Legislature(1997 - 1998)
03/19/1997 03:40 PM Senate RES
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* first hearing in first committee of referral
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SENATE RESOURCES COMMITTEE
March 19,1997
3:40 P.M.
MEMBERS PRESENT
Senator Rick Halford, Chairman
Senator Loren Leman
Senator Bert Sharp
Senator Robin Taylor
Senator John Torgerson
MEMBERS ABSENT
Senator Lyda Green, Vice Chairman
Senator Georgianna Lincoln
COMMITTEE CALENDAR
HOUSE BILL NO. 46
"An Act relating to mining; and providing for an effective date."
- MOVED SCS for CSHB 46(RES) OUT OF COMMITTEE
PREVIOUS SENATE COMMITTEE ACTION
HB 46 - No previous action to consider.
WITNESS REGISTER
Representative Pete Kelly
State Capitol Bldg.
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 46.
Mr. Jules Tileston, Director
Division of Mining and Water Management
Department of Natural Resources
3601 C Street, #800
Anchorage, AK 99503-5935
POSITION STATEMENT: Supported HB 46.
Mr. Roger Burggraf
Alaska Miners Association
830 Sheep Creek Rd.
Fairbanks, AK 99709-6130
POSITION STATEMENT: Supported HB 46.
Mr. David Rogers, Esq.
Council of Alaska Producers
211 4th, #108
Juneau, AK 99801
POSITION STATEMENT: Supported HB 46.
ACTION NARRATIVE
TAPE 97-22, SIDE A
Number 001
HB 46 MINING CLAIMS ON PUBLIC LANDS
CHAIRMAN HALFORD called the Senate Resources Committee meeting to
order at 3:40 p.m. and announced HB 46 to be up for consideration.
REPRESENTATIVE PETE KELLY, sponsor, explained that HB 46 came out
of the permitting process some of the larger mining companies went
through over the past few years, most notably, Illinois Creek and
Fort Knox. It brings the statutes in line with procedures that are
actually within DNR and is supported by industry, as well as the
administration. There is no controversy to his knowledge.
CHAIRMAN HALFORD asked if it eliminated the production licenses.
REPRESENTATIVE KELLY replied yes. CHAIRMAN HALFORD asked what
happens on tide and submerged lands without those licenses and what
legislative oversight there was on mineral closing orders and what
will there be with this bill.
REPRESENTATIVE KELLY said he understands this bill to be a closure
of future locations and legislative review remains the same on
mineral closings.
Number 40
MR. JULES TILESTON, Director, Division of Mining and Water
Management, supported HB 46. He explained that on tide and
submerged lands nothing happens. As an example the mining claims
on the 40 Mile River, an inland navigable water body, have been
regulated under State mining law with absolutely no problem. No
one has ever requested a production license for those particular
claims.
Ninety percent of claim holders in production don't have a license
which led them to ask why they have it in the first place. Their
conclusion was that it replicates the requirements of the mining
license issued by the Department of Revenue and is just a piece of
paper. However, it is specific to the mining claim which is
important, and is good for the life of the operation, as opposed to
the mining license which is renewed annually.
CHAIRMAN HALFORD said his question was from someone who had a
production license interaction with tidelands. MR. TILESTON said
he presumed that was a concern of Mr. Hayes and he had extensive
discussions with him. He has a mining production license that was
issued prior to the present law coming into place. His concern is
if this is somehow retroactive and he would be at legal jeopardy
and MR. TILESTON said he did not see this as being retroactive.
HB 46 does not change the legislative oversight on mineral closing
orders. The oversight provision kicks in when the withdrawal is
more than 640 acres and that provision remains in full force. The
change that is proposed is that the language in the law says a
mineral closing order closes it to mining and that's not correct.
It closes it to new location and, therefore, he proposed inserting
"location" for "mining."
Number 154
MR. TILESTON said that the Consumer Price Index (CPI) changes every
ten years, which is coming up, and is an accounting nightmare for
everyone. So they decided to simply change it to the nearest $5
every ten years. That's the only change.
SENATOR LEMAN commented that he thought the current CPI overstates
inflation and he hoped that would be adjusted sometime.
