Legislature(1995 - 1996)
03/13/1996 03:50 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE RESOURCES COMMITTEE March 13, 1996 3:50 P.M. MEMBERS PRESENT Senator Drue Pearce, Vice Chairman Senator Steve Frank Senator Rick Halford Senator Robin Taylor Senator Lyman Hoffman MEMBERS ABSENT Senator Loren Leman, Chairman Senator Georgianna Lincoln COMMITTEE CALENDAR 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." SENATE BILL NO. 198 "An Act establishing the Homer Airport Critical Habitat Area." SENATE BILL NO. 285 "An Act relating to management of discrete salmon stocks and to a salmon management assessment; and providing for an effective date." SENATE BILL NO. 230 "An Act providing that state land, water, and land and water may not be classified so as to preclude or restrict traditional means of access for traditional recreational uses." 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." PREVIOUS SENATE COMMITTEE ACTION SB 283 - See Resources minutes dated 3/8/96 and 3/11/96. SB 198 - See Resources minutes dated 2/21/96 and 3/1/96. SB 285 - No previous action to be considered. SB 230 - See Resources minutes dated 2/12/96. SB 112 - See Resources minutes dated 3/08/95 and 3/11/95. WITNESS REGISTER Senator John Torgerson State Capitol Bldg. Juneau, Alaska 99801-1182 POSITION STATEMENT: Sponsor of SB 198. Geron Bruce, Special Assistant Department of Fish and Game P.O. Box 25526 Juneau, AK 99811-5526 POSITION STATEMENT: Commented on SB 198. Bob Clasby, Director Division of Commercial Fisheries Department of Fish and Game P.O. Box 25526 Juneau, AK 99802-5526 POSITION STATEMENT: No position on SB 285. Joe Makinko 7625 Spruce Cape Road Kodiak, AK 99615 State Capitol Bldg. Juneau, Alaska 99801-1182 POSITION STATEMENT: Opposed SB 285. Chris Berns P.O. Box 26 Kodiak, AK 99615 POSITION STATEMENT: Opposed SB 285. Bruce Schactler P.O. Box 2254 Kodiak, AK 99615 POSITION STATEMENT: Opposed SB 285. Bob Penny Cook Inlet Sportfishing Caucus Kenai, AK POSITION STATEMENT: Supported SB 285. Robert Hall Houston Chamber of Commerce P.O. Box 871906 Wasilla, AK 99687 POSITION STATEMENT: Supported SB 285. Jude Hinzler Bering Sea Fishing Association 725 Christen Dr. Anchorage, AK 99501 POSITION STATEMENT: Commented on SB 285. Dean Paddock Bristol Bay Driftnetter's Association P.O. Box 21951 Juneau, AK 99802 POSITION STATEMENT: Supported SB 285. Robin Samuelson P.O. Box 412 Dillingham, AK 99576 POSITION STATEMENT: Supported SB 285. Joe McGill Bristol Bay Herring Marketing Coop P.O. Box 1710 Dillingham, AK 99576 POSITION STATEMENT: Opposed SB 285. James Evenson P.O. Box 324 Kenai, AK 99611 POSITION STATEMENT: Opposed SB 285. Ben Ellis, Executive Director Kenai River Sport Fishing P.O. Box 1228 Soldotna, AK 99669 POSITION STATEMENT: Supported SB 285. Dale Bondurant HC1, Box 1197 Soldotna, AK 99669 POSITION STATEMENT: Supported SB 285. Dennis Randa Trout Unlimited P.O. Box 3055 Soldotna, AK 99669 POSITION STATEMENT: Supported SB 285. Theo Matthews, Executive Director United Cook Inlet Drift Association P.O. Box 389 Kenai, AK 99611 POSITION STATEMENT: Opposed SB 285. Karl Kircher, President Kenai Peninsula Fishermen's Association Kasilof, AK 99610 POSITION STATEMENT: Opposed SB 285. Mel Erickson, Vice President Kenai River Guides Association P.O. Box 1127 Soldotna, AK 99669 POSITION STATEMENT: Supported SB 285. Melanie Gunderson, President Peninsula Marketing Association General Delivery Sand Point, AK 99661 POSITION STATEMENT: Opposed SB 285. Gerald McCune United Fishermen of Alaska 211 Fourth Street, #112 Juneau, AK 99801 POSITION STATEMENT: Opposed SB 285. Jim Stratton, Director Division of Parks Department of Natural Resources 3601 C Street, Ste. 1200 Anchorage, AK 99503-5921 POSITION STATEMENT: Commented on SB 230. Leif Peterson P.O. Box 168 Anchor Point, AK 99556 POSITION STATEMENT: Opposed SB 230. Ingrid Peterson P.O. Box 168 Anchor Point, AK 99556 POSITION STATEMENT: Opposed SB 230. Sarah Hannon Alaska Environmental Lobby 419 6th Ave. Juneau, AK 99801 POSITION STATEMENT: Opposed Section 4 of SB 230. Ed Grasser Alaska Outdoor Council Fairbanks, AK 99707 POSITION STATEMENT: Supported SB 230. Jim Dodson, Board Member Alaska Airmen's Association 1515 E. 13th Anchorage, AK 99501 POSITION STATEMENT: Supported SB 230. Cliff Eames Alaska Center for the Environment 519 W 8th, #201 Anchorage, AK 99501 POSITION STATEMENT: Opposed SB 230. Ken Boyd,Director Division of Oil and Gas 3601 C Street Anchorage, AK 99503 POSITION STATEMENT: Commented on SB 112. Paul Richards Stewart Petroleum Anchorage, AK POSITION STATEMENT: Supported SB 112. Patrick Coughlin, Deputy Director Division of Oil and Gas Department of Natural Resources 3601 C Street, 1380 Anchorage, AK 99503-1380 POSITION STATEMENT: Commented on SB 112. ACTION NARRATIVE TAPE 96-28, SIDE A Number 001 SB 283 DOCUMENT FILING, INDEXING, & RECORDING VICE CHAIRMAN PEARCE called the Senate Resources Committee meeting to order at 3:50 p.m. and announced SB 283 to be up for consideration. SENATOR PEARCE asked Senator Taylor if his questions had been answered. SENATOR TAYLOR replied yes and he didn't have any further questions. SENATOR TAYLOR moved SB 283 from committee with individual recommendations. There were no objections and it was so ordered. SENATOR PEARCE announced an at ease at 4:51 p.m. and called the meeting back to order at 4:53. SB 198 HOMER AIRPORT CRITICAL HAB. AREA SENATOR PEARCE announced SB 198 to be up for consideration. SENATOR FRANK moved to adopt the K version CS to SB 198. There were no objections and it was so ordered. SENATOR TORGERSON, sponsor, explained that there were three changes. One was a new purpose section for moose habitat and for guaranteed public access, revisions of boundaries, and new language in section 2 reflecting the stated purpose, inserting on page 6, line 26. The plan is to guarantee access and continued public fishing, hunting, and trapping activities and opportunities in the area. He said these changes are a direct result of the public hearing he and Senator Leman had in Homer. SENATOR TAYLOR asked if this would comport with Senator Miller's bill on no net loss. SENATOR TORGERSON replied no. Number 100 SENATOR PEARCE asked what the FAA restrictions were in terms of hunting. SENATOR TORGERSON explained this was within the city limits