Legislature(2003 - 2004)

04/27/2004 01:42 PM TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE TRANSPORTATION STANDING COMMITTEE                                                                          
                         April 27, 2004                                                                                         
                           1:42 p.m.                                                                                            
                                                                                                                              
TAPE(S) 04-19, 20                                                                                                             
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator John Cowdery, Co-Chair                                                                                                  
Senator Thomas Wagoner, Co-Chair                                                                                                
Senator Gene Therriault                                                                                                         
Senator Georgianna Lincoln                                                                                                      
Senator Donny Olson                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 394                                                                                                             
"An Act  relating to  a port development  project on  Lynn Canal,                                                               
providing   legislative  approval   for  the   Alaska  Industrial                                                               
Development and Export Authority to  issue bonds for the project;                                                               
and providing for an effective date."                                                                                           
                                                                                                                                
     MOVED SB 394 OUT OF COMMITTEE                                                                                              
                                                                                                                                
SENATE CONCURRENT RESOLUTION NO. 25                                                                                             
Relating to state agency construction and maintenance contracts                                                                 
throughout the state.                                                                                                           
                                                                                                                                
     MOVED SCR 25 OUT OF COMMITTEE                                                                                              
                                                                                                                                
SENATE BILL NO. 391                                                                                                             
"An Act relating to use of a snow machine within the James                                                                      
Dalton Highway corridor to establish, maintain, and service                                                                     
traplines located outside the corridor."                                                                                        
                                                                                                                                
     MOVED CSSB 391(TRA) OUT OF COMMITTEE                                                                                       
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 394                                                                                                                  
SHORT TITLE: AIDEA BONDS FOR LYNN CANAL PORT                                                                                    
SPONSOR(s): RULES                                                                                                               
                                                                                                                                
04/22/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/22/04       (S)       TRA, FIN                                                                                               
04/27/04       (S)       TRA AT 1:30 PM CAPITOL 17                                                                              
                                                                                                                                
BILL: SCR 25                                                                                                                  
SHORT TITLE: STATE CONSTRUCTION/MAINTENANCE CONTRACTS                                                                           
SPONSOR(s): TRANSPORTATION                                                                                                      
                                                                                                                                
04/21/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/21/04       (S)       TRA, STA                                                                                               
04/27/04       (S)       TRA AT 1:30 PM CAPITOL 17                                                                              
                                                                                                                                
BILL: SB 391                                                                                                                  
SHORT TITLE: DALTON HIGHWAY TRAPLINE ACCESS                                                                                     
SPONSOR(s): JUDICIARY                                                                                                           
                                                                                                                                
04/20/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/20/04       (S)       TRA, FIN                                                                                               
04/27/04       (S)       TRA AT 1:30 PM CAPITOL 17                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MR. ZACK WARWICK                                                                                                                
Staff to Senator Therriault                                                                                                     
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Presented SB 394.                                                                                         
                                                                                                                                
MR. JIM McMILLAN                                                                                                                
Deputy Director of Credit and Business Development Alaska                                                                       
Industrial Development and Export Authority (AIDEA)                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions pertaining to SB 394.                                                                 
                                                                                                                                
MR. TIM ARNOLD                                                                                                                  
V.P. and General Manager                                                                                                        
Coeur Alaska Inc.                                                                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions about Coeur d'Alene                                                                   
Mines Corporation relating to SB 394.                                                                                           
                                                                                                                                
REPRESENTATIVE BRUCE WEYHRAUCH                                                                                                  
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Testified on SB 394 that this project would                                                              
be beneficial to the Juneau area.                                                                                               
                                                                                                                                
MR. MARK O'BRIEN                                                                                                                
Chief Contracts Officer                                                                                                         
Department of Transportation &                                                                                                  
  Public Facilities                                                                                                             
3132 Channel Dr.                                                                                                                
Juneau, AK  99801-7898                                                                                                          
POSITION STATEMENT: Provided information on SCR 25.                                                                           
                                                                                                                                
MR. FRANK RICHARDS                                                                                                              
State Maintenance Engineer                                                                                                      
Department of Transportation &                                                                                                  
  Public Facilities                                                                                                             
3132 Channel Dr.                                                                                                                
Juneau, AK  99801-7898                                                                                                          
POSITION STATEMENT: Answered questions pertaining to SCR 25.                                                                  
                                                                                                                                
SENATOR RALPH SEEKINS                                                                                                           
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Sponsor of SB 391.                                                                                       
                                                                                                                                
MR. MATT ROBUS                                                                                                                  
Director of Wildlife Conservation                                                                                               
Department of Fish & Game                                                                                                       
PO Box 25526                                                                                                                    
Juneau, AK  99802-5226                                                                                                          
POSITION STATEMENT:  Testified that he was available to answer                                                                
questions on SB 391.                                                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 04-19, SIDE A                                                                                                            
                                                                                                                                
CO-CHAIR JOHN COWDERY called the Senate Transportation Standing                                                               
Committee meeting to order at 1:42 p.m.  Present at the call to                                                                 
order were Senators Lincoln, Olson, Co-Chair Wagoner, and Co-                                                                   
Chair Cowdery.  Senator Therriault arrived while the meeting was                                                                
in progress.  Also present was Representative Weyhrauch.                                                                        
                                                                                                                                
             SB 394-AIDEA BONDS FOR LYNN CANAL PORT                                                                         
                                                                                                                              
The committee took up SB 394.                                                                                                   
                                                                                                                                
MR. ZACK WARWICK, staff to Senator Therriault, presented the                                                                    
bill and testified that SB 394 authorizes Alaska Industrial                                                                     
Development  and Export  Authority  (AIDEA)  to issue  tax-exempt                                                               
bonds to finance port and port  related projects on Lynn Canal in                                                               
Southeast Alaska,  specifically for the Kensington  Mine Project.                                                               
He  noted  that  committee  members   have  an  overview  of  the                                                               
project's re-design that would include  a port from Cascade Point                                                               
to Slate  Creek Cove,  and would use  existing road  systems that                                                               
would be  upgraded to get to  Kensington Mine.  This  is required                                                               
under statute for  any project over $10 million.   At this point,                                                               
these are  estimated numbers, but authorization  was requested so                                                               
that  if cost  exceeds  $10 million,  tax-exempt  bonds would  be                                                               
issued to finance  this program.  This  doesn't guarantee funding                                                               
would go forward,  it just provides authorization to  look at the                                                               
project.  The project would still  have to meet the four criteria                                                               
set out in statute.                                                                                                             
                                                                                                                                
