Legislature(2017 - 2018)BUTROVICH 205
01/22/2018 03:30 PM Senate RESOURCES
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| Audio | Topic |
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| Start | |
| Overview: Alaska's Mining Filing Claim Process | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
January 22, 2018
3:30 p.m.
MEMBERS PRESENT
Senator Cathy Giessel, Chair
Senator John Coghill, Vice Chair
Senator Natasha von Imhof
Senator Bill Wielechowski
Senator Click Bishop
Senator Kevin Meyer
MEMBERS ABSENT
Senator Bert Stedman
COMMITTEE CALENDAR
OVERVIEW: ALASKA'S MINING FILING CLAIM PROCESS
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
ED KING, Special Assistant to the Commissioner
Department of Natural Resources (DNR)
Juneau, Alaska
POSITION STATEMENT: Presented an overview on how mining claims
function in the State of Alaska.
BRENT GOODRUM, Director
Division of Mining, Land, and Water
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Briefly commented on mining claim history.
ASHLEY BROWN, DNR Attorney
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: Answered a question regarding filing of
mining claims.
ACTION NARRATIVE
3:30:14 PM
CHAIR CATHY GIESSEL called the Senate Resources Standing
Committee meeting to order at 3:30 p.m. Present at the call to
order were Senators Bishop, Coghill, von Imhof, Wielechowski,
and Chair Giessel. Senator Stedman is excused.
^Overview: Alaska's Mining Filing Claim Process
Overview: Alaska's Mining Filing Claim Process
3:30:45 PM
CHAIR GIESSEL said the only order of business today would be the
overview of Alaska's mining filing claim process and how the
state administers its mineral properties. Alaska's history is
built on gold rushes and prospectors, reminding her of the Trail
of '98, Skagway, Nome, Girdwood, Hope, and Fairbanks. There are
six large-scale mines, but over 600 small placer miners in the
State of Alaska, more than in any other state. Modern equipment
and techniques make placer mining a 21st Century practice. Laws
and traditions underpinning it date back to the American Civil
War. Alaska's Constitution with its unique mandate of common
ownership of the state's natural resources charges the
Department of Natural Resources (DNR) with the management of the
mineral wealth of the state lands. Today, they would hear from
the department and the division that takes up that
responsibility. She welcomed Mr. Ed King to the committee.
3:31:48 PM
ED KING, Special Assistant to the Commissioner, Department of
Natural Resources (DNR), Juneau, Alaska, said he would lay the
ground work for how mining claims function in the State of
Alaska. This is an informational hearing for the public as well
as the legislature and doesn't represent department views.
3:33:31 PM
Mineral rights in Alaska: recreational mining is a generally
allowed use on public land. No permit is needed; you can just do
it. If a person is successful, the state allows staking the
deposit and prevents anyone else from accessing the minerals.
This is what a "mining claim" is.
In Alaska, the 100+ million acres of state lands are generally
open for claiming unless they are closed: if they are designated
legislatively or conveyed to a municipality, for instance. They
have about 5 million acres of residual land entitlement from the
Statehood Act.
3:35:48 PM
SENATOR VON IMHOF asked if a miner has to pay for his claim when
he stakes it and how big it can be.
MR. KING replied there is no fee for the generally allowed use
of prospecting. However, if one files a claim it has to be
recorded, which has a fee. Also, he must also maintain the
claim, which has a financial component.
SENATOR BISHOP asked if it would be safe to say that it is a
good idea to check to see if there isn't already a claim in good
standing from another miner before a recreational miner goes
out.
MR. KING said that would be a good idea; one would be violating
someone else's claim by doing a generally allowed use on someone
else's claim.
3:37:09 PM
History of how we got to where we are today, and the differences
between minerals and oil and gas. In the 1840s, the Southwest
region of the U.S. was a territory acquired from Mexico.
California and Colorado didn't exist, but mining activity was
going on in those areas. There were no federal laws on how
mining was to be conducted in those territories. In that case,
people would do things in a traditional way. They would go out
and mine and if they found something they would put stakes
around it. During the gold rush of 1848/49 when a lot of people
were moving into the California region, and gold mining was
becoming a very big business, this tradition of claims staking
became the norm.
3:38:49 PM
SENATOR MEYER joined the committee.
