Legislature(2011 - 2012)BUTROVICH 205

03/12/2012 03:30 PM RESOURCES

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Moved CSSB 153(RES) Out of Committee
<Public Testimony>
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                         March 12, 2012                                                                                         
                           3:34 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Joe Paskvan, Co-Chair                                                                                                   
Senator Thomas Wagoner, Co-Chair                                                                                                
Senator Bill Wielechowski, Vice Chair                                                                                           
Senator Bert Stedman                                                                                                            
Senator Lesil McGuire                                                                                                           
Senator Hollis French                                                                                                           
Senator Gary Stevens                                                                                                            
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 153                                                                                                             
"An Act relating  to a gas storage facility; relating  to the tax                                                               
credit for  a gas  storage facility; relating  to the  powers and                                                               
duties  of  the  Alaska  Oil  and  Gas  Conservation  Commission;                                                               
relating to the  regulation of natural gas storage  as a utility;                                                               
relating  to  the  powers  and  duties of  the  director  of  the                                                               
division of  lands and to lease  fees for a gas  storage facility                                                               
on state land; and providing for an effective date."                                                                            
     - MOVED CSSB 153(RES) OUT OF COMMITTEE                                                                                     
SENATE BILL NO. 123                                                                                                             
"An Act establishing May 10 of each year as Alaska Mining Day."                                                                 
     - HEARD & HELD                                                                                                             
SENATE BILL NO. 159                                                                                                             
"An Act establishing the Susitna  State Forest; and providing for                                                               
an effective date."                                                                                                             
     - HEARD & HELD                                                                                                             
SENATE BILL NO. 181                                                                                                             
"An Act  approving an interim classification  by the commissioner                                                               
of  natural resources  closing certain  land  within the  Glacier                                                               
Creek and Winner  Creek drainages to new  mineral entry; amending                                                               
the mineral entry closure in sec. 2, ch. 8, SLA 2003, for                                                                       
certain land within the Glacier Creek and Winner Creek                                                                          
drainages; and providing for an effective date."                                                                                
     - HEARD & HELD                                                                                                             
SENATE BILL NO. 205                                                                                                             
"An Act establishing the Alaska Chinook research and restoration                                                                
endowment fund and relating to grants from the fund."                                                                           
     - HEARD & HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB 123                                                                                                                  
SHORT TITLE: ALASKA MINING DAY                                                                                                  
SPONSOR(s): SENATOR(s) GIESSEL                                                                                                  
04/08/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/08/11       (S)       RES                                                                                                    
03/12/12       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
BILL: SB 159                                                                                                                  
SHORT TITLE: SUSITNA STATE FOREST                                                                                               
SPONSOR(s): SENATOR(s) MENARD                                                                                                   
01/17/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (S)       RES, FIN                                                                                               
03/12/12       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
BILL: SB 181                                                                                                                  
SHORT TITLE: CLOSING CERTAIN LAND TO MINERAL ENTRY                                                                              
SPONSOR(s): SENATOR(s) GIESSEL                                                                                                  
01/27/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/27/12       (S)       RES                                                                                                    
01/27/12       (S)       RES RPT RECD W/CS AWAIT TRANSMITTAL NXT                                                                
01/27/12       (S)       RES RPT CS  #DP #DNP #NR #AM                                                                           
03/12/12       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
BILL: SB 205                                                                                                                  
SHORT TITLE: CHINOOK RESEARCH & RESTORATION ENDOWMENT                                                                           
SPONSOR(s): SENATOR(s) OLSON                                                                                                    
02/21/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/21/12       (S)       RES, FIN                                                                                               
03/12/12       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
BILL: SB 153                                                                                                                  
SHORT TITLE: NATURAL GAS STORAGE TAX CREDIT/REGULATION                                                                          
SPONSOR(s): SENATOR(s) THOMAS                                                                                                   
01/17/12       (S)       PREFILE RELEASED 1/13/12                                                                               
01/17/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (S)       RES, FIN                                                                                               
02/09/12       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/09/12       (S)       Heard & Held                                                                                           
02/09/12       (S)       MINUTE(RES)                                                                                            
03/05/12       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
03/05/12       (S)       Heard & Held                                                                                           
03/05/12       (S)       MINUTE(RES)                                                                                            
03/12/12       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
WITNESS REGISTER                                                                                                              
SENATOR JOE THOMAS                                                                                                              
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT Sponsor of SB 153:                                                                                       
GRIER HOPKINS, staff                                                                                                            
Senator Joe Thomas                                                                                                              
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Answered questions about SB 153 for the                                                                   
SENATOR CATHY GIESSEL                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Sponsor of SB 123.                                                                                        
FRED PARADY, Executive Director                                                                                                 
Alaska Miners Association                                                                                                       
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Supported for SB 123.                                                                                     
SENATOR LINDA MENARD                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Sponsor of SB 159.                                                                                        
MICHAEL ROVITO, Chief of Staff                                                                                                  
Senator Linda Menard                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Answered questions on SB 159 for the                                                                      
JOHN "CHRIS" MAISCH, Director                                                                                                   