MR.  JIM  McMILLAN,  Deputy  Director   of  Credit  and  Business                                                               
Development, AIDEA, testified that the  bill pertains to two dock                                                               
facilities supporting  the Kensington  Gold Project,  proposed to                                                               
be  financed  under  this  legislation.    There  are  two  basic                                                               
requirements under IRS code  addressing financing with tax-exempt                                                               
proceeds:   the docks must be  owned by a government  entity, and                                                               
dock facilities  must be available  for the likelihood  of public                                                               
use.  That  determination has not been made yet.   Because of the                                                               
location  of these  two  facilities, especially  the  one on  the                                                               
northern end  of the  Berners Bay  - Slate  Creek -  AIDEA's bond                                                               
counsel  will   be  seeking   an  IRS   letter  ruling   for  the                                                               
determination  of  public  use  to  ensure  either  one  or  both                                                               
projects  qualify for  tax-exempt  financing.   That process  may                                                               
take  up  to  six  months;  however, Coeur  is  hoping  to  start                                                               
construction later  this summer  or early fall.   The  reason for                                                               
the timing  of this  legislation is  to receive  authorization if                                                               
due diligence falls in place so that the bonds can be issued.                                                                   
                                                                                                                                
MR. TIM  ARNOLD, V.P. and  General Manager of Coeur  Alaska Inc.,                                                               
representing  Coeur  d'Alene  Mines   Corporation,  said  he  was                                                               
available  to answer  questions  about the  Kensington Gold  Mine                                                               
Project.                                                                                                                        
                                                                                                                                
CO-CHAIR COWDERY noted there were  no further questions and asked                                                               
for the will of the committee.                                                                                                  
                                                                                                                                
SENATOR  GEORGIANNA LINCOLN  commented  she had  received SB  394                                                               
about 10  minutes prior to  the meeting,  that the bill  had just                                                               
been introduced on the 22nd of  April, and she was hoping to have                                                               
more of an  opportunity to review the information.   She said the                                                               
proposed  Juneau  access  project has  considered  developing  an                                                               
Alaska Marine  Highway ferry terminal  in Berners Bay,  and asked                                                               
if this project would be available for bonding through AIDEA.                                                                   
                                                                                                                                
MR. McMILLAN  responded that with tax-exempt  proceeds, AIDEA can                                                               
finance an  exempt facility such  as a dock  if it meets  the two                                                               
requirements  of  government  ownership  and  the  likelihood  of                                                               
public use.  He said because  he wasn't familiar with the project                                                               
she was  referring to, he  was hesitant to answer  directly other                                                               
than to outline those two criteria.                                                                                             
                                                                                                                                
SENATOR LINCOLN referred  to the fiscal note,  "The bill provides                                                               
$20  million  in bonding  authorization"  and  asked if  the  $20                                                               
million bond  would prevent other applicants  with large projects                                                               
from applying.                                                                                                                  
                                                                                                                                
MR.  McMILLAN   said  if  this   legislation  passed,   AIDEA  is                                                               
authorized  to issue  up  to  $20 million  in  bonds  for a  port                                                               
development  project on  Lynn Canal.   Assuming  that a  sum less                                                               
than $20 million was needed for  the two dock projects related to                                                               
Kensington, then this authorization  would allow AIDEA to utilize                                                               
the  difference  for another  port  development  project on  Lynn                                                               
Canal.                                                                                                                          
                                                                                                                                
SENATOR DONNY  OLSON asked about  other reasons for  developing a                                                               
port other than Kensington.                                                                                                     
                                                                                                                                
MR. McMILLAN  responded, "We're  not saying that  there is  or is                                                               
not another  reason for developing it.   We are looking  at these                                                               
two projects,  both the  Cascade Point and  the Slate  Creek, for                                                               
supporting the Kensington  Mine, but to do it by  the issuance of                                                               
tax exempt  bonds, it has to  be owned by the  government, and it                                                               
also has to be available for public use."                                                                                       
                                                                                                                                
SENATOR OLSON  asked if the  parent company would be  charged for                                                               
the use of this port, after it's been built.                                                                                    
                                                                                                                                
MR.  McMILLAN  replied this  was  correct.   If  the  legislation                                                               
passes and bonds are issued, there  will be some type of user fee                                                               
that  will re-pay  the bond  proceeds and  generate a  reasonable                                                               
return to AIDEA.                                                                                                                
                                                                                                                                
SENATOR OLSON  asked if a private  person or tourist would  pay a                                                               
fee to use the port.                                                                                                            
                                                                                                                                
MR. McMILLAN  said there has  been discussion of assessing  a fee                                                               
for individual use.                                                                                                             
                                                                                                                                
SENATOR OLSON said he  was hoping for more of a  yes or no answer                                                               
regarding whether there would be  a charge for private as opposed                                                               
to commercial use.                                                                                                              
                                                                                                                                
MR. McMILLAN replied that he  didn't have a specific answer right                                                               
now, but his  perception is a fee won't be  charged to individual                                                               
boaters tying up to the dock.                                                                                                   
                                                                                                                                
SENATOR OLSON  reflected on  current global  unrest and  the high                                                               
price of gold  and said, "Let's say that the  price of gold drops                                                               
after the  presidential election  or after  a semblance  of peace                                                               
comes in  the Middle East.   How do we  make sure that  this port                                                               
facility, or  these two port  facilities that are  involved don't                                                               
turn  into another  seafood-plant-type  project  that's there  in                                                               
Anchorage, or Point  Mackenzie farm situation, or  even the Delta                                                               
Junction farm debacles that we've seen happen in the past?"                                                                     
                                                                                                                                
MR.  McMILLAN acknowledged  that  any project  involves risk  and                                                               
attempts  are  made  to  mitigate  that  risk.    There  will  be                                                               
extensive  due  diligence,  Coeur's   underwriters  will  find  a                                                               
placement for the  purchase of those bonds - either  a private or                                                               
public offering -  and underwriters in the  market will determine                                                               
the structure  and the required  credit enhancements  to mitigate                                                               
the risk.  AIDEA's agreement for  operation or repayment of a fee                                                               
is supposed to be with Coeur  Alaska Inc., which is a fully owned                                                               
subsidiary  of Coeur  d'Alene Mines  Corporation.   An  available                                                               
credit  enhancement   would  be  the  guarantee   of  the  parent                                                               
corporation.   Through  due diligence,  if financial  standing is                                                               
deemed un-satisfactory,  purchasers of  the bond and  AIDEA would                                                               
look  to  other  potential  credit  enhancements  to  assure  the                                                               
project is successful.                                                                                                          
                                                                                                                                
SENATOR  OLSON asked  where  Coeur  d'Alene Mining  Corporation's                                                               
parent offices were located.                                                                                                    
                                                                                                                                
MR.  ARNOLD responded  that Coeur  d'Alene Mines  Corporation was                                                               
located in  Coeur D'Alene, Idaho.   Coeur Alaska Inc.  is located                                                               
in Juneau.                                                                                                                      
                                                                                                                                
