Legislature(2001 - 2002)

04/30/2001 05:35 PM Senate RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     ALASKA STATE LEGISLATURE                                                                                   
                    SENATE RESOURCES COMMITTEE                                                                                
                          April 30, 2001                                                                                        
                             5:35 p.m.                                                                                          
MEMBERS PRESENT                                                                                                               
Senator John Torgerson, Chair                                                                                                   
Senator Drue Pearce, Vice Chair                                                                                                 
Senator Rick Halford                                                                                                            
Senator Robin Taylor                                                                                                            
Senator Kim Elton                                                                                                               
Senator Georgianna Lincoln                                                                                                      
MEMBERS ABSENT                                                                                                                
Senator Pete Kelly                                                                                                              
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 236                                                                                                              
"An Act relating  to the contracting and financing  authority of the                                                            
Alaska Industrial Development  and Export Authority; authorizing the                                                            
authority  to  issue bonds  in  a  principal  amount not  to  exceed                                                            
$76,000,000  to  finance  the  acquisition,  design,  construction,                                                             
inventory,   and  operation   of  natural   gas,  propane   air,  or                                                            
manufactured  gas public  utility facilities;  and providing  for an                                                            
effective date."                                                                                                                
     HEARD AND HELD                                                                                                             
CS FOR HOUSE BILL NO. 244(FIN)                                                                                                  
"An Act relating to a grant  of state land to the Denali Borough for                                                            
a railroad and utility  corridor and a railroad development project;                                                            
repealing provisions  relating to a grant of a right-of-way  of land                                                            
for  a railroad  and  utility  corridor  to  the  Alaska  Industrial                                                            
Development  and Export Authority;  and providing  for an  effective                                                            
     HEARD AND HELD                                                                                                             
CS FOR HOUSE CONCURRENT RESOLUTION NO. 17(RES)                                                                                  
Expressing  the  legislature's  support  for sale  of  a portion  of                                                            
Alaska's North Slope natural  gas for electrical generation to power                                                            
data centers within the North Slope Borough.                                                                                    
     MOVED CSHCR 17(RES) OUT OF COMMITTEE                                                                                       
CS FOR HOUSE BILL NO. 154(FSH)                                                                                                  
"An Act relating to security for the payment of fishery business                                                                
taxes and to payment of the fisheries resource landing tax."                                                                    
     MOVED CSHB 154(FSH) OUT OF COMMITTEE                                                                                       
HOUSE JOINT RESOLUTION NO. 26                                                                                                   
Requesting the National Marine Fisheries Service to relocate the                                                                
Alaska Fisheries Science Center Steller sea lion research team to                                                               
     MOVED HJR 26 OUT OF COMMITTEE                                                                                              
PREVIOUS COMMITTEE ACTION                                                                                                     
HB 236 - No previous action to record.                                                                                          
HB 244 - No previous action to record.                                                                                          
HB 154 - No previous action to record.                                                                                          
HCR 17 - No previous action to record.                                                                                          
HJR 26 - No previous action to record.                                                                                          
WITNESS REGISTER                                                                                                              
Mr. Randy Ruaro                                                                                                                 
Staff to Representative Williams                                                                                                
State Capitol Bldg.                                                                                                             
Juneau AK 99811                                                                                                                 
POSITION STATEMENT: Commented on HB 236.                                                                                      
Mr. Paul Rosenowski                                                                                                             
Alaska Intrastate Gas Co.                                                                                                       
900 West 5th Ave.                                                                                                               
Anchorage AK                                                                                                                    
POSITION STATEMENT: Supported HB 236.                                                                                         
Representative Jeannette James                                                                                                  
State Capitol Bldg.                                                                                                             
Juneau AK 99811                                                                                                                 
POSITION STATEMENT: Prime sponsor of HB 244.                                                                                  
Mr. Richard Schmitz                                                                                                             
