Legislature(2017 - 2018)BUTROVICH 205

02/09/2018 03:30 PM RESOURCES

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Audio Topic
03:30:00 PM Start
03:30:54 PM SB86
03:56:04 PM SB166
04:39:27 PM Overview: Arctic Strategic Transportation & Resources Project (astar)
05:06:43 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 86 ALASKA RAILROAD CORPORATION LAND TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
*+ SB 166 MINING: CLAIMS;RIGHTS;RENTAL RATES;LABOR TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
+ Overview: Arctic Strategic Transportation TELECONFERENCED
& Resources Project (ASTAR)
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                        February 9, 2018                                                                                        
                           3:30 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Cathy Giessel, Chair                                                                                                    
Senator John Coghill, Vice Chair                                                                                                
Senator Natasha von Imhof                                                                                                       
Senator Bert Stedman                                                                                                            
Senator Bill Wielechowski                                                                                                       
Senator Click Bishop                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Kevin Meyer                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 86                                                                                                              
"An  Act relating  to the  sale  or other  disposal, leasing,  or                                                               
encumbrance of  Alaska Railroad  Corporation land;  and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 166                                                                                                             
"An Act  amending requirements for  qualifications to  acquire or                                                               
hold mining  rights; amending rental  rates for  mining locations                                                               
and  leases;  repealing  annual  labor  requirements  for  mining                                                               
locations;   providing  for   waiver  of   a  cure   penalty  for                                                               
abandonment because of failure to  properly record a statement of                                                               
labor; and providing for an effective date."                                                                                    
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
OVERVIEW:  ARCTIC STRATEGIC  TRANSPORTATION  & RESOURCES  PROJECT                                                               
(ASTAR)                                                                                                                         
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB  86                                                                                                                  
SHORT TITLE: ALASKA RAILROAD CORPORATION LAND                                                                                   
SPONSOR(s): SENATOR(s) COGHILL                                                                                                  
                                                                                                                                
03/10/17       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/10/17       (S)       RES, FIN                                                                                               
04/07/17       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
04/07/17       (S)       Heard & Held                                                                                           
04/07/17       (S)       MINUTE(RES)                                                                                            
02/09/18       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
BILL: SB 166                                                                                                                  
SHORT TITLE: MINING: CLAIMS;RIGHTS;RENTAL RATES;LABOR                                                                           
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/29/18       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/29/18       (S)       RES, FIN                                                                                               
02/09/18       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
AKIS GIALOPSOS, staff to Senator Giessel and the Senate                                                                         
Resources Committee                                                                                                             
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Explained the changes from SB 86, version A                                                               
to CSSB 86(RES), to version 30-LS0487\J.                                                                                        
                                                                                                                                
RYNNIEVA MOSS, staff to Senator Coghill                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Commented on SB 86 for the sponsor.                                                                       
                                                                                                                                
BILL O'LEARY, CEO                                                                                                               
Alaska Railroad Corporation (ARRC)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Supported SB 86.                                                                                          
                                                                                                                                
JON COOK, Chairman of the Board                                                                                                 
Alaska Railroad Corporation (ARRC)                                                                                              
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Supported SB 86.                                                                                          
                                                                                                                                
ED KING, Special Assistant to the Commissioner                                                                                  
Department of Natural Resources (DNR)                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Introduced himself and said the deputy                                                                    
commissioner would start with opening remarks on SB 166.                                                                        
                                                                                                                                
HEIDI HANSEN, Deputy Commissioner                                                                                               
Department of Natural Resources (DNR)                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Presented  SB 166 and commented  on the ASTAR                                                             
project.                                                                                                                        
                                                                                                                                
DON PERRIN, Large Project Coordinator                                                                                           
Office of Project Management and Permitting (OPMP)                                                                              
Department of Natural Resources (DNR)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION   STATEMENT:   Commented   on   the   Arctic   Strategic                                                             
Transportation & Resources Project (ASTAR).                                                                                     
                                                                                                                                
JASON BERGERSON, Manager                                                                                                        
North Slope Borough                                                                                                             
Anchorage, Alaska                                                                                                               
POSITION   STATEMENT:   Commented   on   the   Arctic   Strategic                                                             
Transportation & Resources Project (ASTAR).                                                                                     
                                                                                                                                
JENNIFER EDLEMAN, ASTAR coordinator                                                                                             
Office of Project Management and Permitting (OPMP)                                                                              
Department of Natural Resources (DNR)                                                                                           
POSITION   STATEMENT:   Commented   on   the   Arctic   Strategic                                                             
Transportation & Resources Project (ASTAR).                                                                                     
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:30:00 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 Stedman, Bishop, Coghill,  Wielechowski, and                                                               
Chair  Giessel. Senate  Von Imhof  joined  the committee  shortly                                                               
thereafter. Senator Meyer was excused.                                                                                          
                                                                                                                                
            SB  86-ALASKA RAILROAD CORPORATION LAND                                                                         
                                                                                                                                
3:30:54 PM                                                                                                                    
CHAIR  GIESSEL announced  consideration  of SB  86, sponsored  by                                                               
Senator Coghill,  that authorizes  the Alaska Railroad  (ARRC) to                                                               
sell parcels  of land  without checking  in with  the legislature                                                               
each time.  This bill was  first heard on  April 7, 2017,  and at                                                               
that time public testimony was left open.                                                                                       
                                                                                                                                
SENATOR  COGHILL  moved  to  adopt   CSSB  86(RES),  version  30-                                                               
LS0487\J, as the working document.                                                                                              
                                                                                                                                
                                                                                                                                
CHAIR GIESSEL objected for discussion purposes.                                                                                 
                                                                                                                                
AKIS  GIALOPSOS,   staff  to  Senator  Giessel   and  the  Senate                                                               
Resources  Committee, Alaska  State Legislature,  Juneau, Alaska,                                                               
explained the  changes from  SB 86, version  \A to  CSSB 86(RES),                                                               
version 30-LS0487\J,  and said the sponsor's  staff would explain                                                               
the rationale for those changes.                                                                                                
                                                                                                                                
MR. GIALOPSOS said there are three  changes. The first adds a new                                                               
section 17  sunset provision that  would take effect  three years                                                               
after the effective  date of this bill. That in  turn created new                                                               
conforming  sections  2, 4,  5,  7,  9,  11,  and 13.  All  those                                                               
sections are conforming  to the preceding sections  that would be                                                               
enumerated after the sunset provision would have taken effect.                                                                  
                                                                                                                                
3:33:04 PM                                                                                                                    
The second change further conforms to the sunset provision.                                                                     
                                                                                                                                
3:33:48 PM                                                                                                                    
The third change  is language that introduces the  first right of                                                               
refusal. Both the  prior version of the bill and  the proposed CS                                                               
repeal  and  rewrite  AS 42.40.852.  However,  the  proposed  CS,                                                               
version  J, adds  language  in section  12 on  page  6, line  19,                                                               
giving  existing lease  holders  to railroad  land  the right  of                                                               
first refusal  when the  railroad plans  a permanent  disposal of                                                               
the land.                                                                                                                       
                                                                                                                                
3:34:24 PM                                                                                                                    
RYNNIEVA  MOSS,  staff to  Senator  Coghill,  sponsor of  SB  86,                                                               
Alaska   State  Legislature,   Juneau,   Alaska,  explained   the                                                               
rationale behind  the changes CSSB 86(RES),  version 30-LS0487\J.                                                               
She said the sponsor felt the  right of first refusal, on page 6,                                                               
line  19, language  was only  fair. The  three-year sunset  is to                                                               
give  the legislature  a  chance  to take  a  relook  at how  the                                                               
railroad is  managing and  disposing its  land and  investing the                                                               
profits from those sales.                                                                                                       
                                                                                                                                
SENATOR COGHILL added  that the timing is important  as some real                                                               
estate issues  are currently on  the table. Knowing  that private                                                               
land in  Alaska is rare, the  ability to get some  of these lands                                                               
into  private hands  is a  good economic  development opportunity                                                               
and the railroad could do well with it.                                                                                         
                                                                                                                                