Division of Forestry                                                                                                            
Department of Natural Resources (DNR)                                                                                           
Juneau, AK                                                                                                                      
POSITION STATEMENT: Answered questions and provided backup                                                                    
information on SB 175.                                                                                                          
SENATOR CATHY GIESSEL                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Sponsor of SB 181.                                                                                        
SHARON LONG, Staff                                                                                                              
Senator Cathy Giessel                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Provided a sectional analysis for SB 181.                                                                 
WYN MENEFEE, Chief of Operations                                                                                                
Division of Mining, Land and Water                                                                                              
Department of Natural Resources (DNR)                                                                                           
Juneau, AK                                                                                                                      
POSITION STATEMENT: Answered questions regarding SB 181.                                                                      
FRED PARADY, Executive Director                                                                                                 
Alaska Miners Association                                                                                                       
Juneau, AK                                                                                                                      
POSITION STATEMENT: Stated support for SB 181.                                                                                
DAVID SCOTT, Staff                                                                                                              
Senator Donny Olson                                                                                                             
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Explained the changes in the CS to SB 205                                                                 
for the sponsor.                                                                                                                
ACTION NARRATIVE                                                                                                              
3:34:48 PM                                                                                                                    
CO-CHAIR JOE PASKVAN called the Senate Resources Standing                                                                     
Committee meeting to order at 3:34 p.m. Present at the call to                                                                  
order were  Senators Stedman,  French, Wielechowski  and Co-Chair                                                               
        SB 153-NATURAL GAS STORAGE TAX CREDIT/REGULATION                                                                    
3:37:21 PM                                                                                                                    
CO-CHAIR  PASKVAN announced  the consideration  of SB  153, [CSSB                                                               
153, version 27-LS1187\D, was before the committee].                                                                            
SENATOR STEVENS joined the committee.                                                                                           
3:37:26 PM                                                                                                                    
SENATOR JOE THOMAS, Alaska State  Legislature, sponsor of SB 153,                                                               
said the cost of fuel in  Alaska is crippling much of the state's                                                               
economy,  and the  dramatic delivery  of  fuel oil  to Nome  this                                                               
winter helped  focus attention on  it. In the Interior  today, he                                                               
said  heating  fuel  costs  are  $4.68 a  gallon;  when  he  last                                                               
reported they were  under $4, but it is natural  for the price to                                                               
go up in winter.                                                                                                                
He said that when he last  reported, about $660 million was being                                                               
spent in the  Interior on just energy. At the  new rate, it would                                                               
be over  $800 million for  the same  amount of fuel.  It averages                                                               
out to about $8,100 per person  as compared to $6,600 that it was                                                               
last  time he  testified. He  said  39 percent  of Golden  Valley                                                               
Electric  Association's  (GVEA)   electricity  is  produced  from                                                               
diesel  fuel,  which  accounts  for   about  60  percent  of  the                                                               
electrical  generation  budget.  With the  fuel  dollar  increase                                                               
since he left Fairbanks, they  now pay over $40/mmbtu compared to                                                               
$8.67 in  Southcentral. Fairbanks is currently  paying $23.35 for                                                               
1 cf/gas and  $.23 per kilowatt hour. He  said individual heating                                                               
bills  of $1,000  to  $1,500  a month  are  not  unusual for  the                                                               
heating season which is September through April.                                                                                
SENATOR   THOMAS  said   SB  153   addresses   this  problem   by                                                               
incentivizing the  private sector  to deliver  additional trucked                                                               
gas  to  Fairbanks  over  the next  three  years.  Fairbanks  has                                                               
trucked gas now,  but the amount is  limited because Southcentral                                                               
suppliers are  obligated to take  care of their  customers first.                                                               
So they cut  back sometimes and Fairbanks Natural  Gas (FNG), the                                                               
distributor,  can't get  what  they need.  This  means that  some                                                               
places have  to shut down  their natural gas generation  and turn                                                               
their fuel  oil generation back on.  The fuel oil and  gas prices                                                               
are  not   dramatically  different  now,  because   there  is  no                                                               
competition for it.                                                                                                             
He  said SB  153 would  result in  savings of  $15 million  or 50                                                               
percent of the construction cost,  whichever is less. This credit                                                               
is  currently  available to  Cook  Inlet's  gas storage  project,                                                               
CINGSA. He wants  Fairbanks to receive the  same benefit although                                                               
the storage  would be  above ground since  there are  no depleted                                                               
wells  to  use as  underground  storage.  He said  anyone  taking                                                               
advantage  of these  tax  credits must  be  a regulated  utility,                                                               
because then whatever savings is  received will be passed through                                                               
to the consumer through RCA  regulation. It will also ensure that                                                               
neither North Slope producers nor  an LNG export facility that do                                                               
not provide  for consumption of  gas at savings to  Alaskans that                                                               
and are  not regulated utilities,  will not have access  to these                                                               
SENATOR THOMAS  said storage  will be needed  in any  event, even                                                               
with a  gasline from the  North Slope. He  noted that SB  153 has                                                               
had no  negative attention  since it  was introduced.  He thanked                                                               
the additional sponsors.                                                                                                        
3:41:22 PM                                                                                                                    
SENATOR MCGUIRE joined the committee.                                                                                           
3:43:44 PM                                                                                                                    
CHAIR FRENCH said he thought it  was fair to do in Fairbanks what                                                               
has been  done in Kenai  at the  Cook Inlet Natural  Gas Storage,                                                               
Alaska facility (CINGSA).  He asked how much the  state spent for                                                               
the CINGSA facility and how much storage it bought.                                                                             