MR. KING said past 1849 and through the next decade as Colorado,
Nevada, and some of the other states began to get statehood
there started to be federal interest in management of public
lands and the extraction of minerals. So, a handful of laws were
passed after the Civil War in the 1860s: The Load Law was passed
and a couple of others that were dealt with the issue of allowed
uses on public lands. In 1872, the General Mining Act, a
comprehensive bill codifying that tradition was passed. It was
called the "Location System." It encouraged people to go out and
mine in the underdeveloped areas. It was a generous system in
that those miners were also allowed to purchase that land from
the federal government. This is important for Alaska's context,
because whenever the state laws are silent or unclear on an
issue, those federal laws are still referred to. That federal
law of 1872 is still the guiding principle.
At the turn of century big development came with the discovery
of oil. As the U.S. entered WWI, our military converted from
steam to diesel, so oil became a very important strategic
resource for the country. The federal government started to put
aside "Naval Petroleum Reserves." They also realized that the
Mining Act of 1792 didn't prohibit someone from staking claim to
oil or coal resources.
3:42:52 PM
So, the Mineral Leasing Act of 1920 separated those two types of
strategic minerals from other resources that they called
locatable minerals (gold, silver, tin, zinc, and other metallic
minerals). A different suite of "strategic minerals" that
included coal, gas, and oil, were dealt with in the Mineral
Leasing Act of 1920 and demanded that if you were going to get
access to those, it had to be done through a lease. That land
could not be "claimed." The General Mining Act of 1872 was still
in place for the locatable minerals.
MR. KING explained that another tranche of minerals is called
"materials," and includes things like gravel and sand. Those
don't get leased or claimed, but are sold by the state. With
those two laws in place, the General Mining Act governing
locatable minerals and the Mineral Leasing Act governing
strategic minerals, approaching statehood in 1959 the state
already had a lot of people who were either leasing from the
federal government or proclaiming locatable minerals in the
state. Protecting those rights became an important issue when
drafting the Statehood Act and the Constitution. Article 8,
Sections 11 and 12, of the Constitution are almost a reflection
of the General Mining Act and the Mineral Leasing Act in
separating those two types of minerals. The location system was
protected, as well.
He answered Senator von Imhof's earlier question saying that 40
acres is the typical mining claim, but one can have more than
one claim and "quarter section claims," which are 160 acres.
So, the Constitution really adopted and embodied the federal
standard for how things were already happening when the state
entered the Union. Congress also inserted Section 6(i) in the
Statehood Act saying that the minerals of the state belong to
the state, the idea being that is how the state was going to
fund itself. It prohibited the state from divesting of its
mineral interests. This is important because in 1989 an Alaska
Supreme Court case, Trustees of Alaska v. the State, found that
if the state was not charging something for those claims that
meant it was divesting them, which is against the Constitution.
It basically said to the legislature that it had to charge rents
or royalties or some sort of recurring payment, and so, in 1989
the legislature passed HB 99 introducing rents and royalties
into the mining claim system. "So, that's where we are today."
3:46:33 PM
Terminology: "Mining claim" means the exclusive rights to the
minerals, themselves. It doesn't give the miner exclusive rights
to the surface. However, they are allowed to use the surface
insofar as they need to in order to reach those minerals, but it
doesn't mean if you have a mining claim that you can tell
somebody else that they can't walk across it. You don't have any
exclusive rights to the surface.
SENATOR VON IMHOF asked if a miner can build a cabin.
MR. KING answered no. A mining claim itself does not give any
authority to put up any kind of permanent structures. A land
authorization would be needed. As a generally allowed use, one
is allowed to be on a property for 14 consecutive days, but he
can't erect a permanent structure.
SENATOR VON IMHOF asked when someone brings equipment in in the
spring, mines over the summer, if he is required to remove it in
the fall and leave no trace.
MR. KING answered that those types of activities need a
miscellaneous land use permit and it would likely have a
provision requiring the removal at some point.
3:49:09 PM
He said that a "leasehold location" is like a mining claim, but
it's a claim in a place that is only open for leasing not mining
claims. So, if an area was closed for claims, but open for
leasing, one can go in and stake a claim that would be called a
"leasehold location." Municipal entitlements would be on lease-
only area. Then the department would adjudicate the application
and then issue that lease if it was deemed to be in the best
interest of the state. That is a very different process than a
mining claim, which is the department does not adjudicate.