3:35:56 PM                                                                                                                    
SENATOR WIELECHOWSKI asked  her to describe how  the railroad got                                                               
the land in  the first place, if it is  constitutional to allow a                                                               
separate entity  to sell what  he assumes  to be state  land, and                                                               
who gets the proceeds from it.                                                                                                  
                                                                                                                                
3:36:31 PM                                                                                                                    
MS.  MOSS replied  that the  federal  government transferred  the                                                               
land  to the  state, and  it remains  state land  even though  it                                                               
belongs to a  public agency. The proceeds go back  to that public                                                               
agency.                                                                                                                         
                                                                                                                                
3:36:52 PM                                                                                                                    
BILL   O'LEARY,   CEO,   Alaska  Railroad   Corporation   (ARRC),                                                               
Anchorage,  Alaska,  said  the  land  was  transferred  from  the                                                               
federal government when the state  purchased the railroad and the                                                               
other assets  (36,000 acres). The  proceeds of land  sales remain                                                               
with  the ARRC.  Those  funds are  intended  for additional  real                                                               
estate development.                                                                                                             
                                                                                                                                
CHAIR  GIESSEL remembered  a  federal railroad  act  in the  late                                                               
1800s that did appropriate land to the Alaska Railroad.                                                                         
                                                                                                                                
SENATOR  WIELECHOWSKI asked  if he  had  a legal  opinion on  the                                                               
constitutionality  of allowing  a  separate  corporation to  sell                                                               
land and keep the  assets. He also wanted to know  if there was a                                                               
map of the land descriptions.                                                                                                   
                                                                                                                                
MS. MOSS said  yes, and she will make sure  the committee gets it                                                               
[map and land descriptions] before Monday.                                                                                      
                                                                                                                                
CHAIR  GIESSEL  asked  Mr.  Cook  if  he  could  respond  to  the                                                               
constitutionality question of the railroad selling state land.                                                                  
                                                                                                                                
3:39:11 PM                                                                                                                    
JON  COOK, Chairman  of the  Board,  Alaska Railroad  Corporation                                                               
(ARRC), Fairbanks, Alaska, replied that  he couldn't speak to the                                                               
constitutionality, but  he would assume that  issue was addressed                                                               
by legal staff while drafting the bill.                                                                                         
                                                                                                                                
CHAIR GIESSEL asked  if it's true that the  railroad has disposed                                                               
of land in the past, because they have come to the legislature.                                                                 
                                                                                                                                
MR.  COOK  answered  yes.  The   railroad  has  come  before  the                                                               
legislature for approval  of several disposals of  land to DOTPF,                                                               
other  state  agencies  and municipalities,  and  Eklutna  Native                                                               
Corporation. Even  though the number  is limited, he  assumed the                                                               
issues were vetted at the time.                                                                                                 
                                                                                                                                
SENATOR  COGHILL remarked  that  they have  given corporations  -                                                               
like   Alaska  Housing   Finance  Corporation   (AHFC)  and   the                                                               
Department  of Transportation  and  Public  Facilities (DOTPF)  -                                                               
rights to work within those parameters for land transfers.                                                                      
                                                                                                                                
SENATOR WIELECHOWSKI asked for a  description of the sale process                                                               
if this measure passes.                                                                                                         
                                                                                                                                
MR. COOK  replied that  the railroad is  required to  obtain fair                                                               
market value  for any land  disposal either through  an appraisal                                                               
or a competitive bid process.                                                                                                   
                                                                                                                                
SENATOR WIELECHOWSKI asked where that language was in statute.                                                                  
                                                                                                                                
MR. COOK answered that it is in AS 42.40.350(d).                                                                                
                                                                                                                                
3:42:56 PM                                                                                                                    
SENATOR BISHOP  asked if  there is  a timeline  for the  right of                                                               
first refusal  referring to language on  page 6, line 19,  to try                                                               
to put a deal together.                                                                                                         
                                                                                                                                
MS. MOSS replied that is in the policy and procedures for sales.                                                                
                                                                                                                                
MR. COOK  said that it might  be in AS 42.40.352(b)(2),  but that                                                               
their  policy and  or  intent  is to  never  sell  land out  from                                                               
underneath an  existing leaseholder.  The railroad has  no desire                                                               
to sell  land it is getting  rents from. They are  trying to grow                                                               
this  endowment  through  monetizing lands  that  aren't  already                                                               
earning a  current return and  invest that into  income producing                                                               
property,  which produces  an  8 percent  return  at fair  market                                                               
value.  Their  goal  is  not  to  get  rid  of  revenue-producing                                                               
customers.                                                                                                                      
                                                                                                                                
SENATOR WIELECHOWSKI asked when property  is sold now, and has to                                                               
be approved  by the legislature, if  the proceeds go back  to the                                                               
railroad or is that discretionary.                                                                                              
                                                                                                                                
MR.  COOK answered  that  those proceeds  would  remain with  the                                                               
railroad and be reinvested in its real estate portfolio.                                                                        
                                                                                                                                
SENATOR WIELECHOWSKI asked  if that money has always  gone to the                                                               
railroad in the past.                                                                                                           
                                                                                                                                
MR. COOK  answered that in his  almost 10 years on  the board, he                                                               
was  aware of  only  one  transaction and  in  that instance  the                                                               
railroad kept  $1.5 million in  proceeds of the sale  of property                                                               
to DOTPF.                                                                                                                       
                                                                                                                                
SENATOR  WIELECHOWSKI asked  if  that is  subject to  legislative                                                               
appropriation  and if  it is  legal for  the railroad  to receive                                                               
money directly.                                                                                                                 
                                                                                                                                
MR.  COOK said  he  assumed  not. He  said  the  railroad is  not                                                               
subject to the Executive Budget Act.                                                                                            
                                                                                                                                
3:47:25 PM                                                                                                                    
SENATOR  WIELECHOWSKI asked  if Legislative  Legal had  evaluated                                                               
that,  as a  recent Supreme  Court  case addressed  the issue  of                                                               
funds and appropriations and it seemed  that the money now has to                                                               
be appropriated.                                                                                                                
                                                                                                                                
CHAIR  GIESSEL said  her  intention was  to  adopt the  committee                                                               
substitute (CS)  but hold  the bill until  Monday. She  asked Mr.                                                               
O'Leary and Mr. Cook to get  those answers for the committee. She                                                               
noted that  she had received a  map of the railroad's  lands that                                                               
would address the first question.                                                                                               
                                                                                                                                
SENATOR WIELECHOWSKI asked  if the railroad owns  land outside of                                                               
the railroad corridor.                                                                                                          
                                                                                                                                
MS. MOSS answered  yes; the railroad owns parcels  outside of the                                                               
corridor.                                                                                                                       
                                                                                                                                
SENATOR  COGHILL noted  that the  railroad owns  a dock  front in                                                               
Nenana and leases it out. It has many loading fronts.                                                                           
                                                                                                                                
3:50:10 PM                                                                                                                    
SENATOR WIELECHOWSKI asked how much  coordination occurs now with                                                               
DOTPF and what protections can be  put in place for easements. He                                                               
didn't want  the railroad  to have  the freedom  to go  ahead and                                                               
sell  land  that  could  possibly create  problems  for  the  gas                                                               
pipeline or other easements the state might want to retain.                                                                     
                                                                                                                                
MS. MOSS said the railroad  currently works very closely with the                                                               
DOTPF and  has a half  dozen land  exchanges between the  two for                                                               
realignment of the highway and the railroad.                                                                                    
                                                                                                                                
SENATOR  WIELECHOWSKI  remarked  that  they  work  together  now,                                                               
because they  have to  get legislative  approval for  land sales.                                                               
But if  SB 86  passes, they  won't need  to do  that, and  he was                                                               
interested in putting  protections in place for  sales that might                                                               
impact state property.                                                                                                          
                                                                                                                                
