Legislature(2011 - 2012)BELTZ 105 (TSBldg)

03/01/2012 03:30 PM COMMUNITY & REGIONAL AFFAIRS


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 204 LOANS TO COMMUNITY QUOTA ENTITIES/PERMITS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+ Overview: Toxins Release Inventory TELECONFERENCED
<Above Item Removed from Agenda>
= SB 148 GAS PIPELINE PROPERTY TAX EXEMPTION
Moved CSSB 148(CRA) Out of Committee
= SB 152 LEG. APPROVAL OF BRISTOL BAY SULFIDE MINE
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
    SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                  
                         March 1, 2012                                                                                          
                           3:35 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Donald Olson, Chair                                                                                                     
Senator Albert Kookesh                                                                                                          
Senator Linda Menard                                                                                                            
Senator Johnny Ellis                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Thomas Wagoner                                                                                                          
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 148                                                                                                             
"An  Act exempting  a  gas  pipeline with  a  design capacity  of                                                               
500,000,000 or more cubic feet of  gas a day from the state's oil                                                               
and  gas  exploration,  production, and  pipeline  transportation                                                               
property  taxes  until the  pipeline  generates  revenue for  its                                                               
owners; and relating to the  determination of full and true value                                                               
for  the purpose  of  determining the  amount  of required  local                                                               
contribution for public school funding."                                                                                        
                                                                                                                                
     - MOVED CSSB 148(CRA) OUT OF COMMITTEE                                                                                     
                                                                                                                                
SENATE BILL NO. 204                                                                                                             
"An  Act relating  to loans  for  the purchase  of fishing  quota                                                               
shares by certain community quota  entities; and providing for an                                                               
effective date."                                                                                                                
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 152                                                                                                             
"An Act requiring legislative approval  before the issuance of an                                                               
authorization,  license,  permit,  or   approval  of  a  plan  of                                                               
operation  for a  large-scale metallic  sulfide mining  operation                                                               
that could  affect water in or  flowing into or over  the Bristol                                                               
Bay Fisheries Reserve."                                                                                                         
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
OVERVIEW: TOXINS RELEASE INVENTORY                                                                                              
                                                                                                                                
     - REMOVED FROM AGENDA                                                                                                      
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 148                                                                                                                  
SHORT TITLE: GAS PIPELINE PROPERTY TAX EXEMPTION                                                                                
SPONSOR(s): SENATOR(s) WIELECHOWSKI, EGAN, ELLIS, FRENCH, DAVIS,                                                                
KOOKESH                                                                                                                         
                                                                                                                                
01/17/12       (S)       PREFILE RELEASED 1/13/12                                                                               
01/17/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (S)       CRA, RES, FIN                                                                                          
02/09/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
02/09/12       (S)       Heard & Held                                                                                           
02/09/12       (S)       MINUTE(CRA)                                                                                            
02/28/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
02/28/12       (S)       Scheduled But Not Heard                                                                                
03/01/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 204                                                                                                                  
SHORT TITLE: LOANS TO COMMUNITY QUOTA ENTITIES/PERMITS                                                                          
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS                                                                                        
                                                                                                                                
02/21/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/21/12       (S)       CRA, FIN                                                                                               
03/01/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 152                                                                                                                  
SHORT TITLE: LEG. APPROVAL OF BRISTOL BAY SULFIDE MINE                                                                          
SPONSOR(s): FRENCH                                                                                                              
                                                                                                                                
01/17/12       (S)       PREFILE RELEASED 1/13/12                                                                               
01/17/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (S)       CRA, RES                                                                                               
02/28/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
02/28/12       (S)       Heard & Held                                                                                           
02/28/12       (S)       MINUTE(CRA)                                                                                            
03/01/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DAVID SCOTT, Staff                                                                                                              
Senator Donald Olson                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Explained the committee substitute for SB                                                                 
148 and introduced SB 204.                                                                                                      
                                                                                                                                
MICHELLE SYDEMAN, Staff                                                                                                         
Senator Bill Wielechowski                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified that the sponsor supported the                                                                  
committee substitute for SB 148.                                                                                                
                                                                                                                                
DUNCAN FIELDS, Council Member                                                                                                   
North Pacific Fishery Management Council                                                                                        
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SB 204.                                                                           
                                                                                                                                
WANETTA AYERS, Director                                                                                                         
Division of Economic Development                                                                                                
Department of Commerce, Community and Economic Development                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified that DCCED did not have a position                                                              
on SB 204, but was prepared to implement the loans should the                                                                   
bill pass.                                                                                                                      
                                                                                                                                
MICHAEL O'CONNOR, President                                                                                                     
Ouzinkie Native Corporation                                                                                                     
Ouzinkie, Alaska                                                                                                                
POSITION STATEMENT: Testified in support of SB 204.                                                                           
                                                                                                                                
KRISTEN PETERSON, Staff                                                                                                         
Senator Hollis French                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Introduced SB 152 on behalf of the sponsor.                                                               
                                                                                                                                
RICK ROGERS, Executive Director                                                                                                 
Resource Development Council for Alaska, Inc.                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in opposition to SB 152.                                                                        
                                                                                                                                
ANDERS GUSTAFSON, Executive Director                                                                                            
Renewable Resources Coalition                                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 152.                                                                           
                                                                                                                                
JIMMY HURLEY, representing himself                                                                                              
Ekwok, Alaska                                                                                                                   
POSITION STATEMENT: Testified in opposition to SB 152.                                                                        
                                                                                                                                