of Homer and discharge of firearms is prohibited, but bow hunting is not. SENATOR TAYLOR asked why they can't manage the habitat for the benefit of the moose today. SENATOR TORGERSON answered he thought it was because they don't have access to the airport given to them by DOT or FAA. SENATOR FRANK asked about the critical habitat designation. He asked if they had to have the word critical in there. SENATOR TORGERSON replied that he wasn't sure. GERON BRUCE, ADF&G, said there is a definition of critical habitat. The basic idea is that these areas are managed for multiple use, but by declaring them a critical habitat area, other activities in that area must be compatible with the protection of fish and wildlife habitat and other human uses. This does not exclude development. SENATOR FRANK asked if the words critical habitat area are defined in law and require a certain management regime. MR. BRUCE replied that the purposes for the habitat areas are defined in law and then there is a regulatory framework that defines the general procedures for how to get a permit to do things in a critical habitat area. Some of the areas have specific management plans that have been adopted. Number 169 SENATOR TAYLOR asked why the purpose section talks about providing an area for enhancing winter browse for the moose herd on the lower Kenai. MR. BRUCE said he didn't know for sure, but he thought that was from input from people in Homer who are interested in doing some volunteer work in that area to improve the browse for the moose who spend their winters there. SENATOR TAYLOR asked if there was something preventing the people from enhancing the winter browse for moose in that area today. MR. BRUCE said no fish and game statute would prohibit that, but once this is declared a critical habitat area, those kinds of activities are encouraged and might result in some changes in cooperative agreements. SENATOR TAYLOR commented that he didn't want declaring it a critical habitat area to prevent them from enhancing the area because it would require a permit and a hearing. He didn't want to prevent them from doing what they are free to do right now. SENATOR TORGERSON said this was discussed and the feeling is that permits are required now and access is required from DOT. Once they do that, though, they want continual use of that land and this sets it aside for that purpose. DOT might be more of a yearly thing. Number 200 SENATOR TAYLOR asked if DOT was going to invest funds in enhancement. MR. BRUCE replied no that the local folks are interested in doing enhancement on a volunteer basis. Number 234 SENATOR HALFORD asked the reason for the outholdings. SENATOR TORGERSON explained that the two triangles are where the Aleutian Tern nesting area is. The residents wanted this area set aside because this is kind of a rare species of tern. Number 256 SENATOR FRANK moved to pass CS for SB 198 (RES) with individual recommendations along with the accompanying fiscal note. There were no objections and it was so ordered. SB 285 DISCRETE SALMON STOCK MANAGMNT & ASSESSMT SENATOR HALFORD, sponsor, explained that the fish initiative is on the ballot and there are continuous allocation battles that often center in Cook Inlet. It seems like it's been managed based on someone trying to find moral high ground in allocation arguments that are mostly economic between commercial fishing and commercial fishing with a hook and a line and a tourist. He said that over the past decade or so is that some of the minor streams, particularly in the Upper Susitna Drainages, have lost their basic stocks. If you look at the overall escapement even by major drainages, the goals have only been met in only three or four out of the last 10 years. He thought the arguments over allocation have been detrimental to the constitutional obligation to maintain sustained yield. He said he felt that if we are going to harvest mixed stocks, we absolutely have to know where the stocks are going. He thought it was the obligation of those who advocate the harvest of mixed stocks to at some point participate in a real identification that gets us to discrete stock management. If there's any logical solution, any long term goal, it's to meet our constitutional obligation for sustained yield by specific stock, by specific drainage, by every component of the run, etc. We can't do that unless we are willing to spend the money and know where the fish are going. The bill sets out discrete stock management as the long term goal and applies a 15-year phase in by species and by drainage to get from here to there. He said that unless we get to this kind of management, we'll continue to destroy subspecies in some areas and will possibly use court cases on the mandate of sustained yield going into a season shut down fisheries that are unnecessary. Number 340 SENATOR HOFFMAN noted that three years ago they passed legislation directing the Board to develop mixed stock policies. He knew they hadn't done that, but he asked what would be the difference between mixed stocks and discrete stocks. SENATOR HALFORD explained that the legislation they passed three years ago was just putting into statute what their own policy and regulations said and the Board wasn't following it then. He explained he didn't intend this to be an attack on any side of the allocation battle. Number 353 SENATOR HOFFMAN asked if many sports fishermen benefit from this and why does the burden fall on the commercial fisherman. SENATOR HALFORD answered that the majority of the mixed stock users are in the commercial fisheries. He didn't think any of the users would necessarily object to the kind of surcharge it would take to get the kind of management necessary to have truly discrete stock understanding. SENATOR TAYLOR asked how effective this would be if the subsistence management protocols currently being developed by the federal departments of agriculture and interior are implemented this spring. SENATOR HALFORD replied that somewhere along the line they have to use some kind of biological data and information as a weapon in the first battle which is defense of the sustained yield of the resource. Number 373 BOB CLASBY, Director, Commercial Fisheries, said the administration had not developed a position on this bill. It is complex