3:44:11 PM                                                                                                                    
GRIER   HOPKINS,   staff   to  Senator   Thomas,   Alaska   State                                                               
Legislature, Juneau, AK,  answered that $15 million  was given to                                                               
CINGSA in  tax credits on  a volumetric calculation  of $1.50/mcf                                                               
of storage; 11 bcf/gas was stored  in that reservoir along with 7                                                               
bcf of cushion gas for a total of 18 bcf.                                                                                       
CHAIR FRENCH asked what sort of volumes this bill envisions.                                                                    
MR. HOPKINS  replied about  360 mmcf/gas  stored in  two separate                                                               
tanks, two-thirds  of that  on the North  Slope and  one-third in                                                               
North Pole.                                                                                                                     
3:45:24 PM                                                                                                                    
SENATOR STEDMAN said  this looks more like  an appropriation bill                                                               
and asked  him to review who  could take advantage of  it and why                                                               
this  wouldn't be  done through  a regular  capital appropriation                                                               
process for a regular utility.                                                                                                  
SENATOR THOMAS explained that there  has been interest in various                                                               
areas;  propane storage  has interest  as  well. Fish  processing                                                               
plants, Valdez and  Cordova all show interest,  because they have                                                               
huge issues with their electrical  generation and are looking for                                                               
relief.  He initially  wanted to  make sure  that if  the credits                                                               
were given in one place that  they would at least be allowable in                                                               
other places. So, it looks like an appropriation bill.                                                                          
SENATOR STEDMAN  asked if there  are restrictions on it  or could                                                               
every town in the state make a similar request.                                                                                 
SENATOR THOMAS replied  that the only limiting factor  is being a                                                               
regulated utility.                                                                                                              
MR. HOPKINS  added that language on  page 3, line 31,  lowers the                                                               
size  of the  tank to  25,000 gallons  so that  smaller utilities                                                               
(especially along the Railbelt) could apply for the tax credits.                                                                
3:49:29 PM                                                                                                                    
SENATOR STEDMAN  observed that  the term  used is  "credits," but                                                               
it's really more like an equity infusion.                                                                                       
MR.   HOPKINS  said   HB   280  (the   CINGSA   tax  credit)   by                                                               
Representative Hawker was also perceived  to be a tax credit, but                                                               
the project has moved forward,  it has become a limited liability                                                               
corporation with a number of  different entities working together                                                               
in partnership  to build the  storage facility. It is  not paying                                                               
any taxes to the state, the  same situation GVEA would be in with                                                               
this bill.                                                                                                                      
3:51:24 PM                                                                                                                    
SENATOR WIELECHOWSKI  moved to report  CSSB 153( ),  [version D,]                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal  note(s).  There were  no  objections,  and CSSB  153(RES)                                                               
moved from the Senate Resources Standing Committee.                                                                             
3:51:54 PM                                                                                                                    
At ease 3:51 p.m. to 3:53 p.m.                                                                                                  
                    SB 123-ALASKA MINING DAY                                                                                
3:53:54 PM                                                                                                                    
CO-CHAIR PASKVAN announced the consideration of SB 123.                                                                         
SENATOR CATHY  GIESSEL, Alaska State  Legislature, sponsor  of SB                                                               
123,  said the  bill  establishes  May 10  every  year as  Alaska                                                               
Mining  Day. It  recognizes the  role of  development of  mineral                                                               
resources and that role in Alaska's  history and growth - and its                                                               
future. She said  the sponsor statement reviews  that history and                                                               
that mining today  continues to be a source of  jobs and economic                                                               
impact in  communities where  mining has been  going on  for more                                                               
than a  century. For  example, Fort  Knox in  Fairbanks purchases                                                               
its  power  for Golden  Valley  Electric  Association (GVEA)  and                                                               
because of the  impact of that power purchase it  lowers the cost                                                               
of electricity for  the consumers in Fairbanks by  $.1 a kilowatt                                                               
hour. Livengood  also might have  a mine  in the future  and they                                                               
are  also  planning to  purchase  power  from GVEA,  which  would                                                               
provide another significant impact for the Fairbanks ratepayers.                                                                
She  said Nome  is having  quite a  mining boom  with gold  being                                                               
found under  the water on  the beach. A  couple of days  ago, she                                                               
talked  to the  representative from  Nome who  has a  one bedroom                                                               
house he  posted for rent.  Within 24 hours  he had more  than 30                                                               
hits,  because last  year they  ran out  of housing.  This mining                                                               
activity is having quite an  impact economically on the community                                                               
of Nome.                                                                                                                        
Juneau,  which is  named for  Joe Juneau,  had three  very robust                                                               
mines  build up  the community.  Today, some  of the  tunnels are                                                               
being used to  store water for emergency fire  response. In 2010,                                                               
100 private  sector jobs were created  in the Juneau area  at the                                                               
Kensington Mine.  The average wage  in mining is $95,000  a year.                                                               
In fact, the largest private  sector employer is the Greens Creek                                                               
Mine. So mining is having  quite a significant economic impact in                                                               
She reviewed the  contents of their SB 123  packets that included                                                               
a new update  from Dr. Scott Goldsmith, dated March  2012, on the                                                               
structural  analysis of  the Alaska  Economy Mining  Section. She                                                               
thanked  the chair  and Senator  Wagoner  for signing  on as  co-                                                               
sponsors of the bill.                                                                                                           
3:58:08 PM                                                                                                                    
SENATOR STEDMAN  said he  thought having a  designated day  was a                                                               
good idea, but  one of the most infamous mines,  Rodman Bay Mine,                                                               
was left off as was the Chichagof Mine in Southeast.                                                                            
SENATOR  GIESSEL thanked  him and  remarked  that Bokan  Mountain                                                               
contains rare  earth elements  and they are  looking for  quite a                                                               