SENATOR  GENE  THERRIAULT  asked  if  public  use  of  the  Coeur                                                               
facility would be immediate.                                                                                                    
                                                                                                                                
MR. McMILLAN  responded that  this requirement  would need  to be                                                               
satisfied at the  outset.  His understanding is  that it wouldn't                                                               
be necessary  that the public  use occur simultaneously  with the                                                               
completion of the facility, but  there would need to be assurance                                                               
that there  is the likelihood  of public  use during the  life of                                                               
the project.                                                                                                                    
                                                                                                                                
SENATOR THERRIAULT  asked if  the two  port facilities  fit under                                                               
the $20  million, or if  surplus authorization might be  used for                                                               
some Coeur facility on the Lynn  Canal; he asked for an estimated                                                               
cost of the two mine-associated dock facilities.                                                                                
                                                                                                                                
MR. McMILLAN  replied that as  a conceptual design,  according to                                                               
preliminary  discussions with  the engineer,  the projected  cost                                                               
budget is approximately $10 million.   This is a very preliminary                                                               
cost  estimate,  and  probably additional  geotechnical  work  is                                                               
necessary which  could drive up the  cost, and also the  IRS code                                                               
allows for financing improvements  that are ancillary and related                                                               
to the  primary project.   "It is too  soon to indicate  if there                                                               
are  some  other  improvements  that  could  be  thrown  in  this                                                               
package.  If that is the case, we  may get much closer to the $20                                                               
million," he said.                                                                                                              
                                                                                                                                
SENATOR OLSON asked if this was a hard rock mine.                                                                               
                                                                                                                                
MR. ARNOLD said yes, it is underground hard rock.                                                                               
                                                                                                                                
SENATOR  OLSON  asked  how  to   ensure  that  difficulties  with                                                               
environmental concerns  or objections that have  been pointed out                                                               
within the past week at Kensington will not be encountered                                                                      
                                                                                                                                
MR. ARNOLD said  he wasn't sure what Senator  Olson was referring                                                               
to, but noted  that the EIS has been addressed,  and currently, a                                                               
supplemental EIS;  the comment  period ended April  7.   Coeur is                                                               
currently going through the permitting phase.                                                                                   
                                                                                                                                
SENATOR OLSON said he was referring  to a major mine project that                                                               
had all of the permits in order,  but is now shut down because of                                                               
difficulties.                                                                                                                   
                                                                                                                                
MR. ARNOLD  said there  is always the  opportunity for  issues to                                                               
come  up.   Mining  permits take  years to  get,  so he  honestly                                                               
couldn't predict what would happen.                                                                                             
                                                                                                                                
SENATOR THERRIAULT  asked if  the port  facility's infrastructure                                                               
would  be needed  only  if  the mine  was  permitted; would  this                                                               
infrastructure be built if the mine were not permitted?                                                                         
                                                                                                                                
MR. ARNOLD  said the facilities  would not be built  unless there                                                               
was a go-ahead on the permitting processes.                                                                                     
                                                                                                                                
SENATOR  THERRIAULT   asked  Mr.  McMillan  if   there  would  be                                                               
restrictions that no  infrastructure be built until  the mine had                                                               
secured all necessary permits.                                                                                                  
                                                                                                                                
MR. McMILLAN  replied that  because of the  timing of  the issues                                                               
and the  desire to  start construction  this year,  due diligence                                                               
will  need to  begin immediately;  this means  an expenditure  of                                                               
some  funds.    At the  next  board  meeting  on  May 7,  a  cost                                                               
reimbursement  agreement will  be presented  to the  board to  be                                                               
executed with  Coeur d'Alene Mines  Corporation.  If  the project                                                               
goes forward, this  allows advance funds for due  diligence to be                                                               
part of  the financing  package.   If it does  not go  forward, a                                                               
reimbursement  agreement,  a  promissory note,  will  be  repaid.                                                               
Also, the  bonds will not be  issued and financing will  not take                                                               
place from AIDEA until the  feasibility study is seen and permits                                                               
are issued, that is, until the project is ready to go.                                                                          
                                                                                                                                
SENATOR LINCOLN  asked if, without  SB 394, Coeur  would continue                                                               
with the mining.                                                                                                                
                                                                                                                                
MR. ARNOLD said yes.                                                                                                            
                                                                                                                                
SENATOR LINCOLN asked how this would be done without the port.                                                                  
                                                                                                                                
MR. ARNOLD questioned, "Without the  port facility or without the                                                               
financing?"                                                                                                                     
                                                                                                                                
SENATOR LINCOLN replied, "Without the port facility."                                                                           
                                                                                                                                
MR. ARNOLD said he misspoke.   Coeur would need some sort of port                                                               
facility.                                                                                                                       
                                                                                                                                
SENATOR LINCOLN asked, "Why don't you just do that?"                                                                            
                                                                                                                                
MR. ARNOLD said that with the  permits for the Kensington Mine in                                                               
the  supplemental EIS,  there are  two  options.   The option  of                                                               
using AIDEA  to create the  facility offers the advantage  of the                                                               
bonding issue and  the tax-exempt financing.  "This  is a win-win                                                               
situation for both  Coeur d'Alene Mines and the  state of Alaska,                                                               
in our opinion.   It helps us in one way.  But  at the end of the                                                               
day you end up  with a port facility and it  belongs to the state                                                               
of  Alaska."   If Coeur  d'Alene Mines  creates the  port without                                                               
using  AIDEA financing,  Alaska will  not own  the port  and when                                                               
mining is finished, the port facility would be taken away.                                                                      
                                                                                                                                
SENATOR LINCOLN asked  how the requirement for public  use of the                                                               
port is envisioned.                                                                                                             
                                                                                                                                
MR.  ARNOLD said  it wasn't  envisioned yet.   That  is something                                                               
that AIDEA  and Coeur d'Alene  Mines need  to discuss.   He noted                                                               
that  the timing  is  unfortunate because  the  current level  of                                                               
detail is  not the  final detail,  and the  [legislative] session                                                               
will end in a matter of weeks.   The details will be available at                                                               
the end of May.                                                                                                                 
                                                                                                                                
SENATOR LINCOLN  said this bill  had been introduced the  22nd of                                                               
this month, and  she assumed Coeur approached  the Legislature to                                                               
introduce this.                                                                                                                 
                                                                                                                                
MR.  ARNOLD  responded he  wasn't  sure  whether Coeur  or  AIDEA                                                               
approached the Legislature.                                                                                                     
                                                                                                                                
SENATOR THERRIAULT  told members  that AIDEA  representatives had                                                               
contacted   him   and   other    legislators   about   the   port                                                               
infrastructure  possibly going  over  the  current statutory  $10                                                               
million, and the need for increased authorization.                                                                              
                                                                                                                                