SENATOR  VON IMHOF  added that  there seems  to be  a risk/reward                                                               
evaluation of  all components  that go  into a  sale. She  used a                                                               
housing development on  the Chena Pump Road, for  an example. She                                                               
would be hesitant to say hold  off on the housing development for                                                               
a few years just in case there  is an AKLNG project. That kind of                                                               
evaluation is fair.  But, at the same time if  the housing market                                                               
is  hot, it's  only three  years, so  let's let  them try  to get                                                               
money  for  their  operations  and whatever  else  they  need:  a                                                               
risk/reward evaluation.                                                                                                         
                                                                                                                                
MS.  MOSS said  she  believed the  legislature  already passed  a                                                               
statute that set out the right-of-way for that gasline.                                                                         
                                                                                                                                
CHAIR GIESSEL said that is true.                                                                                                
                                                                                                                                
3:53:18 PM                                                                                                                    
SENATOR WIELECHOWSKI  said he worries  a little bit  about giving                                                               
the railroad  free rein, because  it's a very  valuable corridor.                                                               
He wanted to  make sure this was being done  in coordination with                                                               
local communities and the state, and  a lot of that is taken away                                                               
in SB 86.                                                                                                                       
                                                                                                                                
CHAIR  GIESSEL said  she appreciated  the  question and  believed                                                               
that  is part  of the  philosophy behind  the three-year  sunset.                                                               
They also gave a lot of leeway to  a gas project and now they are                                                               
somewhat  restrained  in  their  ability to  interact  with  that                                                               
project. She asked the railroad to  come back on Monday with some                                                               
concrete   legal   discussions   about  the   questions   Senator                                                               
Wielechowski had asked.                                                                                                         
                                                                                                                                
SENATOR WIELECHOWSKI  clarified that  the railroad  couldn't sell                                                               
the  entire railroad  to some  private corporation,  for example,                                                               
just land.                                                                                                                      
                                                                                                                                
MS. MOSS said that was correct.                                                                                                 
                                                                                                                                
CHAIR  GIESSEL,   finding  no  further  questions,   removed  her                                                               
objection and  announced that  CSSB 86(RES),  version 30-LS0487\J                                                               
CS was adopted and held it in committee.                                                                                        
                                                                                                                                
        SB 166-MINING: CLAIMS;RIGHTS;RENTAL RATES;LABOR                                                                     
                                                                                                                                
3:56:04 PM                                                                                                                    
CHAIR  GIESSEL announced  consideration  of SB  166 [version  30-                                                               
GS2589\A was before the committee]  relating to mining statements                                                               
of labor.  This bill is from  the administration and it  is being                                                               
managed  by  the  Department of  Natural  Resources  (DNR).  This                                                               
committee held  an informational  hearing on  the subject  of the                                                               
mining claim process on January 22, 2018.                                                                                       
                                                                                                                                
ED  KING, Special  Assistant to  the Commissioner,  Department of                                                               
Natural Resources  (DNR), Juneau, Alaska, introduced  himself and                                                               
said the deputy commissioner would start with opening remarks.                                                                  
                                                                                                                                
HEIDI   HANSEN,  Deputy   Commissioner,  Department   of  Natural                                                               
Resources (DNR),  Juneau, Alaska,  said SB 166  is an  attempt to                                                               
help  the  mining  community   solve  an  increasingly  prevalent                                                               
problem of  the unintentional abandonment of  mining claims. This                                                               
bill  provides  one  option  to   begin  the  dialogue,  but  the                                                               
department is happy to work with  the committee and the public to                                                               
find a best outcome for all the parties involved.                                                                               
                                                                                                                                
She noted  that a mining  claim is structurally different  than a                                                               
lease agreement. A mining claim  is a self-initiated right, which                                                               
is perpetuated by the miner's  actions. Failure to meet the legal                                                               
requirements  to  maintain  a  claim  results  in  the  automatic                                                               
termination of the claim by  operation of law not by departmental                                                               
action. The  department has little discretionary  authority under                                                               
the current statute to "forgive"  errors on affidavits or failure                                                               
to  pay rent.  The rights,  themselves, and  the preservation  of                                                               
those rights fall to the claimant.                                                                                              
                                                                                                                                
She explained  that over the  last few years, the  department has                                                               
received   numerous  complaints   that   the  current   statutory                                                               
requirements are too  rigid and punitive, and they  agree in many                                                               
regards.  They are  looking  for a  solution  that will  decrease                                                               
rather than increase  DNR's administrative burden in  the face of                                                               
budget cuts and staff reductions.                                                                                               
                                                                                                                                
3:58:29 PM                                                                                                                    
MS.  HANSEN said  the labor  requirement  for a  mining claim  is                                                               
minimal, but the  reality is that the holder of  the mining claim                                                               
is very  likely to  want to  work their  claim to  generate value                                                               
from their  exclusive right  to the  locatable minerals.  A legal                                                               
requirement  to do  that  work is  not  necessary. Meanwhile  the                                                               
requirement to pay rents already  provides an additional economic                                                               
incentive to do that same work.                                                                                                 
                                                                                                                                
As the  options to address  this issue were evaluated,  it became                                                               
clear that  a simple fix was  not available. A waiver  system was                                                               
considered but  administering it would require  additional staff.                                                               
A   grace  period   was  contemplated   along  with   a  required                                                               
notification  but that,  too, would  put an  increased burden  on                                                               
staff, and as did other alternatives.                                                                                           
                                                                                                                                
The  department came  up with  the idea  of repealing  the annual                                                               
labor  requirement as  a win/win  way to  improve miners'  tenure                                                               
security  without increasing  departmental  workload  and SB  166                                                               
begins the dialogue.                                                                                                            
                                                                                                                                
4:00:01 PM                                                                                                                    
MR. KING said they had received  a lot of feedback since the bill                                                               
was  introduced and  are preparing  a frequently  asked questions                                                               
(FAQ) to supplement the materials early next week.                                                                              
                                                                                                                                
4:00:40 PM                                                                                                                    
Section  1  is  a  conforming   change  since  the  annual  labor                                                               
requirement is being removed throughout the statute.                                                                            
                                                                                                                                
Sections 2  and 3 surround  the idea  of a "bonafide  miner" that                                                               
they  are  recommending   as  a  new  term   in  state  statutes.                                                               
Basically, someone  that is  taking the  exclusive rights  to the                                                               
state's resources  should have a responsibility  to develop those                                                               
resources.  In  many  ways  the   annual  labor  requirement  was                                                               
ensuring that  work was happening,  and the department  wanted to                                                               
be very clear  that their intention is that a  holder of a mining                                                               
claim still has that obligation  to develop those resources. They                                                               
think that  all the miners who  are out there doing  their annual                                                               
labor today by their actions  have already demonstrated that they                                                               
are bonafide miners. This language is  not an intent to take away                                                               
anyone's  claims.  Even  without this  language,  the  department                                                               
believes it is implied. The bonafide  miner in section 2 is added                                                               
to the qualifications to hold a mining claim in good faith.                                                                     
                                                                                                                                
4:02:25 PM                                                                                                                    
SENATOR WIELECHOWSKI asked the definition of "bonafide miner."                                                                  
                                                                                                                                
MR.  KING replied  that  the  definition is  added  in section  3                                                               
subsection (d) as follows:                                                                                                      
                                                                                                                                
     An entity or person who  seeks to acquire, acquires, or                                                                    
     holds exploration  or mining rights under  AS 38.05.185                                                                    
     -  AS  38.05.275  in  good faith  for  the  purpose  of                                                                    
     mineral  exploration and  development and  not for  the                                                                    
     prevention of mineral exploration and development.                                                                         
                                                                                                                                
SENATOR  WIELECHOWSKI asked  if he  sees  a lot  of instances  of                                                               
people acquiring land not for  the purpose of mineral exploration                                                               
or development.                                                                                                                 
                                                                                                                                
MR.  KING replied  they don't  go through  that exercise  now but                                                               
that doesn't  mean people aren't  doing it. What they  are trying                                                               
to make  clear through this  legislation is that they  don't want                                                               
to open up a  new way for someone to get  this new opportunity to                                                               
withhold minerals from development.                                                                                             
                                                                                                                                
