Legislature(1993 - 1994)

04/13/1994 04:15 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                   SENATE RESOURCES COMMITTEE                                  
                         April 13, 1994                                        
                           4:15 P.M.                                           
 MEMBERS PRESENT                                                               
 Senator Mike Miller, Chairman                                                 
 Senator Loren Leman, Vice Chairman                                            
 Senator Steve Frank                                                           
 Senator Drue Pearce                                                           
 Senator Dave Donley                                                           
 Senator Fred Zharoff                                                          
  MEMBERS ABSENT                                                               
 Senator Al Adams                                                              
  COMMITTEE CALENDAR                                                           
 SENATE BILL NO. 371                                                           
 "An Act providing for exploration incentive credits for activities            
 involving locatable and leasable minerals and coal deposits on                
 certain land in the state; and providing for an effective date."              
 SENATE BILL NO. 374                                                           
 "An Act extending the period of regulation of material sites used             
 for timber operations under the Forest Practices Act and extending            
 a corresponding exemption from provisions regulating mining                   
 reclamation; and providing for an effective date."                            
 HOUSE BILL NO. 462                                                            
 "An Act repealing certain provisions of the laws, other than those            
 in the Alaska Land Act, relating to recording requirements, labor             
 and improvement requirements, and size requirements for mining                
 claims and providing for the suspension or waiver of state annual             
 mining labor requirements when the federal government has suspended           
 or waived federal annual mining labor requirements administratively           
 or by statute; and providing for an effective date."                          
  PREVIOUS ACTION                                                              
 SB 371 - No previous action to record.                                        
 SB 374 - No previous action to record.                                        
 HB 462 - No previous action to record.                                        
 WITNESS REGISTER                                                              
 Gerry Gallagher, Director                                                     
 Division of Mining                                                            
 Department of Natural Resources                                               
 P.O. Box 107016                                                               
 Anchorage, Ak. 99510-7016                                                     
  POSITION STATEMENT:   Commented on SB 371 and supported SB 374 and           
 HB 462.                                                                       
 David Rogers, Esq.                                                            
 Producers Council                                                             
 Juneau, Ak. 99801                                                             
  POSITION STATEMENT:   Commented on SB 371.                                   
 David Stone, President                                                        
 Producers Council                                                             
 3100 Channel Dr.                                                              
 Juneau, Ak. 99801                                                             
  POSITION STATEMENT:   Supported SB 371.                                      
 Steve Borrel, Executive Director                                              
 Alaska Miners Association                                                     
 501 W. Northern Lights, #203                                                  
 Anchorage, Ak. 99503                                                          
  POSITION STATEMENT:   Supported SB 371.                                      
 Mary Nordale, President                                                       
 Alaska Miners Association                                                     
 501 W. Northern Lights, #203                                                  
 Anchorage, Ak. 99503                                                          
  POSITION STATEMENT:   Supported SB 371.                                      
 Representative Gene Therriault                                                
 State Capitol                                                                 
 Juneau, Ak. 99801-1182                                                        
  POSITION STATEMENT:   Sponsor of HB 462                                      
  ACTION NARRATIVE                                                             
  TAPE 94-35, SIDE A                                                           
 Number 001                                                                    
 CHAIRMAN MILLER called the Resources Committee meeting to order at            
 4:15 p.m. and announced  SB 371  (MINERAL EXPLORATION INCENTIVE               
 CREDITS) to be up for consideration.                                          
 GERRY GALLAGHER, Director, Division of Mining, said they have a               
 problem with granting exploration incentive credits to the industry           
 which is strictly a fiscal concern.  There is not much money coming           
 in and they are very concerned with opening the back door on the              
 general fund with anything that would lessen it.                              
 He said that mental health and school trust lands needed to be                
 exempted specifically so the Department doesn't end up in                     
 litigation.  This could be fixed on page 1, line 8 after the word             
 "grant" insert ",unless otherwise provided by law," so the                    
 Department could identify these lands and exempt not all of the               
 credit, but the royalty portion of the credit.                                
 He explained they had to make some projections about the number of            
 new mines that would happen in the next 15 years to come up with              
 the fiscal note.                                                              
 SENATOR FRANK asked if he considered any taxes and royalties that             
 might accrue because of the credit.  MR. GALLAGHER said that was              
 not considered, but he didn't know how to put it in a fiscal note.            