A "prospecting site" is very similar to a claim; it gives
exclusive right to an individual to look for minerals prior to a
discovery.
The term "at-risk state-selected location" refers to some of the
5 million acres that have not been conveyed and patented to the
state, although the state has already selected them. A claim can
be staked and one is first in line once the land is conveyed to
the state. So, it's an "at-risk location."
3:50:59 PM
He said mining locations can come in all shapes and sizes. A
"mining claim" is the actual piece of land and a "location" is a
document that someone files. The Meridian Township Range Section
and Claims System (MTRSC), are the "tight little boxes," on
residential maps, and that is how claims are typically filed in
modern times. Prior to that, "traditional claims," were filed
and weren't tight little boxes. They could be no greater than 40
acres nor longer than 1,320 feet in one direction. The
boundaries are supposed to be in cardinal directions, but
sometimes rivers and other things cause exceptions.
3:52:09 PM
CHAIR GIESSEL asked if some claims are still non-MTRSC.
MR. KING answered yes.
BRENT GOODRUM, Director, Division of Mining, Land, and Water,
Department of Natural Resources (DNR), agreed that yes; today
there are still some traditional non-MTRSC-located mining claims
within the state.
3:53:18 PM
MR. KING continued that the requirements for making a claim are
laid out in statute. AS 38.05.190 contains the qualifications of
the individual: 18 or older, a U.S. resident, and things like
that. Once the claims are staked, they need to be recorded
(certificate of location) at the Recorder's Office.
3:53:42 PM
CHAIR GIESSEL asked how much recording costs.
MR. KING replied $20 for the first document and $2 for every
additional piece of paper. As a rule, most people pay $20-30
when they record their fees, but some individuals have a lot of
claims that result in much higher fees.
3:54:32 PM
In order for the claim to be valid, the land must not be already
claimed. Then the land must be open for claiming. So, if all
those four things are in order, one has a claim. Mr. King
underscored the importance of that point: the DNR doesn't have
to approve or award mining claims, but are bound by statute to
issue the claim once legal criteria are met.
MR. KING said once one has a claim, it is his responsibility to
maintain it, and under the General Mining Act of 1872 the only
requirement for maintenance is to continue working the claim.
When you stop, someone else has the right to take over that
claim. Alaska's statutes have that same provision; you must do
at least $100 of annual labor. That was set in statute in 1989
when the rents and royalties requirement was introduced and it
hasn't been adjusted since. Before 1989, it was $200, but that
was reduced because of the rents and royalties burden.
3:56:50 PM
SENATOR VON IMHOF said she assumed the amount is low because
gold and other minerals are commodities and the prices go up and
down. And one doesn't want to necessarily abandon a mine for a
year just because prices are down. So, the miner could do a
minimum of work and wait, hoping the prices will recover next
year.
MR. KING replied that was a fair representation. Another
provision allows one to simply pay a fee in lieu of doing the
labor. If one doesn't do either of those things, the claim
becomes abandoned. If one makes money on a claim and doesn't pay
rent or royalty to the state, the claim also becomes abandoned.
The department doesn't have to make any decision: by your
actions you have abandoned the claim.
3:58:16 PM
CHAIR GIESSEL asked if the fees or the activity are due at a
certain time.
MR. KING answered September 1 is the deadline for most of these
activities, and one has 90 days to complete it.
SENATOR VON IMHOF asked if the annual rental payment is $100.
MR. KING replied the annual rental payment was set originally by
statute (AS 38.05.211), and every 10 years the payment is
adjusted for inflation. The updated rental fee is in regulation.
For a 40-acre claim, if it's fairly new, the fee is $35. As the
claim ages, the rental payment increases. Part of the reason for
that is if you are sitting on a claim for a long time, you're
denying access to somebody else. If you are not actively working
on the claim, then it might be in the state's interest to have a
different claimant. Rental payments are deductible against
royalty.
4:00:40 PM
CHAIR GIESSEL noted they were looking at slide 11.
SENATOR VON IMHOF asked if the market is depressed for 3-5 years
and claims remain idle, could a miner (whose fee has gone from
$140 to $280) choose to abandon the mine for a year, hope that
no one re-stakes assuming the commodity price remains low, and
then go back the next year and re-stake it, resetting the price
back down to $140.
MR. KING answered yes, though the miner in that hypothetical
example is taking the risk of someone else taking that claim in
the intervening time.