and needs clarification of some terms and issues. On page 1, line 14 he asked if they are to target only those defined as discrete stocks in D (1) or are they being asked to identify every possible sockeye salmon stock that might be found in a mixed stock fishery. SENATOR HALFORD replied that it would be nice to have every segment of every stock and every substock in every drainage, but there is enough work to do with the 24. MR. CLASBY said they want the division to determine the stock composition by river of origin of each existing mixed stock salmon fishery. He assumed the mixed stock salmon fisheries are those that are listed in sections 1 - 3. SENATOR HALFORD asked if he had any further refinements of the lists they have missed on how the stocks actually break up, the committee would like their recommendations on those as well. MR. CLASBY asked if the sponsor wants escapement objectives developed, would he want systems in place to annually measure those? SENATOR HALFORD answered yes. MR. CLASBY noted the second line of subparagraph 18 said the objectives were to be based on spawning and rearing habitat and average production and he recommended instead of limiting themselves, that phrase be deleted and insert something like best available information. SENATOR HALFORD said he would like to leave the language there, but add something that allows the expansion beyond that. Number 459 MR. CLASBY said he assumed the sponsor wants escapements accurately measured. There was also a question in paragraph C, computing the cost. It was the division's assumption that the cost of the projects that are conducted in the area would be born by that area's fisheries. All the stocks that make up the composite would have to be known so the cost would be spread over a number of fisheries. SENATOR HALFORD said that sounded like it was too complicated and he didn't intend it to be that complex. Number 534 SENATOR TAYLOR asked if the division is now doing some discrete stock inventory. MR. CLASBY said they are definitely doing that - particularly on sockeyes. SENATOR TAYLOR said he was concerned that a study like this would show that there are non-Alaskan fish in our fisheries. MR. CLASBY agreed. SENATOR TAYLOR asked if it was intended to have Canadians participate in this study. SENATOR HALFORD said there was no intention to manage for the benefit of Canada, but if we're going to win in the argument right now, having information about where they really are going could be used. TAPE 96-28, SIDE B SENATOR TAYLOR said it didn't do any good to study the heck out of an area if it's locked up as a wilderness area. He was concerned that not only would we be able to use the information, but it might be used against us. SENATOR HALFORD said the information could be used for escapement and propagation. He thought if we had enough data we would probably be able to get more timber and more fish, but it's blanket rules because you don't have data that costs us both timber and fish. SENATOR TAYLOR said he hated to see our adversaries saying we're taking too many fish. When they actually look at their own streams, it isn't because Alaskans are taking their fish. The problem is that they have just about destroyed the habitat, damned every river that fish wanted to run up. Now that they've destroyed the runs, they want to come back and say well, you're taking too much of a limited amount of stock that's returning. SENATOR HALFORD said he agreed with most of what Senator Taylor said, but he concluded that that's why we need to do the study. JOE MAKINKO, Kodiak fisherman, said he didn't think anyone had any idea of the cost of this. He thought the questions they were asking were only politically correct and not biologically correct ones. He thought the proposal was physically impossible to do. CHRIS BERNS, Kodiak fisherman, said he agreed that this was a set up and biologically was "goofy stuff." He thought Republicans were supposed to be unburdening an industry from goofy regulations. Number 511 BRUCE SCHACTLER said this has all been said before, but this bill has a different agenda than what is really being said. It's advocating terminal fisheries which can cause real damage to a fishery. He said this is cost prohibitive; it's absolutely absurd. What the Department is doing now is just fantastic. Bob Penny, Cook Inlet Sportfishing Caucus, said he represents sport fishing associations in Kenai, Southcentral, and Mat-Su. They support SB 285 because they didn't see how fishing was going to last into the future without something like it. He thought there would be a shut down of certain species in the Upper Susitna because legislation like this isn't in place. ROBERT HALL, Houston Chamber of Commerce, said they strongly support this bill. He said there is a growing concern about the health of our salmon catch. There are a lot of stories about large and small streams where there used to be salmon runs, but they are now weak or no longer there. He said the mixed stock fishery clearly has the most potential problems since fishing technology has become much more efficient. Number 420 JUDE HINZLER, Bering Sea Fishing Association, said they wanted chum salmon to be included in the waters north of the Kuskokwim River. Existing fishery management areas are often superficial and are not comprehensive because they don't include the Northern Interior spawners as part of the management area. He said the formula for how the study gets paid for bothers them because it is hard to understand. DEAN PADDOCK, Bristol Bay Driftnetters Association, supported SB 285. He said it would supply much needed direction and intent to management of our salmon fisheries. He said he was a salmon biologist before he was a salmon fisherman and he didn't think this would cost as much as Senator Halford thinks and the technology is there. It doesn't need to take 15 years if the staff is committed to it. Number 345 ROBIN SAMUELSEN said he is a past member of the Board of Fisheries and a commercial fisherman all his life and he supported SB 285 conceptually. JOE MCGILL, Bristol Bay Herring Marketing Coop., said he has questions about the bill. He knows that work has to be done not only in the streams, but out on the high seas which he thinks is most important. He said fishermen