SENATOR LINCOLN  said the  project has  been in  the works  for a                                                               
while and  asked why  on April  22nd it  was determined  that the                                                               
project might go over $10 million.                                                                                              
                                                                                                                                
SENATOR  THERRIAULT  said this  could  be  answered by  Coeur  or                                                               
AIDEA, but thought  it had become clearer as  numbers were firmed                                                               
up.                                                                                                                             
                                                                                                                                
MR.  McMILLAN offered  that while  the  project has  been on  the                                                               
drawing boards  for quite  a while,  the most  recent discussions                                                               
with Coeur  regarding AIDEA's providing financial  assistance has                                                               
only occurred during  the past month and a half.   "Coeur came to                                                               
us and  said they were ready.   We laid out  potentials for them,                                                               
and  these  two  projects   being  potentials  under  development                                                               
financing."   He acknowledged the  timing as unfortunate,  but to                                                               
move forward  under development  finance, authorization  from the                                                               
Legislature is required.                                                                                                        
                                                                                                                                
SENATOR  LINCOLN said  the US  Forest  Service owns  the land  on                                                               
which most of  the mine will be situated, and  their EIS won't be                                                               
completed until  September at the  earliest.  She asked  if AIDEA                                                               
begins  evaluating the  project  before the  project is  actually                                                               
permitted to proceed.                                                                                                           
                                                                                                                                
MR. McMILLAN said yes.   The project begins immediately after the                                                               
May  7th board  meeting, assuming  the board  authorizes entering                                                               
into a  cost reimbursement agreement.   Regarding  Cascade Point,                                                               
some if not all of the property  on the south side of Berners Bay                                                               
was  owned by  Goldbelt Corporation.   A  lease will  need to  be                                                               
negotiated for  the use  of that  property.   He said  he thought                                                               
Senator  Lincoln was  correct regarding  the northern  side.   He                                                               
said he  understood the EIS to  be rendered in June  unless it is                                                               
extended.                                                                                                                       
                                                                                                                                
SENATOR LINCOLN asked  Mr. Arnold if this loan would  be going to                                                               
Coeur Alaska, Inc.                                                                                                              
                                                                                                                                
MR.  ARNOLD  deferred  the question  regarding  the  workings  of                                                               
finances to AIDEA.                                                                                                              
                                                                                                                                
SENATOR LINCOLN  asked about a  guarantee by the  parent company,                                                               
and whom the loan would be going to.                                                                                            
                                                                                                                                
MR. McMILLAN said  it is proposed that the  parent company, Coeur                                                               
d'Alene Mines Corporation, will issue  a guarantee that there may                                                               
be additional mitigates of risk, or credit enhancements.                                                                        
                                                                                                                                
CO-CHAIR WAGONER  asked for  an expansion  of the  guarantee from                                                               
the parent company, wondering if this  was a letter of credit, or                                                               
what type  of guarantee  would need  to be  provided to  AIDEA if                                                               
this project moves forward.                                                                                                     
                                                                                                                                
MR. McMILLAN said AIDEA normally goes  into it knowing it will be                                                               
an unsecured guarantee, meaning they  will be standing behind the                                                               
payment by  Coeur, of  the user  fee, with all  of the  assets of                                                               
Coeur d'Alene Mines Corporation.                                                                                                
                                                                                                                                
SENATOR  LINCOLN questioned  if this  was the  normal legislative                                                               
procedure, without going into the timing or the guarantee.                                                                      
                                                                                                                                
SENATOR  THERRIAULT responded  that  Mr. McMillan  could say  for                                                               
certain.                                                                                                                        
                                                                                                                                
MR.  McMILLAN  said   that  is  correct.    He   said  there  are                                                               
similarities with  previous authorizations for  other development                                                               
finance  projects.    There isn't  more  detail  because  statute                                                               
merely requires  authorization from the Legislature  if bonds are                                                               
in  excess of  $10 million,  and  also because  the statute  sets                                                               
forth very  specific requirements  before the financing  can take                                                               
place.                                                                                                                          
                                                                                                                                
CO-CHAIR  WAGONER asked  what Coeur  d'Alene Mines  Corporation's                                                               
total assets were.                                                                                                              
                                                                                                                                
MR. ARNOLD said he didn't know but could find out.                                                                              
                                                                                                                                
SENATOR LINCOLN  asked if  $12 million was  an estimate  for this                                                               
project, why was "not to exceed $20 million" specified?                                                                         
                                                                                                                                
MR. McMILLAN explained  the project's budget is not  firm at this                                                               
point   and  also   the  code   allows   financing  for   related                                                               
improvements.  Although  the conceptual cost estimate  of the two                                                               
dock facilities  is within the  $10 million range it  will likely                                                               
be  higher   with  the  final   design.    If  the   $20  million                                                               
authorization  passes, AIDEA  will  only issue  bonds  up to  the                                                               
required amount to finance portions  of the project that qualify.                                                               
The remaining  amount could  be used  for other  qualifying Coeur                                                               
development projects in Lynn Canal.                                                                                             
                                                                                                                                
SENATOR LINCOLN reviewed  that Coeur was asking  for $2.9 million                                                               
for  the Cascade  Point dock,  $4.4 million  for the  Slate Creek                                                               
dock, which  total $7.3  million; that  leaves $12.7  million for                                                               
the uplands.  She asked if these figures were correct.                                                                          
                                                                                                                                
MR. ARNOLD said yes those were the preliminary numbers.                                                                         
                                                                                                                                
SENATOR  LINCOLN asked  if  the  balance would  be  tied to  this                                                               
project or if it could be used in another part of the state.                                                                    
                                                                                                                                
MR.  McMILLAN   said  the  authorized  amount   left  over  could                                                               
potentially be used for the  [indisc.] rural development project,                                                               
meeting  the  IRS  requirements,  that is,  "a  port  development                                                               
project on  Lynn Canal" so  if there  was a feasible  project and                                                               
issued bonds  could be  repaid, AIDEA would  look at  the project                                                               
and its  location to see if  it meets the intent  of the original                                                               
authorization.    He  said,  "It's  a  hard  question  to  answer                                                               
specifically at this  point.  It wouldn't necessarily  have to be                                                               
related to this mine project."                                                                                                  
                                                                                                                                
SENATOR LINCOLN  asked if  it was AIDEA's  language to  allow for                                                               
development of other areas in Lynn Canal.                                                                                       
                                                                                                                                
MR. McMILLAN reported  that once the determination  was made that                                                               
Coeur wanted to move forward  and legislation was required, AIDEA                                                               
provided  sample  language to  Coeur.    This  is the  result  of                                                               
discussions  between Coeur  and AIDEA,  attorneys at  Legislative                                                               
Legal and AIDEA's assistant to the attorney general.                                                                            
                                                                                                                                
