Legislature(1995 - 1996)
03/11/1996 03:37 PM Senate RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE RESOURCES COMMITTEE March 11, 1996 3:37 P.M. MEMBERS PRESENT Senator Loren Leman, Chairman Senator Drue Pearce, Vice Chairman Senator Steve Frank Senator Rick Halford Senator Robin Taylor Senator Lyman Hoffman MEMBERS ABSENT Senator Georgianna Lincoln COMMITTEE CALENDAR SENATE JOINT RESOLUTION NO. 37 Urging the United States Congress to give an affirmative expression of approval to a policy authorizing the state to regulate, restrict, or prohibit the export of unprocessed logs harvested from its land and from the land of its political subdivisions and the University of Alaska. SENATE BILL NO. 112 "An Act establishing a discovery royalty credit for the lessees of state land drilling exploratory wells and making the first discovery of oil or gas in commercial quantities." SENATE JOINT RESOLUTION NO. 38 Opposing the proposed expansion of the United States Environmental Protection Agency's toxins release inventory program. SENATE JOINT RESOLUTION NO. 39 Relating to the U.S. Environmental Protection Agency draft National Pollutant Discharge Elimination System general permit for placer mining in Alaska. SENATE BILL NO. 199 "An Act relating to environmental audits and health and safety audits to determine compliance with certain laws, permits, and regulations; and amending Alaska Rules of Appellate Procedure 202, 402, 602, 603, 610, and 611." SENATE BILL NO. 262 "An Act relating to management of game populations for maximum sustained yield for human harvest and providing for the replacement of areas closed to consumptive uses of game; relating to management of fish and game areas; and amending Rules 79(b) and 82(b)(2), Alaska Rules of Civil Procedure." CS FOR HOUSE BILL NO. 212(FIN) "An Act relating to the management and sale of state timber and relating to the administration of forest land and classification of state land." SENATE BILL NO. 283 "An Act relating to filing, recording, and indexing of documents with or by the Department of Natural Resources; repealing certain filing requirements concerning property involving nonresident aliens; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SJR 37 - See Resources minutes dated 3/8/96. SB 112 - See Resources minutes dated 3/6/96. SJR 38 - No previous action to consider. SJR 39 - No previous action to consider. SB 199 - See Resources minutes dated 1/31/96 and 3/6/96. SB 262 - See Resources minutes dated 2/12/96 and 3/8/96. HB 212 - No previous action to consider. SB 283 - See Resources minutes dated 3/8/96. WITNESS REGISTER Mark Rubin American Petroleum Institute Washington, D.C. POSITION STATEMENT: Commented on SJR 38. Faye Sullivan, Environmental Scientist UNOCAL Oil and Gas P.O. Box 196247 Anchorage, AK 99519 POSITION STATEMENT: Supported SJR 38. Mark Wheeler Alaska Environmental Lobby P.O. Box 22151 Juneau, AK 99802 POSITION STATEMENT: Opposed SJR 38 and SB 199, and commented on HB 212. Steve Borell, Executive Director Alaska Miners Association 501 W. Northern Lights, #203 Anchorage, AK 99503 POSITION STATEMENT: Supported SJR 39. David Chambers, Mining Analyst Sierra Club Legal Defense Fund 325 4th Ave. Juneau, AK 99801 POSITION STATEMENT: Opposed SJR 39. Mike Pauley, Aide % Senator Loren Leman State Capitol Bldg. Juneau, AK 99801-11182 POSITION STATEMENT: Sponsor of SB 199. Dwight Perkins, Special Assistant Department of Labor P.O. Box 21149 Juneau, AK 99802-1149 POSITION STATEMENT: Opposed SB 199. Janice Adair, Director Division of Environmental Health Department of Environmental Conservation 555 Cordova Street Anchorage, AK 99501 POSITION STATEMENT: Opposed SB 199. Geron Bruce, Legislative Liaison Department of Fish and Game P.O. Box 25526 Juneau, AK 99811-5526 POSITION STATEMENT: Opposed SB 199. Lynn Levengood 931 Vide Way Fairbanks, AK 99712 POSITION STATEMENT: Supported CSSB 262. Bill Perhach Alaska Environmental Lobby 419 6th Street Juneau, AK 99801 POSITION STATEMENT: Opposed SB 262. Ken Taylor, Deputy Director Division of Wildlife Conservation Department of Fish and Game P.O. Box 25526 Juneau, AK 99802-5526 POSITION STATEMENT: Opposed SB 262. Senator Torgerson State Capitol Bldg. Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of SJR 37. Cliff Eames Alaska Center for the Environment 519 W 8th, #201 Anchorage, AK 99501 POSITION STATEMENT: Supported SJR 37. Mark Wheeler Alaska Environmental Lobby 419 6th Street Juneau, AK 99801 POSITION STATEMENT: Supported SJR 37. Ken Boyd, Director Division of Oil and Gas Department of Natural Resources 3601 C Street, Suite 1380 Anchorage, AK 99503-5948 POSITION STATEMENT: Commented on SB 112. Representative Jeannette James State Capitol Bldg. Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of HB 212. Jack Phelps Alaska Forest Association 111 Stedman, Ste 200 Ketchikan, Ak 99901 POSITION STATEMENT: Supported HB 212. Erik Holland 427 1st Ave. Fairbanks, AK 99701 POSITION STATEMENT: Opposed HB 212. Dan Ritzman Northern Alaska Environmental Center 218 Driveway St. Fairbanks, AK 99701 POSITION STATEMENT: Opposed HB 212. Sharon Young, State Recorder Department of Natural Resources 3601 C Street, Ste. 1180 Anchorage, AK 99503-5947 POSITION STATEMENT: Supported SB 283. ACTION NARRATIVE TAPE 96-26, SIDE A Number 001 SJR 38 TOXINS RELEASE INVENTORY PROGRAM CHAIRMAN LEMAN called the Senate Resources Committee meeting to order at 3:37 p.m. and announced SJR 38 to be up for consideration. He explained this is a result of information he and Senator Pearce found at the Energy Council meeting in Washington, D.C. Mark Rubin, American Petroleum Institute, informed them that the EPA is proposing to expand the TRI Program to include oil and gas exploration and production as well as some other categories. The downside to this is that it will likely make oil and gas producers the biggest polluters in the state because they are pulling from a formation and treat the oil and the gas and separate it and take the produced water and produced gas and reinject it. It doesn't make any sense to have to monitor, test, and report that as a toxic release. Number 44 MARK RUBIN testified that Toxins Release Program currently requires that a number of manufacturing industries report for 651 toxic chemicals. The EPA is considering whether to put additional industries into this program including the oil and gas exploration and production industry. They would have to report for about 80 chemicals, some of which occur naturally in oil, gas, and produced water, like benzene or tylene. If they expand this to the exploration and production (E&P) industry, API estimates about 4,700 or more facilities would have to report. The first year cost to the industry would be about $228 million; annual costs thereafter would be about $110 million per year. The average cost for offshore oil and gas would be about $58,000 in the first year and about $8,000 each year thereafter. They believe strongly that the TRI Program is