are already paying taxes for enhancement and he wanted to know how much money this would take and how would the assessment work. Number 330 JAMES EVENSON, commercial fisherman in Cook Inlet, opposed SB 285 because it's unnecessary and misguided. Alaska has the most successful wild salmon management in the world and our runs are basically in good shape. He speaks from the perspective of a Cook Inlet Drifter. In Cook Inlet the rivers are managed for the specific stocks that are in them. A great deal of effort has been put into identifying and protecting the separate stocks. All the stocks seems to be healthy and meeting their escapement goals. He noted that this bill was not motivated by ADF&G or on any biological basis. It's for a reallocation of salmon away from the commercial fisheries. BEN ELLIS, Executive Director, Kenai River Sportfishing Association, supported SB 285. It will give the direction and funding needed to uphold our constitutional mandate to provide for sustained yield of wild salmon. This bill provides the framework where science may be gathered in an organized manner so we can move toward management of genetic diversity of discrete stocks in a timely fashion with a minimum amount of disruption to commercial fisheries. DALE BONDURANT supported SB 285 and said this bill is vital to the integrity of the survival of Alaskan salmon fisheries. He read from a 1988 ADF&G memo that said the commercial fisheries are currently managed only for the sockeye escapement goals with coho and chinook harvest incidental to sockeye. He just sat for 15 days at a Board of Fisheries meeting and he is convinced they will fail to address discrete salmon stock management that is absolutely necessary. DENNIS RANDA, Trout Unlimited, said that the national organization of Trout Unlimited opposes mixed stock fisheries because they result in decline of weak stocks all across the West Coast. In the face of increasing public demand when the Board drafted their mixed stock policy they admitted that the burden of conservation of the resource was disproportionately shared and he agreed with them. He sees an ulterior motive in terms of reallocation. Number 154 MR. RANDA read an article by a biologist named Hilburn that said that few salmon fisheries operate on single stocks. Stock recruitment analysis will usually underestimate the optimum escapement and overestimate the optimum harvest rate when mixed stocks are stated as a single stock. These conclusions will be true for any mixed stock fishery with different productivities of the stocks. They support SB 285. THEO MATTHEWS, United Cook Inlet Drift Association, said the first part of the bill makes the assertion the discrete stock management is necessary to preserve our salmon runs or we will lose them. The second part talks about the need for more information. UCIDA is absolutely opposed to the concept that mixed stock fisheries are going to lead to the loss of our fisheries. They do not agree with the sponsor statement that current management centers around heavy exploitation of mixed stock fisheries and disregards the negative effects of this policy on discrete stocks of all salmon species. He said that sound State management has rebuilt salmon runs from the dismal runs inherited with statehood. Existing data does not support the fact that the world's fisheries are in trouble. MR. MATTHEWS commended Lieutenant Governor Ulmer and ASMI for their educational efforts to promote Alaska's plentiful salmon. Finally, we need to get to the real issue, he said, that recreational advocates will not seriously address. The problem is not with the commercial fisheries; the problem as noted in an article he read is that overfishing, entering new species, and dams have devastated native fish populations. He said there is overfishing in rivers by recreational anglers. Number 75 KARL KIRCHER, President, Kenai Peninsula Fisherman's Association, opposed SB 285 and agreed with most of the opposition to the bill. He thought this bill represented taxation without understanding. He asked if we were after better data from mixed stock management or are we after weak stock management which could lead us to a spotted owl type situation or some type of abuse in river which makes the stock diminish. Do we put the burden of conservation on the mixed stock fisheries, he asked. The terms, like genetic diversity, are being unevenly applied in mixed stock commercial fisheries. Genetic diversity of fish stocks is being destroyed in river sport fisheries. MEL ERICKSON, Vice President, Kenai River Guides Association, said they have 150 members who are sportfish guides in the Deep Creek Marine Waters and the Kasilof and Kenai Rivers. They support SB 285. He said there is a lot of enhancement going on and they are wiping out the wild runs. SENATOR HALFORD commented that he didn't think there was any moral evil in mixed stock fisheries and he didn't think the bill intended to say that. The question is one of management difficulty because when you harvest commingled stocks, you affect the weaker stock. TAPE 96-29, SIDE A Number 001 His intent is to ensure that wherever we fish stocks that are mixed we can prove and manage where they are going. MELANIE GUNDERSON, President, Peninsula Marketing Association, opposed SB 285 because she was sure this bill targets some of the conflicts going on in Area M. She noted that there are no river systems from her area listed in the bill and they at least have some major red streams. SENATOR TAYLOR commented that allocation seems to be at least a fear - commercial on one side and recreational on the other. If you look at the legislation without that thought, it appears to be an information collection and management tool. He asked if allocation was part of the process and how did it fit in. SENATOR HALFORD answered that it was not his intent to get into the allocation fights. He believes that the propagation, escapement, and maintaining sustained yield is moral high ground. The area he represents in Upper Cook Inlet has not been meeting escapement goals and they have endangered at least some subspecies in drainages to the point that you can't find them anymore. He said that interception questions come up in all fisheries where there are mixed stocks. He said he thought