robust development there, which will impact Southeast.                                                                          
3:59:18 PM                                                                                                                    
FRED  PARADY,  Executive  Director,  Alaska  Miners  Association,                                                               
Anchorage, AK, supported for SB  123. He said his organization is                                                               
a  nonprofit organization  established in  1939 to  represent the                                                               
mining  industry in  Alaska. It  is composed  of more  than 1,400                                                               
individual prospectors,  geologists, engineers,  vendors, suction                                                               
dredge miners,  small family mines,  junior mining  companies and                                                               
major mining  companies. Throughout the state  they produce gold,                                                               
silver, platinum, diamonds, lead,  zinc, copper, coal, limestone,                                                               
sand, gravel,  crushed rock,  armor rock  and other  material and                                                               
the members live  and work throughout the state in  each of their                                                               
MR. PARADY said the anniversary of  the General Mining Act of the                                                               
United  States is  May  10,  making it  an  appropriate date  for                                                               
celebrating   mining.  He   explained  that   minerals  are   not                                                               
discovered  in  a  vacuum;  they   are  a  product  a  particular                                                               
technical  knowledge and  skill  coupled with  tenacity and  risk                                                               
taking. These  minerals were essentially  the primary  drivers of                                                               
Alaska's  early   economic  development   and  cities   such  and                                                               
Fairbanks, Juneau and  Nome were founded on mining  and today the                                                               
same sort of  cities - Fairbanks, Juneau,  Kotzebue and Anchorage                                                               
- are  reliant on the  products of  mining and the  prosperity it                                                               
brings to the Alaskan economy.                                                                                                  
MR.  PARADY  said  mining  is   also  a  key  driver  to  further                                                               
development  of  infrastructure across  the  state,  but what  he                                                               
really wanted to focus on was  the workforce it would create. The                                                               
recent  McDowell report  estimated the  creation of  4,500 direct                                                               
jobs with a new average wage of $100,000.                                                                                       
He asked  them to replace  their mental image  of a miner  with a                                                               
sledge hammer to  one of a miner at the  controls of multimillion                                                               
dollar highly  computerized piece of equipment  that is producing                                                               
the  resources from  the earth  that everyone  relies on.  Miners                                                               
today are  highly skilled;  they have  to be  knowledgeable about                                                               
high   pressure  hydraulics,   high  voltage   electronics,  rock                                                               
mechanics, instrumentation and controls.                                                                                        
MR. PARRADY said Alaska has  seven operating mines: Usibelli Coal                                                               
Mine,  Greens Creek,  Red Dog,  Fort Knox,  Pogo, Kensington  and                                                               
Nixon  Fork,  and  substantial  projects  are  moving  their  way                                                               
through  exploration  including  Chuitna, Wishbone  Hill,  Donlin                                                               
Gold, Livengood,  Niblack and Pebble.  There were  60 exploration                                                               
projects  last year  that spent  more than  $100,000 and  30 more                                                               
projects spending more than $1  million. This is the leading edge                                                               
of  the next  generation of  mining in  Alaska -  the exploration                                                               
He concluded with a quote from  President Abe Lincoln in a letter                                                               
to  miners  meeting  in  Denver at  the  Western  Association  of                                                               
Miners. It was on April 14, 1865. His message was:                                                                              
     Tell  the miners  from me  that I  shall promote  their                                                                    
     interests to  the utmost of  my ability,  because their                                                                    
     prosperity  is the  prosperity of  the  nation, and  we                                                                    
     shall prove in a very few  years that we are indeed the                                                                    
     treasury of the world.                                                                                                     
4:03:39 PM                                                                                                                    
SENATOR STEVENS noted  that Koniaq Corporation is  opening a very                                                               
large granite quarry on Kodiak  Island and asked if he considered                                                               
that mining.                                                                                                                    
MR. PARADY  said yes and  apologized for omitting that  mine from                                                               
his list.  He added that one  of the hidden stories  of mining in                                                               
modern day  Alaska is that  the Native Corporations  benefit from                                                               
the  mining  industry  activity through  7(i)  and  7(j)  royalty                                                               
sharing payments,  which amounted  to $82  million last  year for                                                               
Red Dog. Koniaq is in the same vein.                                                                                            
MR. PARADY said  that modern mining techniques  bring the ability                                                               
to  meet   modern  environmental   standards,  because   you  are                                                               
generating wealth and are able to do good work.                                                                                 
CO-CHAIR PASKVAN held SB 123 in committee.                                                                                      
                  SB 159-SUSITNA STATE FOREST                                                                               
4:05:21 PM                                                                                                                    
CO-CHAIR PASKVAN announced the consideration of SB 159.                                                                         
SENATOR  LINDA MENARD,  Alaska State  Legislature, sponsor  of SB                                                               
159,  said that  MatSu Borough  has  16.1 million  acres and  9.5                                                               
million acres  of it is  forestland; the Susitna State  Forest is                                                               
763,200 acres and would represent 4 percent of it.                                                                              
She said  that Article 8,  Section 4, of the  Alaska Constitution                                                               
addresses  sustainable yield  including:  fish forest,  wildlife,                                                               
grass lands  and all other  replenishable resources  belonging to                                                               
the  state shall  be utilized,  developed and  maintained on  the                                                               
sustainable   yield  principle   subject  to   preferences  among                                                               
beneficial  users.  SB  159  seeks  to  further  accomplish  this                                                               
constitutional  mandate by  creating  the  Susitna State  Forest.                                                               
Through SB 159,  the Division of Forestry will be  able to manage                                                               
the  state forest  for  a long  term supply  of  timber to  local                                                               
processors and  retain the land  in state ownership  for multiple                                                               
uses such as trapping, mining, fishing and hunting.                                                                             
SENATOR  MENARD  said  the  proposed  state  forest  includes  32                                                               
parcels  totaling about  763,200  square acres.  The parcels  are                                                               
forestry  classified   lands  and  are  located   in  four  large                                                               
management blocks.  She explained that  legislatively designating                                                               