not really designed for the E&P industries. It is designed more for businesses that are in close proximity to communities and most E&P facilities are away from communities or offshore and they have very few releases to the environment. EPA believes that the TRI Program has been a great success and one of the reasons because there was a voluntary reduction in releases from some of the facilities that report. The largest releases from E&P would be naturally occurring constituents of oil, gas, and water. Reducing those releases would be close to impossible without shutting in wells. The industry is not opposed to providing more information to the public, and they have recommended to the EPA that instead of expanding the TRI Program that they look at what type of information is really needed by the public working with the Interstate Oil and Gas Compact Commission, the State Regulators Commission, and include EPA officials. Number 128 FAYE SULLIVAN, Environmental Scientist, UNOCAL, said they support SJR 38. She said the original TRI was established to provide information to the public about potential chemical releases as a risk of these releases to the local community. It's not appropriate to expand TRI reporting to the oil and gas industry which generally operates in remote areas or offshore. Oil and gas facilities have limited release potential and present a very low risk to the public. Typical oil and gas reportable releases would include discharges of produced water, underground injection of waste, and air emissions from combustion sources. All of these activities are currently strictly regulated by existing federal and state programs. Use of chemicals can vary in the oil and gas industry from day to day and week to week. Expanding the TRI Program would force operators to conduct regular expensive waste removal tests with very little environmental benefit. Many old fields are marginal now and their expected life is decreased with each additional regulatory burden placed on them. MARK WHEELER, Alaska Environmental Lobby, said they support free and easy access to information on toxic chemical releases. They commend EPA's efforts to increase the scope of their reports to include other industries with high potential for toxic pollution including mining facilities, waste management facilities, and electric utilities. He urged the legislature to reject this resolution and to help the public gain more knowledge, not less about toxic releases into our air and water. SENATOR PEARCE moved to pass SJR 38 with individual recommendations and a $0 fiscal note. There were no objections and it was so ordered. Number 192 SJR 39 EPA'S NPDES PERMIT FOR PLACER MINING STEVE BORELL, Executive Director, Alaska Miners Association, supported SJR 39. He suggested two potential changes. He said the resolution references dredge and recreational mining; however, the issue goes far beyond just dredge and recreational mining and it affects any commercial mining operation. The resolution should address how it affects commercial operators and should give full due deference to the folks that have caused the problem by litigants being included in addition to their attorneys. SENATOR LEMAN noted that they had two proposed amendments from the Alaska Miners and he thought they were friendly amendments and would improve the resolution. SENATOR TAYLOR moved to adopt amendment number one. There were no objections and it was so ordered. SENATOR TAYLOR moved to adopt amendment number two. There were no objections and it was so ordered. Number 219 SENATOR TAYLOR moved to pass SJR 39 from committee as amended. SENATOR LEMAN asked him to hold the motion as there were people who wanted to testify. DAVID CHAMBERS, Mining Analyst, Sierra Club Legal Defense Fund, said he is a geophysicist by training, not an attorney. He was one of the people involved in the settlement agreement that is at issue with this resolution. He wanted to clear up some of the misleading statements in SJR 39. The first "Whereas" requires all dredges to have a NPDES permit despite the fact that EPA does not have the personnel to process all of the newly required permits. While the settlement agreement requires small suction dredgers to send their names and addresses to EPA and in turn they receive a one page sheet listing specific practices to follow. He did not think that was an onerous requirement. The second concern was the arsenic level of .18 parts per billion. While that is factually correct and is a requirement of state and federal law, during the course of the year and a half of negotiations they never once discussed the arsenic level at its numeric limits. This is just a number EPA is putting in the permit; it's required to do so by law. Should EPA change its standard as is referred to in the next line, to 50 parts per billion, he assumed that would become a part of this permit as it would all other permits. He said there were numerous compromises in the agreement and at the end of the discussions, the miners were invited to comment and they chose not to do so. MR. CHAMBERS said he thought EPA entered into this settlement agreement because its position under their legal challenge was weak. He said the settlement agreement was in the best interests of the State. If the terms of the settlement agreement aren't complied with and we end up in court, they would go back to their original negotiating position and he did not think it best to have a court imposed solution. He said if there are perceived weaknesses in the settlement agreement the door is open to miners or anyone else. SENATOR LEMAN noted that there are some things the legislature doesn't agree with and asked why the arsenic level was set a .18 parts per billion which is considerably lower than the requirement for drinking water. MR. CHAMBERS explained .18 is just a reflection of what the State and federal standard is. It is not an element of the settlement. SENATOR TAYLOR asked if the Sierra Club Legal Defense Fund had filed a suit against EPA. MR. CHAMBERS answered that they challenged the EPA permit on behalf of their clients, American Rivers and the Northern Alaskan Environmental Center. Number 318 MARK WHEELER, Alaska Environmental Lobby, said the recent draft NPDA permit for placer mining in Alaska is a result of one and a half years of settlement negotiations between the EPA, the State of Alaska, and the Sierra Club Legal Defense Fund. It is a good compromise agreement which seeks to protect water quality in Alaska. He encouraged the legislature to support this compromise agreement by rejecting the proposed resolution. SENATOR TAYLOR asked if .18 parts per billion is a lower standard than the current standard for drinking water. MR. CHAMBERS replied the current standard is 50 parts per billion, so .18 is quite lower. It is based on a human carcinogenic health risk. SENATOR TAYLOR asked if the 50 parts per billion which municipal water systems use was based on a health standard. MR. CHAMBERS