Number 186
SENATOR TORGERSON asked if there were any public notice
requirements. MR. TILESTON said he didn't think they were making
any. There were changes of "permit" to "lease" dealing with a mill
sight to be consistent. There were no changes to the overall
intent.
SENATOR TORGERSON asked what the changes were to oil and gas. MR.
TILESTON replied there were none. This strictly deals with
provisions of mining.
SENATOR TORGERSON asked if it was correct on page 3, section 3
where it says the Commissioner may lease land for development that
has been offered without worrying about a reoffer because the bill
speaks about oil and gas throughout and he found it hard to believe
they weren't affecting it somehow.
MR. BRUCE CAMPBELL, Staff for Representative Kelly, explained that
he was referring to changes made in section 7 where they changed
the word "permit" to "lease" on lines 11 and 13. He said it is
important to realize that mining leases are not subject to the same
best interest findings that oil and gas leases are. So the service
lease is exempted from the best interest finding in section 2, page
3, line 22. He said Senator Torgerson's question was specifically
to the oil and gas numbering reference on page 3, line 26 from
AS38.05.035 (e)(6)(F), but it used to be (e)(6)(G).
SENATOR TORGERSON said he was particularly concerned with section
(B) at the top of page 4 which refers to land that hasn't gone
through any process being included if the commissioner makes a best
interest finding, etc... MR. CAMPBELL agreed, but said that
nothing in this bill changes anything in that section because that
is the existing law.
SENATOR LEMAN asked if the next amendment makes the issue of aliens
consistent with corporations that have non U.S. citizens as a
majority of their stock holders. REPRESENTATIVE KELLY replied that
language was for consistency. CHAIRMAN HALFORD asked what their
intent was and why we are offering staking ability to foreign
individuals or corporations. REPRESENTATIVE KELLY replied that we
are trying to open up mining in the State. CHAIRMAN HALFORD
commented he thought there were two ways to fix the inconsistency.
One is to go back to no aliens and the other is to say all aliens
are O.K.; and his choice is to say all aliens are O.K.
SENATOR LEMAN moved to adopt amendment 3/7/97 Luckhaupt 0-
LSO265\F.1. He asked if other countries grant these privileges to
citizens of the U.S. MR. TILESTON answered that he didn't know
specifics, but it is consistent with federal law. The basic
difference between federal law and this bill is that you can't get
a patent if you're a foreign alien, even if the country has
reciprocity.
SENATOR SHARP asked if the current prohibition on the 50% rule been
enforced. MR. TILESTON responded that many of the larger
corporations aren't native.
CHAIRMAN HALFORD asked if Canada allow U.S. citizens to stake
mining claims in their jurisdiction. REPRESENTATIVE KELLY said he
had only been told that there were Alaskan miners in Canada staking
their own claims.
CHAIRMAN HALFORD asked if there were objections to the amendment.
There were none and the amendment was adopted. He added that there
was some interest from the Alaska Miners Association in including
some provisions in a related bill - HB 173. REPRESENTATIVE KELLY
said he had no objections to that.
MR. TILESTON said that the Administration supports HB 173 whether
it's incorporated in this bill or remains separate. There are two
broad sections of the bill, itself. The first part amends AS
27.21.120, the coal program, which deals with what you can use a
federal grant for on a small coal mine. It does two things: first,
it changes the definition of a federal small coal mine from 100,000
tons to 300,000 tons. The second part liberalizes what you may use
those grant monies for. Existing federal regulation was very
restrictive, he explained, and subsistence is now included as well
as archeology studies. The federal government has recognized there
are costs to small coal miners and they are willing to fund those
costs. Alaska statute still has the restrictive language and they
are proposing to make the two statutes compatible.
The second broad group of amendments deals with the exploration
incentive credits bill which was passed two years ago. That bill,
which is doing very well, has had $57 million worth of credits
applied for. The problem was in starting to implement it, they
used existing staff; and there is a requirement for annual filings
with an automatic approval process. This means if someone applies,
and the division doesn't do something, that application is
automatically approved - a paper process. They are proposing to
eliminate the annual filing requirement and have set some
thresholds that deal with when a person should file. One is if you
have spent more than $250,000 or you are ready to cash in the
entire amount regardless of what it is.