SENATOR VON IMHOF asked if the fee schedule could be based on
the market versus an arbitrary time frame outside of the market,
because gold going up and down makes a real difference in
activity level.
MR. KING said he would be happy to have that conversation, but
he couldn't speculate on what the administration's position
would be. The next inflation adjustment is due to happen next
year. It looks like the 0-5 years will increase to $40; the 6-10
years will increase to $80; and over 10 years will increase to
about $190.
4:02:50 PM
Back to slide 7, Mr. King reiterated that the inaction of a
claimant is what abandons the claim under AS 38.05.265.
CHAIR GIESSEL asked if paperwork is filed each year, which also
sustains that claim.
MR. KING turned to slide 8 that said the annual labor
requirement is that the locator must either perform $100 worth
of work or pay cash in lieu of that for up to four consecutive
years; on the fifth year they have to submit an affidavit of
annual labor. He noted that the statute says, "statement of
annual labor," but the regulations says, "affidavit of annual
labor," but they are talking about the same thing.
MR. KING explained that every year, because that work is
required, there has to be a way for the department to know the
requirement was actually met, and since it's unreasonable to
send staff out to every claim, an affidavit is required of
annual labor. That document acts as "prima facie evidence" that
the annual labor was conducted. Part of the abandonment
provision in the statute uses this sentence: "A statement of
annual labor that does not accurately set the essential facts is
void and has no effect." It is a potential issue for a miner if
some other miner wants to fight them on whether that affidavit
was void or not and whether that claim was abandoned or not.
Those requirements are outlined in 11 AAC 86.220(c) that says
the recorded document must have the name or number of the
location; every meridian, township, range, section and recording
district has to have the name and mailing address of every owner
and it has to have the correct dates, character, and value of
the labor performed. An error in any of those could
theoretically constitute an inaccuracy and failure to accurately
set out the essential facts, so someone might argue that those
claims are void.
MR. KING said the statement of annual labor must be completed on
September 1, and that must be recorded within 90 days.
CHAIR GIESSEL asked if that meant 90 days before and/or after
September 1.
MR. KING replied that he was almost positive that it is after,
but he would ask.
4:07:23 PM
MR. GOODRUM replied that it's 90 days after September 1.
CHAIR GIESSEL asked if they get until November 30.
MR. GOODRUM said that was correct.
4:08:29 PM
MR. KING said opportunities to cure for a statement or affidavit
error is an issue that has come to his attention more in the
last few years (slide 10). When an error occurs, or someone
makes the accusation that the essential facts weren't laid out,
there are ways to fix those errors. In some cases, a corrected
affidavit can be made within two years. It will record over the
previous affidavit.
SENATOR BISHOP asked what that costs.
MR. KING replied that one would have to pay the recording fee
again if one is using AS 38.05,210(c). The other way to repair
an affidavit is to re-record an affidavit that is more than two
years old, but you have to pay the equivalent of one-year annual
rent along with the recording fee.
CHAIR GIESSEL asked if an error is in the labor report and they
have two years to correct it, but in that period, someone could
come forward and make a claim, would the original claimant have
priority and the opportunity to make the correction.
4:11:04 PM
ASHLEY BROWN, DNR Attorney, Department of Law (DOL), Anchorage,
Alaska, answered that if someone else over-staked a claim, under
AS 38.05.265, a person cannot cure that error. There is an
intervening right.
4:12:28 PM
SENATOR BISHOP clarified that the first claimant can't cure the
so-called essential facts breach.
MS. BROWN responded if there has been an error in essential fact
and the claim is abandoned and someone else stakes a claim, the
first claimant cannot cure the error in the essential fact under
AS 38.05.265.
SENATOR BISHOP asked who makes the call that there is a failure
of essential facts.
MR. KING replied the decision ultimately needs to be made by the
court.
SENATOR BISHOP said, so then it's a civil case between the top
filer and the original claimant.
MR. KING said that was correct.
CHAIR GIESSEL asked what if someone accidentally puts in the
wrong birthdate, is he informed of the opportunity to cure it.
MR. KING replied that the abandonment of a claim happens as a
self-initiated process. So, when someone makes an error, if
somebody else finds that error, they can make that accusation
that the affidavit is void, and the claim is abandoned, and they
can stake that claim. They would have to go to court and make
their case. The department doesn't go through affidavits and
ensure they are in compliance, because it doesn't make a
decision on whether a claim is abandoned or not. When someone
finds an error or someone fails to pay rents or royalties, the
department will give a notice to that claimant that his claim
has been abandoned.