SENATOR WIELECHOWSKI  asked him  to cite  some examples  of lands                                                               
where people  are holding  exploration or  mining rights  for the                                                               
prevention of mineral exploration or development.                                                                               
                                                                                                                                
MS.  HANSEN  replied  more  to  the point,  they  are  trying  to                                                               
encourage the development of mineral exploration and production.                                                                
                                                                                                                                
SENATOR WIELECHOWSKI said he took that as a no.                                                                                 
                                                                                                                                
MR.  KING said  that was  correct. In  removing the  annual labor                                                               
requirement,  they  don't  want  to  create  an  opportunity  for                                                               
someone to get those exclusive  rights and deny them indefinitely                                                               
to someone who wants to develop them.                                                                                           
                                                                                                                                
4:05:01 PM                                                                                                                    
CHAIR GIESSEL  remarked that the  annual labor report is  kind of                                                               
like a plan  of development for an oil lease  by documenting that                                                               
work was  done.  But if  that requirement is to  be removed, they                                                               
want  to make  sure something  is in  place that  says some  work                                                               
still has  to be done  even though  the department is  not asking                                                               
for the written document.                                                                                                       
                                                                                                                                
MR. KING replied that is their expectation.                                                                                     
                                                                                                                                
4:06:02 PM                                                                                                                    
MR.  KING  said  section  3  (c)  of  AS  38.05.090  adds  a  new                                                               
subsection   intended  to   address  how   the  department   will                                                               
administer this  bonafide miner  requirement. He  elaborated that                                                               
in applying  for a lease, the  applicant would have to  submit an                                                               
affidavit  that says  they are  intending to  work that  claim. A                                                               
mining claim doesn't  have that requirement, because  a miner has                                                               
self-initiated  rights:  it is  assumed  that  they are  bonafide                                                               
unless the department asks for  verification, which can be in the                                                               
form of a recorded sworn statement.                                                                                             
                                                                                                                                
SENATOR WIELECHOWSKI  asked if it  is correct that  under current                                                               
law, someone has to provide an  affidavit that they are doing the                                                               
work on the property.                                                                                                           
                                                                                                                                
MR. KING answered yes.                                                                                                          
                                                                                                                                
SENATOR WIELECHOWSKI remarked that they  are changing that now so                                                               
that someone  doesn't have to do  the work, and he  asked if they                                                               
think that is going to encourage more mining.                                                                                   
                                                                                                                                
MR. KING replied the issue  is that these unintended abandonments                                                               
create a lot of uncertainty about  whether a claim is still under                                                               
claim. If that can be  clarified, they believe it would encourage                                                               
more investment.  The economic  incentives themselves  will drive                                                               
that investment.                                                                                                                
                                                                                                                                
SENATOR WIELECHOWSKI asked how much the annual labor costs.                                                                     
                                                                                                                                
MR. KING said the labor requirement amounts to $100 per year.                                                                   
                                                                                                                                
SENATOR WIELECHOWSKI asked if he  had thought about extending the                                                               
time  someone has  to actually  perform labor  on their  property                                                               
from one to two years. He added  that he just didn't see how this                                                               
encourages people to do more.                                                                                                   
                                                                                                                                
MR. KING  said he  saw his  point, but the  purpose of  this bill                                                               
isn't to  encourage more  development. It's  to secure  a miner's                                                               
tenure  and to  take away  that  uncertainty that  they might  be                                                               
working a claim  that has been invalidated and  that someone else                                                               
can take  away from them (by  going out and staking  that claim).                                                               
He pointed  out that $100  per year  labor is required,  but more                                                               
labor above  that rolls forward into  the next year(s) -  a miner                                                               
don't have to be  out there every year. And if  a miner can't get                                                               
out to  his claim  and actually  perform the  labor, he  can just                                                               
send a check for $100.                                                                                                          
                                                                                                                                
The  current  environment  isn't doing  anything  to  necessarily                                                               
encourage  that investment.  It's the  miners' actions  and their                                                               
motivation  for economic  gain that  is generating  this resource                                                               
development. That isn't  being taken away, but  the department is                                                               
trying to help  secure that tenure to make  them very comfortable                                                               
to continue investing.                                                                                                          
                                                                                                                                
4:10:03 PM                                                                                                                    
SENATOR BISHOP clarified  on the $100: is that  for a one-quarter                                                               
quarter section claim? If one  starts adding quarter sections, it                                                               
gets real expensive real quick.                                                                                                 
                                                                                                                                
CHAIR GIESSEL said  she was trying to interpret  the problem this                                                               
legislation is  trying to solve  and thought it was  the question                                                               
of top-filing.  Someone else  seeing an unintentional error in an                                                               
annual filing, top-files on a miner  and he loses that claim. DNR                                                               
is trying  to fix  that problem by  removing the  requirement for                                                               
that paperwork. Is that close to what they are doing?                                                                           
                                                                                                                                
MR.  KING clarified  when that  erroneous affidavit  is recorded,                                                               
the abandonment already occurred. It's  not the action of someone                                                               
else  staking  over  that claim  that  invalidates  the  previous                                                               
claim,  and it's  not  a notification  from  the department  that                                                               
abandons that  claim either. The  claimant's actions  making that                                                               
error is what abandoned that claim.                                                                                             
                                                                                                                                
CHAIR  GIESSEL  said  she  was   trying  to  drill  down  to  the                                                               
motivation and asked if there  is no grace period or notification                                                               
of the mistake, and are they trying to fix that, too.                                                                           
                                                                                                                                
MR.  KING  said  that  was correct.  Under  current  statute  the                                                               
department doesn't have any leeway  to forgive an error. It's not                                                               
a decision  that the department  makes and therefore, it's  not a                                                               
decision they can rescind.                                                                                                      
                                                                                                                                
If  the requirement  for annual  labor and  the recording  of the                                                               
annual labor  affidavits is  removed, the  problem goes  away. If                                                               
they  don't want  to go  that far,  they could  consider a  grace                                                               
period. However,  in doing  that, one  of the  goals they  had in                                                               
providing this legislation  was not to increase  the state budget                                                               
and they are  worried that a grace period would  create more work                                                               
for the department.                                                                                                             
                                                                                                                                
4:13:43 PM                                                                                                                    
SENATOR VON IMHOF asked if  a 60-day grace period could alleviate                                                               
some  of  Senator Wielechowski's  concerns.  She  asked how  many                                                               
errors were  made in  the past  and how much  staff time  a grace                                                               
period would take.                                                                                                              
                                                                                                                                
MR. KING  responded because the abandonment  actually occurs when                                                               
the error  occurs, the error may  have happened 10 years  ago. In                                                               
that case,  a 60-day  grace period would  have also  expired. So,                                                               
unless the  grace period is  attached to a notification  that the                                                               
abandonment has occurred,  there would be no  opportunity to cure                                                               
it, but then the department has to provide the staff to do that.                                                                
                                                                                                                                
SENATOR  VON  IMHOF  said  she   thought  paperwork  is  required                                                               
annually and therefore, it should be caught before 10 years.                                                                    
                                                                                                                                
MR. KING indicated no.                                                                                                          
                                                                                                                                
SENATOR  WIELECHOWSKI  asked  how someone  could  have  abandoned                                                               
their claim 10  years ago and still be paying  the annual fee for                                                               
the same  claim. He asked how  many mining claims there  are each                                                               
year and how many are abandoned.                                                                                                
                                                                                                                                
MR. KING answered there are  about 35,000 mining claims today and                                                               
about 5-10  percent per year  are known  to be abandoned,  but he                                                               
would get better figures for him.                                                                                               
                                                                                                                                
4:16:13 PM                                                                                                                    
SENATOR  WIELECHOWSKI asked  if people  are checking  the records                                                               
and taking over a claim.                                                                                                        
                                                                                                                                