CO-CHAIR COWDERY  announced that Representative Weyhrauch  was at                                                               
the meeting and wanted to testify.                                                                                              
                                                                                                                                
REPRESENTATIVE  BRUCE WEYHRAUCH  testified  that Goldbelt,  Inc.,                                                               
the Native Corporation  that Mr. McMillan referred  to, is called                                                               
such because there is gold  throughout this area.  The Kensington                                                               
Mine has  worked long and  hard to  develop that project,  and it                                                               
would   provide   tremendous   employment   and   diversification                                                               
opportunities for this  locality.  The city of  Juneau has worked                                                               
with Goldbelt,  Inc. to  develop lands  and opportunities.   This                                                               
project  seems  to  meet  the  exact  statutory  criteria  in  AS                                                               
44.88.095,  as the  project is  economically advantageous  to the                                                               
state and the  general public welfare and will  contribute to the                                                               
state's economic growth.                                                                                                        
                                                                                                                                
REPRESENATIVE   WEYHRAUCH  continued   that  Senator   Olson  had                                                               
mentioned  potential impacts  to the  Pogo Mine  and the  drop in                                                               
gold prices.   The  state has relied  on mining  opportunities to                                                               
develop  the  economy.   The  project  applicant  is  financially                                                               
responsible, has developed huge  mining operations throughout the                                                               
world, and  is the likely  candidate to support AIDEA  in issuing                                                               
these  bonds.   Work  has  been done  with  the Southeast  Alaska                                                               
gillnet fleet to address water  quality and fishing issues in the                                                               
area.  The  other statutory requirement is to  provide and retain                                                               
employment related  to the  amount financed  by the  authority in                                                               
consideration  of  the  amount of  investment  per  employee  for                                                               
comparable facilities  and other  related relevant factors.   The                                                               
Red Dog Mine  Dock and the Federal Express  terminal in Anchorage                                                               
seem to fall within that criterion.                                                                                             
                                                                                                                                
REPRESENTATIVE   WEYHRAUCH  said   this  meets   the  employment,                                                               
resource  development,  and public  use  need  for this  type  of                                                               
facility.   It would be rare  for boats to use  this dock because                                                               
there are  dock facilities  in Skagway and  Haines just  north of                                                               
the  facility  and  in  Auke  Bay just  south  of  the  facility.                                                               
However, in most  cases in Alaska, if a mariner  needs a dock for                                                               
emergency  purposes,  this  would   be  readily  available.    In                                                               
addition, beyond the  life of this project, there  will be access                                                               
to  public  lands in  that  area  for hunting,  fishing,  hiking,                                                               
camping,  and so  forth.   Beyond  the intended  purposes of  the                                                               
dock, this provides  a valuable public resource  for people, some                                                               
of whom may be opposed to the  mine.  He expressed his support on                                                               
behalf of  a community that  needs this resource  development and                                                               
opportunity for diversification.                                                                                                
                                                                                                                                
SENATOR  THERRIAULT asked  Mr. McMillan  if  there was  currently                                                               
statutory  authority  to  put  together projects  of  up  to  $10                                                               
million.                                                                                                                        
                                                                                                                                
MR.  McMILLAN  said   if  the  project  is   financed  under  the                                                               
development  finance program,  this would  apply if  the facility                                                               
was owned.   He clarified  that the proposed  financing structure                                                               
of the two docks was a hybrid of two of the programs.                                                                           
                                                                                                                                
TAPE 04-19, SIDE B                                                                                                            
                                                                                                                                
MR.  McMILLAN continued  that  issuing  general obligation  bonds                                                               
means AIDEA  was at risk  for repayment  of those bonds  if there                                                               
was a default.  That has  been subsequently corrected in a future                                                               
refunding.  Another  example of a similar project is  the sale of                                                               
Snettisham.  AIDEA  owned the facility but the  type of financing                                                               
was a  conduit bond  as indicated  in the fiscal  note.   Under a                                                               
conduit bond, the  assets, credit [indisc.] or  authority are not                                                               
at  risk,  and that's  what  is  being  proposed here.    AIDEA's                                                               
ownership is  [indisc.] classified  as non-ownership in  order to                                                               
give lower-cost  financing issuance  of tax-exempt bonds.   AIDEA                                                               
will  have title  to the  facility but  will not  be at  risk for                                                               
repayment of  bonds that  will be  issued.   That also  speaks to                                                               
Senator Olson's  earlier concern about  future risk.   He thought                                                               
due diligence  would be more extensive  on the part of  people or                                                               
entities who buy these bonds.                                                                                                   
                                                                                                                                
SENATOR WAGONER  said he's  had inherent distrust  of AIDEA.   He                                                               
then  asked what  facilities are  being  talked about  in SB  394                                                               
other than the construction of ports.                                                                                           
                                                                                                                                
2:30 p.m.                                                                                                                       
                                                                                                                                
MR. McMILLAN  replied that  no related  facilities have  yet been                                                               
identified.   Because of the timing  and preliminary discussions,                                                               
AIDEA  wanted  to  allow  for related  facilities  such  as  fuel                                                               
storage, for example.                                                                                                           
                                                                                                                                
SENATOR LINCOLN referred to the  $12.7 million and asked if AIDEA                                                               
could resolve  an amount, up to  the $20 million cap,  that Coeur                                                               
is  willing to  bond  for regarding  related  facilities on  Lynn                                                               
Canal.                                                                                                                          
                                                                                                                                
MR.  McMILLAN  said  this  was probably  correct  but  thinks  it                                                               
requires a  separate bond issue  which would double  the issuance                                                               
cost.    If the  project  were  clearly  going  to be  under  $10                                                               
million, then  legislative authorization  would not  be required.                                                               
They really don't know yet  about the issues of preliminary costs                                                               
and capital improvements, and would  like to include it under one                                                               
issuance to minimize issuance costs.                                                                                            
                                                                                                                                
SENATOR WAGONER  said he would  like to  know the value  of Coeur                                                               
d'Alene's assets  before voting on SB  394.  He repeated  that he                                                               
has  an  inherent distrust  of  AIDEA,  that  he's seen  the  ASI                                                               
building in  Anchorage that will  cost the state  several million                                                               
dollars,  and he  doesn't  want  the state  to  get into  another                                                               
similar situation with AIDEA.                                                                                                   
                                                                                                                                
MR. ARNOLD told committee members  he had just been informed that                                                               
the parent company's assets are currently $258 million.                                                                         
                                                                                                                                
SENATOR THERRIAULT  moved to report  SB 394 and  the accompanying                                                               
fiscal notes  to the  Senate Finance  committee for  review, with                                                               
individual recommendations.                                                                                                     
                                                                                                                                