replied that it was not based on risk of arsenic as a carcinogen; that is what the .18 per billion is based on. He elaborated that the .18 applies to all discharges in the State of Alaska, not just to placer miners. SENATOR TAYLOR remarked that normal water running off a hillside would be higher than what the number would be. He asked if someone wanted to extract gravel would they have to set up a filtration system that would take out the normal background levels of arsenic. SENATOR LEMAN answered that he doubted that a filtration system would do that. Number 388 SENATOR PEARCE asked if the administration had a position on this resolution. SENATOR HALFORD asked if the administration agreed to this settlement? MR. CHAMBERS replied that yes, they did. MR. BORELL disagreed and said the administration, in a letter for Deputy Commissioner Michelle Brown, said if a series of things were met they would look kindly on it, but the details of the letter were not met and they haven't heard if they have withdrawn their support. SENATOR PEARCE asked how the State became involved. MR. BORELL replied that the State was questioned during various points during the negotiations and involved by the EPA. SENATOR PEARCE asked if the Miners Association was asked what they thought of the new regulations. MR. BORELL replied that they were asked. COMMISSIONER BURDEN specifically called on a couple of different occasions asking for comments. There may have been one occasion when the EPA attorney called, but they did not see a copy of the draft permit until it was put out for public notice. They were not aware of the multitude of details in that general permit that had never been discussed with EPA, DEC, or with them. SENATOR PEARCE asked why the Miners did not actually try to inject themselves into the suit? MR. BORELL said there were two reasons: there was a group of miners at the time who felt they had an agreement between themselves and EPA that the existing general permit was going to be satisfactory. With that promise they were not interested in pursuing it. The other reason is that the industry was just burned out on being in court. SENATOR TAYLOR asked if the settlement decision had been given back to the judge, yet, for approval. MR. BORELL replied that it hadn't been approved by the court. It depends on this draft of the general permit going forward and EPA meeting several other criteria. SENATOR TAYLOR asked if they would be involved at that point. MR. BORELL replied that they would like to, but they don't have access at this point because they were not involved at any earlier stage. Number 480 SENATOR TAYLOR commented that this seems to be a pattern that the environmental community files a suit against a federal monitoring agency and by filing that suit they are able to go into a back room with the attorneys on behalf of the federal government who talk with their friends about what kind of a settlement should be achieved on their litigation. The settlements that come down, then, establish through court order new standards and new requirements without any of the effected people being in the room or being allowed to participate. SENATOR PEARCE moved to pass SJR 39 am with a $0 fiscal note and individual recommendations. There were no objections and it was so ordered. SB 199 ENVIRONMENTAL & HEALTH/SAFETY AUDITS SENATOR PEARCE moved to adopt the workdraft (f)Lauterback 3/9/96 as their working document. There were no objections and it was so ordered. MIKE PAULEY, Staff to Senator Leman, said the new committee substitute incorporates certain recommendations they received from both the business community and the administration. Many changes are technical matters. They have added clarifying language in the area of privilege saying that if one part of an audit report is disclosed for any reason, the privilege still applies to the remaining portions of the audit report. This is necessary because some federal courts have adopted a four part test for determining claims of privilege on the basis of self critical analysis. They have added to the list of nonprivilege materials such information that is required in order to obtain, maintain, or renew a license and also such information that is required under a contract with the State. These changes were made to address concerns of administration representatives. In the area of immunities they clarified that a regulated entity which voluntarily reports instances of noncompliance is not only eligible for immunity for the violations reported, but also violations that are based on the facts disclosed and which were unknown to the person making the disclosure. This change was made because of the concern that a person might not be covered by immunity for violations that were discovered as a result of a voluntary disclosure, but were not declared as violations in the disclosure. This possibility could be a powerful disincentive to voluntarily report violations. An extra requirement has been added for immunity. A regulated entity is required to disclose under terms of the confidentiality agreement that part of an audit report which deals with the plan for compliance, but only if the information is requested by the appropriate regulatory agency. A new paragraph has been added to the bill clarifying that a regulatory agency may not initiate an investigation of a regulated entity based solely on the fact that the entity has provided a notice of intent to perform a self audit. He said that the circumvention by regulation prohibited regulation was deleted because it is already covered in another part of State law. SENATOR LEMAN noted that made three major changes that were requested by DEC. SENATOR LEMAN noted that the circumvention regulation was addressed in AS44.62.030. He said they wanted to make sure it was covered not only by regulation, but by permit and other administrative action as well. They do not want to do things that are contrary to statute. DWIGHT PERKINS, Special Assistant, Department of Labor, said in the hearing on this bill last week Mr. Paul Grossi, Director, Workers Compensation, and Mr. Jeff Carpenter, Occupational Safety both testified why they have concerns. The Commissioner didn't have a problem with the legislation prior to introduction of the bill. After going through the bill they found that it does significantly change their role in Workers Compensation. On March 5 they had a letter prepared reviewing their concerns and he noted it was in their packets. He said they would be happy to work with the committee. TAPE 96-26, SIDE B Number 582 SENATOR LEMAN commented he was frustrated that they were notified of concerns after the first hearing when the bill had been out for 60 days. MR. PERKINS responded that during the first hearing the DOL and DEC did speak, but they ran out of time and the Department of Labor didn't go on record. SENATOR LEMAN apologized. MR. WHEELER, Alaska Environmental Lobby, commented that none of their concerns