Staff to Representative James                                                                                                   
State Capitol Bldg.                                                                                                             
Juneau AK 99811                                                                                                                 
POSITION STATEMENT: Answered questions about HB 244.                                                                          
Mr. John Nierenberg                                                                                                             
Mile 14 San Pedro                                                                                                               
Healy AK 99743                                                                                                                  
POSITION STATEMENT:  Opposed HB 244.                                                                                          
Ms. Linda Paganelli                                                                                                             
Healy AK 99743                                                                                                                  
POSITION STATEMENT:  Opposed HB 244.                                                                                          
Mr. David Braun                                                                                                                 
No address provided                                                                                                             
POSITION STATEMENT:  Opposed HB 244.                                                                                          
Mr. Dick Mylius, Director                                                                                                       
Division of Mining, Land and Water                                                                                              
Department of Natural Resources                                                                                                 
550 W 7th Ave. Ste 1050                                                                                                         
Anchorage AK 99501                                                                                                              
POSITION STATEMENT:  Opposed HB 244.                                                                                          
Mr. Land Cole                                                                                                                   
P.O. Box 67                                                                                                                     
Denali National Park AK 99755                                                                                                   
POSITION STATEMENT:  Opposed HB 244.                                                                                          
Mr. Jeff Yunachi                                                                                                                
Stampede Rd.                                                                                                                    
Denali National Park AK 99755                                                                                                   
POSITION STATEMENT:  Opposed HB 244.                                                                                          
Ms. Joan Frankevich                                                                                                             
National Park Conservation Association (NPCA)                                                                                   
750 W 2nd Ave.                                                                                                                  
Anchorage AK 99501                                                                                                              
POSITION STATEMENT:  Opposed HB 244.                                                                                          
Mr. Joe Fields                                                                                                                  
Kantishna Holdings Inc.                                                                                                         
P.O. Box 71047                                                                                                                  
Fairbanks AK 99707                                                                                                              
POSITION STATEMENT: Supported HB 244.                                                                                         
Mr. Chuck Harlamert                                                                                                             
Division of Tax                                                                                                                 
Department of Revenue                                                                                                           
PO Box 110400                                                                                                                   
Juneau, AK  99811-0400                                                                                                          
POSITION STATEMENT: Supported HB 154.                                                                                         
Mr. Mark Myers, Director                                                                                                        
Division of Oil and Gas                                                                                                         
Department of Natural Resources                                                                                                 
400 Willoughby Ave.                                                                                                             
Juneau, AK  99801-1724                                                                                                          
POSITION STATEMENT: Commented on HCR 17.                                                                                      
Representative Fred Dyson                                                                                                       
State Capitol Bldg.                                                                                                             
Juneau AK 99811                                                                                                                 
POSITION STATEMENT: Sponsor of HJR 26.                                                                                        
ACTION NARRATIVE                                                                                                              
TAPE 01-35, SIDE A                                                                                                            
Number 001                                                                                                                      
            HB 236-AIDEA BONDS FOR GAS PUBLIC UTILITIES                                                                     
CHAIRMAN  JOHN  TORGERSON  called  the  Senate  Resources  Committee                                                          
meeting  to order at  5:35 p.m. and  announced HB  236 to be  up for                                                            
MR. RANDY RUARO,  staff to Representative  Williams, said  this bill                                                            
provides legislative  authority under  AS 44.88.100(g) for  AIDEA to                                                            
issue bonds  for a  specific natural  gas project.  The natural  gas                                                            
service  would  offer  a  fairly  cheap  and environmentally   clean                                                            