a state forest would ensure  that some land will remain available                                                               
for long term  forest management and that the  region will retain                                                               
large open  spaces of  public lands to  benefit residents  of the                                                               
region who currently enjoy them for multiple uses.                                                                              
A state  forest designation  gives the  Division of  Forestry the                                                               
assurance  that  lands  they  are   managing  will  be  there  in                                                               
perpetuity, and  importantly, it  will therefore  be more  apt to                                                               
invest money  and resources towards permanent  upgrades. There is                                                               
also  a need  to more  actively  manage lands  and vegetation  to                                                               
promote a  variety of forests  ages to provide for  diversity and                                                               
healthy  habitats   for  wildlife.  At  the   same  time,  active                                                               
management  will also  help to  reduce  wild land  fire risks  by                                                               
breaking   up   large   fuel  types   and   encouraging   initial                                                               
regeneration of hardwood species.                                                                                               
SENATOR MENARD  said that SB  159 will  set aside ground  work to                                                               
accomplish  all of  this. Besides  professional mills,  the state                                                               
forest will maintain  a supply of hardwood for  personal use. For                                                               
instance,  right now  Susitna Valley  High School  is looking  at                                                               
woody biomass that  could heat their entire school  and chips and                                                               
pellets have become more common  and sought for residential space                                                               
heating.  It's important  for Alaska  residents to  have a  place                                                               
managed for them to obtain their material.                                                                                      
By  passing SB  159,  Senator  Menard said,  they  will make  the                                                               
Susitna State Forest (second largest)  the fourth state forest in                                                               
Alaska  and it  will  be  joined by  Tanana  Valley State  Forest                                                               
(largest), the Haines State Forest  and Susitna Southeast Forest.                                                               
The Division of Forestry will  manage the Susitna State Forest as                                                               
part  of the  State  Forest System  under  AS 41.17.200-230,  the                                                               
statute that governs the creation of the state forests.                                                                         
SENATOR MENARD related  that the division is  required to prepare                                                               
a  management plan  for  the  forest within  three  years of  its                                                               
establishment. She said  the division had put years  of work into                                                               
this plan  and Alaska is ready  for its fourth state  forest. She                                                               
noted letters of  support and a resolution  passed unanimously by                                                               
the City of Houston in support of this bill.                                                                                    
SENATOR FRENCH asked if there was any opposition to the bill.                                                                   
4:11:29 PM                                                                                                                    
MICHAEL ROVITO,  Chief of Staff  to Senator Linda  Menard, Alaska                                                               
State Legislature, answered the bill had no opposition.                                                                         
CO-CHAIR PASKVAN asked the purpose  of identifying the particular                                                               
parcels in the bill.                                                                                                            
SENATOR MENARD deferred to the state forester.                                                                                  
4:12:14 PM                                                                                                                    
JOHN "CHRIS"  MAISCH, Director, Division of  Forestry, Department                                                               
of  Natural  Resources  (DNR), explained  that  these  are  legal                                                               
descriptions  that need  a  high level  of  detail, because  they                                                               
become  a matter  of law.  A lot  of effort  goes into  the legal                                                               
descriptions. He noted that a future CS will address inholdings.                                                                
CO-CHAIR PASKVAN asked when that would be complete.                                                                             
MR. MAISCH replied shortly.                                                                                                     
SENATOR WIELECHOWSKI said some of  the parcels are not contiguous                                                               
and some are not touching at  all and asked what the law requires                                                               
as  far  as parcels  being  contiguous,  how these  parcels  were                                                               
selected, what kind  of public process this had  gone through and                                                               
what further process he anticipated.                                                                                            
MR. MAISCH  explained that all the  land on the map  was owned by                                                               
the state already.  Two area plans pertain to  that area: Susitna                                                               
management plan (recently signed  and approved) and the Southeast                                                               
Susitna area  plan, and  they both talk  about access  and access                                                               
corridors. In addition, if this  bill passes, they must prepare a                                                               
forest management  plan for the  state forest and  address access                                                               
issues  in that.  Right now  they  have the  capability to  cross                                                               
other state lands  to access disparate parcels. He  said they are                                                               
interested in access  to the better forest lands,  and an example                                                               
of small  corridors was between  the Skwentna and  Mount Susitna.                                                               
Problems with access are not anticipated, he added.                                                                             
With regard to the second  question about the public process that                                                               
has taken place,  he explained that as part of  the area planning                                                               
functions  seventeen   separate  meetings   were  held   for  the                                                               
Matanuska Area  planning process.  In addition,  in the  last two                                                               
weeks he  had been to a  number of public meetings  in the Valley                                                               
and  met with  the Willow  Dog Mushers  Association, the  Houston                                                               
City  Council, the  Talkeetna  Community  Council, the  Matanuska                                                               
Susitna  Borough and  Senator Menard  had hosted  an open  house.                                                               
Division  of  Forestry  staff  were   present  at  all  of  those                                                               
MR.  MAISCH  explained that  the  area  plans classify  lands  as                                                               
either  forestry,   agriculture,  settlement   or  a   few  other                                                               
categories. The concept  of state forests was  brought forward in                                                               
this area planning process.                                                                                                     
SENATOR WIELECHOWSKI noted a number  of prolific salmon areas and                                                               
asked him to  discuss setbacks on salmon streams  when logging is                                                               
MR. MAISCH  explained that  the major systems  have buffers  of a                                                               
quarter  mile.   In  addition,   the  State's   Forest  Resources                                                               
Practices Act  divides the state into  three different geographic                                                               
areas: the Interior  (Region 3), the Southcentral  (Region 2) and                                                               
Southeast (Region  1). There  are various  salmon and  high value                                                               
resident fish protection standards based  on the kind of stream -                                                               