SENATOR LINCOLN  objected and spoke  to her objection.   She said                                                               
even though  she was  able to ask  questions during  the meeting,                                                               
she was  uneasy about not  knowing how  all the pieces  will fall                                                               
together.  Her  questions were financial in nature  and she would                                                               
relate  those question  to members  in Finance.   With  that, she                                                               
withdrew her objection.                                                                                                         
                                                                                                                                
CO-CHAIR COWDERY  acknowledged there  were no  further objections                                                               
and announced the bill was so moved.                                                                                            
2:40 p.m.                                                                                                                       
        SCR 25-STATE CONSTRUCTION/MAINTENANCE CONTRACTS                                                                     
                                                                                                                                
The committee took up SCR 25.                                                                                                   
                                                                                                                                
CO-CHAIR COWDERY, sponsor  of SCR 25, said SCR 25  was his effort                                                               
to address problems due to SB 40, and testified as follows:                                                                     
                                                                                                                                
     In order  to maintain transparency and  to make certain                                                                    
     public  funds are  spent efficiently,  statute requires                                                                    
     construction  and maintenance  contracts be  awarded on                                                                    
     the basis of a competitive bid.                                                                                            
                                                                                                                                
     In the  case of small  projects or repairs,  law allows                                                                    
     the state,  for the  purpose of  efficiency, to  fund a                                                                    
     project  in-house   through  what's  termed   a  'force                                                                    
     account.'   Ideally,  these  are  for projects  costing                                                                    
     $250,000 or less.                                                                                                          
                                                                                                                                
     The  purpose of  SCR 25  is to  encourage the  State of                                                                    
     Alaska  (primarily DOT&PF)  to use  day labor,  24-hour                                                                    
     call out contracts, competitively  bid, in the range of                                                                    
     $250,000  to $1,500,000.    Contractors employ  skilled                                                                    
     managers  and  maintain  an  inventory  of  specialized                                                                    
     equipment.   Therefore, construction  work done  in the                                                                    
     public  sector requires  similar  staffing  as well  as                                                                    
     inventory,  thus resulting  in  increased  cost to  the                                                                    
     ratepayer.                                                                                                                 
                                                                                                                                
     Day  labor  contracts  on 24-hour  call  would  be  all                                                                    
     encompassing, using the competitive  bid process to set                                                                    
     line  item  costs  for a  set  of  numerous  individual                                                                    
     tasks,  such as  replacing  a road  sign  to filling  a                                                                    
     pothole to grading a gravel  runway, and in some places                                                                    
     in rural  Alaska, boardwalks.   Contractors  on 24-hour                                                                    
     call would use pretty much local labor sources.                                                                            
                                                                                                                                
CO-CHAIR  COWDERY  questioned  if   force  accounts  ever  use  a                                                               
competitive  bid project  if  they run  into  problems that  they                                                               
don't have  the money for, and  use force accounts to  finish the                                                               
project.                                                                                                                        
                                                                                                                                
MR. MARK O'BRIEN,  Chief Contracts Officer for  DOT&PF, said yes.                                                               
In  a case  where there  is an  ongoing construction  project and                                                               
they run  into an unknown repair,  it is fairly typical  to use a                                                               
force  account to  conduct work  that was  not previously  called                                                               
for,  under the  low-bid competitive  bid  that was  put out  and                                                               
awarded under the contract.  That  needs to be accounted for in a                                                               
different manner.                                                                                                               
                                                                                                                                
CO-CHAIR  COWDERY asked  if the  force account  was used,  in the                                                               
original  conception  of  force  accounts for  the  purpose  just                                                               
referred to.                                                                                                                    
                                                                                                                                
MR. O'BRIEN  replied this  was probably the  most common  use for                                                               
force  account within  the  department; to  pick  up and  address                                                               
these issues that were not within  the scope of the original hard                                                               
money bid  that was put  out and awarded.   There are  other uses                                                               
for it too.                                                                                                                     
                                                                                                                                
CO-CHAIR COWDERY asked if the  estimated savings on calendar year                                                               
2002 force  account projects, between  $250,000 and  $1.5 million                                                               
was $905,000, or 38 percent.                                                                                                    
                                                                                                                                
MR. O'BRIEN confirmed this was correct.                                                                                         
                                                                                                                                
CO-CHAIR  COWDERY  said  assuming  the amount  of  force  account                                                               
projects  remains constant,  over  the next  six  years the  lost                                                               
savings would total $5.43 million.                                                                                              
                                                                                                                                
MR. O'BRIEN said this was correct.                                                                                              
                                                                                                                                
CO-CHAIR COWDERY  asked if this  referred to contracts  that were                                                               
competitively bid by engineers' estimates.                                                                                      
                                                                                                                                
MR.  O'BRIEN  said these  were  estimated  savings based  on  the                                                               
difference  between issuing  a competitive  sealed bid  and using                                                               
in-house force  account labor  to accomplish  the work.   Savings                                                               
are primarily the result of  the differential between Davis Bacon                                                               
wages and the wages paid by  the state, a profit that contractors                                                               
receive that  the state does  not charge  on a project.   Cheaper                                                               
materials are  a result  of stockpiling  materials in  advance of                                                               
the  project,  and a  number  of  factors  determine that  for  a                                                               
particular project  it was  'x' percent less  expensive to  do it                                                               
with  a  force   account.    The  representative   number  is  an                                                               
accumulation and average.                                                                                                       
                                                                                                                                
CO-CHAIR  COWDERY said  these were  never bid  out competitively.                                                               
He asked if this  was an estimate of what it would  be if it went                                                               
on the street.                                                                                                                  
                                                                                                                                
MR. O'BRIEN said that was correct.                                                                                              
                                                                                                                                
CO-CHAIR COWDERY, suggesting that  estimates are guesswork, asked                                                               
if engineers' estimates were always accurate.                                                                                   
                                                                                                                                
MR.  O'BRIEN  said  no,  occasionally  engineers'  estimates  are                                                               
considerably off from the price that comes in from contractors.                                                                 
                                                                                                                                
CO-CHAIR COWDERY said he has bid on  jobs where it was as high as                                                               
50 percent.   For example, bidding  on the Port of  Anchorage, he                                                               
came  in  very low  because  of  "having  a better  mousetrap  or                                                               
whatever." They did  the job but it was about  fifty percent less                                                               
than  the  engineer's estimate.    He  said  his point  was  that                                                               
there's no way  to be accurate until you have  a competitive bid.                                                               
He referred to  the St. Mary's project, and  mentioned that local                                                               
residents were  state employees.   He said  whether one  lives in                                                               
rural or  urban Alaska, the labor  force should be paid  the same                                                               
since people work  just as hard to finish the  project.  The wage                                                               
scale  should be  on  a par  with  the urban  wage  scale.   This                                                               
resolution assures that it's competitively  bid, that Davis Bacon                                                               
wages are followed, and so forth.   He said he doesn't agree with                                                               
the fiscal note showing a savings because it's all speculation.                                                                 
                                                                                                                                