SUE ANELON, Member                                                                                                              
Iliamna Village Council                                                                                                         
Iliamna Natives LTD.                                                                                                            
Iliamna, Alaska                                                                                                                 
POSITION STATEMENT: Testified in opposition to SB 152.                                                                        
                                                                                                                                
VERNER WILSON III, Member                                                                                                       
Curyung Tribal Council and                                                                                                      
Shareholder, Bristol Bay Native Corporation (BBNC                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 152.                                                                           
                                                                                                                                
FRED ANGASAN, Chair                                                                                                             
Land Committee                                                                                                                  
Alaska Peninsula Corporation                                                                                                    
South Naknek, Alaska,                                                                                                           
POSITION STATEMENT: Testified in opposition to SB 152.                                                                        
                                                                                                                                
MIKE SATRE, Executive Director                                                                                                  
Council of Alaska Producers                                                                                                     
Juneau, Alaska,                                                                                                                 
POSITION STATEMENT: Testified in opposition to SB 152.                                                                        
                                                                                                                                
ED FOGLES, Deputy Commissioner                                                                                                  
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified on  SB 152 and provided information                                                             
on the permit process for large-scale hard rock mining projects                                                                 
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:35:59 PM                                                                                                                    
CHAIR  DONALD  OLSON called  the  Senate  Community and  Regional                                                             
Affairs Standing Committee meeting to  order at 3:35 p.m. Present                                                               
at  the call  to order  were Senators  Wagoner, Kookesh,  Menard,                                                               
Ellis and Chair Olson.                                                                                                          
                                                                                                                                
           SB 148-GAS PIPELINE PROPERTY TAX EXEMPTION                                                                       
                                                                                                                              
3:36:18 PM                                                                                                                    
CHAIR OLSON announced  the consideration of SB 148  and asked Mr.                                                               
Scott to explain the committee substitute (CS).                                                                                 
                                                                                                                                
DAVID   SCOTT,  Staff,   Senator  Donald   Olson,  Alaska   State                                                               
Legislature  and Aide,  CRA Committee,  said version  I committee                                                               
substitute  (CS)  makes  three changes.  First,  the  legislation                                                               
sunsets in 10 years. The idea  was that this would spur a company                                                               
to act to  take advantage of the tax  exemption. Second, language                                                               
on  page  4,  lines  27-28,  clarifies  that  the  pipeline  must                                                               
transport the gas to market for  sale. Third, language on page 5,                                                               
lines 7-8, clarifies  that the state will assess  the 0.5 bcf/day                                                               
pipeline when it assesses the pipeline transportation systems.                                                                  
                                                                                                                                
CHAIR OLSON asked if the sponsor approved of the 10-year sunset.                                                                
                                                                                                                                
MR. SCOTT answered that the sponsor did not object.                                                                             
                                                                                                                                
CHAIR  OLSON asked  if  he  or the  sponsor  had  heard from  any                                                               
boroughs or  landowners that  would be  affected by  the property                                                               
tax exemption.                                                                                                                  
                                                                                                                                
MR. SCOTT said no.                                                                                                              
                                                                                                                                
CHAIR OLSON asked the reason for the third change.                                                                              
                                                                                                                                
MR.  SCOTT   answered  that  the  state   assessor  brought  that                                                               
suggestion forward.  Current statute requires the  state assessor                                                               
to find the  full and true value of oil  and gas pipeline systems                                                               
and the assessor wanted to  clarify that the 0.5 bcf/day pipeline                                                               
also needed to be assessed.                                                                                                     
                                                                                                                                
3:40:42 PM                                                                                                                    
MICHELLE SYDEMAN, Staff, Senator  Bill Wielechowski, Alaska State                                                               
Legislature, said  the sponsor was  comfortable with  the changes                                                               
made in the CS for SB 148.  The third change was an amendment the                                                               
sponsor brought  to the committee  to alleviate the  problem that                                                               
had  come up  with TAPS,  which was  that local  governments have                                                               
different ideas about  the value of an asset.  The state assessor                                                               
would  provide a  uniform valuation  for the  asset. The  sponsor                                                               
also requested the requirement to  transport the gas to market so                                                               
the  state doesn't  give  a tax  deferral to  move  gas from  one                                                               
production facility  to another. The  intention was that  the gas                                                               
would serve  Alaskans. With  regard to the  sunset, she  said the                                                               
sponsor appreciated that  the committee wanted to  create a sense                                                               
of urgency to  act but she imagined that  the Resources Committee                                                               
would  take up  that  issue,  because some  people  may think  it                                                               
should be longer.                                                                                                               
                                                                                                                                
CHAIR OLSON  found no further  questions or discussion  and asked                                                               
for a motion to adopt the CS.                                                                                                   
                                                                                                                                
3:42:20 PM                                                                                                                    
SENATOR KOOKESH  moved to adopt  the CS  for SB 148,  labeled 27-                                                               
LS0990\I.                                                                                                                       
                                                                                                                                
CHAIR OLSON found  no objection and announced that  version I was                                                               
adopted. He asked the will of the committee.                                                                                    
                                                                                                                                
3:42:42 PM                                                                                                                    
SENATOR KOOKESH  moved to report  [CS for] SB 148  from committee                                                               
with individual recommendations and attached fiscal note(s).                                                                    
                                                                                                                                
3:42:53 PM                                                                                                                    
CHAIR OLSON announced that without  objection CSSB 148(CRA) moved                                                               
from  the   Senate  Community   and  Regional   Affairs  Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
        SB 204-LOANS TO COMMUNITY QUOTA ENTITIES/PERMITS                                                                    
                                                                                                                                