CHAIR GIESSEL asked if the person has two years to make the
correction.
MR. KING replied that failure to file is incurable. If you fail
to record, as long as no one else intervenes, the claim can be
revived. As a general matter, as soon as someone else top-files
that claim, the ability for the department to intervene becomes
very limited.
SENATOR VON IMHOF asked if a person or family is "mining the
heck" out of this claim, and then between September 1, they file
their paperwork and make one small paperwork error, they have no
intention of abandoning it and have paid everything current,
what is the issue at that point.
MR. KING replied there would potentially be an opportunity for
someone else to make that claim to the court.
SENATOR VON IMHOF remarked that it behooves the miner to file
the paperwork extremely carefully and accurately.
MR. KING agreed with that conclusion.
4:17:28 PM
CHAIR GIESSEL asked how often abandonments occur due to clerical
error.
MR. KING replied he didn't have that number, but he could try to
put something together.
CHAIR GIESSEL agreed to that.
4:18:54 PM
MR. KING said another opportunity a claimant might have is to
request from the commissioner a certificate of substantial
compliance, which can be used in a limited scope of
circumstances. For instance, if you're on the way to the
recorder's office and get into a car accident and end up in the
hospital and miss your deadline, maybe you can petition the
commissioner with the accident report, the hospital admission
records, and ask for forgiveness. That is what a certificate of
substantial compliance would be. If one abandons a claim, it can
be re-staked, but there is a one-year waiting period.
SENATOR VON IMHOF asked if there is an updated list that people
can look at on line to monitor lands when they become available
for any reason.
MR. KING replied that the Alaska Mapper System has land claim
status and the Recorder's Office records the documents that are
publicly available. So, someone could watch the claim status and
go to the Recorder's Office and make sure everything is recorded
correctly.
MR. GOODRUM added that both are excellent resources to find that
information.
4:20:42 PM
MR. KING said the next requirement to maintain a mining claim is
to pay one's production royalty. Royalty in the context of
mining is different than oil and gas. The production royalty on
mining is 3 percent of the net income. Oil and gas is 12.5
percent of one's gross income.
SENATOR VON IMHOF asked if what constitutes allowable expenses
is in statute.
MR. KING replied that it is enumerated within the Department of
Revenue (DOR) under the mining tax law.
4:21:52 PM
SENATOR BISHOP asked if one has to file tax returns in order to
get a mining license.
4:22:35 PM
MR. KING replied yes, - and added that rental payment is a
deductible expense against one's royalty payment. It does not
reduce income, but it reduces one's liability.
4:23:02 PM
He said the mineral property management team consists of seven
people who do a tremendous job with limited resources. They
manage 34,461 active state mining claims, in addition to 47
upland and 80 offshore mining leases.
CHAIR GIESSEL asked if the 34,461 active state mining claims
include placer and large mines.
MR. KING replied that the large mines, by and large, will
convert their claims to a lease before they go into actual
development. In reality, only one of those mines is on state
land and is being operated under a state lease.
CHAIR GIESSEL asked if they are under the 47-upland mining lease
number.
MR. KING said he thought that was the case.
CHAIR GIESSEL commented that it looks like many of them have
multiple claims.
MR. KING said that was correct. He said that the Mineral
Management Section administered 3,848 mining locations and 1,839
ownership transfers. In addition, they issued 47 prospecting
site licenses and 2 mining leases last year and collected over
$7 million in rental payments. That concluded his presentation.
CHAIR GIESSEL thanked Mr. King for being available today and the
simplicity and basic level of his presentation.
4:26:24 PM
There being no further business to come before the committee,
Chair Giessel adjourned the Senate Resources Standing Committee
meeting at 4:26 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Sen Resources Committee Agenda - Jan 22 - 2018.pdf |
SRES 1/22/2018 3:30:00 PM |
|
| Sen Resources Committee - Overview of Mining Claims - Jan 22 - 2018.pdf |
SRES 1/22/2018 3:30:00 PM |
Mining |
| Sen Resources - Univ Montana BBER 2015 Report on Alaska's Timber Industry - 1 - 22 - 2018.pdf |
SRES 1/22/2018 3:30:00 PM |
Forestry |