a  large glacial  braided system  or a  small narrow  fresh water                                                               
clear system,  for instance. The  buffer standards in  the Forest                                                               
Practices Act  are tailored to the  type of fish and  the type of                                                               
stream  in the  three different  regions. Those  standards affect                                                               
both public lands and private lands.                                                                                            
4:19:00 PM                                                                                                                    
SENATOR STEDMAN observed that it's  a good idea to create forests                                                               
and  commented that  the Tongass  National Forest  with 1,800,000                                                               
acres, another at  763,000, the Haines Forest at  286,000 and the                                                               
Southeast Forest  at 48,000 - just  a fraction of what  we have -                                                               
also has the  potential in southern Southeast of  having the best                                                               
quality  timber.  It  hinders Southeast  timber  development.  He                                                               
provided some  back ground saying  that at the time  of statehood                                                               
Southeast didn't really get to  participate in the land selection                                                               
process and 50  year contracts were put in place  in the Tongass.                                                               
Those, along  with fishing,  were the major  anchors for  jobs in                                                               
Southeast  communities. Now,  Southeast has  no long  term timber                                                               
contracts  and both  pulp mills  were removed  going on  20 years                                                               
ago. He  thought they should  maybe take the opportunity  in this                                                               
piece  of   legislation  and  encourage  the   administration  to                                                               
negotiate with  the federal  government to  either get  some land                                                               
out of  the Tongass with  remaining statehood selections  or just                                                               
flat out  buy it and  get some of  the Southeast land  into state                                                               
ownership so we could have  a better opportunity to stabilize the                                                               
community  and create  some growth,  and basically  have livable-                                                               
wage jobs. The  window of opportunity might be  better today than                                                               
it  was  10  years  ago  with  the  federal  government's  fiscal                                                               
position  being substantially  weaker  than it  was and  Alaska's                                                               
substantially stronger.                                                                                                         
SENATOR  STEDMAN   said  there  are  48,000   acres  in  southern                                                               
Southeast and  13 million  board feet  a year  could come  out of                                                               
MR.  MAISCH confirmed  that  the allowable  cut  is 12.8  million                                                               
board feet a year.                                                                                                              
4:22:56 PM                                                                                                                    
SENATOR  STEDMAN said  that's about  one-third of  what a  medium                                                               
sized  saw  mill  would  need.  He said  it's  difficult  to  get                                                               
financing without having at least a  20-year supply of fiber.  He                                                               
said he would discuss this further with the bill sponsor.                                                                       
MR.  MAISCH  added   that  the  Tongass  Timber   Task  Force  is                                                               
considering  this same  question and  that report  is due  to the                                                               
governor in  July, but they  have a self-imposed deadline  of May                                                               
because of the urgency they feel.                                                                                               
SENATOR STEDMAN  said his  understanding of  that concept  is the                                                               
state may  manage some of  the Tongass forest, but  the ownership                                                               
would remain  with the  federal government.  That is  better than                                                               
the current  situation, but it would  be better to own  the deed.                                                               
"Otherwise  we're  still  always  going   to  be  in  the  king's                                                               
4:25:35 PM                                                                                                                    
CO-CHAIR  PASKVAN  commented  that  possibly  language  could  be                                                               
included  in the  future CS.  From what  he has  heard about  the                                                               
forests of Southeast Alaska, one  would think their acreage would                                                               
be  much  greater  than  Interior  Alaska  as  a  primary  timber                                                               
resource of the whole state.                                                                                                    
4:26:36 PM                                                                                                                    
SENATOR MCGUIRE said  she would support that idea  and citing the                                                               
most  recent DOR  recreational remote  cabin site  pamphlet noted                                                               
that  it  was controversial  when  first  introduced. Finally  it                                                               
passed, and now Alaskans all  over the state are taking advantage                                                               
of  this opportunity  to get  out into  the forest  and establish                                                               
cabin sites. She  agreed with Senator Stedman that  too much land                                                               
is held by the federal government.                                                                                              
SENATOR  WIELECHOWSKI   asked  him   to  explain   the  practical                                                               
implication  of making  this a  state forest  and the  impacts on                                                               
hunting, fishing, and other recreation in this area.                                                                            
MR. MAISCH  replied that all  those activities will  continue and                                                               
based  on his  experience with  the Tanana  Valley State  Forest,                                                               
more access would  be developed over time with a  mixture of all-                                                               
season roads and winter access.                                                                                                 
The   division's  perspective   on  the   long  term   nature  of                                                               
designating this  as a state forest  is that it is  important for                                                               
long term  sustained yield with  different types of  multiple use                                                               
opportunities  for wood  products; for  instance, Talkeetna  High                                                               
School using wood  biomass for space heating. In  turn, the state                                                               
will  make long  term investments  in roads,  bridges and  access                                                               
developments that  they don't currently  make, because  that land                                                               
could be reclassified for some other use at a future point.                                                                     
SENATOR WIELECHOWSKI  asked what kind  of timber is found  in the                                                               
MR.  MAISCH answered  that it  varies in  different parts  of the                                                               
Valley; generally speaking the forests are toward the over-                                                                     
mature side in  terms of age class and size.  This means the hard                                                               
woods are  declining in  quality. Fire  is one  of the  main ways                                                               
these forests  are regenerated  and it has  been quite  some time                                                               
since  a large  scale stand  replacement fire  happened. So,  any                                                               
kind  of forest  management  activity  they can  do  to break  up                                                               
conifers is beneficial  from a wild fire  and habitat standpoint.                                                               
From a  hunting standpoint,  various age  classes are  better for                                                               
wildlife habitat.  In the Valley, the  wildlife professionals say                                                               