3:43:12 PM                                                                                                                    
CHAIR OLSON announced the consideration  of SB 204, which relates                                                               
to loans to community quota entities (CQE).                                                                                     
                                                                                                                                
3:43:25 PM                                                                                                                    
DAVID   SCOTT,  Staff,   Senator  Donald   Olson,  Alaska   State                                                               
Legislature and  Aide, CRA Committee,  said that SB  204 modifies                                                               
the  Community  Quota Entity  (CQE)  program  by establishing  an                                                               
independent  revolving  loan  fund modeled  within  the  existing                                                               
Alaska  Commercial  Fishing  Revolving  Loan  Fund.  It  provides                                                               
better terms for the CQEs  to purchase independent fishing quotas                                                               
(IFQ). He provided the following sectional analysis:                                                                            
                                                                                                                                
     Section 1  amends AS 16.10.320(a)  to conform  to other                                                                    
     changes in the bill, specifically Section 3.                                                                               
                                                                                                                                
     Section   2  provides   that  principal   and  interest                                                                    
     payments  or  any  money  chargeable  to  principal  or                                                                    
     interest  that  is  collected  through  liquidation  by                                                                    
     foreclosure would go back into  the revolving loan fund                                                                    
     created in the bill.                                                                                                       
                                                                                                                                
     Section 3  adds a new  subsection (l) to  AS 16.10.320.                                                                    
     It  establishes  that  CQEs  may  use  the  loan  terms                                                                    
     spelled out  in the bill  to purchase 50,000  pounds of                                                                    
     quota share. The loan may  not exceed 95 percent of the                                                                    
     appraised value of the collateral  and the maximum term                                                                    
     is   25  years,   except   for   extensions  under   AS                                                                    
     16.10.310(a)(1)(E). The loan may  not exceed $1 million                                                                    
     and  interest payments  may be  deferred for  up to  10                                                                    
     years.                                                                                                                     
                                                                                                                                
     Section 4 amends the Commercial Fishing Revolving Loan                                                                     
         Fund statute, AS 16.10.340, to include the CQE                                                                         
     revolving loan fund.                                                                                                       
                                                                                                                                
     Section 5 is a conforming language change.                                                                                 
                                                                                                                                
     Section 6 adds a new section to AS 16.10 that creates                                                                      
     the revolving loan fund.                                                                                                   
                                                                                                                                
       Section 7 amends AS 16.10.350(a) to state that the                                                                       
     commissioner of commerce will be the administrator of                                                                      
     the fund.                                                                                                                  
                                                                                                                                
       Section 8 is the effective date, which is July 1,                                                                        
     2012.                                                                                                                      
                                                                                                                                
3:46:54 PM                                                                                                                    
SENATOR ELLIS joined the committee.                                                                                             
                                                                                                                                
CHAIR  OLSON  asked  if  the commissioner  of  commerce  had  the                                                               
authority to oversee this type of loan.                                                                                         
                                                                                                                                
MR.  SCOTT responded  that the  commissioner of  commerce already                                                               
oversees the Commercial Fishing Revolving Loan Fund.                                                                            
                                                                                                                                
CHAIR OLSON asked how CQEs are related to IFQs.                                                                                 
                                                                                                                                
MR.  SCOTT said  CQE stands  for community  quota entity  and IFQ                                                               
stands for individual fishing quota.  The North Pacific Fisheries                                                               
Management  Council qualified  42 Gulf  of Alaska  communities to                                                               
form  nonprofit CQE  organizations  in order  to purchase  50,000                                                               
pounds  of IFQ  shares. He  deferred further  explanation to  Mr.                                                               
Fields.                                                                                                                         
                                                                                                                                
CHAIR OLSON asked if a CQE could exist without IFQs.                                                                            
                                                                                                                                
MR. SCOTT  responded that there  would be  no point in  forming a                                                               
CQE if the organization didn't move forward to buy quota shares.                                                                
                                                                                                                                
3:49:38 PM                                                                                                                    
DUNCAN FIELDS, Fisheries Consultant,  stated that he was speaking                                                               
on  behalf  of   the  rural  communities  for   which  he  works,                                                               
particularly Old  Harbor and  Ouzinkie on  Kodiak Island  and the                                                               
Gulf of Alaska Coastal Community  Coalition, which represents the                                                               
42  communities that  have qualified  as  Community Quota  Entity                                                               
(CQE)  communities. He  was  not representing  the  views of  the                                                               
North Pacific  Fisheries Management Council (NPFMC),  although he                                                               
was a member.  He noted that the NPFMC had  recognized three more                                                               
communities  as   CQE  qualified  so   there  would  be   45  CQE                                                               
communities once the federal regulations were finalized.                                                                        
                                                                                                                                
MR.  FIELDS  said SB  204  is  a  loan  bill to  create  economic                                                               
opportunities and jobs  in rural CQE communities.  About 15 years                                                               
ago,  the  NPFMC realized  that  fishing  permits and  IFQs  were                                                               
leaving  rural communities  and fishing  opportunities were  lost                                                               
when these  were sold.  When community leaders  looked at  how to                                                               
reverse that  downward spiral,  they struck on  the concept  of a                                                               
community  quota   entity.  Unlike   the  Bering   Sea  Community                                                               
Development Quota  (CDQ) program,  these entities  would purchase                                                               
the quota in the marketplace.  The community would hold the quota                                                               
in trust and lease it to individuals in the community.                                                                          
                                                                                                                                