had been addressed in this CS. He said they are worried about the health and safety of the citizens of Alaska. This legislation shows a blatant disregard for the health of the public. The bill seems to make it harder for DEC and other State agencies to do their jobs by extending the right of privilege to information disclosed in self audits, by allowing industry to get around working toward compliance by excusing persons ignorant of the law and granting immunity for violations which industry hasn't even acknowledged breaking. MR. WHEELER said there was little evidence for protection against bad actors. There's not much talk about repeat violators. They are also concerned with interjecting "substantial" when referring to injury on page 4 of the summary of changes. SENATOR LEMAN said the intent of this legislation was to get people to come in compliance with environmental laws and he thought the bill accomplished that. He wanted to address some of his concerns. Number 525 JANICE ADAIR, Director , Division of Environmental Health, said she continues to have concerns with the privilege and that immunity is provided for criminal activity, and continue to have concerns with the broad definition of environmental health and safety law. She also pointed out that in the section regarding substantial harm and substantial injury she had pointed out that there was inconsistency. SENATOR TAYLOR asked if there was anyone here from ADF&G who wanted to address the $66,500 fiscal note submitted with the bill. He asked specifically why they would need additional staff to encourage people to come into compliance. GERON BRUCE, ADF&G, said they are looking at their authority under AS16.05.870 which regards anadromous streams, crossing, and other activities in the streams. Because of the broad application of privilege and immunity to information provided by this legislation they feel they would have to have some increased effort to develop their own sources of information when they suspect violations are occurring. In the past they have enjoyed good relationships with the companies in the field and they have gone to them for a lot of information, but they don't think that is likely to continue under this legislation. SENATOR TAYLOR countered that the self audit would be an effort to comply and would only impact the law if, in fact, it did. MR. BRUCE said he thought they were seeing things differently developing the balance between allowing private industry to conduct their business and our responsibility to protect the public resources. They are not eager to prosecute people. They have very few prosecutions under their authorities to protect anadromous fish streams. They generally try to work with operators up front to prevent problems and when problems are detected to then work with them to correct them. Because of the broad nature of the legislation some operators may not be willing to cooperate the same way they have in past. The Department may have to develop independent information where they think violations have occurred, because they will see this as a way to shield themselves from actions which were not in compliance. SENATOR LEMAN noted that the protection of the self audit only applies if the party who does the audit performs immediate compliance with the law. He thought the Committee should be seeing negative fiscal notes from all departments. SENATOR TAYLOR asked for an example of how this could be used as a shield. In response MR. BRUCE explained that someone going to engage in some kind of activities in an anadromous fish stream is supposed to notify the Department, supply plans about their intentions, and then receive a permit from them. After that, they pretty much operate on their own. For some reason, if they deviated from the terms of the permit that resulted in some damage of the stream, they could conduct one of these audits, disclose the information, then perhaps engage in some activity to correct the problem. The State would be in the position of arguing whether or not their corrective action was actually equal to what they thought it should be. SENATOR TAYLOR said he thought their department would probably be consulted on what was the best remedial action. They don't get the shield unless they haven't cleaned up their act. MR. BRUCE said their fiscal note addresses the cost of collecting information to demonstrate that a violation has occurred since under this legislation they can't get the information from the operator themselves if they have conducted an audit and the information is then confidential. SENATOR LEMAN commented that he thought they had the capacity to put in permit conditions which are not protected under the audit. MR. BRUCE said he thought it would be helpful for his staff to get together with some of their field people to walk them through some other examples. Number 312 SENATOR TAYLOR asked if he had conferred with other States to see if they needed additional funding for self audit programs. MR. BRUCE said they didn't and one of the reasons they didn't contact the state of Texas is there's so much difference between the two states. Texas, for instance, doesn't have salmon resources. He wasn't sure their experience would help us that much with the unique laws we have on the books to protect our salmon resources. Number 299 SENATOR HOFFMAN moved to adopt the Department of Labor amendment to add "except for worker's compensation proceedings." There were no objections and it was so ordered. SENATOR TAYLOR moved to pass CSSB 199 am from committee with individual recommendations. There were no objections and it was so ordered. SB 262 MANAGEMENT OF FISH/GAME POPULATION & AREA SENATOR LEMAN announced SB 262 to be up for consideration. MARY GORE, Staff to Senator Miller, sponsor, said she had highlighted the changes for the committee. SENATOR TAYLOR moved to adopt the committee substitute to SB 262. There were no objections and it was so ordered. SENATOR HOFFMAN asked if the Tanana Chiefs supported the legislation with the current changes. MS. GORE replied that they do. LYNN LEVENGOOD, Fairbanks, supported the committee substitute. He said it was absolutely necessary to reverse the plummeting laws of consumptive use opportunities by politically based closures to their uses. BILL PERHACH, Alaska Environmental Lobby, commented on the assumption that game should be managed for the maximum sustained yield by human harvest. This is assuming that human consumption is the highest and best use. He said like a lot of people in the Denali Borough he makes his living through tourism. He has worked for the last 14 years with the packaged tour segment of the market and the last six years with eco-tourism which is just booming. In over 20 years he has seen tourism growth between 3 - 16 percent every year. They sell two things at Denali - the Mountain and watchable wildlife. He said the animals in the park are affected by what happens around the perimeter of the park. They