4:16:38 PM                                                                                                                    
MR.   KING  answered   yes,  people   are  finding   mistakes  on                                                               
affidavits, over-staking  those claims,  and accusing  the senior                                                               
claimant of being in default  or having abandoned their claim and                                                               
claiming ownership of it. He  corrected that his earlier estimate                                                               
was for "known" abandonments. It's  possible other errors haven't                                                               
been detected. It  creates a property rights issue  that needs to                                                               
be settled in  civil court ultimately, because  when these issues                                                               
have been brought to the  department's attention, it doesn't have                                                               
any tools to do anything about it.                                                                                              
                                                                                                                                
MS. HANSEN added  that a number of people  have expressed concern                                                               
to DNR  that when they  believe that their claims  are abandoned,                                                               
they have  to go  back and  re-stake them,  and depending  on the                                                               
number of  claims, that could  cost a lot,  as well. So,  this is                                                               
not only curing the problem that  Mr. King just mentioned, but it                                                               
also cures this re-staking issue.                                                                                               
                                                                                                                                
MR.  KING said  he was  sure some  of the  committee members  had                                                               
heard about this from their constituents.                                                                                       
                                                                                                                                
CHAIR GIESSEL said, yes, many.                                                                                                  
                                                                                                                                
SENATOR VON  IMHOF said she was  eager to get his  FAQs and asked                                                               
him to  put them in layman's  terms and start with  what concerns                                                               
they are  trying to address,  what they  are proposing to  do and                                                               
what the consequences are.                                                                                                      
                                                                                                                                
MS. HANSEN said she would be happy to do that.                                                                                  
                                                                                                                                
4:19:19 PM                                                                                                                    
SENATOR  BISHOP  said  he  would   provide  a  little  historical                                                               
perspective  on  why this  discussion  is  taking place  with  an                                                               
example: his  office has  files from  people who  have been  on a                                                               
staked claim for  10 years and through an error  on recording the                                                               
affidavit of annual  labor they were sent  an abandonment notice.                                                               
In  the  meantime, someone  top-filed  over  them. So,  after  10                                                               
years' worth of effort and  one mistake, it's gone. The top-filer                                                               
now has the ground. That is  just one example but there are more.                                                               
Hopefully,  a solution  can be  found,  because he  thinks it  is                                                               
wrong.                                                                                                                          
                                                                                                                                
4:21:24 PM                                                                                                                    
MR.  KING said  if  there is  a problem  with  the definition  of                                                               
"bonafide miner"  in sections 2  and 3 the  rest of the  bill can                                                               
survive without those provisions.                                                                                               
                                                                                                                                
Section 4  is a  conforming change and  removes the  reference to                                                               
"annual labor"  elsewhere in statute.  Section 5 is  the increase                                                               
in the annual rental payment.                                                                                                   
                                                                                                                                
The  fiscal analysis  for  SB 166  indicates  that repealing  the                                                               
annual  labor  requirement would  result  in  an annual  loss  of                                                               
$584,000 to the state. Currently  there are 21,000 quarter claims                                                               
(each  claim   has  four  40-acre  claims   within  them),  which                                                               
calculates  into a  total  of 85,000  40-acre  claims. There  are                                                               
57,975 acres under lease; if  each of those leases were converted                                                               
to 40-acre claims  that would result in  1,449 equivalent claims.                                                               
Then they have 13,294 actual 40-acre  claims; for a total of just                                                               
under 100,000 40-acre equivalent claims.                                                                                        
                                                                                                                                
4:26:52 PM                                                                                                                    
The rental  amount goes from  $20 to $50 on  page 3, line  29, of                                                               
the bill.  It looks like  it's more  than double. But  he pointed                                                               
out that $20 was put in  place in 1989 and adjusted for inflation                                                               
every 10 years. So, today, miners  pay $35 (for that same zero to                                                               
five-year  old 40-acre  claim).  The last  time  this number  was                                                               
adjusted  for  inflation  was  2009,  so next  year  it  will  be                                                               
adjusted again.  Applying that inflation adjustment  today brings                                                               
one to  the numbers on  the fifth line of  that box on  the third                                                               
page of the  fiscal analysis. If this bill were  not to pass, the                                                               
miners would  be paying $40,  $85, and  $200. The correct  way to                                                               
look at  the rental  increase in  this bill is  to compare  it to                                                               
that baseline.                                                                                                                  
                                                                                                                                
4:28:07 PM                                                                                                                    
SENATOR BISHOP  asked if the  10-year consumer price  index (CPI)                                                               
increment  in the  statute  is  still at  the  discretion of  the                                                               
commissioner.                                                                                                                   
                                                                                                                                
MR. KING replied yes; the fee  schedule is updated every 10 years                                                               
by regulation:  so, to the  extent that the commissioner  has the                                                               
authority to implement a regulation.                                                                                            
                                                                                                                                
SENATOR  BISHOP said  that  could  be in  the  FAQ  sheet at  the                                                               
chair's prerogative.                                                                                                            
                                                                                                                                
CHAIR GIESSEL indicated that would be fine.                                                                                     
                                                                                                                                
SENATOR  WIELECHOWSKI  asked  if  this  bill  affects  claims  on                                                               
federal property.                                                                                                               
                                                                                                                                
MR.  KING  replied  that  they  talked  to  the  Bureau  of  Land                                                               
Management (BLM)  to make sure  what this measure  doesn't affect                                                               
federal  claims.  There are  state  requirements  that do  govern                                                               
federal  claims, but  a federal  claim must  also follow  federal                                                               
law, and that  is what state law says. The  department thought it                                                               
made  sense   because  they  were   removing  the   annual  labor                                                               
requirement from  state law  that it  got removed  everywhere. If                                                               
that creates  a problem, there  is no requirement that  the Title                                                               
27 references to annual labor should be repealed.                                                                               
                                                                                                                                
4:29:47 PM                                                                                                                    
SENATOR WIELECHOWSKI  asked what the federal  requirements are to                                                               
establish and keep a mining claim.                                                                                              
                                                                                                                                
MR.  KING replied  that  the  federal law  is  still the  General                                                               
Mining  Act  of  1872,  and  it  requires  just  an  annual  work                                                               
assessment that is also $100 for 40 acres.                                                                                      
                                                                                                                                
SENATOR WIELECHOWSKI  asked if the  state system is  identical to                                                               
the federal system currently.                                                                                                   
                                                                                                                                
MR.  KING  replied prior  to  1989  it  was; Alaska  adopted  the                                                               
federal  law and  the federal  system at  statehood. However,  in                                                               
1989,  the Supreme  Court  ruled against  the  state and  started                                                               
requiring that  the state also  impose annual rental  and royalty                                                               
payments, which  don't exist for  federal claims. The  debate was                                                               
always  if  Alaska  wants  a location  system  like  the  federal                                                               
government  or   a  leasing  system   that  requires   rents  and                                                               
royalties, and right  now, we have both. So,  they are suggesting                                                               
removing that  annual labor  requirement that  is really  kind of                                                               
unnecessary.                                                                                                                    
                                                                                                                                
4:31:08 PM                                                                                                                    
MR. KING said  they have received many questions  about section 5                                                               
and  he hoped  his  answer  is adequate.  He  would  be happy  to                                                               
discuss the fiscal note with the committee at any time.                                                                         
                                                                                                                                
He said  section 6 is  the inflation adjustment, and  because the                                                               
rental payments are being adjusted,  it makes sense to inflation-                                                               
adjust  the  statutory  requirements into  today's  dollars.  So,                                                               
section  6 rebases  the  inflation index  to  the 2018  timeframe                                                               
instead   of  the   1989  timeframe   in   the  original   rental                                                               
requirements.                                                                                                                   
                                                                                                                                
4:32:10 PM                                                                                                                    
Section  7 maintains  definitions  that would  otherwise be  lost                                                               
through repeal and  those are found in the  annual labor chapter,                                                               
AS 38.05.242.  Because most of  those definitions are  related to                                                               
things   associated  with   annual  labor   the  only   surviving                                                               
definition  that   needs  to  be  maintained   is  the  meridian,                                                               
township,  range  section  claim  (MTRSC). So,  that  section  is                                                               
pulled out of section .242 and moved into section .211.                                                                         
                                                                                                                                