The  North Pacific  Fisheries Management  Council developed  this                                                               
construct and  imposed limitations as  to the type of  quota that                                                               
could be purchased, the amount  of quota that could be purchased,                                                               
the way the quota could be  fished. In 2004, the NPFMC authorized                                                               
forty-two  Gulf   Coast  communities  to  purchase   halibut  and                                                               
sablefish  IFQ shares.  Only two  communities have  bought quota,                                                               
primarily because they lacked access to capital.                                                                                
                                                                                                                                
The  state  initially  qualified  the  CQEs  for  the  Commercial                                                               
Fisheries  Revolving  Loan  Fund,  but the  terms  of  the  loan,                                                               
particularly  the  20  percent  down  payment,  were  a  barrier.                                                               
Representative Austerman  suggested modifications  and introduced                                                               
HB 141, the companion bill to SB 204.                                                                                           
                                                                                                                                
3:55:58 PM                                                                                                                    
MR.  FIELDS explained  that SB  204 establishes  a separate  loan                                                               
fund  for CQE  communities.  The  down payment  is  5 percent  as                                                               
opposed to  the previous  20 percent. The  loan term  is extended                                                               
from 20 years to 25 years  and interest payments may be suspended                                                               
[for  up  to   10  years].  The  bill  also   provides  that  the                                                               
communities would pay  interest at rates similar to  those in the                                                               
revolving  loan fund.  He  opined that  this  would provide  some                                                               
communities  an opportunity  to  access IFQs  that they  couldn't                                                               
otherwise access. As communities  have success, other communities                                                               
will likely follow and access these loan funds.                                                                                 
                                                                                                                                
The  $45  million fiscal  note  would  provide  a maximum  of  $1                                                               
million to each of the approximately 45 qualified communities.                                                                  
                                                                                                                                
3:57:50 PM                                                                                                                    
CHAIR  OLSON commented  on the  number of  limited entry  fishing                                                               
permits  that are  held by  non-residents, and  asked why  anyone                                                               
would be interested in selling such a valuable asset to a CQE.                                                                  
                                                                                                                                
MR.  FIELDS differentiated  the halibut  and sablefish  IFQs from                                                               
the  State  of Alaska  limited  entry  permits. The  halibut  and                                                               
sablefish IFQs  are more fluid  in terms of market  exchange than                                                               
limited entry permits. The people who  sell the IFQs tend to make                                                               
different  economic  decisions  than  folks that  are  selling  a                                                               
limited entry permit. A limited  entry permit gives an individual                                                               
a right  to participate in the  fishery, whereas an IFQ  gives an                                                               
amount of product,  pounds of fish. Sometimes people  will sell a                                                               
portion of  their IFQs to  expand their business and  others will                                                               
sell all their IFQs because they're getting out of the fishery.                                                                 
                                                                                                                                
He said that one reason  for forming the community quota entities                                                               
was  to address  the  problem of  limited  entry permits  leaving                                                               
rural  communities.  Should  there   be  a  mechanism  for  rural                                                               
communities to  hold limited  entry permits,  he opined  that the                                                               
CQE would  be the ideal  entity to facilitate that  mechanism. He                                                               
relayed that  these CQEs  have also received  two other  types of                                                               
fishery access  opportunities from the National  Marine Fisheries                                                               
Service through  the NPFMC. One  is halibut charter  permits. The                                                               
21 CQE communities  in Southeast Alaska have each  received up to                                                               
five  halibut  charter permits.  The  community  can lease  those                                                               
permits  to  an individual  who  must  either  start or  end  the                                                               
fishing trip  in the  community. Gulf  of Alaska  CQE communities                                                               
have seven permits.                                                                                                             
                                                                                                                                
Gulf  of  Alaska  communities  have   a  third  fisheries  access                                                               
opportunity  called a  groundfish limited  license permit  (LLP).                                                               
These are  essentially federal limited  entry permits for  use by                                                               
the CQE in that community.                                                                                                      
                                                                                                                                
CHAIR OLSON asked  how it happened that two  CQE communities were                                                               
financially successful.                                                                                                         
                                                                                                                                
MR.  FIELDS  said  they  were   both  unique  circumstances.  The                                                               
community  of  Ouzinkie  was  able to  access  IFQs  through  the                                                               
fortuitous sale  of trees that  were donated by the  local Native                                                               
corporation. Old Harbor accessed  quota share primarily through a                                                               
five-year  loan.  He  said  that CQE  needed  to  locate  another                                                               
funding source within 18 months or sell its IFQ shares.                                                                         
                                                                                                                                
4:03:09 PM                                                                                                                    
CHAIR OLSON asked if there were loan default plans.                                                                             
                                                                                                                                
MR. FIELDS  cautioned that he was  not a banking expert,  but his                                                               
understanding was  that the payments  would be made  annually and                                                               
the loans would be secured by  the halibut quota. In the event of                                                               
a  default, the  community  would  sell the  IFQ  shares and  the                                                               
proceeds would go to the State of Alaska.                                                                                       
                                                                                                                                
CHAIR OLSON asked what the interest rate would be.                                                                              
                                                                                                                                
MR.  FIELDS  said the  interest  would  be  prime rate  plus  two                                                               
percentage points, but not more than 10.5 percent.                                                                              
                                                                                                                                
CHAIR  OLSON asked  what other  lending  institutions thought  of                                                               
this program.                                                                                                                   
                                                                                                                                