are looking for some sort of acknowledgement that this wildlife is a product a kind of subsistence activity. It is the way they make their living - a nonconsumptive use of the wildlife. MR. PERHACH said there are two native corporations in the Denali Borough right now which are looking at tourism because they can't continue to live off of resource extraction. Ahtna, for example, is actively engaged in a project in Broad Pass. The Doyon Corp. just bought property in Kantishna where subsistence hunting is still allowed (inside the park). He thought that once Doyon started trying to make a living from tourism they might also request some relief from Senator Miller. Number 146 SENATOR HALFORD explained one of the conflicts is the source of funding for the management and he asked if it was reasonable for management of these resources to be paid for by the taxes, revenue sharing, and license fees of hunters. MR. PERHACH said he didn't see why the tourist industry shouldn't contribute. SENATOR TAYLOR asked if thought that managing for consumptive uses is somehow going to be detrimental to those people who view. MR. PERHACH said the folks he deals with are not going to get off the road corridor for their experience, so he didn't have a problem with subsistence and recreational hunting. He helps people who work for their meat. It's people who hunt in road corridors who are a problem for him and his clientele. He said this is a very complex issue and the bill is very simplistic. He didn't think they could predict what the impact would be if they continue to allow this type of access to game. He sensed that as hunting from the road increases, the game year round disappears. MR. PERHACH said his most important concern is that he get some acknowledgement that wildlife viewing is just as important as consumptive use. SENATOR HALFORD asked if he thought he'd win in the battle if wildlife were managed according to a public mandate. MR. PERHACH said he thought it would. TAPE 96-27, SIDE A Number 001 KEN TAYLOR, Deputy Director, Division of Wildlife Conservation, said he noticed some changes that weren't mentioned before. On page 2, line 21 "highest" was substituted for "high" and "greater than" was included at the end of the sentence. On line 24 "the highest" was substituted for "a high." The same occurs on page 4, line 1 and line 5. There are three portions of this version of SB 262 that cause the Department concern. The first is in section 1 which mandates the game population should be managed solely for maximum sustained yield by human harvest. The definitions which follow would mandate harvest levels that could only be achieved only by reducing wolf and bear populations to extremely low levels and by wide spread establishment of antlerless moose hunts which even are prohibited in AS16.05.780. The second concern is that the bill would prohibit the expenditure of federal aid to ADF&G from management of non-game species. The fact is that the non-game program was established to meet the statutory requirements of the Alaska Endangered Species Statute which passed in 1971. The purpose of that statute is to establish a program for conservation, protection, restoration, and propagation of species listed as endangered in Alaska. He said their track record has been excellent in that regard. If these programs go unfunded and we fail to meet our conservation and management responsibilities for non-game or endangered species, Alaska's authority to manage these resources will be further eroded. Currently ADF&G has a place at the table of the U.S. Fish and Wildlife Service and the National Marine Fisheries Service on Endangered Species management. We are actively involved in decisions on Goshawks and wolves in Southeast Alaska, eiders and Aleutian Canada Geese, and peregrin falcons in the Arctic (recently delisted). If funding is eliminated for this small State program, we will be shut out of the endangered species decision making process, leaving this entirely up to the federal agencies. Our marine mammal program also focuses on endangered species such as the Stellar sea lion and the bowhead whale. MR. TAYLOR said that we fund only two positions to establish expertise in this area, but we are known world-wide. Their third concern is that section 2 removes authority from the Board of Game to restrict public access in a variety areas, including sanctuaries, refuges, and special management areas. Since statehood the Board has adopted several management areas and controlled use areas that restrict access methods and means to reduce conflicts between user groups, provide for various quality hunting experiences the public has desired, and to maximize opportunities for participation and hunting. Without this tool the Board will be forced to shorten seasons, establish additional tier II permit hunts which Alaskan hunters overwhelmingly oppose, or close areas entirely. The Board has recently taken a regional approach to considering regulatory changes and all areas will be reviewed to determine if they are meeting the objectives for which they were established. The provision in section 1(b) that mandates the Board to open an area at least three times larger than an area closed is really unrealistic. Nearly all the lands closed to hunting in Alaska are under federal management over which the State has no authority. The Board would essentially be prohibited from passing any regulations in the future that restrict methods, manner, or means in an area as hunting pressure increases or shifts from one area to another. Their only options would be to shorten seasons or to close them and be subject to litigation. Serving on the Board of Game is a tiring and thankless task. Subjecting Board members to litigation and personal liability for decisions they make in the interests of Alaskans would likely result in many of them resigning. Section 2(b) would prohibit access restrictions in sanctuaries. This provision is in direct conflict with AS16.20.094 and AS16.21.62 which specifically authorize the Board to adopt regulations governing public entry onto these lands. Without this authority unrestricted public access would soon render these areas useless as sanctuaries. The cost of this to Alaska's economy, national image, and ultimate authority to manage its resources is impossible to calculate. MR. TAYLOR concluded saying the Department really didn't see a great deal of change in this version from the original version and remains opposed. Number 130 SENATOR TAYLOR asked how all the other managers who are doing work under the Endangered Species Act were being paid. MR. TAYLOR replied in their Marine Mammal Program there are two positions that are funded in their budget ($163,000). All of the other positions, projects, and work that's done in marine mammals cost $1.5 - $2 million and are all federal funds. A sizeable chunk of money comes from the National Marine Fisheries Servey to work on Stellar Sea Lions. Because of that