MR.  O'BRIEN said  that some  projects are  based on  competitive                                                               
bid.   For instance,  in a  year when they  did resurfacing  in a                                                               
particular area  with a  contractor, they  knew what  those costs                                                               
were.   If they do a  force account project on  a similar stretch                                                               
of  road, they  have accumulated  both of  those costs  to verify                                                               
that  in  fact the  estimate  for  savings was  verified  through                                                               
actual bid results.                                                                                                             
                                                                                                                                
CO-CHAIR COWDERY said  he didn't understand if a job  was put out                                                               
to bid,  the contractor went to  the cost of bidding  it but then                                                               
it  went  to  the  force   account.    Until  one  actually  does                                                               
something,  all  one  has  is   an  educated  guess  which  isn't                                                               
accurate, he said.                                                                                                              
                                                                                                                                
MR.  O'BRIEN  said  he  meant  that if  there  are  two  separate                                                               
projects, one  accomplished by  a contractor  under low  bid, and                                                               
one accomplished by the state  under force account, and track the                                                               
cost for both  of those projects, it verifies  a cost-savings for                                                               
the state  to use force  account for  the re-surface job  that he                                                               
referred to earlier.   He clarified that it wasn't  that they did                                                               
the project and then told the  contractor that they were going to                                                               
do it with their own forces,  but rather that it was a comparison                                                               
of two similar  projects, one accomplished with  a contractor and                                                               
one with state forces.                                                                                                          
                                                                                                                                
CO-CHAIR COWDERY said, "Granted, the  state has equipment, but do                                                               
they pay  taxes like the  contractor does?   Have overhead?"   He                                                               
said  with the  St. Mary's  project, two  contractors spent  time                                                               
bidding on the job and then the bids were cancelled.                                                                            
                                                                                                                                
MR. O'BRIEN  said the department  did not  actually competitively                                                               
bid the St. Mary's project.                                                                                                     
                                                                                                                                
CO-CHAIR  COWDERY mentioned  that contractors  went there  to see                                                               
the job.                                                                                                                        
                                                                                                                                
MR. O'BRIEN responded that may be correct.                                                                                      
                                                                                                                                
SENATOR  OLSON acknowledged  that  the force  account system  has                                                               
done a  wonderful job in  rural Alaska for some  DOT&PF projects.                                                               
He said  a number of the  airports done under force  account have                                                               
been a positive  factor for those involved with the  project.  He                                                               
mentioned the  project in  Elim in  particular where  the village                                                               
and  the city  were  involved,  and the  project  was done  under                                                               
budget.   After the project  was completed, people took  pride in                                                               
it.   He said the force  account system has been  working well in                                                               
the  past,  and  asked  for   the  department's  opinion  of  the                                                               
resolution.                                                                                                                     
                                                                                                                                
MR. O'BRIEN  said some  concerns about  the resolution  have been                                                               
formulated.  The  resolution intends to encourage the  use of as-                                                               
needed  contracts,  which  are   commonly  referred  to  as  term                                                               
contracts where  one doesn't  have a specific  piece of  work but                                                               
has a contractor on board to  take on whatever next piece of work                                                               
comes  along.    He  said the  department  currently  uses  term-                                                               
contracts for various  pieces of work, but  is usually restricted                                                               
to  individual tasks  or  individual contracts.    He said  there                                                               
should be  a list  of examples  of term-contracts  the department                                                               
currently uses, provided in the packet.   He gave the examples of                                                               
construction inspection,  corrosion inspection,  cost estimating,                                                               
and  materials  testing.    Those  are  examples  of  "as-needed"                                                               
contracts that are kept on the maintenance and operation side.                                                                  
                                                                                                                                
MR. FRANK RICHARDS, State Maintenance  Engineer for Department of                                                               
Transportation   and  Public   Facilities  (DOT&PF),   said  that                                                               
included  in  the  committee  packet  is  an  extensive  list  of                                                               
contracts currently  under maintenance, including  specialty work                                                               
such  as   brush-cutting,  guard  rail   replacement,  electrical                                                               
repair,  and  the largest  one  likely  being  the snow  haul  in                                                               
Anchorage.  It's an as-needed,  on-call basis for contract repair                                                               
to remove the snow.  One of  the other large efforts is the rural                                                               
highways and  airport contracts.   There are about  170 contracts                                                               
essentially on an  as-needed basis, primarily to  remove the snow                                                               
on the runways and roads in  rural Alaska.  Those are worth about                                                               
$2 million per year, which is a fairly large number.                                                                            
                                                                                                                                
SENATOR OLSON said  he was talking about new  capital projects as                                                               
opposed to maintenance and operations projects.                                                                                 
                                                                                                                                
MR.  O'BRIEN responded  that  this ties  in  to the  construction                                                               
contracts  because statute  and  regulations require  all of  the                                                               
construction contracts,  absent those approved by  force account,                                                               
to be  done by competitive  sealed bid, to the  lowest responsive                                                               
and  responsible bidder.   That  is different  than the  way this                                                               
tool sets  that up.   If these as-needed contracts  were imposed,                                                               
there  is no  project for  the contractor  to bid  on when  he is                                                               
responding to the as-needed contract.   His only option is to bid                                                               
hourly  rates, equipment  costs, and  those kinds  of figures  so                                                               
they are sitting there when the  department is ready to turn on a                                                               
project.  In  this case, if an as-needed contract  were used, the                                                               
department would not have a contract  low bid price for this work                                                               
going  in; it  would  be  time and  materials.    Rarely has  the                                                               
department  seen a  low bid  come  in that  is going  to be  more                                                               
expensive  than the  time and  materials contract.   Locking  the                                                               
contractor in from day one  for the specific construction project                                                               
is the main concern.  If  the department used this vehicle to use                                                               
a contractor who  was not locked in, it may  result in additional                                                               
costs to the state.  That's the primary concern, he said.                                                                       
                                                                                                                                
CO-CHAIR  COWDERY said  once  when  he worked  for  the mayor  of                                                               
Anchorage, the  same problem arose  and he developed a  day labor                                                               
contract.  Everybody who bid on  it, including ABC, liked it.  He                                                               
said he thought that in years  past, he had given contract copies                                                               
of that to  DOT&PF.  It was put  out similar to a job  to build a                                                               
road  from Juneau  to Skagway,  that is,  anticipating everything                                                               
that's  needed,  whether  that be  guard  rails,  signage,  glass                                                               
culvert, or  asphalt per  ton per  mile.  It  started out  at $.5                                                               
million  dollars  with  the  city  of Anchorage  and  went  to  a                                                               
million; it  was very  competitively bid,  and it  was understood                                                               
that  "items that  you bid  may not  ever occur.   But  everybody                                                               
being on the  up and up, the size of  the contract was determined                                                               
by someone  to be a fair  expectation of the amount  of work that                                                               
was going to be  done in that year.  In  other words, it wouldn't                                                               
be said that it would be $10 million and then do $10."                                                                          
                                                                                                                                