Recognizing the cost to the State of processing this, industry
agreed to do some of the work by attaching a CPA statement to any
exploration incentive in excess of $40,000 for any mineral property
in any one year. This fits nicely with what industry has to do as
part of their tax filings, anyway. The third item is a fee that is
based upon the amount of the application being filed. If it's
under $1 million, it's a $500 fee; if it's over $1 million, it's a
$1,000
fee. This, again, was negotiated with the industry and has the
support of both.
Number 444
SENATOR TAYLOR said they have had some problems with people in
other areas where they utilized mining claims for other purposes
than mining. He thought they might be opening themselves up to
additional misuse. MR. TILESTON responded no. The credits can
only be accrued through detailed exploration work as defined by
statute. It does not give any property right. It is just a data
collection thing.
MR. ROGER BURGGRA F , Director, Alaska Miner's Association, supporte
HB 46. This is a case where government and industry have worked
together to clarify and streamline regulations. He said there is
probably one correction that should be made where it refers to the
Petersville Recreational Mining Area of 540 acres which is actually
520 acres.
SENATOR TAYLOR asked if he opposed melding HB 173 into HB 46. Mr.
Burggraf said he thought it could be done.
MR. DAVID ROGERS, Council of Alaska Producers, supported HB 46 and
they also strongly support the marriage of HB 173 with HB 46.
SENATOR LEMAN moved to adopt the contents of HB 173 into SCS HB 46
(RES). There were no objections and it was so ordered.
CHAIRMAN HALFORD noted that he thought the 520 acres in the
Petersville area was supposed to be created as a recreational
mining area when they did the mineral closing order. MR. TILESTON
said that area is part of a large block of federal mining claims
completely surrounded by State land at this point. Those mineral
claims were going through the process of mineral patent and a
technical mistake was made. The federal claims were closed and
lost at which time the State selection automatically falls in
place. (You can't relocate a federal claim.) The area was a
producing gold area with a good history, and their first thought
was to close the whole area, but what they did was pick two cites
for a total of 520 acres; one at the south end of the canyon and
the other at the north end. The one at the south end has the old
gold mining facilities and an airstrip and the concept of a
recreational mining area came at that time. Ownership of the
facilities is being cleared up now.
It's the administration's feeling that they have committed to doing
an update on the existing land use plan that looks at that corridor
and decides if it should go commercial or not. They would then
come to the legislature with what they want to do with the specific
north and south pieces.
MR. BURGGRAF said he thought the concept was good and there weren't
many areas in the State where recreational mining was available and
he thought it would be a good commercial venture to have.
CHAIRMAN HALFORD announced an at ease from 4:27 - 4:32 p.m.
TAPE 97-20, SIDE B
CHAIRMAN HALFORD said he thought it was appropriate to add the
Petersville Recreational Mining Area to the bill and asked if they
added this to the Caribou Creek Recreational Mining Area section,
would DNR still be in charge with regard to a commercial permit for
tourist operations vs. non-tourist operations. MR. TILESTON
replied they would.
SENATOR TAYLOR moved to conceptually add the Petersville
Recreational Mining Areas to Caribou Creek Recreational Mining Area
that is in existing law. It would also add section 23.625 which
would be a legal description of the Petersville Mining Area. MR.
TILESTON said there may be a simpler way to refer to the mineral
closing orders because there's a legal description that goes with
it. That way there is absolutely no confusion as to what pieces of
land they are talking about or why it was withdrawn. CHAIRMAN
HALFORD said it would be whatever drafting tells them would be the
most concise, reasonable description of the 520 acres that is
contained in that mineral closing order. He said he would have it
drafted as a CS and it would come back not before the Committee,
but before any of them to look at to see if they agree with the
wording before it's actually transmitted to the next committee.
There were no objections and it was so ordered.
SENATOR TAYLOR moved SCS HB 46 (RES) with individual
recommendations, assuming that members of the Committee will have
an opportunity to review it before the chairman releases it. There
were no objections and it was so ordered.
CHAIRMAN HALFORD adjourned the meeting at 4:40 p.m.
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