MR. FIELDS said the banks they  work with recognize that loans of                                                               
this type would not be allowed  in their portfolios; in this role                                                               
the state  can promote rural  economic development.  Some bankers                                                               
have suggested  that if this  program is successful, it  may help                                                               
individuals  build their  personal  portfolios  and increase  the                                                               
likelihood of qualifying for personal loans.                                                                                    
                                                                                                                                
CHAIR OLSON asked if more IFQs might be available in the future.                                                                
                                                                                                                                
MR. FIELDS  responded that  there was a  national effort  to move                                                               
the  federal  fisheries  towards  rationalized  fisheries  or  an                                                               
individual  transferable  quota  (ITQ) program.  He  offered  his                                                               
belief  that in  the near  future  all the  federal fisheries  in                                                               
Alaska would be encompassed by either ITQ or IFQ programs.                                                                      
                                                                                                                                
4:07:33 PM                                                                                                                    
CHAIR OLSON asked how many of  the 42 IQE communities depended on                                                               
subsistence fishing to feed their families.                                                                                     
                                                                                                                                
MR.  FIELDS answered  that a  number  of the  smaller Gulf  Coast                                                               
communities  rely  on subsistence  for  a  substantial amount  of                                                               
their diet. The  same applies for Kodiak Island  and he suspected                                                               
it  was  true  for  the  Chignik  area  as  well.  Dependence  on                                                               
subsistence is probably less in  the larger communities, but it's                                                               
still a component of their diet.                                                                                                
                                                                                                                                
CHAIR   OLSON  asked   how  commercial   fishing  entities   view                                                               
subsistence users.                                                                                                              
                                                                                                                                
MR. FIELDS  said there  seems to  be general  cooperation between                                                               
the local  residents who  are fishing CQE  halibut and  those who                                                               
are  subsistence users.  He opined  that sport  charter operators                                                               
and non-resident fishermen  would be more likely  to compete with                                                               
subsistence users.                                                                                                              
                                                                                                                                
CHAIR OLSON asked Ms. Ayers to comment.                                                                                         
                                                                                                                                
4:10:38 PM                                                                                                                    
WANETTA  AYERS,  Director,   Division  of  Economic  Development,                                                               
Department  of  Commerce,   Community  and  Economic  Development                                                               
(DCCED),  said  that  DCCED  followed HB  141  last  session  and                                                               
provided a fiscal  note on SB 204 regarding  operating costs. The                                                               
division would be able to manage this  loan fund if it were to be                                                               
implemented;  it  appears  to  be very  similar  to  the  current                                                               
Fisheries Enhancement  Revolving Loan  Fund. She agreed  with Mr.                                                               
Field's answer regarding loan payments and defaults.                                                                            
                                                                                                                                
CHAIR  OLSON asked  if  selling the  quota  generally covers  any                                                               
delinquency and default.                                                                                                        
                                                                                                                                
MS. AYERS answered yes; quota  is considered very good collateral                                                               
and DCCED has liquidated it in the past when necessary.                                                                         
                                                                                                                                
CHAIR OLSON  said he  asked because it  appeared that  the number                                                               
and size of halibut was on a downward trend.                                                                                    
                                                                                                                                
MS. AYERS said that DCCED  would take all regulatory, management,                                                               
and market factors into consideration when making a loan.                                                                       
                                                                                                                                
CHAIR OLSON asked if the administration was in favor of SB 204.                                                                 
                                                                                                                                
MS.  AYERS  answered  that  the   administration  does  not  have                                                               
specific  position  on  the  bill,  but  DCCED  was  prepared  to                                                               
implement it should it be adopted.                                                                                              
                                                                                                                                
4:14:42 PM                                                                                                                    
MICHAEL  O'CONNOR, President,  Ouzinkie Native  Corporation, said                                                               
Ouzinkie  was a  nonprofit corporation  that focused  on economic                                                               
development. He relayed that Ouzinkie  currently had 8,000 pounds                                                               
of halibut IFQs and Old Harbor  had 16,000 pounds. These were the                                                               
only CQEs that  own and actively fish halibut  IFQs. In Ouzinkie,                                                               
the individual  who leased the  halibut IFQs received  55 percent                                                               
of  the  catch and  the  CQE  nonprofit corporation  received  45                                                               
percent. This brings substantial money to a small community.                                                                    
                                                                                                                                
Responding  to a  comment from  the Chair,  he elaborated  on the                                                               
timber sale  that made it  possible for  the Ouzinkie CQE  to buy                                                               
8,000   pounds  of   halibut  IFQ   shares.  He   confirmed  that                                                               
conventional  lenders are  not interested  in  loaning money  for                                                               
community owned IFQs.                                                                                                           
                                                                                                                                
4:20:55 PM                                                                                                                    
CHAIR OLSON asked if it was because of the risk.                                                                                
                                                                                                                                
MR. O'CONNOR answered yes.                                                                                                      
                                                                                                                                
CHAIR OLSON questioned why the state should undertake that risk.                                                                
                                                                                                                                
MR. O'CONNOR opined that it  wasn't large risk because the market                                                               
for IFQs was fluid.                                                                                                             
                                                                                                                                
CHAIR  OLSON asked  if he  agreed  that the  growing farmed  fish                                                               
market might threaten Alaska wild fish.                                                                                         
                                                                                                                                
MR.  O'CONNOR   answered  that  he   believed  that   the  public                                                               
perception of farmed fish was turning negative.                                                                                 
                                                                                                                                