alternative source of fuel to communities.                                                                                      
MR. PAUL  ROSENOWSKI,  Alaska Intrastate  Gas Co.  (AIGC), said  his                                                            
company  believes  introduction  of  gas utility  service  to  these                                                            
communities  will  provide  a  very  good,  clean,  environmentally                                                             
friendly  alternative  fuel source  that will  help  the economy  of                                                            
these  communities  as well  as significantly  reduce  their  energy                                                            
He said the  cost of heating the Ketchikan  high school is  $400,000                                                            
per  year fuel  oil.  If the  school  was  heated with  natural  gas                                                            
instead,  that cost  would be reduced  by $60,000  to $80,000.  That                                                            
amount would  significantly boost  the school budget but  gas is not                                                            
available in  that community. The  same kind of savings could  occur                                                            
elsewhere.  He  said the  City  of  Cordova has  the  capability  of                                                            
supporting  a seafood processing plant,  but the costs of  operating                                                            
in the  community  are such  that there  are no  longer any  seafood                                                            
processors there. That  situation could change with the introduction                                                            
of natural gas.                                                                                                                 
CHAIRMAN  TORGERSON asked  what percentage  of AIGC's portfolio  the                                                            
$76 million represents.                                                                                                         
MR. ROSENOWSKI replied  that $76 million represents about 66 percent                                                            
of the  total project  costs. The  17 communities  are estimated  to                                                            
cost approximately $115  million.  AIGC and AIDEA have discussed the                                                            
possibility of bonding  approximately $50 million, which would leave                                                            
$26 million  of that bonding available  for subsequent communities.                                                             
They would  use $50  million in  Phase I for  three communities  and                                                            
then the  remainder would  be used for the  subsequent build-out  in                                                            
the smaller communities.  The total $76 million would  be sufficient                                                            
to cover the entire project.                                                                                                    
CHAIRMAN TORGERSON  asked if the $50  million was front-end  loaded.                                                            
He said  that amount  would fix  three communities  and asked,  "How                                                            
much are you going  to have into it before you run  out of our AIDEA                                                            
MR.   ROSENOWSKI   replied,   "The  financing   package   would   be                                                            
approximately  $70 million for Phase I, which is three  communities.                                                            
Eleven  million  dollars   of that   would  be  brought  in  through                                                            
ourselves.  Thirteen million  dollars  would be  brought in  through                                                            
internal  financing and the  remainder would  be the debt  financing                                                            
through  AIDEA, which  would bring  us up to  approximately the  $70                                                            
CHAIRMAN TORGERSON  said the committee would hold  the bill to await                                                            
further information.                                                                                                            
          HB 244-RIGHT-OF-WAY TO DENALI BOR. FOR RR/UTIL.                                                                   
CHAIRMAN TORGERSON announced HB 244 to be up for consideration.                                                                 
MR. RICHARD SCHMITZ,  staff to Representative Jeannette  James, told                                                            
members  their  packets  contained   two  maps  that  accompany  his                                                            
comments. The  green map shows the  old Stampede Trail, which  is an                                                            
old mining road that goes  back into Kantishna. The yellow map shows                                                            
a piece  of state land,  four townships wide,  extending from  Healy                                                            
into the park boundary,  known as the Wolf Townships. A group called                                                            
Kantishna  Holdings, organized  by Joe Fields,  has been working  on                                                            
putting a railroad through  that area for nine years. Two years ago,                                                            
HB 386 provided an opportunity  to do that, but it didn't happen. As                                                            
a result, Representative  James came  up with the idea of  replacing                                                            
AIDEA with the Denali Borough; that's what HB 244 is about.                                                                     
MR.  SCHMITZ explained  that  the  original idea  was  to allow  the                                                            
right-of-way  for  the railroad  to  be identified.  Under  HB  244,                                                            
whatever  land is not  needed of  the four townships  to create  the                                                            
right-of-way would remain  with the state. Only the actual right-of-                                                            
way will be transferred  to the Denali Borough, or about 3,500 acres                                                            
maximum. However, Representative  James believes the acreage will be                                                            
closer 1,500 acres. He  stated, "For that return, the idea is to get                                                            
economic development  into the Healy area, a hotel  possibly on some                                                            
railroad  land has been  worked on  near the  road. Eventually,  the                                                            
long-term goal would be  to connect into the Kantishna area where it                                                            
could meet up with the existing road."                                                                                          
MR. SCHMITZ said  subsections (a) and (b) of the proposed  committee                                                            
substitute  (CS) allows the  Denali Borough  to work with  Kantishna                                                            
Holdings, Inc.  to identify the railroad utility corridor.  The rest                                                            