there are  not enough  younger age classes  of hard  wood species                                                               
for  a  lot of  the  ungulates,  which  in turn  affects  hunting                                                               
4:32:07 PM                                                                                                                    
CO-CHAIR  PASKVAN  asked  why the  mountaintops  aren't  included                                                               
within the forest.                                                                                                              
MR. MAISCH said  the state forests are focused on  areas that are                                                               
good for  timber production. Another  issues is that  the steeper                                                               
ground is more difficult to access.                                                                                             
SENATOR MENARD  suggested that a  strong Senate  resolution would                                                               
encourage the  governor to allow  these federal lands  to benefit                                                               
all state forests, but she  thought this was good legislation and                                                               
wanted to see it move.                                                                                                          
CO-CHAIR PASKVAN held SB 159 in committee.                                                                                      
          SB 181-CLOSING CERTAIN LAND TO MINERAL ENTRY                                                                      
4:34:08 PM                                                                                                                    
CO-CHAIR PASKVAN announced the consideration of SB 181.                                                                         
SENATOR CATHY  GIESSEL, Alaska State  Legislature, sponsor  of SB                                                               
181,  said this  measure  would close  certain  lands to  mineral                                                               
entry  (mining claims).  She  related that  Girdwood  is home  to                                                               
Alyeska  Ski Resort,  the largest  recreational  facility of  its                                                               
kind in  Alaska. Girdwood also  has multiple world  class hiking,                                                               
cross country running, mountain biking  and Nordic ski trails. It                                                               
is  a  year  round  recreational  destination  for  Alaskans  and                                                               
visitors to the  state, as well. SB 181 allows  for the expansion                                                               
of these recreational opportunities in  the mountains to the east                                                               
of  the ski  resort  by  closing additional  state  lands in  the                                                               
Glacier  and Winner  Creek drainages  to mining  claims. A  large                                                               
portion  of the  land had  already been  closed to  mining claims                                                               
since 1992  by action  of the legislature.  And that  closure has                                                               
recently been  extended by the  legislature to the  Department of                                                               
Natural Resources  (DNR) commissioner. SB 181  will complete some                                                               
necessary additional land closures  in that area for recreational                                                               
She said  there is widespread  support for the bill  from private                                                               
persons  who live  in the  Girdwood  area as  well as  businesses                                                               
there. Even the Alaska Mining  Association supports this bill. Of                                                               
significance to  her was  one that one  of her  Hope constituents                                                               
who is  a placer miner recently  "poked around" in this  area and                                                               
reported that he saw no  significant mining opportunities on this                                                               
land  supports this  bill, too.  This bill  will not  impact Crow                                                               
Creek,  an  active   gold  mining  area  several   miles  to  the                                                               
4:36:55 PM                                                                                                                    
SHARON  LONG,  staff  to  Senator  Cathy  Giessel,  Alaska  State                                                               
Legislature, provided a sectional analysis for SB 181.                                                                          
Section  1 states  the  purpose of  the bill  is  to approve  the                                                               
interim classifications contained in mineral order 121.                                                                         
Section 2  identifies the  land in the  Glacier Creek  and Winner                                                               
Creek drainages that  are closed to new mineral  entry. Section 3                                                               
amends the  description of land  in the Glacier Creek  and Winner                                                               
Creek drainages  that were closed  to mineral entry  and approved                                                               
by the  legislature in  section 2,  chapter 8,  SLA 2003,  a bill                                                               
that  Senate French  was a  cross  sponsor of,  by excluding  two                                                               
additional mining claim  recordations that were left  out in that                                                               
Section 4 provides for an immediate effective date.                                                                             
CO-CHAIR PASKVAN said  page 1, line 12, talks  about "new mineral                                                               
entry"  and seemed  to infer  that current  mineral activity  was                                                               
going on there and asked if that was true.                                                                                      
MS.  LONG replied  her understanding  was that  the lands  in the                                                               
blue area of the map had  been closed to mineral entry since 1992                                                               
for a 10-year period and extended  again in 2003. The new mineral                                                               
order which was  issued this last year is the  gold area. She was                                                               
unaware of mining  activity in that area, but  the division could                                                               
speak to specifics.                                                                                                             
4:39:20 PM                                                                                                                    
WYN MENEFEE,  Chief of Operations,  Division of Mining,  Land and                                                               
Water,  Department of  Natural  Resources  (DNR), explained  that                                                               
were no  mineral claims or  locations within the area  except for                                                               
the  federal claims  in the  Crow Creek  area, and  those existed                                                               
prior to the original mineral closing order.                                                                                    
4:40:22 PM                                                                                                                    
FRED  PARADY,  Executive  Director,  Alaska  Miners  Association,                                                               
Juneau, AK,  stated support for  SB 181.  While some may  find it                                                               
surprising that the association supports  this bill, he said they                                                               
were specifically appreciative of the  process followed by DNR in                                                               
evaluating the proposed  areas as to their  mineral potential and                                                               
other values. They support the  closure orders and agree with the                                                               
assessment that  these lands are properly  suitable for expansion                                                               
of the  recreation uses. He noted  that if such uses  cease, they                                                               
would like to  the see the closure orders reversed  and the areas                                                               
reopened to  mineral development, commenting that  you just never                                                               
know what might happen in the future.                                                                                           
CO-CHAIR PASKVAN held SB 181 in committee.                                                                                      
        SB 205-CHINOOK RESEARCH & RESTORATION ENDOWMENT                                                                     
4:42:20 PM                                                                                                                    
CO-CHAIR PASKVAN announced the consideration of SB 205.                                                                         
SENATOR WIELECHOWSKI  moved to bring  CS for SB 205,  labeled LS-                                                               
271312\D,  before the  committee as  the working  document. There                                                               
were no objections and it was so ordered.                                                                                       
4:42:50 PM                                                                                                                    