funding they have been working identifying separate stocks in the stellar sea lion population. The stock in the Bristol Bay area has been declining much more rapidly than the stock in Southeast Alaska. SENATOR TAYLOR said he knew the Department was involved in more non-game species management than just the two marine mammal programs he commented on and asked where the funding for that came from. MR. TAYLOR replied that they get funding from the Forest Service and the Fish and Wildlife Service to do goshawk and archipelago wolf research. They get funding for the peregrin falcon work through section 7 Fish and Wildlife Service Funds. These are all special project accounts. They aren't part of the permanent budget. SENATOR TAYLOR asked how many employees were being paid mostly from the State budget and just a token amount from federal funds. MR. TAYLOR replied comparing all the special projects funding to amount of funding that's in their base budget, they will find that what he has said is true. Most of the funding that goes to both non-game and marine mammal programs comes from other sources. Number 235 SENATOR HALFORD asked if the Endangered Species Act treats the Stellar sea lions as one population. MR. TAYLOR answered that he wasn't an expert on the Endangered Species Act, but he thinks the Act treats them as one population. The Department is arguing that they are two population stocks and there are provisions in the Endangered Species Act that allow for that. SENATOR HALFORD asked if the one population that wasn't in trouble is of sufficient strength to carry the population that is in trouble if they are managed as one species. He said he was trying to figure out if the State's position was the same as the congressional delegation's position regarding the reauthorization of Endangered Species Act. MR. TAYLOR said he didn't know what our delegation is doing on that issue and he wasn't an expert. He said that the population has declined overall in Alaska from 120,000 stellar sea lions in the 1950's to 30,000 statewide which is why they are listed as threatened. He didn't know if 30,000 was sufficient to carry the population. Number 306 SENATOR HOFFMAN asked if the Board of Game was the public official he was referring to when he said they might not be able to get people to serve if they are going to get sued. MR. TAYLOR replied yes and the reason he brought it up is because the Board of Game makes the decisions on which areas are going to be open or closed. They are the only public officials who do make those decisions, so the penalty clause will apply to them alone. SENATOR HALFORD said regarding the access provision - the public trust would be breached by restricting public access to State game refuges, etc. and he didn't agree with the concern that the animals move away and don't come back. Some access methods do provide some pretty significant impacts that stay there for a long time and may have some negative impact on tourism and he thought they should add an exception that might read, "except where such restrictions are solely for the purpose of protecting habitat from direct damage due to the method of access." SENATOR LEMAN said he wouldn't object to such an amendment. SENATOR TAYLOR said his only concern was that it would be misused as well as it was used and withdrew his objection. SENATOR HALFORD moved to insert on page 3 "except where such restrictions are solely for the purpose of protecting habitat from direct damage due to the method of access." There were no objections and it was so ordered. SENATOR HOFFMAN moved on page 2, line 10 to delete "or public official" and on line 11 delete, "a public official is not immune from suit under this section." His primary concern was being able to get competent people to serve on the Board of Game. SENATOR TAYLOR objected; he said he believed people needed to be accountable. SENATOR HOFFMAN repeated his concern that they wouldn't be able to get people to service. SENATOR TAYLOR agreed that it was a bit harsh, but he thought the point needed to be made that someone had to be accountable. SENATOR HALFORD said he thought there might be two questions where on line 10 the public official could be the Commissioner acting on an emergency closure or something else. He thought it wasn't just Board members and he thought it could be drafted in a way to exclude the Board members. SENATOR TAYLOR withdrew his objection. SENATOR HOFFMAN amended his motion to just Board members, not public officials. There were no objections and the amendment to the amendment was adopted. SENATOR LEMAN asked if there was any objection to SENATOR HOFFMAN'S amended amendment. There were no more objections and it was adopted. SENATOR TAYLOR moved to pass CSSB 262 (res)(am) from committee with individual recommendations. There were no objections and it was so ordered. SJR 37 PRIMARY MFG OF PUBLICLY OWNED TIMBER SENATOR TORGERSON, sponsor, said he understood there is curre legislation to give Alaska this exemption and one of those bills was vetoed by the President. So there is nothing before Congress that would give them this authorization. This approach includes municipal lands and also the University of Alaska lands. The reason for the legislation is because in the City of Seward there was a saw mill that shut down because of a lack of material to be processed resulting in them auctioning off all the equipment. A year ago there was a sale and it was purchased by an outfit from Oregon. The chances are now that this raw material will be exported to Oregon. The exemption asked for has been granted to 11 other western states. So they can come up here and export, but Alaskans are prohibited from doing the same down there to supplement our timber supply. Number 425 SENATOR TAYLOR asked if he thought there would be any exceptions to this legislation. He said the U.S. Forest Service has had a restriction on round log export in Southeast Alaska for many years. As a consequence it did develop the local economy. During the entire time there has been an exemption on cedar logs. SENATOR TORGERSON responded that this proposal asks Congress the authority for the State of Alaska to regulate, restrict, or prohibit. We could decide to prohibit entirely. SENATOR TAYLOR said he was pointing out that this is not a complete ban on the exportation of logs, but merely provided the State with some working tools. SENATOR FRANK commented that it would be helpful to have an additional whereas expressing that it would be just a tool to help local development. SENATOR TORGERSON said he thought that was what he thought the resolution was saying. Number 490 CLIFF EAMES, Alaska Center for the Environment, noted the committee had a letter from him supporting SJR 37. MARK WHEELER, Alaska Environmental Lobby, strongly supported SJR 37. He said when timber is harvested on State land it makes sense to maximize the number of jobs from each tree cut. Exporting logs in the round sends jobs out