of subsection (b) is a  description of the railroad right-of-way and                                                            
what  it will  need to  include, such  as  a turn-around  yard or  a                                                            
maintenance shed.                                                                                                               
New subsection  (c) puts  in writing where  the land will come  from                                                            
and  identifies  it  by township.   That was  not  included  in  the                                                            
original  bill.  Subsection  (d) contains  a  standard  clause  that                                                            
prohibits  the grant  from impairing  valid property  rights on  the                                                            
land. It sets  a date when the Borough will allow  the process to go                                                            
ahead. Subsection  (e) mandates  that this  corridor does not  count                                                            
toward the fulfillment  of the Denali Borough's general entitlement,                                                            
at the request  of the borough. Subsection (f) was  added to require                                                            
DNR to designate an employee to be the liaison.                                                                                 
REPRESENTATIVE JAMES interjected  that the yellow area is not in the                                                            
bill any  more, because originally  they had  to transfer it  to the                                                            
borough. First, DNR has  to identify all of the existing rights that                                                            
may be in that  area and then work  with everyone to identify  where                                                            
the  corridor  would  go. Once  that  is  done,  they would  do  the                                                            
surveying and then the land could be transferred.                                                                               
CHAIRMAN TORGERSON  asked if the original bill gave  AIDEA the land.                                                            
REPRESENTATIVE  JAMES said  that it authorized  DNR to transfer  the                                                            
yellow portion  of land to AIDEA so  it could bond for this  project                                                            
but, "That never did happen."                                                                                                   
CHAIRMAN TORGERSON asked if that is repealed in Section (2).                                                                    
REPRESENTATIVE JAMES indicated that was correct.                                                                                
Number 1000                                                                                                                     
CHAIRMAN TORGERSON asked  if the capital budget contains any federal                                                            
money for this project.                                                                                                         
REPRESENTATIVE  JAMES  replied  that  Congress  appropriated   $1.23                                                            
million for  the corridor but it has  been sitting there  because of                                                            
no matching state  funds. She understands that there  are now enough                                                            
funds for the state's share.                                                                                                    
SENATOR ELTON asked who Kantishna Holdings is.                                                                                  
REPRESENTATIVE  JAMES replied that it is a holding  company that was                                                            
created  nine or  10 years  ago  with Mr.  Joe Fields  of  Fairbanks                                                            
leading it. Other people are investors in it for this purpose.                                                                  
SENATOR ELTON  said he sold  a house and it  took a private  company                                                            
four weeks to  do a title search. He expressed concern  that setting                                                            
a deadline  of  September 1,  2001 to  identify  all valid  property                                                            
rights  in  the  yellow   section  is  very  aggressive.   He  asked                                                            
Representative James how she came up with that date.                                                                            
REPRESENTATIVE  JAMES replied  that her daughter  works for  a title                                                            
insurance  company and said,  "I can tell  you they weren't  working                                                            
for four weeks  to do it. That was the time it took  you to get it."                                                            
She thought that most of  the existing rights were pretty well known                                                            
at this time. She said  the fiscal note would help them get it done.                                                            
CHAIRMAN TORGERSON  said he intended  to hold the bill in  committee                                                            
until the fiscal note "caught up to us."                                                                                        
SENATOR  LINCOLN  said  she  didn't know  what  rights  the  holding                                                            
company  would  have  to  build  a railroad  and  asked  if  it  was                                                            
originally  given the  bonding authority  through  AIDEA to do  this                                                            
REPRESENTATIVE  JAMES replied  that Kantishna  Holdings already  has                                                            
less  expensive  financing  than  what  AIDEA could  offer  for  the                                                            
project. This  legislation gives this particular land  to the Denali                                                            
Borough,  which  Kantishna  Holdings  would  have  to  pay  to  use.                                                            
Kantishna Holding  Inc. does not want  to own the land; it  wants to                                                            
lease it from the borough.                                                                                                      
SENATOR  LINCOLN asked  if  the Kantishna  Holding  Company has  the                                                            
right-of-way now.                                                                                                               
REPRESENTATIVE  JAMES said it does not; DNR has the  entire interest                                                            
in this land.                                                                                                                   
MR. JOHN  NIERENBERG, a Healy  resident, said  he saw some  problems                                                            
with the bill.  He said that no EIS has been completed  on the lands                                                            
in question  and the  public has not  had any  chance to comment  on                                                            
proposals.  There is strong local  opposition to any plan  that does                                                            