4:32:56 PM                                                                                                                    
Section  8  is a  conforming  change  that removes  the  repealed                                                               
statutes from the abandonment provision in AS 38.05.065.                                                                        
                                                                                                                                
4:33:21 PM                                                                                                                    
Section  9  is  a  new  subsection  (c)  that  is  added  to  the                                                               
abandonment section.  It is intended  to help existing  errors on                                                               
affidavits  that are  in existing  files. Because  the department                                                               
doesn't have  the discretion  to grant  them immunity,  they were                                                               
trying to figure  out the best way to allow  those cures to occur                                                               
and decided  to waive  the penalty  associated with  curing those                                                               
abandoned claims.  He explained that section  .265 already allows                                                               
one to cure an abandoned claim that  is the result of an error in                                                               
an essential fact, but it requires paying a penalty.                                                                            
                                                                                                                                
SENATOR BISHOP asked the timeline on that.                                                                                      
                                                                                                                                
MR. KING  replied that no time  is defined in statute  to cure an                                                               
abandonment. It is  indefinite. He added that the  only caveat is                                                               
that  the  cure  provision  doesn't apply  whenever  there  is  a                                                               
competing interest. If two people  assert their rights to a claim                                                               
the  cure can't  happen and  it  must be  litigated before  going                                                               
forward.                                                                                                                        
                                                                                                                                
4:36:03 PM                                                                                                                    
Section 10 repeals the annual labor requirement.                                                                                
                                                                                                                                
4:36:24 PM                                                                                                                    
Section 11  is transition language  that was inserted  to clarify                                                               
what happens  when annual labor  is removed  in the middle  of an                                                               
annual labor  year. It  creates transition  language to  go along                                                               
with an effective date of September 1.                                                                                          
                                                                                                                                
SENATOR  WIELECHOWSKI asked  if section  10 repeals  a number  of                                                               
statues that are conforming changes.                                                                                            
                                                                                                                                
MR. KING  answered yes.  It is the  annual labor  requirement and                                                               
all the statutes surrounding the enforcement of it.                                                                             
                                                                                                                                
4:37:27 PM                                                                                                                    
He  said   section  12   clarifies  the   timing  in   which  the                                                               
commissioner can calculate  the changes of rentals  in each year.                                                               
It clarifies  that the next  inflation adjustment will  happen in                                                               
the year 2028.                                                                                                                  
                                                                                                                                
Section  13 authorizes  the department  to adopt  regulations and                                                               
implement changes that are made by this act.                                                                                    
                                                                                                                                
Section 14 authorizes the department  to amend existing leases to                                                               
conform with statutory  changes in this bill. The  reason that is                                                               
important  is because  a  lease,  unlike a  claim,  is an  actual                                                               
contract and has  contract terms, and the  legislature can't just                                                               
strike a term of a  contract. This language allows the department                                                               
to  take  those terms  out  of  the  lease  to conform  with  the                                                               
statutory changes this bill would be making.                                                                                    
                                                                                                                                
4:38:21 PM                                                                                                                    
Section 15 provides  for an immediate effective  date for section                                                               
13, and section  16 provides for the effective  date of September                                                               
2 for  first day of  the next  annual labor year.  That concluded                                                               
the provisions in SB 166.                                                                                                       
                                                                                                                                
CHAIR GIESSEL thanked  him and finding no  further questions, set                                                               
SB 166 aside.                                                                                                                   
                                                                                                                                
^Overview:  Arctic Strategic  Transportation &  Resources Project                                                               
(ASTAR)                                                                                                                         
 Overview: Arctic Strategic Transportation & Resources Project                                                              
                            (ASTAR)                                                                                         
                                                                                                                              
4:39:27 PM                                                                                                                    
CHAIR GIESSEL announced  the final order of business  was to hear                                                               
about the  Arctic Strategic Transportation and  Resources Project                                                               
(ASTAR) that deals  with road infrastructure on  the North Slope.                                                               
It  is becoming  increasingly  challenging to  put  in ice  roads                                                               
there  due  to  some  warming  and  this  project  looks  at  the                                                               
possibility of putting in some gravel roads, as well.                                                                           
                                                                                                                                
HEIDI   HANSEN,  Deputy   Commissioner,  Department   of  Natural                                                               
Resources  (DNR), Juneau,  Alaska, said  the ASTAR  protect is  a                                                               
partnership with  the North Slope  Borough in  collaboration with                                                               
area  communities and  other stakeholders.  They  are seeking  to                                                               
identify, evaluate, and advance  community infrastructure. A 2017                                                               
supplemental set aside $17.3 million for this project.                                                                          
                                                                                                                                
ASTAR  is operating  under a  formal  partnership agreement  that                                                               
established a working relationship  and open dialogue between DNR                                                               
and the  North Slope Borough.  This partnership will  help ensure                                                               
the needs  of the people  and the communities within  the borough                                                               
are reflected in ASTAR's outcomes.                                                                                              
                                                                                                                                
She  said  the participating  state  agencies  are Department  of                                                               
Natural  Resources   (DNR),  Department  of  Health   and  Social                                                               
Services (DHSS),  Department of Commerce, Community  and Economic                                                               
Development (DCCED), and Department  of Transportation and Public                                                               
Facilities  (DOTPF). Within  DNR,  the Office  of Management  and                                                               
Permitting (OPMP)  provides management  and coordination  for the                                                               
project and  the contractors. The  Division of Mining,  Land, and                                                               
Water's (DMLW)  Resource Assessment Development  Section provides                                                               
planning  and  website  content. The  Support  Services  Division                                                               
within DNR provides Geographic Information  System (GIS) and data                                                               
processing and  some website design and  management. The Division                                                               
of  Parks  and  Outdoor  Recreation  is  providing  some  graphic                                                               
support  with   regard  to   the  interpretation   and  education                                                               
component of the  Parks Division. The Division  of Geological and                                                               
Geophysical Surveys (DGGS) and the  Division of Oil and Gas (DOG)                                                               
will provide  subject matter  expertise associated  with resource                                                               
industry operations and available data.                                                                                         
                                                                                                                                
4:42:05 PM                                                                                                                    
MS. HANSEN  said they are also  working with DHSS to  provide the                                                               
baseline health summary  report for the North  Slope Borough that                                                               
will identify  and explain health  data gaps and  potential means                                                               
to fill  those gaps. Potential health  connectivity opportunities                                                               
may   include  advancing   telemedicine,   which  would   require                                                               
broadband.                                                                                                                      
                                                                                                                                
Discussions  are under  way  with the  DCCED  to engage  multiple                                                               
staff to  focus on the regional  funding opportunities, community                                                               
resilience and adaptation, and other community resources.                                                                       
                                                                                                                                
She  said ASTAR  will  provide opportunities  for leadership  and                                                               
capacity-building within the region. The  team is working closely                                                               
with the  DOTPF to  enhance the overall  project outcomes  and to                                                               
minimize  any  duplication  that   might  result  without  better                                                               
coordination.                                                                                                                   
                                                                                                                                
4:43:16 PM                                                                                                                    
CHAIR GIESSEL commented  that some folks might think  it odd that                                                               
the  DNR is  collaborating with  the DHSS,  but DNR  led the  way                                                               
nationally   in  considering   social  and   health  impacts   on                                                               
developing Alaska's  resources several  years ago.  Another thing                                                               
of interest  is that  the Northwest  Territories just  finished a                                                               
road to  their Arctic Coast and  it means cost of  living savings                                                               
of $12,000/year for  each village occupant along  that road. "So,                                                               
it's a huge impact."                                                                                                            
                                                                                                                                