of state and hurts the future of a sustainable timber industry in Alaska. They respectfully ask that other trust lands be included in the resolution and urge passage in a timely manner. SENATOR TORGERSON commented that lands held in trust have been determined by the higher courts as having a higher fiduciary responsibility to the trust than they do to the residents of the area in which the trust has effect. Number 503 SENATOR PEARCE moved to pass SJR 37 from committee with individual recommendations and a $0 fiscal note. There were no objections and it was so ordered. SB 112 DISCOVERY ROYALTY CREDIT SENATOR PEARCE moved to adopt the F version Chenoweth 3/9/96 work draft for SB 112. There were no objections and it was so ordered. ANNETTE KREITZER, Staff to the Senate Resources Committee, explained the changes in version F. The substantive change begins on page 2, line 30. She worked with the administration to create language acceptable to the committee regarding definition of pools. SENATOR PEARCE moved to adopt amendment #1. MS. KREITZER explained that AS38.05.134 speaks to the exploration licensing program that was passed by the legislature a couple of years ago. The Cook Inlet Basin is a very large sedimentary basin and some of the area especially in the northern part is open to licensing and they didn't mean to exclude that part of the basin. KEN BOYD, Director, Division of Oil and Gas, said it was unlikely that they would have any objection to it unless it had some strange definition of the Cook Inlet Sedimentary Basin. There were no objections to amendment #1 and it was adopted. MS. KREITZER explained the second proposed amendment which clarified which production is actually getting the royalty reduction. TAPE 96-27, SIDE B Number 580 SENATOR LEMAN noted that this amendment was Mr. Boyd's suggestion. MR. BOYD agreed and said it eliminated ambiguity. The way the language is now, for instance he said, if the pool was on all six of the leases, their intention was to reward the initial discovery on that one lease in that pool. MS. KREITZER noted to be consistent the same change would have to be made on page 3, lines 5 and 6. SENATOR PEARCE moved to adopt amendment #2, there were no objections and it was adopted. MR. BOYD had a concern with "commercial quantities," but he said the last amendment had changed the absolute need for a dimension and he wanted to work with the committee on that issue. He said the point was that the well had to be capable of producing commercial quantities. SENATOR PEARCE asked when they certify a well producable what language to they use. MR. BOYD replied they certify capable of production in paying quantities. SENATOR PEARCE asked if they should just use that language. MR. BOYD replied no, that he thought it was a different standard. In paying quantities does not really say that it will be produced. SENATOR LEMAN asked if line 8 would have to be changed also. MR. BOYD answered that it would have to be changed anywhere "commercial quantities" appeared would have to have "capable of producing" added. SENATOR PEARCE moved to adopt that amendment. There were no objections and it was so ordered. MS. KREITZER noted that language was used throughout amendment #1 and on page 3, lines 1 - 12. SENATOR TAYLOR moved amendment #4. SENATOR LEMAN objected for purposes of explanation. SENATOR TAYLOR explained the effect of this amendment would be to set it up so that current lease holders in the Cook Inlet Basin would fall within this royalty bill. SENATOR HALFORD asked if the royalty was being made retroactive with regard to investment decisions that were made five years ago and rewarding those decisions with the credit? He said that any kind of a credit bill is supposed to encourage marginal activity. Going back in a lease term so they can put the money in now is still a prospective reward for activity that might not otherwise occur. But going back and picking up activity that occurred in 1992 and applying that to the terms the effect is a retroactive tax credit and it's hard to argue that that credit has encouraged marginal activity retroactively. SENATOR TAYLOR agreed and explained that without doing so this would be applicable against new leases. SENATOR HALFORD said there are two questions; one is going back to the leases is the right thing to do; the second question is are they talking about investments made from the time of the effective date of the bill forward on leases that were already held before that or are they talking about going backward in both cases. SENATOR TAYLOR replied that his desire would be to go backward on those leases already held for new discoveries, but he thought this goes beyond that. However, he would rather err in going beyond that than in not accomplishing it at all. SENATOR LEMAN said he was concerned with how they recover those lease payments that have already been made and whether that's done as a credit to future royalties. SENATOR FRANK asked if they considered that in the formation of their committee substitute. SENATOR LEMAN answered they considered it and there is one other approach, Senator Halford's, which he thought merited discussion. Applying it to leases that have not been explored would create an incentive and the down side of that is that you change the value of leases. SENATOR FRANK commented that the value of a lease changes every time the price of oil goes up or down, as well as every time they pass a law concerning worker's compensation or the environment. He supported Senator Taylor's concept and Senator Halford's desire to fine tune it. He thought Senator Taylor's amendment went a little too far. SENATOR HALFORD said he didn't think retroactive credits worked the way they are intended to work. But he didn't think they should exclude leases because they were already out there. He wanted those leases to be eligible. SENATOR LEMAN asked if there was any objection to incorporating the conceptual amendment. There was no objection and it was so ordered. SENATOR LEMAN noted that the bill would be back in committee on March 13. HB 212 TIMBER MANAGEMENT & STATE LAND CLASSIF. SENATOR LEMAN announced HB 212 to be up for consideration. REPRESENTATIVE JEANETTE JAMES, sponsor, said she filed this bill at the request of timber industry constituents in Fairbanks. These are small lumber businesses in the local communities whose lives have been impacted by the overly complicated procedures through which they have to go to secure timber. It wasn't the lack of timber; it was the inability of the DNR to allow the harvesting of the resource. SENATOR TAYLOR asked what the comma on page 1, line 14 meant. REPRESENTATIVE JAMES replied that the comma was added in the House Resources Committee and the emphasis makes a difference in the way the sentence reads. The comma refers to the best available data and then describes the best available data as opposed to the agencies describing it. SENATOR TAYLOR said he would like to delete