everyone looked at every management structure for its potential advantage and often that applies to the allocative affects. GERALD MCCUNE, United Fishermen of Alaska, said the reason there is a lot of problems with this bill is because it is very allocative. He said he didn't want to see them get into weak stock management. He said he wanted the true picture. He wanted to know how much it would cost. Number 195 SENATOR HALFORD responded that he hoped both commercial and sport interests would keep an open mind because he thought we would eventually have to go to this kind of database for management. SENATOR PEARCE said they would set SB 285 aside for further work. SB 230 MANAGEMENT OF PARKS & RECREATIONAL AREAS SENATOR PEARCE announced SB 230 to be up for consideration and that they will consider a proposed CS, Luckhaupt/K/3/11/96. SENATOR TAYLOR moved to adopt the CS to SB 230. There were no objections and it was so ordered. SENATOR PEARCE explained that the changes were substantial and narrowed the focus of the effort to Title 41. It adds a section requiring the Department to give the legislature a list on an annual basis that tells them what designations of incompatible uses that would either prohibit or restrict the traditional means of access, what of those they have done and what their reasons were. It also further defines traditional means of access and recreational activity. Section 2 has a new subsection saying the Department may not manage as special purpose park land those areas not inside park boundaries as designated by the legislature. She explained that one of the reasons she introduced this bill is because Blair Lake is outside the boundaries of Denali Park. However, because Division of Lands transferred that Lake to the Division of Parks through an ILMA, Division of Parks closed that lake to traditional access (by airplane). This subsection keeps the Department from being able to take lands that have not been designated parks by the legislature and manage them as parks. Section 3 sets new boundaries for Denali Park. Number 264 JIM STRATTON, Division of Parks, asked when they were to start doing the reporting. SENATOR PEARCE indicated it would start from this point and go forward. MR. STRATTON said they have no problem with the reporting requirement. He asked if they are to report on all the parks or just on ones that were administratively created. SENATOR PEARCE answered all of the park lands assuming there are new restrictions. MR. STRATTON noted that there was a conflict between the intent of section 2 and existing statutes for Chugach, Point Bridgette, and Kenai which do give them direction to add lands outside of the park. He said there are no guidelines for Woodtikchik and Denali so they assumed they have the authority to do that. SENATOR PEARCE responded that the three parks he mentioned there is within the legislation which established the parks the ability for the Division to add areas or change uses. When SB 230 passes, the revisor would go through and change language in those areas they have legislatively designated that authority. MR. STRATTON said this is a management tool that is important for them to have in areas outside of the three that are listed. In addition to ILMA's they secure land that could be made available to expand the boundaries of the parks through management agreements with other government agencies, through gifts from people, and through purchases from cash court settlements, to name a few. SENATE PEARCE said that something like a land exchange the legislature would look favorably upon as they have a number of times in the past. The legislature should designate parks lands; it should not be done administratively. MR. STRATTON suggested that if the target is ILMA's, to rewrite section 2 to target them. He said they would like to retain the power to add acreage to a park that doesn't restrict anyone's traditional access. SENATOR FRANK commented that they haven't turned any of those down to date. MR. STRATTON asked if the intent of this bill was to disallow stand alone ILMA's from being managed as part of the park. SENATOR PEARCE said that was the intent. MR. STRATTON explained that the ILMA's they create they manage as though they are part of the park system so their park regulations can operate. He said the reason they seek ILMA's is to develop and create recreational opportunities like trail heads, camp grounds, boat launch ramps, etc. They feel they need to manage those under Title 41 as part of the park system. SENATOR PEARCE responded that if he gets legislative approval to add that land to a park, then he'll get to do it. MR. STRATTON said they are not added to parks right now; they are stand alone. They are called State recreation sites and they have been creating them administratively for 25 years. They are under 640 acres and they have not been getting legislative approval. He asked if he needed to get legislative approval now. If he does, he has very serious reservations about this bill. SENATOR PEARCE said the intent is to go forward from now, but they need legislative approval for creation of all parks. Number 406 MR. STRATTON said AS41.21.022 already allows for hunting and the use of firearms in all of the State parks so he thought section 3 was redundant. However, if the intent is to allow target practice, he would oppose that. MR. STRATTON said the language identifying incompatible uses changes the direction Denali State Park will be managed. For 26- years it has been managed to balance different uses and user groups from conflicting with one another. There is nothing that gives one use access over another use. He said there is a lot of public ownership of the Denali State Park master plan and it was that plan that set forth the aircraft closures that are behind this whole bill. He is concerned that they are changing the management mode for Denali State Park that a lot of people have bought into. Regulations under review right now in the Department of Law opens the park to recreational gold panning and they want that language reflected in the bill. Their intent is to let people pan for gold, but they don't want recreational suction dredges being used in the park and he thought that might be interpreted under recreational mining. SENATOR PEARCE