not allow public comment  on alternatives and other concerns. HB 244                                                            
mandates that land be transferred  to the borough and then leased to                                                            
a private  company without  a competitive bid  process. He  said the                                                            
Denali Borough does not have a land use or transportation plan.                                                                 
MS. LINDA PAGANELLI, a  Healy resident, opposed HB 244. She said she                                                            
has driven  a bus for 20  years on the Denali  Park Road.  This bill                                                            
mandates DNR to transfer  of 3,500 acres of state land to the Denali                                                            
Borough. The land in question,  the Wolf Townships, is not available                                                            
for selection  as part of the entitlement.  The bill authorizes  DNR                                                            
to disregard this fact.  She added, "If this bill passes, there will                                                            
be no [indisc.]  that the  transfers will  be in the best  interests                                                            
nor will there be opportunity for public comment."                                                                              
She recommended  that line 15 be deleted because it  says: "However,                                                            
other provisions of AS 29.65 do not apply to the transfer."                                                                     
Number 1600                                                                                                                     
MS. PAGANELLI commented:                                                                                                        
     This  bill  appears  to be  a  state give  away  of  prime                                                                 
     wildlife   habitat  of  recreation  lands  to  a  private                                                                  
     developer.  I question where  the state's common interest                                                                  
     is in bestowing this sweetheart deal…                                                                                      
She said, "The Denali Borough  and the state legislature hogtied the                                                            
citizens  of the borough  to a company that  has not demonstrated  a                                                            
need for  a railroad, the  economic feasibility  of a railroad,  nor                                                            
financial backing  to support a railroad."  She reiterated  that the                                                            
borough   has  no   land   use  or   transportation   plan  and   no                                                            
infrastructure  to  absorb  the responsibilities  inherent  in  this                                                            
MS. PAGANELLI also expressed  concern that the bill does not contain                                                            
a sunset date to prevent  the option of remaining open in perpetuity                                                            
if  the borough  does  not  act on  the railroad  project  within  a                                                            
designated  time  frame.  In  addition,   the  bill  contains  vague                                                            
language that alludes to  facilities to support economic development                                                            
in conjunction with the  railroad project. She questioned what those                                                            
facilities would be. She  thought some general guidelines need to be                                                            
included  in the bill  and said,  "One Glitter  Gulch in the  Denali                                                            
Borough is more than enough."                                                                                                   
MR. DAVID BRAUN  said he opposes HB  244 because public and  private                                                            
land  developers are  trying  to appropriate  state  land to  Denali                                                            
Borough and  develop it for their  own financial gains. It  attempts                                                            
to  bypass state  government  and  the public  process.  He  thought                                                            
keeping  the Wolf Townships  out of  the arch  is good for  economic                                                            
development.  He  said this  bill has  very  little to  do with  the                                                            
railroad,  since it  will probably  not  be built  for economic  and                                                            
political reasons,  but the Denali  Borough Assembly will  still get                                                            
land in the  Wolf Townships that they  have coveted for many  years.                                                            
MR. DICK MYLIUS,  Division of Mining, Land and Water,  Department of                                                            
Natural Resources (DNR), said:                                                                                                  
     I have four points regarding  the proposed bill. The first                                                                 
     one is that DNR believes  that a lot more acreage is going                                                                 
     to be needed  to determine the best access route  into the                                                                 
     north  side of Denali National  Park. The railroad in  the                                                                 
     corridor  may or may not be the  best approach. There  are                                                                 
     two  other planning  efforts that the  rail project  could                                                                 
     maybe   coordinate   with.   The   State   Department   of                                                                 
     Transportation   is poised  to  receive  $1.5  million  in                                                                 
     federal  funding for an EIS for  the [indisc.] access  and                                                                 
     this  effort  is subject  to an  appropriation,  which  is                                                                 
     contained in SB 3. In addition,  the National Park Service                                                                 
     has  invited the  state  to participate  in  its study  up                                                                 
     North  on access  alternatives.  Because so  much of  this                                                                 
     route into Kantishna will  be across National Park Service                                                                 
     lands, the  railroad cannot be built without Park  Service                                                                 
     concurrence.  DNR believes  it is essential  to work  with                                                                 
     the  National  Park  Service  to achieve  an  agreed  upon                                                                 
     access plan for the Denali National Park.                                                                                  
     Our second concern regards  what rights the bill grants to                                                                 