MS.  HANSEN  thanked  her  for   those  comments  and  said  they                                                               
absolutely agree.  She said  the desired  outcomes for  the ASTAR                                                               
project is increased cultural connectivity,  reduction in cost of                                                               
living,   decreased  rehabilitation   costs   for  the   National                                                               
Petroleum  Reserve-Alaska (NPR-A)  legacy  wells, more  efficient                                                               
development   of  natural   resources,  and   increased  economic                                                               
activity.  This project  covers  the entire  North Slope  Borough                                                               
down to Anaktuvuk Pass. Cumulative  benefits are being identified                                                               
for  the specific  infrastructure and  this collaborative  effort                                                               
will  help  inform  state  and  local  discussions  with  federal                                                               
agencies on any sort of development.                                                                                            
                                                                                                                                
She  said some  of  the transportation  corridor routing  include                                                               
seasonal  ice  and snow  roads,  year-round  gravel roads,  trail                                                               
identification   and  maintenance,   opportunities  for   utility                                                               
corridors  such as  for  natural gas  pipelines,  power lines  or                                                               
renewable  sources,  fiber optic  networks  for  high speed  data                                                               
connection,   and   port/barge/shipping   marine   and   aviation                                                               
facilities. Their minds are open to possibilities.                                                                              
                                                                                                                                
CHAIR  GIESSEL asked  how many  miles of  road she  envisioned in                                                               
this project.                                                                                                                   
                                                                                                                                
MS. HANSEN  said she didn't  know but would  happy to go  back to                                                               
see if there is a sense of that.  She added that this is just the                                                               
beginning of the analysis.                                                                                                      
                                                                                                                                
CHAIR  GIESSEL  said  she  assumed it  would  be  an  incremental                                                               
process.                                                                                                                        
                                                                                                                                
4:46:46 PM                                                                                                                    
SENATOR  WIELECHOWSKI asked  if a  plan  is in  place to  finance                                                               
these developments.                                                                                                             
                                                                                                                                
MS. HANSEN answered  that assessing the sources of  funding is as                                                               
part of  the ASTAR project.  ASTAR money will not  actually build                                                               
it.                                                                                                                             
                                                                                                                                
SENATOR  WIELECHOWSKI asked  if this  part of  state's long-range                                                               
transportation  plan  was  developed  by  the  Alaska  DOTPF  and                                                               
approved by the federal DOT.                                                                                                    
                                                                                                                                
MS.  HANSEN   answered  no;  this  is   specifically  a  resource                                                               
development analysis  of how to  increase connectivity  (not just                                                               
roads)  to enhance  and  enable development  in  the North  Slope                                                               
Borough.                                                                                                                        
                                                                                                                                
4:47:53 PM                                                                                                                    
SENATOR WIELECHOWSKI  said his experience  is that roads  go from                                                               
$1 million/mile to  $20-plus million/mile road. Do  they think in                                                               
terms of  general obligation (GO)  bonds or federal funds  to pay                                                               
for them?                                                                                                                       
                                                                                                                                
MS. HANSEN said she would have to get back to him on that.                                                                      
                                                                                                                                
MS. HANSEN  pointed out that proof  of concept is under  way now:                                                               
the ASTAR team is coordinating with  the North Slope Borough on a                                                               
pilot  project  that  includes participation  in  pre-application                                                               
meetings  and permitting  follow-up, as  well as  assistance from                                                               
the   OPMP   coordinators.    The   borough   submitted   several                                                               
applications  to  state  and  federal  agencies  for  permits  to                                                               
connect  community  winter  access  trails through  some  of  the                                                               
villages  in the  North Slope  Borough. They  hope this  proof of                                                               
concept project  will be  very enlightening in  terms of  what is                                                               
possible on  a larger scale  for ASTAR. It will  provide valuable                                                               
data collection  opportunities including learning about  how many                                                               
and   why  people   utilize  transportation   opportunities;  for                                                               
example, if it's viable to  use these transportation alternatives                                                               
as an  alternative to flying.  It would  be good to  analyze what                                                               
the  various capacities  of  the  different transportation  means                                                               
(flying and  barging) to see  what it  means to the  economic and                                                               
socio-economic output for communities.                                                                                          
                                                                                                                                
This proof  of concept project  would also allow and  provide for                                                               
regulatory  expertise   for  future  projects.  These   types  of                                                               
projects are  complex in terms  of permits and when  they require                                                               
local,  state, and  federal processes,  this will  allow them  to                                                               
look  at multiple  uses by  multiple users  in NPR-A  and benefit                                                               
from those experiences.                                                                                                         
                                                                                                                                
MS. HANSEN said  the state and federal  permitting processes that                                                               
are currently under way involve  multiple proposed routes for the                                                               
activities  of  organized  caravanning of  personal  vehicles  of                                                               
residents on  the snow  roads. A route  for hauling  fuel between                                                               
Utquiagvik  (Barrow)  and  Atqusuk  has been  permitted  and  the                                                               
permitting for the  caravanning route is currently  under way. It                                                               
is interesting to have these projects  going on at the same time,                                                               
because they will  be able to evaluate the benefits  if ice roads                                                               
versus snow roads  and a mixture of those two  different kinds of                                                               
access opportunities.  The ice roads  provide access  for heavier                                                               
equipment versus the caravanning that is just a snow road.                                                                      
                                                                                                                                
4:51:55 PM                                                                                                                    
CHAIR GIESSEL asked the difference in  cost of an ice road versus                                                               
a snow road.                                                                                                                    
                                                                                                                                
4:52:29 PM                                                                                                                    
DON PERRIN,  Large Project Coordinator, Office  of Management and                                                               
Permitting   (OPMP,  Department   of  Natural   Resources  (DNR),                                                               
Anchorage, Alaska, said  he would defer that answer  to the North                                                               
Slope Borough and also get back to her with more accurate data.                                                                 
                                                                                                                                
CHAIR GIESSEL said that would be fine.                                                                                          
                                                                                                                                
SENATOR BISHOP  asked the cost  for an ice  road to move  a drill                                                               
rig (as opposed to light vehicle traffic).                                                                                      
                                                                                                                                
MS. HANSEN  said they would  get back  to the committee  with the                                                               
various scenarios.                                                                                                              
                                                                                                                                
SENATOR WIELECHOWSKI asked  if the public input  process is local                                                               
or statewide.                                                                                                                   
                                                                                                                                
MR. PERRIN  replied that the  Division of Mining, Land  and Water                                                               
(DMLW) permitting process  for tundra travel has  a local, state,                                                               
and BLM public comment period, and that is currently under way.                                                                 
                                                                                                                                
4:55:00 PM                                                                                                                    
JASON  BERGERSON,   Manager,  North  Slope   Borough,  Anchorage,                                                               
Alaska,  added that  the local  permitting process  has a  20-day                                                               
public  comment  period. The  DMLW  permits  have public  comment                                                               
periods as do the BLM permits.                                                                                                  
                                                                                                                                
MS. HANSEN  said some of the  2018 work highlights were  on slide                                                               
7.  ASTAR  is hired  Alaska-based  contractors  hired to  provide                                                               
project management  support, data  analysis, management,  and GIS                                                               
analysis, stakeholder outreach and  coordination and economic and                                                               
socio-economics (such as for  infrastructure cost comparisons and                                                               
analysis, assessment  of project  abilities, and quality  of life                                                               
outcomes for residents).                                                                                                        
                                                                                                                                
After the competitive bidding process  and protest period, Arctic                                                               
Slope  Regional Corporation  (ASRC) Energy  Services-Alaska (also                                                               
known as  AES, Inc.) and  Resource Data, Inc. were  selected, and                                                               
contract negotiations  are under way. They  received 23 proposals                                                               
and the  evaluation team  reviewed them all.  An intent  to award                                                               
was issued  on January 5;  the mandatory protest period  ended on                                                               
the 16th and there were no  protests. The fact that they received                                                               
23  proposals demonstrates  that there  is a  lot of  interest in                                                               
what is  going on. AES  and Resource  Data will be  competing for                                                               
task  orders on  the  data analysis,  management, and  Geographic                                                               
Information  System (GIS)  analysis  and  integration work  going                                                               
forward.                                                                                                                        
                                                                                                                                
