Legislature(1995 - 1996)
02/05/1996 03:35 PM Senate RES
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SENATE RESOURCES COMMITTEE
February 5, 1996
3:35 P.M.
MEMBERS PRESENT
Senator Loren Leman, Chairman
Senator Drue Pearce, Vice Chairman
Senator Steve Frank
Senator Rick Halford
Senator Georgianna Lincoln
Senator Lyman Hoffman
MEMBERS ABSENT
Senator Robin Taylor
COMMITTEE CALENDAR
SENATE BILL NO. 240
"An Act relating to the statewide bonding pool for the reclamation
activities imposed on mining operations, and extending the pool's
use to surface coal mining projects."
PREVIOUS SENATE COMMITTEE ACTION
SB 240 - No previous action to consider.
WITNESS REGISTER
Bob Stiles, President
Alaska Coal Association
711 H St., Ste. 600
Anchorage, AK 99501
POSITION STATEMENT: Supported SB 240.
Charlie Boddy
Usibelli Coal
122 1st Ave., Ste. 302
Fairbanks, AK 99701
POSITION STATEMENT: Supported SB 240.
Jules Tileston, Director
Division of Mining & Water Management
Department of Natural Resources
3601 C Street, Ste. 800
Anchorage, AK 99503-5935
POSITION STATEMENT: Supported SB 240.
ACTION NARRATIVE
TAPE 96-11, SIDE A
Number 001
SRES 2/5/96
SB 240 MINING BONDING POOL
CHAIRMAN LEMAN called the Senate Resources Committee meeting to
order at 3:35 p.m. and announced SB 240 to be up for consideration.
He said this bill was recommended by the Alaska Minerals Commission
and that it also applies to coal mining operations.
BOB STILES, President, Alaska Coal Association, said he is
currently involved in the development of the coal reserves in the
Beluga region. He said SB 240 doesn't decrease the amount of the
bonding requirement for a surface coal mining operation.
Typically, a surface coal mining operation bonding requirement will
be $1,000 - $10,000 per acre, he said.
SB 240 would not increase the risk profile of a bonding pool,
although there has never been a forfeiture of a reclamation bond by
a western coal mining operation. The reason for that is if an
operator ever forfeits a reclamation bond, he will never get a
permit to operate a coal mine again.
This bill has the potential of reducing the amount of assets an
operator has to pledge in order to obtain the bond.
Number 75
Most importantly, the bill makes bonding available when it might
not be available otherwise.
MR. STILES said SB 240 was a very good piece of legislation.
SENATOR LEMAN added that this bill does not propose any additional
state commissions to be established and assumes the Alaska Minerals
Commission could cover it. He asked Mr. Stiles what he thought of
that. MR. STILES responded that there clearly were a number of
things to be addressed in the surface mining program, bonding is
one of them. There needs to be some sort of mechanism for that
occurring.
Number 125
CHARLIE BODDY, Usibelli Coal, supported SB 240. The 1982 Surface
Mining Law specifically said the commissioner "shall" develop
regulations. SB 240 amended the 1990 reclamation law which
addresses all other types of non-coal mining and the words used in
that legislation are the commissioner "may." The coal operators
thought it was imperative to change the "may" to "shall" since they
didn't have a self-bonding program, yet. He hoped that the State
bonding pool would be the source of recognition of bonding for all
types of mining.
Number 158
JULES TILESTON, Director, Division of Mining and Water Management,
said he had no problem with changing "may" to "shall."
As the bonding program exists today, they have a more comprehensive
idea of how to fine-tune the reclamation/bonding act. The bonding
pool now is comprised of mostly small placer mining operations and
a few large hard-rock operations. There are approximately 400
operations involving a total of 2,500 acres in the bond pool.
These small operations have contributed the total of about $500,000
in cash bonds. The Red Dog Mine has approximately a $1 million
plus letter of credit to cover its 5-year reclamation obligation.
Fort Knox has a $1.5 million letter of credit, in addition to a
$450,000 bond with DEC to cover solid waste.
Both DEC and DNR are operating on a single line, MR. TILESTON
pointed out, and they needed to look at whether two bonds should be
required or if one bond instrument would handle it.
At present, no coal operation has requested or is in the bonding
pool. There are a little over $5 million in bonds by the coal
producers of the State, today. About $3.9 million of that is a
collateral bond for Usibelli. The Wishbone Hill project had filed
a $6.1 million letter of credit and their reclamation will be about
$35 million.
Number 230
SENATOR PEARCE moved to pass SB 240 from committee with individual
recommendations with the accompanying fiscal notes. There were no
objections and it was so ordered.
There being no further business before the committee, CHAIRMAN
LEMAN adjourned the meeting at 3:50 p.m.
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