02/09/2018 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB86 | |
| SB166 | |
| Overview: Arctic Strategic Transportation & Resources Project (astar) | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 86 | TELECONFERENCED | |
| *+ | SB 166 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | 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), 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 Arctic
Strategic Transportation & Resources Project (ASTAR).
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 in 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 appropriated 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 the
[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 if that is 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
was adopted. She held the bill in committee.
SB 166-MINING: CLAIMS;RIGHTS;RENTAL RATES;LABOR
3:56:04 PM
CHAIR GIESSEL announced consideration of SB 166 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. The department is 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.
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 asked if the $100 is for a one-quarter quarter
section claim and commented that adding quarter sections gets
expensive really 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.
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: 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 this 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.
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.
Section 8 is a conforming change that removes the repealed
statutes from the abandonment provision in AS 38.05.065.
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.
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.
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.
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, held
SB 166 in committee.
^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, whether 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.
CHAIR GIESSEL said she had heard of several investment groups
that are interested in investing on the North Slope. She thanked
the presenters.
5:06:43 PM
Finding no further business, Chair Giessel adjourned the Senate
Resources Standing Committee meeting at 5:06 p.m.