     Kantishna  Holdings. Once the corridor is identified,  the                                                                 
     implication  is  that  Kantishna Holding  would  have  the                                                                 
     exclusive  right to  build in  the railroad  corridor.  We                                                                 
     believe  that the land should  be conveyed to the borough                                                                  
     so that  other uses  or developers could  make use of  the                                                                 
     land as well.                                                                                                              
     Two  additional concerns  DNR  has is with  the committee                                                                  
     substitute  presented  today. The  first one  is that  the                                                                 
     land  will  not  be  charged  to  part  of the  borough's                                                                  
     entitlement  and we believe it  should be. Our concern  is                                                                 
     that if the  legislature starts granting additional  lands                                                                 
     for  specific   projects,  you're  opening  the   door  to                                                                 
     requests  from municipalities.  Right  now we  are in  the                                                                 
     process  of conveying land at  Hatcher Pass to the Mat-Su                                                                  
     Borough  for  the ski  area.  That land  will  be charged                                                                  
     against  their  entitlement.  The municipal  entitlements                                                                  
     were  based  on a  formula  that was  established  by  the                                                                 
     legislature back in 1978  and that formula was established                                                                 
     to avoid disagreements over  entitlements that had existed                                                                 
     prior   to  that  date   and  actually   is  involved   in                                                                 
     litigation.  The specific issue of the litigation  was how                                                                 
     much   the    entitlement   should   be   for    all   the                                                                 
     municipalities.  The  legislature established  a standard                                                                  
     formula  that [indisc.]. Land  for development is exactly                                                                  
     the  type of land that  is supposed  to be conveyed  under                                                                 
     the entitlement.                                                                                                           
     The  final concern we  have would be  the question of  why                                                                 
     DNR  was  deleted from  the  consultation  upfront.  We're                                                                 
     concerned  because in  the end,  DNR is going  to have  to                                                                 
     approve the railroad corridor  and we think it's essential                                                                 
     that DNR be involved in  the process from the beginning so                                                                 
     we can assure that more  statewide and public concerns are                                                                 
     addressed  upfront rather than having to try to  deal with                                                                 
     those issues at the end of the process.                                                                                    
CHAIRMAN  TORGERSON   asked  how   much  of  the  Denali   Borough's                                                            
entitlement is unfulfilled.                                                                                                     
MR. MYLIUS answered that  the borough's entitlement was 49,000 acres                                                            
and it has received about 20,000 acres.                                                                                         
CHAIRMAN TORGERSON  said he would look at Mr. Mylius's  concerns and                                                            
see what he could do.                                                                                                           
MR. LAND COLE  opposed HB 244 and  said he is a 30-year resident  of                                                            
the Denali Borough. [Indisc.].                                                                                                  
MR. JEFF YUNACHI  said he and his family run the Stampede  Trail Bed                                                            
and Breakfast and Sled  Dog Tours. Their sled dog tour in the winter                                                            
utilizes  areas  in the  Wolf  Townships.  He  is concerned  that  a                                                            
railroad through that area  would "virtually kill our business."  He                                                            
said it is  an especially critical  time for them, because  they are                                                            
in the  process of negotiating  another sled  dog business.  He said                                                            
they  don't feel  that there  has been  any public  input. They  are                                                            
concerned  that language  in  HB 244  could possibly  exclude  other                                                            
business  interests from  occurring  in the 3,500-acre  tract.  They                                                            
don't  know  if  they  would  be  able  to  continue  to  use  their                                                            
traditional sled dog trails if this bill goes through.                                                                          
MS. JOAN FRANKEVICH, National  Park Conservation Association (NPCA),                                                            
opposed HB  244. The NPCA considers  the Denali Borough to  have the                                                            
wrong  role  in  this  project.  The  logical   player  would  be  a                                                            
state/federal  partnership. She said there is no public  process and                                                            
the bill  does not provide  for competition.  She said the  railroad                                                            
would not serve  visitor needs or  demands. She commented,  "It is a                                                            
most unusual way for a land selection to be conducted."                                                                         
She said that Kantishna  Holdings has had eight years to establish a                                                            
right-of-way.  There is no demand for a less scenic  route to Wonder                                                            
Lake. She stated, "The better alternative is south Denali."                                                                     
MR. JOE FIELDS, Kantishna Holdings, supported HB 244.                                                                           