said it is her intent after 26 years to put sidebars on the management of Denali State Park because some difficulties in other parks have arisen from overutilization. She said they will be getting more requests for restricting access and she thought the legislature should be able to make changes if it's desirable. Number 470 LEIF PETERSON said he is a bush resident and he objects to more use in Denali State Park because it will destroy habitat. He said dog mushing doesn't make much of an impact. INGRID PETERSON asked if this is a companion bill to HB 447. SENATOR PEARCE replied the two bills were introduced at the same time, but they are different now. Peterson said she thought if SB 230 was anything like HB 447 that it was just a Republican industry profit give away to big business at the expense of all Alaskans. She said a lot of public input has gone into deciding the uses of Denali. She didn't think the industry controlled legislature needed to be dabbling in that. She understood that Alaska Air Carrier Pilots/Big Game Guides are supporting this bill. She said that the only traditional access is mother nature. The way they define traditional access as motor use just destroys the natural environment. She said the Attorney General's office is reviewing the State Park Management Regulations right now and that should be sufficient. Number 507 Sarah Hannan, Alaska Environmental Lobby, said she wanted to talk about the Blair Lake controversy. She said that both the conservation community and the air carrier community were concerned about that ILMA addition to State parks and the closure to air traffic. She said she thought it was a good intention by State Parks at the encouragement of the legislature to be more cooperative with commercial development. She thought it was a special interest effort to accommodate Princess Hotel's interest in having a monopoly on the air traffic on that lake to accommodate their new hotel. She thought they did a bad job of it. She said they should follow what the statutes tell them to do because the policy is already decided at the legislative level. In an attempt to appease a commercial user there is a bad situation where no one is happy. Any time you limit an Alaskan to do anything, they are going to be upset. MS. HANNAN asked the committee to think about the extensive process State Parks needs to go through to come with a management plan that promulgates regulations that close things. To close some portions of Denali State Park to commercial air traffic and recreational aircraft landings while keeping open others. She said in the future we are going to need to regulate commercial uses in our State parks. Air traffic is going to be one of the great industries tourism will grow in. SENATOR PEARCE said for 26 years people had been flying into the Blair Lake area and it doesn't make sense for the Parks Division to close it to everybody. MS. HANNAN said her only criticism of CSSB 230(RES) is Section 4. She thinks the extensive public process that has gone into developing the current regulations that are out there for the new management plan of Denali State Park should go forward. There has been a nearly two year process with three task forces, with 50-odd people serving on those and hundreds of hours of public testimony taken. At this point, to repeal those regulations discredits the public process. She thought the legislature could encourage State Parks to immediately revisit those regulations if they view them as inappropriate. She said the controversy will not go away because we have put prime real estate into parks for the purpose of it being prime real estate. With increased use there is going to be competition for that air space and land. It will burden the legislature extensively to take those kinds of public planning processes away from State Parks. SENATOR FRANK said he appreciated the tenor of her remarks. ED GRASSER, Alaska Outdoor Council, supported SB 230 and had concerns with access being restricted by administrative orders. His organization is becoming increasingly concerned about the restrictions that are being placed on Alaskans and their traditional life style pursuits. TAPE 96-29, SIDE B Number 580 MR. GRASSER said the public process doesn't always work as well as some people believe. He said the advisory committee for Mat-Su Parks is made up mostly of people who are opposed to motorized access and, in many instances, hunting and trapping. They make sure the membership against motorized access are notified of meetings, but their organization is left to find it in the newspaper somewhere. SENATOR PEARCE asked which statute allows for gold panning in parks. MR. STRATTON said he would get that for her and he understands that most of the park system is open for recreational gold panning. They just haven't gotten around to doing Denali. JIM DODSON, board member of Alaska Airmen's Association, said they are not confused as to the intent of this legislation and they support it wholeheartedly. CLIFF EAMES, Alaska Center for the Environment, opposed SB 230. He said they felt that the real problem is not that there aren't adequate opportunities for use of motorized recreational vehicles, but that there are inadequate opportunities for quiet recreation which is an activity that is important to Alaskans and visitors. SENATOR HALFORD moved to pass CSSB 230(RES) out of committee with individual recommendation and the accompanying fiscal notes. There were no objections and it was so ordered. SB 112 DISCOVERY ROYALTY CREDIT SENATOR PEARCE announced SB 112 to be up for consideration. SENATOR HALFORD moved to adopt CSSB 112(RES), version G, as the working draft. There were no objections and it was so ordered. ANNETTE KREITZER, Staff, Senate Resources Committee, explained that she worked with Ken Boyd, Director, Division of Oil and Gas, to come to some agreement about the applicability section. She said this version deleted the "commercial quantities" language in all sections because administration felt it was more to the point without it. It also adds applicability language. KEN BOYD, Director, Division of Oil and Gas, commented that they had come a long way in getting the language straightened out. They took the commerciality standard out because the same arguments that have