DAVID  SCOTT,   staff  to  Senator  Donny   Olson,  Alaska  State                                                               
Legislature, sponsor  of SB  205, explained  that the  CS mirrors                                                               
the  companion   House  bill.  It   creates  a  trust   fund  and                                                               
establishes  a  long  term  source of  funding  to  support  high                                                               
quality interdisciplinary  research on  Alaska king salmon  in AS                                                               
37.14. He explained  that in 2010, the Yukon  kings were declared                                                               
failing  by  the federal  government  and  of  the 14  stocks  of                                                               
concern in  the state, 8  are king  salmon stocks. He  thought it                                                               
was time to  augment what the Alaska Department of  Fish and Game                                                               
(ADF&G) has been doing.                                                                                                         
MR. SCOTT provided  a sectional analysis explaining  what each of                                                               
the new sections to AS 37.14 would do as follows:                                                                               
     Section  37.14.650   establishes  the   Chinook  Salmon                                                                    
     Research and Restoration Fund.                                                                                             
     Section 37.14.655 establishes the  grant account in the                                                                    
     General Fund.  The fund  would make  the money  and the                                                                    
     legislature  would appropriate  money out  of it.  From                                                                    
     the  grant  fund the  board,  which  is created  later,                                                                    
     would award  grants to Alaskan entities  that would put                                                                    
     forward projects for  restoration or research regarding                                                                    
     king salmon. Section 37.14.660  is where the Department                                                                    
     of  Revenue   (DOR)  commissioner  will   identify  the                                                                    
     availability  of  funds  to   be  appropriated  to  the                                                                    
     restoration fund from the grant fund.                                                                                      
     Section  37.14.665 relates  to what  the appropriations                                                                    
     in the  grant account  may be  used for.  "Research and                                                                    
     restoration" was  changed to "research  or restoration"                                                                    
     to  not limit  their use.  They  can also  be used  for                                                                    
     reimbursement to  the Department  of Revenue  (DOR) for                                                                    
     the  cost  establishing  and   managing  the  fund  and                                                                    
     Department   of   Commerce,  Community   and   Economic                                                                    
     Development (DCCED)  for the  cost of  establishing and                                                                    
     administering  the board  and the  grant program.  They                                                                    
     may also  be used  for matching  funds for  private and                                                                    
     federal   grants  and   soliciting  contributions   for                                                                    
     purposes  consistent with  establishment  of the  fund.                                                                    
     The board  may also  expend private donations  for uses                                                                    
     consistent  with  the  fund and  the  purposes  of  the                                                                    
     grantee of a private fund.                                                                                                 
     Section  37.14.670  establishes   the  board  and  .675                                                                    
     further specifies  who is  on the  board. They  are all                                                                    
     appointed   by   the    governor   and   includes   the                                                                    
     commissioner of ADF&G and six  public members, one each                                                                    
     residing  in from  Southeast, Southcentral,  Southwest,                                                                    
     Western,  Arctic  and  Interior Alaska.  They  must  be                                                                    
     engaged  somehow  in  subsistence, personal,  sport  or                                                                    
     commercial use of king salmon.  Section .680 is how the                                                                    
     board will  administer the  program. Section  .685 says                                                                    
     what  the  board has  to  consider  in reviewing  grant                                                                    
     applications  (not  awarding   projects  that  are  not                                                                    
     needed).  The  board  will also  consider  whether  the                                                                    
     applicant has appropriate  experience. It must consider                                                                    
     recommendations  of  state  agencies  or  organizations                                                                    
     involved in  salmon management.  It must  give priority                                                                    
     grants that  target king salmon stocks  that are stocks                                                                    
     of  concern  that  are  subject  to  state  or  federal                                                                    
     fisheries  disaster declarations,  that  are closed  or                                                                    
     significantly     restricted    or     have    declined                                                                    
     significantly  from historic  yields.  Section .695  is                                                                    
4:50:10 PM                                                                                                                    
CO-CHAIR PASKVAN found no further questions.                                                                                    
SENATOR STEVENS asked if this is truly aimed at salmon as a                                                                     
statewide resource.                                                                                                             
MR. SCOTT confirmed that this is aimed at a statewide resource.                                                                 
CO-CHAIR PASKVAN held SB 205 in committee.                                                                                      
4:53:46 PM                                                                                                                    
There being no further business to come before the committee,                                                                   
Co-Chair Paskvan adjourned the Senate Resources Committee                                                                       
meeting at 4:53 p.m.                                                                                                            

Document Name Date/Time Subjects
SB0123 vs M.pdf SRES 3/12/2012 3:30:00 PM
SB 123
SB 123 Research & backup.pdf SRES 3/12/2012 3:30:00 PM
SB 123
DRAFT CS SB - 153 - Version D.pdf SRES 3/12/2012 3:30:00 PM
SB 153
SB 159 RFH.pdf SRES 3/12/2012 3:30:00 PM
SB 159
SB 159 Sponsor Statement.pdf SRES 3/12/2012 3:30:00 PM
SB 159
SB 159.pdf SRES 3/12/2012 3:30:00 PM
SB 159
SB 159 Sectional Analysis.PDF SRES 3/12/2012 3:30:00 PM
SB 159
SB 159 Expanded Bullets on SSF area plans public process.pdf SRES 3/12/2012 3:30:00 PM
SB 159
SB 159 Susitna State Forest Briefing Paper.pdf SRES 3/12/2012 3:30:00 PM
SB 159
SB 159 Susitna State Forest Briefing Side by Side.pdf SRES 3/12/2012 3:30:00 PM
SB 159
SB 159 Suuport Docs.pdf SRES 3/12/2012 3:30:00 PM
SB 159
SB 159 MAPS.pdf SRES 3/12/2012 3:30:00 PM
SB 159
SB 181 Hearing Request Memo.pdf SRES 3/12/2012 3:30:00 PM
SB 181
SB 181 Sponsor Statement.pdf SRES 3/12/2012 3:30:00 PM
SB 181
SB 181 ver M.pdf SRES 3/12/2012 3:30:00 PM
SB 181
SB 181 Sectional Analysis.pdf SRES 3/12/2012 3:30:00 PM
SB 181
SB 181 Supporting Document-Certification Letter Comm Sullivan DNR.pdf SRES 3/12/2012 3:30:00 PM
SB 181
SB 181 Supporting Document-Findings of the Commissioner DNR.pdf SRES 3/12/2012 3:30:00 PM
SB 181
SB 181 Supporting Document-Letters of Support with Index.PDF SRES 3/12/2012 3:30:00 PM
SB 181
SB 205 hearing request.pdf SRES 3/12/2012 3:30:00 PM
SB 205
SB 205 - SS.pdf SRES 3/12/2012 3:30:00 PM
SB 205
SB 205 - version M.PDF SRES 3/12/2012 3:30:00 PM
SB 205
SB 205 - Advisory Committees by Region.pdf SRES 3/12/2012 3:30:00 PM
SB 205
SB 205 - Regional AC's regulations.PDF SRES 3/12/2012 3:30:00 PM
SB 205
SB 205 Letters of Support.pdf SRES 3/12/2012 3:30:00 PM
SB 205
SB159-DNR-FMD-03-09-12.pdf SRES 3/12/2012 3:30:00 PM
SB 159
SB205-DOR-TRS-03-07-12.pdf SRES 3/12/2012 3:30:00 PM
SB 205
SB205-DOA-DOF-02-22-12.pdf SRES 3/12/2012 3:30:00 PM
SB 205
SB205-DCCED-DCRA-03-09-12.pdf SRES 3/12/2012 3:30:00 PM
SB 205
SB205-DFG-CO-03-09-12.pdf SRES 3/12/2012 3:30:00 PM
SB 205
SB 181 Supporting Document-AMA Letter, USDA Letter.PDF SRES 3/12/2012 3:30:00 PM
SB 181
SB 159 Ruffed Grouse Soc.pdf SRES 3/12/2012 3:30:00 PM
SB 159
SB123-DOA-FAC-3-11-12.pdf SRES 3/12/2012 3:30:00 PM
SB 123
SB181-DNR-MLW-03-07-12.pdf SRES 3/12/2012 3:30:00 PM
SB 181