TAPE 01-35, SIDE B                                                                                                            
MR. FIELDS said that all  the cities and boroughs along the Railbelt                                                            
have  written   letters  in   support  of   this  project   and  two                                                            
legislatures have passed  resolutions supporting it. On the positive                                                            
side of the  project, he said it should  be noted that the  National                                                            
Park System  Advisory Board looked  at the Denali Task Force  Report                                                            
and found it  extremely wanting because  the charter business  given                                                            
to that  committee was not  fulfilled by it.  Their response  was to                                                            
amend the  Denali Task Force  Report to call  for the creation  of a                                                            
new northern  railroad right-of-way  to Wonder  Lake. They  included                                                            
follow-through  on the balance  of issues of  items within  the Task                                                            
Force Report  and one  of those was  the south  Denali plan,  but no                                                            
money was forwarded to  it and it doesn't access the park. Although,                                                            
it might provide  some good access for short trips  out of Anchorage                                                            
and it might  not be a  bad idea, he didn't  think it would  happen.                                                            
There was just too much opposition.                                                                                             
In response to  the conflict of interest issue, MR.  FIELD said this                                                            
is not in response  to an RFP. An  evaluation of the corridor  needs                                                            
to be  done  and they  have been  trying for  some time  to get  one                                                            
established.  The result  of their  first attempt  in 1993 was  that                                                            
Commissioner Olds  of DNR put forward a proposal to  allow an access                                                            
permit  at the  edge  of park  and do  that  they could  move  their                                                            
facilities on  to that. They were not able to put  the entire right-                                                            
of-way into action  and, therefore, were not able  to come up with a                                                            
study for the  entire corridor to the edge of the  park. After 1994,                                                            
the National Park System Advisory Board didn't act on it either.                                                                
MR. FIELDS  stated that there had  been a public process.  Kantishna                                                            
Holdings had been  before the Denali Borough several  times and they                                                            
were in favor  of it. He said the  opposition to it is specifically                                                             
from people in  the NPCA. The Secretary of the Board  of Trustees is                                                            
the owner of  Camp Denali, Land Cole.  These people have  a conflict                                                            
of  interest when  they  don't want  to have  people  come into  the                                                            
backcountry of Denali.                                                                                                          
CHAIRMAN  TORGERSON indicated  there were  no further questions.  He                                                            
questioned  why  a sunset  date  wouldn't  work  and why  this  land                                                            
transfer  shouldn't  be part  of  the borough  selections.  He  also                                                            
wanted to know  if it is necessary to mention Kantishna  Holdings in                                                            
the bill.                                                                                                                       
         HB 154-FISHERY BUS. TAX/FISHERIES RES. LAND. TAX                                                                   
CHAIRMAN TORGERSON announced HB 154 to be up for consideration.                                                                 
REPRESENTATIVE  SCALZI, prime sponsor,  said the fisheries  business                                                            
tax is set  up so that  processors will collect  the tax during  the                                                            
year, hold  it and pay it to the state  on April 1 of the  following                                                            
year. He explained:                                                                                                             
     They're  allowed to hold  that tax so  they can pay  their                                                                 
     fishermen and sell their  pack before they are financially                                                                 
     solvent.  In doing so, they give  a security to the  state                                                                 
     of Alaska  of either  three times the  amount of lienable                                                                  
     property  in the amount of taxes  they collected the  year                                                                 
     before  or a  bond in  that amount.  This works  fine  for                                                                 
     canneries  and large  processors  who have a  lot of  real                                                                 
     property as  assets, but after the advent of IFQs  we have                                                                 
     new  buyers -  a fish  processor  who operates  an option                                                                  
     block for  some type of quick sales of fish. In  doing so,                                                                 
     they generate  a lot of money  and a lot of raw fish  tax,                                                                 
     sometimes  in excess of half  million dollars. To do  this                                                                 
     under current  statutes, they have to bond for  that money                                                                 
     for  the next  year. Even  though they  haven't collected                                                                  
     any,  if they had a  half million dollars  worth of  taxes                                                                 
     collected the previous year,  they have to bond for half a                                                                 
     million  dollars  or  have  three  times  that  amount  in                                                                 
     lienable property, which would be $1.5 million.                                                                            
     These  fish buyers don't  have that  kind of assets.  They                                                                 
     operate  with a computer,  an office,  a few cell phones.                                                                  
     They  operate on a very  small margin,  but they are  very                                                                 