existed in past languages don't exist any longer. MR. BOYD thought the committee needed to consider in the applicability section to exclude things in existing units because a unit is formed to produce all the oil and gas within the unit. If it's already in a unit, it's already been discovered. SENATOR PEARCE asked if the unitization agreement is for a discrete pool. MR. BOYD answered a unitization agreement generally covers the field and all the pools within the field. He explained that sometimes there is more than one participating area within one unit. The participating area being that area of the unit that actually contributes production. SENATOR PEARCE asked if there could be a discovery royalty on a well in an overlapping unit. MR. BOYD answered that he thought the answer would be no because sometimes there is more than one participating area within a unit. He said they would not want to make this applicable to leases that already were eligible for the old provisions of discovery royalties because of the conflict it would recreate and he said that should be put in statute. Number 390 SENATOR FRANK asked if there were leases from before 1969 that don't have production on them. MR. BOYD answered yes. SENATOR FRANK said he thought there had to be some kind of production to extend a lease beyond 10-years. MR. BOYD explained that some of the old leases are DL 1 leases and are still not producing, but have provisions of the earlier law. SENATOR FRANK asked why they would be extended if they didn't have any production on them. MR. BOYD replied that he would have to check that out. MR. BOYD asked if it was the committee's intention to have multiple discovery royalties on one lease or should there be one per lease. In other words would you want the discovery well to discover all the pools that might be discovered from a single well or would it be possible to have two discovery royalties if two pools were discovered. SENATOR FRANK said he would not allow that. MR. BOYD thought the place that need clarifying was on page 3, line 31. He was also concerned with the retroactivity of the bill. He opposed making something retroactive that is a discovery royalty activity. He explained that when we became a state we adopted federal law about discovery royalties which was there for years. People knew nothing about the North Slope or Cook Inlet. He questioned whether the discovery royalty provision ever helped discover any oil. MR. BOYD pointed out that coal bed methane under discovery royalties would create something unusual because coal is difficult to define. It occurs differently than normal sediments. Number 297 MR. PAUL RICHARDS, Stewart Petroleum, said he felt the purpose of the bill seems to have gotten lost in the discussion. He appreciates the way the bill is drafted now. Speaking on behalf of independents who could possibly come into marginal fields within the Cook Inlet, the intent of the bill is to help those companies who do not have the financial weight to invest millions of dollars, but look for assistance through royalty credit. If this bill gets passed, more independents would go into Cook Inlet which would create good paying jobs for an industry that is being flattened out. One question he has is on page 4, line 3 - undiscovered oil or gas pool within five years of the effective date of the lease. He thought there was a collective agreement on Senator Taylor's amendment to delete "within five years of the effective date of the lease" which would apply the royalty for future leases and to leases that are active now. SENATOR PEARCE explained that Senator Taylor's amendment was divided into two parts and the committee didn't actually take action on that part. MR. RICHARDS said his second concern was with applicability of the effective date and whether it referred to the date of the regulations or the effective date of this particular bill. Number 192 SENATOR TAYLOR said that the primary concern he had was that they provide the discovery opportunity for existing leases and the initial amendment he offered went back too far. The intent of the effective date is to have it start with the bill so that when it's signed into law in July any discoveries made after that on existing leases would receive that benefit. SENATOR HALFORD said he thought they had to delete the "within five years of the effective date of the lease" and then the applicability section would work if they changed the effective date of the regulations to the effective date of this law. SENATOR TAYLOR agreed. Number 168 MR. BOYD commented that however they adopt the effective date, if there are no regulations that means there are no definitions which means there are no tools at all to define anything. He said that none of the terms the committee wants defined are in law and regulations take time. If they want the law applicable now, then there will be a period of time when there will be nothing. SENATOR HALFORD moved to delete on page 4, line 3 "within five years of the effective date of the lease." There were no objections and it was so ordered. There was general discussion on how to deal with the regulations. SENATOR PEARCE asked what the drilling season in Cook Inlet was. MR. BOYD answered that it ran from April to November. SENATOR FRANK suggested saying "were entered into before May 1, 1996" or something like that. MR. BOYD said there would be no way of knowing it was a valid credit because the Commissioner would have to certify with no rules. He thought that they would have to have regulations prior to certifying anything, awarding any credits, or giving anybody a hint that you might do so. SENATOR FRANK asked if it didn't take a long time to actually start drilling. MR. BOYD replied that it did. PATRICK COUGHLIN, Division of Oil and Gas, explained that the old regulations define what is "first encounter" and further define what evidence you have to submit in order to prove it. If someone was unable to produce that evidence, then under the old regulations, they couldn't qualify. MR. BOYD added that if companies wanted certainty, they would have to have a clear definition of what they would be expected to do. The State would be at risk to certify something it shouldn't be certifying. He thought we would be subject to a potential