the comma and asked her to comment on using "use" instead of "consumption." REPRESENTATIVE JAMES explained that there was a concern with a number of people that there is human use other than consumption. JACK PHELPS, Alaska Forest Association, said they continue to support this legislation and thought it would make some positive changes for the forest industry particularly in the interior and possibly southcentral. SENATOR TAYLOR asked if the negotiation on the House side included the administration. MR. PHELPS answered that was correct; he added that public comment was also part of the negotiations. He asked if he has assurances that this will be signed into law. MR. PHELPS said they had been given some strong assurances that the bill would be signed in its present form. Number 351 CLIFF EAMES, Alaska Center for the Environment, commended the House, the Administration, and the Board of Forestry for their work; the bill is close to something they can support. Their concern is with the 160 acre exemption from the five year schedule requirement. He said in the interior and Kenai there are a number of timber sales off of State lands that are 160 acres and less and they are very important to people in their cumulative affect. They supported the compromise proposed by the Board of Forestry, recognizing that it is a well balanced Board. The present requirement is that sales appear for two years on a five year schedule. The present bill would exempt the sales of 160 acres or less entirely from the five year schedule; the compromise proposed by the Board of Forestry would have those sales appear just one year on the five year schedule. They believe that would give adequate notice to the public of the full range of sales that are proposed to be offered without burdening the State and without having any undue affect on the actual selling of those sales. He didn't think the Board of Forestry could make a strong argument that having those sales appear just once on the schedule is going to be any significant obstacle to their management of the sales. He urged the committee to adopt the Board of Forestry's proposed compromise. ERIK HOLLAND, Fairbanks, said that a number of local loggers have told him that exporting is killing and that the scale of the bill is too large and the part of the bill they like best is the first part where the 10 acres are exempted. The 160 acre exemption doesn't seem to help very much. He suggested exempting two or three parcels a year. All the loggers have told him that they need the wood yesterday. He is in support of a truly sustainable local industry. DAN RITZMAN, Northern Alaska Environmental Lobby, recognized and appreciated the efforts of the House members and Representative James in particular. He said HB 212 makes substantial changes to Title 38 and 41, statutes which cover the entire State, not just small sales by Interior operators. The development of the Forest Resources and Practices Act represented a lot of work from a variety of interests including the timber industry, the fishing industry, conservation organizations, and many others. Changes are not needed in the law; changes are needed in the funding, implementation, and regulations that the agency uses to carry out the law. This legislation will further stress the Department and put Alaska's population of fish and wildlife at further risk. A fiscal note should be required of this legislation which takes into account the unfunded Forest Practices responsibilities to DNR, DEC, and ADF&G. Eliminating the five year schedule requirement for sales of 160 acres or less would mean that over 70 percent of the sales in the Interior and a fair number of sales on the Kenai would not have to appear on the schedule. It is nearly impossible to learn about individual sales from their individual announcements which are buried in the legal section of the newspaper. This does not give a good sense of the overall picture for the region. MR. RITZMAN reiterated that the Board of Forestry which has representatives from logging companies, fishing communities, conservation organizations, recreation, and fish and wildlife sciences recommended that all sales be listed at least once on a five year schedule. Number 261 Finally, section 11, page 5, lines 20 - 24 is a wildlife issue that shouldn't be a part of the Forest Resources and Practices Act. While it is appropriate to put wildlife protections in the Act, management of wildlife is not a DNR function. SENATOR TAYLOR moved to amend page 1, line 14 to delete the comma. There were no objections and it was so ordered. SENATOR TAYLOR moved to pass SCSCSHB 212(FIN) from committee with individual recommendations. There were no objections and it was so ordered. MR. WHEELER, Alaska Environmental Lobby, said they still have a few problems with the bill as drafted. They would like to see sales of 160 acres or less appear at least once in the five year schedule. The Board of Forestry presents a good vehicle for hashing out language that represents a lot of diverse interests and should be listened to in this matter. Section 11 should be deleted also. Wildlife management is not a function of DNR and should not be a part of this bill. The language in section 7 is not a great improvement over the prior language and they would like to see the prior language kept as is. SB 283 DOCUMENT FILING, INDEXING, & RECORDING SENATOR LEMAN announced SB 283 to be up for consideration. SHARON YOUNG, State Recorder, DNR, testified in support of SB 283. She said the recording laws in this state were last visited in 1988 when there were comprehensive changes and consolidation. These were a big improvement, but they have slowly shown some areas of inconsistency and ambiguity. SB 283 is largely a housekeeping bill and makes minimal substantive changes. The changes it does make are very beneficial for their staff, the State, and the public who uses their services on a daily basis. SENATOR LEMAN asked if anyone who used their services provide any suggestions or testimony in opposition. MS. YOUNG replied that she had heard of no opposition at all. She has heard favorable comments from the major user groups, such as the title industry. It also has a negative fiscal note attached. SENATOR TAYLOR asked if they were going to be charging multiple fees for recording the same document if it is to be recorded for different purposes. MS. YOUNG replied that this seldom occurs, but it is how they currently operate. It has never been clear in the past, but this clarifies that. SENATOR TAYLOR said he wanted to make sure the State would not be losing recorders offices because of streamlining. He also wanted to see the program receipts go back into the recorders office which has been grossly underfunded. It actually makes money. SENATOR TAYLOR invited Ms. Young to work on this with him and answer a few more questions regarding this program. SENATOR LEMAN said he would set aside SB 283 and adjourned the meeting at 6:40 p.m.