHENSIVE RATIONALIZATION PLAN
CHAIRMAN WILLIAMS told committee members there is a draft
Resources Committee Substitute (CS) in their folders. The
CS was drafted to correct a technical error in the original
bill; page 2, line 12, in the whereas clause that states the
amount of money the Alaska seafood processing industry has
invested in shoreside processing plants. He said in the
original bill, the dollar amount was listed as one million
dollars, but it should have read one billion dollars.
Number 022
REPRESENTATIVE CARL MOSES, PRIME SPONSOR, HJR 50, said he
introduced the resolution to address a potential problem for
shore-based processors and the granting of Individual
Fishing Quotas (IFQs) to individual fish harvesters. He
stressed if consideration is not given to shore-based
processors, zero fish will be going to shore.
REPRESENTATIVE ELDON MULDER referring to page 1, line 13,
"WHEREAS the IFQ system would greatly reduce the volume of
groundfish and crab sold to shore-based processors;" asked
Representative Moses what basis he was using when saying the
volume will definitely be reduced.
REPRESENTATIVE MOSES responded that conceivably all fish
could be transferred to a mother ship off shore.
Number 046
REPRESENTATIVE CON BUNDE inquired if there are tax
considerations which encourage offshore processors not to
come to shore.
REPRESENTATIVE MOSES answered that was correct as many ports
have a sales tax.
REPRESENTATIVE BILL HUDSON said in reviewing page 2, it
states the dollar value paid to fish harvesters is $1.4
billion. He felt the figure quoted was high and asked if it
included salmon, groundfish and all types of crab, etc.
REPRESENTATIVE MOSES replied that was correct.
REPRESENTATIVE HUDSON asked what percentage of that figure
is nonresident.
REPRESENTATIVE MOSES said he did not know, but guessed that
the majority was nonresident. He stated the figure was
taken from a resolution passed by the city of Unalaska.
REPRESENTATIVE PAT CARNEY commented CSHJR 50(RES) contains
many numbers and he hoped they are accurate.
Number 077
RICK LAUBER, REPRESENTATIVE, PACIFIC SEAFOOD PROCESSORS
ASSOCIATION, AND CHAIRMAN, NORTH PACIFIC FISHERIES
MANAGEMENT COUNCIL, said the council is considering a
comprehensive rationalization of the groundfish and crab
fishers off the coast of Alaska and IFQs or Individual
Transferable Quotas (ITQs). From research completed by
several entities it was indicated that if an ITQ system is
granted only to harvesters and factory trawlers, the shore-
based industry in Alaska will go into a death spiral,
lasting 5-7 years before they go bankrupt. He said that
statement has been reviewed by the scientific and
statistical committee of the council and other economists
and has been verified.
MR. LAUBER stressed there are many reasons for the situation
including the fact that the factory trawl fleet and the
mother ship operation offshore operate at a lower price.
They are not burdened by the regulations which the shore-
based industry face. For example, if there are four people
working at a shore-based plant, according to the laws of the
state of Alaska, 240 square feet has to be provided for
sleeping accommodations whereas aboard ship, only 64 square
feet of floor space has to be provided.
MR. LAUBER pointed out that an ITQ is like a share of stock;
it is owned, it can be transferred and it can be used as
collateral. If a person has an IFQ share for one million
pounds of fish, a loan for 70 percent of the value of the
share can be secured and used to purchase more quota shares.
He said the real threat is from the factory trawl fleet.
MR. LAUBER mentioned the figures used in CSHJR 50(RES) were
prepared by Pacific Associates, a research group, and he
thought all of the numbers are official government numbers
received from various agencies. He stressed in the state's
traditional salmon and halibut fishing, the majority of
fishermen are Alaskans. However, in the offshore fisheries,
all of the factory trawlers are based outside of Alaska with
crews also from outside the state. He noted the shore-based
plants are all located in the state, paying local and state
taxes. When the Magnuson Act was passed in 1976, it was
hoped there would be benefits to the United States and to
the state of Alaska and to this point, there have been.
MR. LAUBER stressed if the ITQ system, which only grants
quota shares to harvesters, factory ships and factory
trawlers is used, there is a dangerous risk that the
economists are correct and within a few years, there will be
no shore-based processing plants for groundfish and crab.