     valuable  to the industry  right now.  We have produced  a                                                                 
     very high price for halibut  and sable fish since IFQs and                                                                 
     with the  long season we have,  they are very valuable  to                                                                 
     the  industry. When we  have higher  fish prices, we  also                                                                 
     have higher fisheries business tax.                                                                                        
     I went  to the Department of  Revenue to see how we  could                                                                 
     make  this   work  and  they  were  very  cooperative   in                                                                 
     designing something that  they felt would secure the State                                                                 
     of Alaska,  which would be to  allow these fish buyers  to                                                                 
     pay their raw fish tax on  a 30-day allotment. So, if they                                                                 
     pay as they  go, the Department of Revenue has  no problem                                                                 
     with that.  For a bond, they will have to issue  a $50,000                                                                 
     bond or have $100,000 in lienable property.                                                                                
MR. CHUCK HARLEMERT, Division of Tax, Department of Revenue (DOR),                                                              
supported HB 154.                                                                                                               
CHAIRMAN  TORGERSON indicated  there were  no further questions  and                                                            
that he would hold the bill for a quorum.                                                                                       
He announced an at-ease from 6:37 to 6:39 p.m.                                                                                  
         HCR 17-SALE OF NATURAL GAS TO POWER DATA CENTERS                                                                   
CHAIRMAN TORGERSON announced HCR 17 to be up for consideration.                                                                 
MR.  MARK MYER,  Division  of Oil  and  Gas, Department  of  Natural                                                            
Resources  (DNR),  said  that  DNR  supports  HCR 17.  He  said  the                                                            
amendments adopted in the  House significantly improved the bill. He                                                            
thought  the challenge  of  this project  would  be  to determine  a                                                            
valuation methodology  that would be fair prior to  a gas sale. Some                                                            
of the questions that would  have to be discussed with the producers                                                            
are the structure  of the facilities and the method  of repayment of                                                            
SENATOR TAYLOR asked if  a sale could take place without approval of                                                            
the legislature  because it says the commissioner  "can determine on                                                            
his own" and make such a sale.                                                                                                  
CHAIRMAN  TORGERSON responded  if DNR puts  it out as a competitive                                                             
bid,  it  can sell  it,  but  it can't  negotiate  one  without  the                                                            
legislature's approval.                                                                                                         
SENATOR TAYLOR  asked if DNR could make a determination,  go through                                                            
a competitive bidding and  sell the state's royalty gas on the North                                                            
CHAIRMAN TORGERSON answered affirmatively.                                                                                      
MR. MYERS  said that one  of the "WHEREAS"  clauses requires  DNR to                                                            
have long-term  substantial sales of the state's oil  and gas and to                                                            
obtain the approval of the legislature.                                                                                         
CHAIRMAN TORGERSON  asked if sales  from competitive bids  must have                                                            
legislative approval.                                                                                                           
MR. MYERS answered yes.                                                                                                         
SENATOR PEARCE  moved to pass HCR 17 from committee  with individual                                                            
recommendations. There were no objections and it was so ordered.                                                                
         HB 154-FISHERY BUS. TAX/FISHERIES RES. LAND. TAX                                                                   
CHAIRMAN  TORGERSON announced  that  a quorum was  present and  they                                                            
would take up HB 154.                                                                                                           
SENATOR TAYLOR  moved to pass HB 154 from committee  with individual                                                            
recommendations. There were no objections and it was so ordered.                                                                
          HJR 26-STELLER SEA LION RESEARCH TEAM TO ALASKA                                                                   
CHAIRMAN TORGERSON announced HJR 26 to be up for consideration.                                                                 
REPRESENTATIVE  DYSON, sponsor of  HJR 26, said it is a very  simple                                                            
resolution that  asks the National Marine Fisheries  Service to move                                                            
a research  team  to Alaska  to study  the Steller  sea lion,  which                                                            
threatens  the  polluck  fishery   in Alaska.   This  resolution  is                                                            
important because  there are travel restrictions on  National Marine                                                            
Fisheries Service personnel  so they can't always be where they need                                                            
to be to study  the creatures and because it's important  to realize                                                            
that there is  space available for the team to relocate.  He stated,                                                            
"Basically, the  idea is that we should relocate this  team to where                                                            
the critters are and not to where they aren't."                                                                                 
SENATOR TAYLOR  moved to pass HJR 26 from committee  with individual                                                            
recommendations. There were no objections and it was so ordered.                                                                
CHAIRMAN TORGERSON adjourned the meeting at 6:50 p.m.                                                                           

Document Name Date/Time Subjects