 He believed the fiscal notes were realistic in terms of royalties             
 and where they were going to go.                                              
 SENATOR MILLER asked Mr. Gallagher to testify on  SB 374  (MATERIAL           
 SITES FOR TIMBER OPERATIONS).                                                 
 Number 111                                                                    
 MR. GALLAGHER explained that the Mine Reclamation Act and the                 
 Forest Practices Act both require the reclamation of material                 
 gravel sites.  If one agency is doing the same thing as another,              
 cooperative agreements are used.  When the DNR put the Mine                   
 Reclamation regulations out to notice, they relied on the Forest              
 Practices Act, because they were more rigorous so they didn't have            
 to double permit. He said they couldn't complete the regulations              
 for the Mining Reclamation Act because the regulations for the                
 Forest Practices Act got hung up in some controversy and                      
 difficulties.  The regulations on mining reclamation now need to              
 defer back to the Forest Practices Act regulations which are in               
 place.  This bill simply gives them 6 months to finish doing that.            
 If they don't do this, the forest operators will have to get two              
 permits for the same gravel pit.  It is not a good use of our time            
 or theirs and it doesn't change the regulatory requirements.                  
 Number 155                                                                    
 SENATOR MILLER thanked Mr. Gallagher and announced  SB 371  to be up     p    
 for consideration again.                                                      
 DAVID ROGERS, Counsel for the Producers Council, said the primary             
 element of the bill authorizes exploration incentive credits which            
 can be used by qualified applicants to offset tax and royalty                 
 obligations.  It applies to coal and leasable and locatable mineral           
 exploration activities.  The activities which qualify for credits             
 include geophysical and geochemical surveys, drilling exploration             
 holes, aerial photography, and other exploratory work.  The earned            
 credits can be applied against general corporate income taxes,                
 mining license taxes, and royalties.  Qualified exploration                   
 activities must be documented.  The maximum credit available is               
 equal to 60% of direct labor costs for Alaska residents and 50% of            
 other eligible costs as defined in the bill.                                  
 SENATOR LEMAN noted that this should be checked with SB 151 to see            
 if it is consistent with the credits.                                         
 DAVID STONE, President, Council of Alaska Producers, supported SB
 371.  He said throughout the world, countries are actively courting           
 mining companies by offering economic incentives and other                    
 inducements and it has been particularly successful in Chile and              
 Mexico where privatization and tax incentives have revitalized                
 their mining industries.  At the same time obstacles in the lower             
 48 are forcing many companies to look elsewhere.  SB 371 is one of            
 the things we should do to draw more industry attention to Alaska             
 and compete in the increasing competitive global market place.                
 STEVE BORREL, Executive Director, Alaska Miners Association,                  
 supported SB 371.  It would allow credit for a percentage of                  
 certain specified direct expenditures that are made during the                
 early exploration stage.  The credit cannot be taken until the                
 project actually begins to be an operating mine.  The credits can             
 be transferred which is important for a future sale of the mine.              
 He concluded by saying that SB 371 will send a positive message to            
 the international mining industry that Alaska is improving the                
 investment climate and is working to encourage mineral development.           
 SENATOR MILLER said they would hold SB 371 for a quorum and                   
 announced  HB 462  (MINING REQUIREMENTS:RECORDING/LABOR/SIZE) to be           
 up for consideration.                                                         
 Number 350                                                                    
 REPRESENTATIVE GENE THERRIAULT, sponsor of HB 462, said it clears             
 up inconsistencies that exist between our Title 27, dealing with              
 mining on federal land, and federal regulations.                              
 GERRY GALLAGHER, DNR, supported HB 462.  It makes necessary changes           
 in state law to conform with federal law.  It would eliminate some            
 MARY NORDALE, President, Alaska Miners Association, supported HB
 462.  She recommended they consider a repeal of AS 27.10.120,                 
 because it is archaic and relates to staking of claims by a person            
 holding a power of attorney.  It is a practice that has worn out              
 the need at this time.                                                        
 SENATOR MILLER said they would work on this issue and announced  SB
 374  (MATERIAL SITES FOR TIMBER OPERATIONS) to be up for                      
 consideration.  He announced a recess from 4:44 p.m. - 4:49 p.m.              
 SENATOR ZHAROFF moved to pass SB 374 from committee with individual           
 recommendations.  There were no objections and it was so ordered.             
 SENATOR MILLER announced  SB 371  to be up for consideration.  He             
 said there was a proposed amendment on line 8, page 1 after the               
 word "grant" to add "unless otherwise provided by law."                       
 SENATOR LEMAN moved the amendment.  There were no objections and it           
 was so ordered.                                                               
 SENATOR LEMAN moved to pass SB 371 from committee with individual             
 recommendations.  There were no objections and it was so ordered.             
 SENATOR MILLER adjourned the meeting at 4:50 p.m.                             

Document Name Date/Time Subjects