He expressed support of CSHJR 50(RES).
Number 198
REPRESENTATIVE HUDSON asked if there should be language in
one of the WHEREAS clauses relating to ITQs.
MR. LAUBER responded it is not necessary, since the council
uses the terms IFQs and ITQs interchangeably and both are
understood.
REPRESENTATIVE MULDER recalling the $1.4 billion going to
out of state interests, asked if there are any steps the
legislature can take to reverse the problem.
MR. LAUBER responded there are many things which can be
done, none of which could immediately change the situation.
It is a matter of capital. There have been companies in
Alaska, owned by Alaskans, who as they grew larger, found
there was a need to compete which resulted in a need to move
their corporate offices out of Alaska. He gave several
examples of companies and their situations.
MR. LAUBER told members what is important to remember is
that those Alaskan-owned companies have an investment in
Alaska, not where they may have their corporate offices.
They are located in the state, they pay taxes here, they buy
locally, and have a commitment in the state. He said often
there is a hostile attitude regarding the regulatory process
in the state and gave examples of situations and large fines
being assessed. He felt that attitude often makes it
difficult for these companies to invest, expand or add
added-value facilities.
Number 327
REPRESENTATIVE MULDER asked Mr. Lauber if he had seen the
20/20 program on television showing problems with the
seafood industry and if so, questioned if there are ways to
insure the quality of the product.
MR. LAUBER stressed a television show like the 20/20 program
does horrible damage to the seafood industry. He said up
until recently, the state was putting money into the Alaska
Seafood Marketing Institute (ASMI) and currently, the
industry is putting a substantial amount of money into the
ASMI program. He noted that most of the television program
centered on the problem of what happens to the product after
it leaves the fishing vessel and the processing plant. The
program focused on fish markets, consumer markets or the
distribution point of seafood.
MR. LAUBER stated the standards which Alaska are held to are
far higher than any other state but once the product leaves
the state, it can be misused and there is not much the state
can do about it.
REPRESENTATIVE HUDSON mentioned he was distressed that the
program used Alaska posters, when in reality the subject
matter was not directly related to the product coming from
the state. He felt there needs to be a continued, expanded
effort by ASMI to educate consumers and institutions on how
to handle and use seafood as well as how to maintain the
quality of the product.
REPRESENTATIVE HUDSON asked if the study that Mr. Lauber
referred to earlier which provided the figures in CSHJR
50(RES) is available.
MR. LAUBER said it is available probably through
Representative Moses' office. He stressed the seafood
industry is interdependent. The companies who operate in
Alaska have a broad range of species and product forms which
they purchase and sell. What happens to companies in the
salmon market affects their general business health.
Therefore, it is true that ITQs on groundfish and crab might
not directly impact the salmon or halibut industry but it
does affect other industries.
REPRESENTATIVE HUDSON said there is some precedence, as a
percentage of the allocation was previously granted to
onshore processors.
MR. LAUBER replied that was correct and noted they are
currently operating under the inshore/offshore allocation
and will do so through 1995. The allocation includes:
fishermen delivering to inshore operations receive 35
percent; the offshore sector gets 75 percent; and 7 1/2
percent goes to the community development quota (CDQ)
program. He noted that in the Gulf of Alaska, the onshore
allocation is 100 percent.
REPRESENTATIVE HUDSON asked Mr. Lauber if he envisioned an
expansion of the CDQ program.
MR. LAUBER responded the only eligible communities in the
current CDQ program on pollock are within 50 miles of the
coast of the Bering Sea. There are a number of communities
that the state did not find eligible such as Dutch Harbor
and Unalaska.
Number 498
REPRESENTATIVE CARNEY made a motion to ADOPT the draft
committee substitute for HJR 50 as CSHJR 50(RES).
CHAIRMAN WILLIAMS asked if there were any objections.
Hearing none, CSHJR 50(RES) was ADOPTED.
OLE HARDER, KODIAK, said he has been involved in Alaska
fisheries since 1948 including all types of fish and
canneries. He felt the resources and the fishing business
are in the worst condition ever. He stressed a high
percentage of the salmon industry will go broke this year.