4:22:43 PM                                                                                                                    
CHAIR OLSON  found no further  public testimony and  announced he                                                               
would hold SB 204 in committee.                                                                                                 
                                                                                                                                
        SB 152-LEG. APPROVAL OF BRISTOL BAY SULFIDE MINE                                                                    
                                                                                                                              
4:23:03 PM                                                                                                                    
CHAIR OLSON announced  the consideration of SB 152  and asked Ms.                                                               
Peterson to remind the committee about the bill.                                                                                
                                                                                                                                
4:23:44 PM                                                                                                                    
KRISTEN  PETERSON, Staff,  Senator  Hollis  French, Alaska  State                                                               
Legislature, read  the first paragraph  of the  sponsor statement                                                               
for SB 152 as follows:                                                                                                          
                                                                                                                                
     Senate Bill  152 is designed to  engage the legislature                                                                    
     in  development issues  in  the  Bristol Bay  Fisheries                                                                    
     Reserve.  The bill  would  require  the legislature  to                                                                    
     enact a law  that includes a finding  that any proposed                                                                    
     large-scale    metallic    sulfide    mine    operation                                                                    
     constitutes  no  danger  to   the  fishery  within  the                                                                    
     reserve.  This would  have to  be completed  before the                                                                    
     issuance  of  an  authorization,  license,  permit,  or                                                                    
     approval  of  a plan  of  operation  that could  affect                                                                    
     water in or flowing into or over the reserve.                                                                              
                                                                                                                                
CHAIR OLSON opened public testimony.                                                                                            
                                                                                                                                
4:24:38 PM                                                                                                                    
RICK  ROGERS, Executive  Director,  Resource Development  Council                                                               
(RDC) for Alaska, Inc., said RDC  was strongly opposed to SB 152.                                                               
He relayed  that RDC was  a nonprofit organization  whose purpose                                                               
was  to link  its  diverse membership  interests  to encourage  a                                                               
strong,  diversified, private  sector in  Alaska, and  expand the                                                               
state's economic base through responsible resource development.                                                                 
                                                                                                                                
He  said that  one of  RDC's  top legislative  priorities was  to                                                               
encourage  the  state to  promote  and  defend the  integrity  of                                                               
Alaska's  permitting process  and  to  advocate for  predictable,                                                               
timely,  and efficient  permitting  processes that  are based  on                                                               
sound  science and  economic feasibility.  RDC's perspective  was                                                               
that SB  152 did the  opposite. The bill  was not about  just the                                                               
Pebble  mine; it  was  a legislative  referendum  on the  state's                                                               
permitting  process  for  projects   across  all  industries.  It                                                               
effectively  usurps the  permitting  authority  of the  executive                                                               
branch and  creates uncertainty for companies  that are investing                                                               
or contemplating investment in Alaska.  He urged the committee to                                                               
hold the bill.                                                                                                                  
                                                                                                                                
CHAIR OLSON asked  how to protect the fisheries  and maintain the                                                               
maximum sustainable yield.                                                                                                      
                                                                                                                                
MR.  ROGERS answered  that  there are  processes  and systems  in                                                               
place to  do that. Any  suggested improvements should  be vetted,                                                               
but  the  legislature should  not  adjudicate  whether a  project                                                               
should  get  permits.  Many  people will  review  a  project  the                                                               
magnitude of  Pebble before  it gets a  permit; that  process has                                                               
worked  for  Alaska for  years.  It's  been possible  to  develop                                                               
large-scale  projects  responsibly  while  maintaining  a  robust                                                               
fishery.                                                                                                                        
                                                                                                                                
4:29:08 PM                                                                                                                    
CHAIR OLSON commented that what  the Murkowski administration did                                                               
to the  coastal zone  management program  was devastating  to the                                                               
people of Alaska,  particularly those on the coast  who no longer                                                               
have a seat  at the table to voice concerns.  That's why there is                                                               
grave reservation about this particular mine, he said.                                                                          
                                                                                                                                
MR. ROGERS said he recognized  the concern about the magnitude of                                                               
the  project,  its  location,  and the  other  resources  in  the                                                               
Bristol Bay  region, but he  did not believe  that SB 152  was an                                                               
appropriate approach for dealing with those issues.                                                                             
                                                                                                                                
4:30:23 PM                                                                                                                    
ANDERS   GUSTAFSON,  Executive   Director,  Renewable   Resources                                                               
Coalition (RRC), said he was speaking  on behalf of the more than                                                               
6,000  Alaskan  members in  support  of  SB 152.  The  membership                                                               
consists  of  individuals,  businesses,  and  organizations  that                                                               
historically  have  fought over  allocation  of  the Bristol  Bay                                                               
fishery resource,  but have  since joined  forces to  protect the                                                               
habitat and water that is the building block of this resource.                                                                  
                                                                                                                                
In the early  1970s when Alaska was first developing  its oil and                                                               
gas  resources,   the  legislature  recognized   the  incredible,                                                               
renewable resource that  is the Bristol Bay  fishery and realized                                                               
it was  appropriate to designate  a boundary for  this watershed.                                                               
The  legislature also  realized  there should  be  a process  for                                                               
Alaskans   to  have   a  say   in   whether  massive   industrial                                                               
developments  should  be  allowed.  By  supporting  SB  152,  the                                                               
coalition is  asking the legislature  to give that same  level of                                                               
oversight  to  a  large-scale  mining  development  in  the  same                                                               
region. The  bill does not  affect mining development  across the                                                               
state;  it  is about  protecting  the  Bristol Bay  fishery.  The                                                               
members of  RRC also believe that  SB 152 will create  a level of                                                               
certainty in the  marketplace that this fishery  will continue to                                                               
be strong.  This will create  a friendlier environment  for those                                                               
dependent on the fishery to reinvest in their businesses.                                                                       
                                                                                                                                