MS.  HANSEN  said one  of  the  crucial  pieces of  planning  for                                                               
infrastructure   is  understanding   the  construction   material                                                               
sources, work the Division of  Geological and Geophysical Surveys                                                               
(DGGS)  and the  Division  of Oil  and Gas  would  be doing.  The                                                               
information on construction materials  is scarce. The survey will                                                               
be led by  the DGGS and include regional  and local partnerships.                                                               
The work will include the  office data compilation, limited field                                                               
investigations in  2018 and 2019  and any  subsequent publication                                                               
of  maps and  reports. She  emphasized that  existing information                                                               
will be utilized to the greatest extent possible.                                                                               
                                                                                                                                
4:58:06 PM                                                                                                                    
SENATOR BISHOP commented that it  might be worth getting into the                                                               
National   Archives  and   Records  Administration   archives  at                                                               
Utqiagvik, because the Navy spent a lot of time up there.                                                                       
                                                                                                                                
4:58:34 PM                                                                                                                    
MS.  HANSEN  said slide  9  provided  the  2018, 2019,  and  2020                                                               
budgets.  The initial  pot of  money was  $7.3 million,  and they                                                               
anticipate  burning through  $2.5 million  of that  in 2018.  The                                                               
first contract  term is  through June 30,  2019 with  the renewal                                                               
option expiring June 30, 2020.                                                                                                  
                                                                                                                                
MS.  HANSEN explained  that the  contracts and  personal services                                                               
are the bulk  of the expenditures; DNR travel is  also very high.                                                               
The  reason for  that is  not only  the face-to-face  interaction                                                               
with  folks  in  the  communities,  but the  very  high  cost  of                                                               
helicopter use that DGGS may need to rely on.                                                                                   
                                                                                                                                
She  flagged an  error  in the  Computers  and Supplies  category                                                               
where the cost should be $11,000 in FY 2019 and $8,000 in 2020.                                                                 
                                                                                                                                
SENATOR VON  IMHOF asked  what the  $7.3 million  in deliverables                                                               
are at the end of 2020.                                                                                                         
                                                                                                                                
5:00:50 PM                                                                                                                    
JENNIFER   EDLEMAN,   ASTAR   coordinator,  Office   of   Project                                                               
Management   and  Permitting   (OPMP),   Department  of   Natural                                                               
Resources   (DNR),   Anchorage,   Alaska,  answered   that   they                                                               
anticipate a  variety of  end products:  one is  the construction                                                               
materials survey of multiple areas  over the course of the three-                                                               
year project and  will also have a health baseline  report, and a                                                               
strategic planning document that  will include the ASTAR process.                                                               
The  resulting  suite of  materials  in  the plan  would  include                                                               
identifying projects  that have both local  and statewide support                                                               
heard  through  their  scoping  efforts,  an  analysis  of  those                                                               
projects  in  order  to  determine  which  ones  will  bring  the                                                               
greatest  cumulative benefits  to the  area. Those  projects that                                                               
demonstrate the  greatest benefit  will be advanced  and assessed                                                               
for  a  variety  of  things including  funding  sources,  project                                                               
sponsors, identifying  obstacles and challenges,  and identifying                                                               
permitting and  any data  gaps. These  reports will  be available                                                               
for subsequent efforts.                                                                                                         
                                                                                                                                
5:03:28 PM                                                                                                                    
SENATOR  VON IMHOF  said  she saw  the involvement  of  a lot  of                                                               
government agencies  and asked how  private developers  are being                                                               
engaged.                                                                                                                        
                                                                                                                                
MS. EDLEMAN  answered that  they are  just beginning  to identify                                                               
and map out  scoping and plan to start within  the communities in                                                               
the  North   Slope  Borough,  meeting  with   community  leaders,                                                               
individuals, residents, and folks  who survive within those areas                                                               
to  learn from  them  what local  infrastructure  needs to  have.                                                               
After   that   they  anticipate   having   a   wide  variety   of                                                               
opportunities  to engage  both industries  present  on the  North                                                               
Slope now  and industries (as  well as investment  industry) that                                                               
may want to expand to the  North Slope but don't have the ability                                                               
to  do  that  because  of   the  infrastructure  challenges.  She                                                               
anticipates  working with  the economic  and socio-economic  team                                                               
and potential funders to be able to fund the projects if                                                                        
possible.                                                                                                                       
                                                                                                                                
SENATOR VON IMHOF remarked those are great plans but the devil                                                                  
is in the details. She wished her luck.                                                                                         
                                                                                                                                
5:06:43 PM                                                                                                                    
CHAIR GIESSEL  said she  had heard  of several  investment groups                                                               
that are interested in investing  on the North Slope. She thanked                                                               
the  presenters and  finding no  further business,  adjourned the                                                               
Senate Resources Committee meeting at 5:06 p.m.                                                                                 
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
Senate Resources - Hearing Agenda - 2 - 9 - 2018 .pdf SRES 2/9/2018 3:30:00 PM
CSSB86 - Version J - 1 - 30 - 2018.pdf SRES 2/9/2018 3:30:00 PM
SB 86
CSSB86- Explanation of Changes from Version A to Version J - 2- 9 - 2018.pdf SRES 2/9/2018 3:30:00 PM
SB 86
SB 86 - Sectional Version J.pdf SRES 2/9/2018 3:30:00 PM
SB 86
SB 86 - Sponsor Statement Version J.pdf SRES 2/9/2018 3:30:00 PM
SB 86
SB86 - Fiscal Note - Dept of Commerce - 2 - 2 - 2018.pdf SRES 2/9/2018 3:30:00 PM
SB 86
SB86 - Supporting Document - Letter AK Bankers' Association.pdf SRES 2/9/2018 3:30:00 PM
SB 86
SB86 - Supporting Document - Letter from Fairbanks Economic Development Corporation - 2- 2 - 2018.pdf SRES 2/9/2018 3:30:00 PM
SB 86
SB 86 - Frequently Asked Questions.pdf SRES 2/9/2018 3:30:00 PM
SB 86
SB166 - Version A.PDF SRES 2/9/2018 3:30:00 PM
SB 166
SB166 - Transmittal Letter from Governor - 1 - 26 - 2018.pdf SRES 2/9/2018 3:30:00 PM
SB 166
SB166 - Fiscal Note DNR - 1 - 25 - 2018.pdf SRES 2/9/2018 3:30:00 PM
SB 166
SB 166 - Repealed Statutes.pdf SRES 2/9/2018 3:30:00 PM
SB 166
SB 166 - Fiscal Analysis.pdf SRES 2/9/2018 3:30:00 PM
SB 166
Senate Resources - Presentation of ASTAR Project from Dept. Natural Resources - 2 - 9 - 2018.pdf SRES 2/9/2018 3:30:00 PM
Infrastructure
SB86 - Supporting Document - Updated Letter of Support from UCM - 2 - 8 - 2018.pdf SRES 2/9/2018 3:30:00 PM
SB 86
SB 86 - Supporting Document - Letter from Greater Fairbanks Chamber of Commerce - 2 - 9 - 2018.pdf SRES 2/9/2018 3:30:00 PM
SB 86
SB166 Fiscal Note.pdf SRES 2/9/2018 3:30:00 PM
SB 166
SB86 - Supporting Document - City of Fairbanks Resolution of Support.PDF SRES 2/9/2018 3:30:00 PM
SB 86
SB86 - Supporting Document - Legislative Legal Memorandum.pdf SRES 2/9/2018 3:30:00 PM
SB 86
SB166 - Comments - Mike Busby - 2 - 9 - 2018.pdf SRES 2/9/2018 3:30:00 PM
SB 166
SB 86 - Supporting Document - Resolution Fairbanks North Star Borough - 2 - 8 - 2018.pdf SRES 2/9/2018 3:30:00 PM
SB 86
Senate Resources - Response to Committee Questions - 2 - 21 - 2018.pdf SRES 2/9/2018 3:30:00 PM
Roads
SB 166 FAQ from DNR.pdf SRES 2/9/2018 3:30:00 PM
SB 166