Unless $20-25 million is devoted to saving the second
biggest industry in the state, it will go broke. Mr. Harder
emphasized this will be an even worse year for the industry.
He favors additional taxes to save the industry.
REPRESENTATIVE CARNEY asked if additional money is
allocated, what it will be used for.
MR. HARDER responded additional efforts other than ASMI are
needed. He stressed there is a need for high line
marketing.
REPRESENTATIVE HUDSON wondered if Mr. Harder meant that the
$25 million a year will expand the domestic market.
MR. HARDER said that is correct.
Number 605
REPRESENTATIVE BUNDE made a motion to MOVE CSHJR 50(RES) out
of committee with INDIVIDUAL RECOMMENDATIONS.
CHAIRMAN WILLIAMS asked if there were any objections.
Hearing none, the motion PASSED.
(CHAIRMAN WILLIAMS noted for the record that REPRESENTATIVE
GREEN had joined the committee at 8:22 a.m.)
TAPE 94-11, SIDE B
Number 000
HB 333 - MINING LOCATIONS ON STATE SELECTED LAND
CHAIRMAN WILLIAMS advised members there was a draft
committee substitute for HB 333 in their folders.
JACK PHELPS, AIDE, REPRESENTATIVE PETE KOTT, explained that
HB 333 is a simple measure which inserts a definition into
Title 38 with respect to selected lands. The definition is
important because a large amount of the state is covered by
land selections, many which are mineralized. He said there
are federal claims on many of the lands. A federal claim,
unless it has been patented, is often in question as to
whether it is a valid claim. Federal requirements for a
valid claim include a marketability standard. When there is
a state selection over the top of a federal claim, it is not
known if the federal claim is valid. He stated if the claim
is valid, it is a federal inholding and has no capability of
being conveyed to the state. If it is an invalid federal
claim, there is a state selection over the top of it.
MR. PHELPS said the Minerals Commission reviewed the problem
and felt the way to solve it was to define state selected
lands so that a selection is considered a selection for
mining claim purposes, regardless of the validity or the
effect on any particular piece of the land within that
selection. For the purpose of staking a claim, the land is
considered selected whether it is validly selected or a
topfiled.
MR. PHELPS said a person with a federal mine claim might
want to convert it to a state claim once the land is
patented to the state. That is important to the state
because it gets rid of the little pockets of federal
inholdings throughout the state selections. He pointed out
that the benefits of HB 333 accrue not only to the mining
industry but also to the state.
Number 080
MR. PHELPS explained the committee substitute was introduced
because there were concerns expressed by the Department of
Natural Resources (DNR) and Native corporations as to how HB
333 will affect their operations. The Native corporations
were concerned how HB 333 would affect their Alaska Native
Claims Settlement Act (ANCSA) topfilings or selections. In
many cases, there are state selections and ANCSA selections
which overlap.
MR. PHELPS explained to solve the problem, subsection (b)(2)
was added. It says if there is a pending selection of an
ANCSA corporation, it is exempted. This raised new
questions. What if a person already has an at-risk claim on
land which is both selected by the state and ANCSA? That
question led the sponsor to add Section 2 of the bill, which
says even though ANCSA selections are exempted from the new
definition of state selected lands, any existing at-risk
claims lying in those areas are not affected. He said if
the ANCSA selection goes away, if the state selection
attaches by conveyance, etc. the person who has an at-risk
claim becomes the first (indiscernible).
Number 108
MR. PHELPS continued that Section l, subsection (c), lines
five and six, were added because of legitimate concerns
expressed by the Division of Land regarding the division's
ability to decide which lands will be tentatively approved
to the state.
REPRESENTATIVE JOE GREEN said it was his understanding that
in the Statehood Act, land conveyed to the state for the
purpose of making the state solvent had to convey land in
fee and the state had to maintain the mineral rights. He
asked if there is an attachment on the mineral rights
through a prior federal claim, can land selected be conveyed
with that encumbrance.
MR. PHELPS responded that land with a federal claim is not
conveyed to the state and continues to be a federal
inholding as long as the miner maintains the claim.