MR. GUSTAFSON  reiterated that SB  152 does not  prohibit mining.                                                               
It  ensures a  process by  which  the people  of Alaska,  through                                                               
their  representatives, can  protect  the incredibly  significant                                                               
Bristol Bay fisheries resource.                                                                                                 
                                                                                                                                
4:33:29 PM                                                                                                                    
JIMMY  R. HURLEY,  representing  himself, said  he  had lived  in                                                               
Ekwok for  the past 50 years  and he strongly opposed  SB 152. He                                                               
said that the people who live in  this area don't want to live on                                                               
food stamps; they want jobs.                                                                                                    
                                                                                                                                
4:35:52 PM                                                                                                                    
SUE  ANELON, Member,  Iliamna  Village  Council, Iliamna  Natives                                                               
Limited  (INL),  stated that  the  council  and corporation  were                                                               
strongly  opposed to  SB 152,  because  a rigorous  science-based                                                               
permitting system  was already in  place. The  legislature should                                                               
instead be dealing  with the more important issues  of oil taxes,                                                               
helping companies create jobs, and  economic development in rural                                                               
communities. She  also stated  that the  bill could  affect other                                                               
landowners and development projects within the state.                                                                           
                                                                                                                                
CHAIR OLSON said he should  have pointed out earlier that Senator                                                               
French had visited  Southwest Alaska a number of  times to survey                                                               
the situation.                                                                                                                  
                                                                                                                                
4:37:59 PM                                                                                                                    
VERNER   WILSON  III,   Member,   Curyung   Tribal  Council   and                                                               
shareholder, Bristol Bay Native  Corporation (BBNC), testified in                                                               
support  of SB  152.  He said  he was  a  Bristol Bay  commercial                                                               
fisherman who  also did subsistence  fishing. He stated  that the                                                               
legislation  gives a  voice  to Alaskans  on  the very  important                                                               
issue  of  a   large-scale  mine  in  the   Bristol  Bay  region.                                                               
Proponents say the development could  create 2,000 jobs, but they                                                               
don't say how many jobs may  be impacted. He said his father paid                                                               
thousands of dollars for a permit  to fish in Bristol Bay and the                                                               
family depends  on the fishery.  This issue is important  to this                                                               
and future  generations. The Bristol  Bay fishery has  been there                                                               
for thousands of years and it  can continue for thousands more if                                                               
it  is  managed sustainably  and  the  habitat is  protected.  He                                                               
reiterated that  the legislation  gives voice  to Alaskans  on an                                                               
issue about which they really care.                                                                                             
                                                                                                                                
CHAIR OLSON asked  why he was interested in  protecting a fishery                                                               
that he didn't depend on any longer.                                                                                            
                                                                                                                                
MR.  WILSON clarified  that  he  did depend  on  the Bristol  Bay                                                               
fishery; his  parents still live  in the  area and he  returns to                                                               
fish  every  summer.   He  imagined  that  he   would  move  back                                                               
permanently after  he finished graduate school.  He began fishing                                                               
when  he was  about age  four  and looked  forward eventually  to                                                               
getting his  own boat and  permit. If  fishing and mining  are to                                                               
coexist, it's necessary to ask the tough questions, he said.                                                                    
                                                                                                                                
CHAIR OLSON  asked if  after he finished  graduate school  he can                                                               
imagine putting  on boots and rain  gear and working in  the fish                                                               
slime.                                                                                                                          
                                                                                                                                
MR.  WILSON answered  yes. He  added  that he  looked forward  to                                                               
being a  part of  further developing the  seafood industry  and a                                                               
sustainable economy.                                                                                                            
                                                                                                                                
4:44:23 PM                                                                                                                    
FRED  T.   ANGASAN,  Chair,  Land  Committee,   Alaska  Peninsula                                                               
Corporation  (APC), stated  that as  one of  the largest  private                                                               
landowners  within  the  Bristol  Bay  Salmon  Reserve,  APC  was                                                               
opposed  to SB  152.  Matters currently  committed  to the  sound                                                               
discretion  of  executive  agencies  based  on  science  and  the                                                               
concept  of  due  process  would instead  be  considered  in  the                                                               
political arena. He  said APC was convinced  that the legislation                                                               
violated state law.  APC's primary mission is to  manage its land                                                               
for  the benefit  of the  villages and  Congress has  charged the                                                               
corporation  with economic  development  of those  lands. SB  152                                                               
directly interferes  with that by creating  uncertainty about the                                                               
effect of  a metallic  sulfide deposit on  their land,  which has                                                               
tremendous potential  for mineral development. It  would place at                                                               
risk  the surface  exploration agreements  that  APC has  entered                                                               
into. APC has confidence in the current process, he stated.                                                                     
                                                                                                                                