lawsuit. SENATOR HALFORD said to get any incentive that has an effect this year, the accrual has to start based on events and investments and spending that maybe occurs in May or June of this year. He wanted language saying the credit would be available pursuant to regulations and definitions, etc, being promulgated. If there's royalty paid in the meantime, it's paid at the rate and credited back and there probably wouldn't be any anyhow, he said. SENATOR PEARCE asked Mr. Boyd if he thought there could realistically be any wells drilled this season that hadn't already been permitted. MR. BOYD replied in general no, but given the extent of the bill not necessarily no. He thought that coal bed methane or shallow gas wells in the Northern part of Cook Inlet could be drilled. TAPE 96-30, SIDE A Number 001 SENATOR PEARCE commented that she thought the bill should be moved to the Finance Committee where Senator Frank and Senator Halford could work on it. SENATOR FRANK asked if they could do a temporary regulation that was broad enough to capture all new wells. MR. BOYD replied that there have been many lawsuits going on for so many years on virtually every one of the applications. The lawsuits are over the definition of words - who was the first person who discovered it. MR. COUGHLIN added that there is the question of whether you want to use an objective or a subjective test. He said the committee could make an effective date, then they could adopt regulations, but a person who drilled in the interim would run the risk of not complying with the regulations. SENATOR FRANK added that the State would be at risk for losing a lawsuit, too. SENATOR TAYLOR said that he thought the risk was that the regulations might be found to be inappropriate relative to the law. The only thing we would lose would be the incentive credit which we were going to give up in the first place. MR. BOYD said he understands what reasonable people would like to do, but there are thousands of pages of lawsuits that argue against what he's saying. Big money is involved. SENATOR HOFFMAN asked if the June 1 date suggested by Senator Halford would be enough time for the Department to promulgate regulations. SENATOR PEARCE responded that that wouldn't work because the bill doesn't have an effective date and it becomes a law 90 days after the Governor signs it and they don't know when he would sign it. So it could be the first of October before it goes into effect. Unfortunately putting in a date before it becomes law or they have a chance to write regulations is not appropriate. Number 197 MR. RICHARDS said he realized there needs to be some negotiation and regulatory development of this bill. He said no one was going to make a decision to drill this year. The bill tells investors that it's marketable to invest in a company that will do it. He thought passing the bill would be a good indication to investors getting the financing part going and also give the Department enough time to write regulations. SENATOR FRANK asked if it was reasonable for the Department to start immediately on regulations when the bill is signed. MR. BOYD replied absolutely. SENATOR TAYLOR commented that they had already done all the research and he didn't see why regulations would take so long. MR. BOYD responded that every one of the "warts" was still being litigated. Adopting what's already there is not the right answer. He has been told it takes a year to promulgate regulations because of all the reviews it takes. When he developed exploration incentive credit regulations, it took two years, for example. MR. BOYD said the problem with the discovery royalty process is that it has been a lawsuit generator. MS. KREITZER reviewed the issues in the first proposed amendment for the committee. Does the committee intend to allow more than one discovery royalty per lease or do they want DNR to define it in regulation. Number 300 SENATOR TAYLOR moved to amend line 13 to delete "are" and insert "were nonproducing leases on the effective date of the act." SENATOR PEARCE noted that was on another topic and they were considering the issue of allowing one or more discovery royalties per lease. SENATOR FRANK moved to adopt an amendment limiting it to one. There were no objections and it was so ordered. MS. KREITZER then reviewed the second issue of applicability and whether to include "nonunitized" wherever "nonproducing" is used. MR. BOYD interjected that if leases are determined not to be producible, they are removed from the unit. So he recommended that things in units should be excluded. SENATOR FRANK asked if you could get out of a unit without the approval of the State. MR. COUGHLIN answered that you couldn't and the reason you would want to stay in the unit if you're not producing is because you would expect to eventually drill a well. MR. RICHARDS asked if the bill intends to reference unitization you have done before the bill. The committee answered no. MR. BOYD explained the credit would apply to future unitization. SENATOR FRANK moved to add "nonunitized" wherever "nonproducing" leases were mentioned. There were no objections and it was so ordered. Number 495 MS. KREITZER said the final issue was whether the committee wanted to make a policy decision regarding the nonapplicability of the old discovery royalty where the new one applies because of the conflicting nature of the two. SENATOR TAYLOR moved to disallow usage of the old program in areas where the new program would apply once it goes into effect. There were no objections and it was so ordered. Number 523 There was more discussion on the effective date issue. TAPE 96-30, SIDE B Number 554 SENATOR TAYLOR and SENATOR FRANK moved to adopt a conceptual amendment to make the act effective on all leases now and in the future on nonproducing and nonunitized leases after the certifiable discovery six months after the effective date. SENATOR PEARCE objected to the amendment and asked for a roll call vote. SENATOR FRANK, SENATOR TAYLOR, and SENATOR HOFFMAN voted "Yes" and SENATOR PEARCE voted "Nay;" and so, the amendment was adopted. SENATOR TAYLOR moved to pass CSSB 112(RES), as amended, from committee with individual recommendations. There were no objections and it was so ordered. SENATOR PEARCE adjourned the meeting at 7:48 p.m.