REPRESENTATIVE GREEN questioned if a person holding a
federal mining claim does not want to convert it to a state
claim, could there be legal ramifications at a later date.
MR. PHELPS responded that could happen. However, the claims
being discussed are very small, 1500 by 660 feet. He said
realistically it will be a very long time before the state's
land selections are settled. He added that the longer it
takes, the more likely that the more valuable mineralization
areas will be identified.
REPRESENTATIVE GREEN said he was concerned that a judge may
rule the land cannot be conveyed as long as it is federal
and at some time, the person might lose his claim.
MR. PHELPS responded that once a mechanism is provided for a
miner to convert from a federal to a state claim, the
likelihood for him doing that is increased.
CHAIRMAN WILLIAMS asked Mr. Phelps to again speak to Section
2 and questioned the date of April 14, 1966, contained in
that section.
MR. PHELPS said Section 1, subsection (b)(2) exempts
anything which has a pending ANCSA selection over it. If HB
333 passes, there will be no ability for a person to go into
an ANCSA selected land until the Native corporation is
satisfied. He noted the date April 14, 1966, is used
because that is the date AS 38.05.275 was effective. He
stressed that under CSHB 333(RES), all land which is under a
pending ANCSA selection is protected.
Number 220
REPRESENTATIVE CARNEY made a motion to ADOPT the committee
substitute for HB 333.
CHAIRMAN WILLIAMS asked for objections to the motion and,
hearing none, CSHB 333(RES) was ADOPTED.
Number 230
REPRESENTATIVE CARNEY made a motion to ADOPT the proposed
amendments to CSHB 333(RES).
CHAIRMAN WILLIAMS read the proposed amendments:
1. page 1, lines 7-11, delete all material and insert:
"(1) means land for which the state has filed a
selection application with the United States under
Sec. 6 of the Alaska Statehood Act, as amended,
regardless of the validity or effect of the application,
if the selection described in the application has not
been rejected or relinquished;"
2. page 1, line 14 - page 2, line 1, delete all material
and insert:
"corporation organized under 43 U.S.C. 1607(a), as
amended, a Native group corporation that qualifies for
a land conveyance under 43 U.S.C. 1613(h)(2), as
amended, or a Native urban corporation that qualifies
for a land conveyance under 43 U.S.C. 1613(h)(3), as
amended, has"
3. page 2, line 11:
delete [AS 27.10 or AS 38.05.195]
insert "AS 38.05.185 - 38.05.275 or in the manner
described in AS 27.10"
4. page 2, line 16:
delete [AS 27.10.050 or AS 38.05.195]
insert "AS 38.05.185 - 38.05.275 or in the manner
described in AS 27.10"
Number 245
CHAIRMAN WILLIAMS asked if there were any objections to the
motion. Hearing none, the AMENDMENTS were ADOPTED.
Number 257
JERRY GALLAGHER, LEGISLATIVE LIAISON, DEPARTMENT OF NATURAL
RESOURCES, AND DIRECTOR, DIVISION OF MINING, stressed HB 333
is simple and straightforward. He expressed support of CSHB
333. It allows a miner who has federal mining claims to
change over to state mining claims without having a gap of
time in his title. He said currently if a person owns a
federal mining claim and the state has topfiled it with a
land selection, that land selection is not real because the
state can only select vacant, unappropriated land. If a
miner has a federal claim and wants to convert it to a state
claim, that person has to go to the Bureau of Land
Management (BLM), and give them a relinquish document. Then
the person has to go back out in the field and stake a state
mining claim. Mr. Gallagher emphasized that CSHB 333(RES)
allows a person to stake a state mining claim on a federal
claim.
Number 308
REPRESENTATIVE HUDSON made a motion to MOVE CSHB 333(RES) as
amended with INDIVIDUAL RECOMMENDATIONS and a zero fiscal
note. CHAIRMAN WILLIAMS asked if there were any objections
to the motion. Hearing none, the MOTION PASSED.
ANNOUNCEMENTS
CHAIRMAN WILLIAMS announced the committee will meet Friday,
February 11 at 8:15 a.m. to take up SB 153.
ADJOURNMENT
There being no further business to come before the House
Resources Committee, Chairman Williams adjourned the meeting
at 9:25 a.m.
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