4:51:29 PM                                                                                                                    
MIKE  SATRE,  Executive  Director, Council  of  Alaska  Producers                                                               
(CAP), said  CAP was a  nonprofit trade  association representing                                                               
the  producing  large  metal mines  and  large  mine  development                                                               
projects  in  the state.  He  said  he  was testifying  to  voice                                                               
opposition to SB  152. The bill uses  existing statutory language                                                               
that places limitations  on surface entry permits  to develop oil                                                               
and gas  leases or  exploration licenses  within the  Bristol Bay                                                               
Fisheries Reserve, but  it goes much farther. SB  152 attempts to                                                               
restrict mining  throughout the region regardless  of land status                                                               
or whether the activities are  in the fisheries reserve. It could                                                               
strip the  rights of individuals  who already hold  valid mineral                                                               
claims and exploration  permits in the area.  This could possibly                                                               
constitute  a taking,  which would  violate both  the Alaska  and                                                               
U.S. constitutions.  The existing  statute for  oil and  gas does                                                               
not assume that  the development will adversely  affect water; it                                                               
only requires  a finding that  the development will not  harm the                                                               
fishery.  SB  152 assumes  that  mining  activity will  adversely                                                               
affect water quality and the  proponents have stated their belief                                                               
that  it will  potentially stop  one project.  This, too,  raises                                                               
constitutional issues, he said.                                                                                                 
                                                                                                                                
MR.  SATRE said  CAP strongly  supports the  existing large  mine                                                               
permitting processes in the state  and all efforts to fully fund,                                                               
strengthen, and improve the permitting  functions of the resource                                                               
agencies.  If SB  152  were to  pass,  state permitting  agencies                                                               
would  be forced  to follow  the directives  of the  legislature,                                                               
rather  than  basing  decisions on  the  existing  science-based,                                                               
transparent, and predictable permitting processes.                                                                              
                                                                                                                                
4:54:11 PM                                                                                                                    
ED  FOGLES, Deputy  Commissioner,  Department Natural  Resources,                                                               
said  he was  not taking  a position  on the  bill. He  wanted to                                                               
discuss  the state's  regulatory process  and present  issues for                                                               
the  committee  to consider.  He  opined  that the  state's  mine                                                               
permitting process  was solid. The  seven operating mines  in the                                                               
state were  all operating  within environmental  compliance, with                                                               
no significant impact to the downstream fisheries.                                                                              
                                                                                                                                
He emphasized  that the permitting  process for a large  mine was                                                               
complex. It involves  a number of agencies and  dozens of experts                                                               
with advanced  degrees in addition  to the  federal environmental                                                               
impact statement  (EIS). He cautioned that  the legislature would                                                               
have to figure out  how to parse through that in  order to make a                                                               
decision, but it wouldn't be an easy task.                                                                                      
                                                                                                                                
SENATOR  MENARD asked  how many  people would  be dedicated  to a                                                               
project like the Pebble Mine.                                                                                                   
                                                                                                                                
MR. FOGLES  said that  approximately 20  agency experts  would be                                                               
involved, although the  number would vary throughout  the life of                                                               
the mine.                                                                                                                       
                                                                                                                                
SENATOR MENARD observed  that a tremendous number  of people were                                                               
already  dedicated  to  the  process,   which  was  why  she  was                                                               
uncomfortable.                                                                                                                  
                                                                                                                                
4:58:35 PM                                                                                                                    
MR. FOGLES said  that DNR's reading of the bill  is that it would                                                               
cover any hard  rock metal mine on both state  and private lands.                                                               
Thus,  any  significant  hard  rock  mining  project  within  the                                                               
Bristol  Bay area  would  have to  come  before the  legislature.                                                               
Because  each mine  project has  dozens and  dozens of  state and                                                               
federal  permits that  come out  at different  times, DNR  is not                                                               
clear on how that would work  for the legislature. Time lags will                                                               
also be  an issue  to evaluate because  the legislature  isn't in                                                               
session all the time.                                                                                                           
                                                                                                                                
5:00:33 PM                                                                                                                    
CHAIR OLSON  commented that he  anticipates more bills  like this                                                               
because there was  no coastal zone program where  people from the                                                               
local area have a seat at the table to voice their concerns.                                                                    
                                                                                                                                
MR. FOGLES  said he had been  involved in permitting a  number of                                                               
mines,  three  of  which  were  not  in  the  coastal  zone,  and                                                               
community concerns were always taken  into account. Regardless of                                                               
what is in place, DNR  will always address community concerns, he                                                               
said.                                                                                                                           
                                                                                                                                
CHAIR  OLSON said  public testimony  would continue  at the  next                                                               
meeting. He asked the sponsor to provide closing comments.                                                                      
                                                                                                                                
5:02:13 PM                                                                                                                    
SENATOR  HOLLIS FRENCH,  sponsor of  SB  152, said  the bill  was                                                               
based on the 1972 law that  was passed to protect the Bristol Bay                                                               
Fisheries Reserve  from oil and gas  development. The legislature                                                               
at the time  considered including mining but oil and  gas was the                                                               
immediate threat  to the fisheries  and that became the  topic of                                                               
the bill.  SB 152 is  designed to  put large-scale mining  on the                                                               
same footing as  oil and gas. If  it can be done  safely and with                                                               
no threat  to the  fishery, then  go ahead. If  it can't  be done                                                               
safely,  then  it should  stop.  The  legislature deserves  input                                                               
given the far-reaching  nature of the impact  on fishermen across                                                               
all of Alaska.                                                                                                                  
                                                                                                                                
CHAIR  OLSON  asked  the  sponsor  before  the  bill  moved  from                                                               
committee to  address the constitutional questions  that the bill                                                               
potentially raised.                                                                                                             
                                                                                                                                
CHAIR OLSON held SB 152 in committee.                                                                                           
                                                                                                                                
5:03:58 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair Olson  adjourned the Senate Community  and Regional Affairs                                                               
Standing Committee meeting at 5:03 p.m.                                                                                         

Document Name Date/Time Subjects