2:58 p.m.                                                                                                                       
                                                                                                                                
CO-CHAIR  WAGONER   referred  to  Mr.  O'Brien's   comment  about                                                               
different  salaries  the state  pays  versus  Davis Bacon  wages,                                                               
saying he doesn't think one  could stick to those parameters when                                                               
figuring the  cost of jobs  because he has observed  that between                                                               
Kenai and Anchorage, a lot of guard  rail is lost every year.  He                                                               
said he  had the  chance to  observe private  contractors working                                                               
with two  to three people,  whereas the highway  department would                                                               
have a much larger crew doing that  type of work.  He said it was                                                               
really difficult  to estimate the  actual cost unless it  was bid                                                               
out, and then one takes that bid  and relates it to the state and                                                               
looks at the increase in the amount  of hours.  He said he wasn't                                                               
saying which  was right or  wrong, but intangibles  were involved                                                               
regarding figuring prices and jobs.                                                                                             
                                                                                                                                
CO-CHAIR  WAGONER  remarked  that  this  is  a  good  bill.    He                                                               
referenced 1996  when he  was running for  office and  going back                                                               
and forth between  Kenai and Anchorage every day.   The state was                                                               
doing a large seal coat job  on the highway, there was continuous                                                               
traffic  and it  was  all  state equipment,  state  workers.   He                                                               
didn't know how  many millions of dollars the job  was worth, but                                                               
it must not have  been a job that was bid out.   He said he would                                                               
much  rather  see  state employees  working  in  maintenance-type                                                               
efforts to  keep the  good quality  of the  roads up  than seeing                                                               
them  working  with  equipment that  costs  several  hundreds  of                                                               
thousands of dollars, doing construction  work.  He said this was                                                               
a major construction project that  he doesn't think was ever bid,                                                               
although the private sector is there  to do the work, and has the                                                               
equipment.   He  questioned whether  the state  should have  that                                                               
type of equipment, because "that's  a lot of money sitting around                                                               
in  inventory" although  he understands  in the  winter there  is                                                               
some use for sanding and other functions.                                                                                       
                                                                                                                                
CO-CHAIR  COWDERY questioned  whether  the state  could do  those                                                               
jobs for less.                                                                                                                  
                                                                                                                                
SENATOR OLSON  said he  wanted to  distinguish between  the force                                                               
account projects  on the road  system and  those not on  the road                                                               
system.   He said he  was more familiar  with the one  outside of                                                               
the Railbelt,  or road system  in Alaska.   He said he  knows the                                                               
state has  leased a  lot of  equipment and it  has cut  the price                                                               
down.   This was true  for the St.  Mary's and the  Elim project.                                                               
There  has been  an addition  to the  community as  opposed to  a                                                               
project that goes  on in the community, when  everybody comes and                                                               
then leaves, including a majority of  the labor capital.  He said                                                               
from a business perspective, he  has concerns regarding equipment                                                               
being  purchased or  depreciating,  and yet,  in  looking at  the                                                               
whole picture,  he sees  the positive  effects of  force accounts                                                               
where it  has been unfettered by  the numbers or the  size of the                                                               
project,  especially  in  construction.   From  a  public  policy                                                               
standpoint, he said  DOT&PF's force account system seems  to be a                                                               
positive factor,  despite some of  the negative  sentiments being                                                               
voiced.    He  reiterated  that there  should  be  a  distinction                                                               
between road and not-on-the-road force account projects.                                                                        
                                                                                                                                
CO-CHAIR  COWDERY asked  if the  marine highway  was on  the road                                                               
system.                                                                                                                         
                                                                                                                                
SENATOR OLSON said  this wasn't black or white, but  a grey area.                                                               
He said  somebody representing the  Marine Highway  System should                                                               
comment.                                                                                                                        
                                                                                                                                
CO-CHAIR COWDERY  commented that the purpose  of SCR 25 on  SB 40                                                               
would be to give some latitude  to the local people.  Having been                                                               
a  contractor involved  with making  money, he  said whenever  he                                                               
could, he hired  local people.  The local people  were anxious to                                                               
work,  were  good, creative  workers,  and  he paid  Davis  Bacon                                                               
wages.                                                                                                                          
                                                                                                                                
SENATOR LINCOLN said  she didn't find that SCR 25  would help the                                                               
villages, as Co-Chair  Cowdery was suggesting.  She  said she has                                                               
some misunderstanding  of the "as needed"  contractors and asked,                                                               
"In the force  account projects that you've had  in the villages,                                                               
how much  in 2003 would  have been  provided to force  account to                                                               
villages versus  competitive bidding  throughout Alaska,  or even                                                               
competitive bidding in the villages?"                                                                                           
                                                                                                                                
MR. O'BRIEN said he didn't have those numbers with him today.                                                                   
                                                                                                                                
SENATOR LINCOLN asked, regarding force  account, if he could give                                                               
a  percentage, such  as  50  or 80  percent  of  the projects  in                                                               
Alaska.                                                                                                                         
                                                                                                                                
MR.  O'BRIEN said  no, in  terms of  the total  highway [indisc.]                                                               
force accounts, for instance, in  2002, force account represented                                                               
2.23 percent of the department's funding.                                                                                       
                                                                                                                                
SENATOR LINCOLN  asked, of that  2.23 percent, were those  all in                                                               
rural, bush communities?                                                                                                        
                                                                                                                                
MR. O'BRIEN  said no  they weren't.   They reflect  two different                                                               
programs  -  maintenance  and  operation  programs  that  Senator                                                               
Wagoner discussed  - with road crews  doing jobs in an  area.  It                                                               
would also include projects such  as King Cove or Soldotna, where                                                               
there   were  individual   force   account   projects  in   those                                                               
communities.  He  said it's a mixture of both  and he didn't have                                                               
a breakdown for where those percentages were.                                                                                   
                                                                                                                                
SENATOR LINCOLN asked  if 97.75 percent of all  the projects were                                                               
done through competitive bidding.                                                                                               
                                                                                                                                
MR. O'BRIEN said this was correct.                                                                                              
                                                                                                                                
SENATOR LINCOLN asked for an  explanation of why 97.75 percent of                                                               
all the projects  in 2002 - and she expressed  interest in 2003 -                                                               
was a concern, when force accounting is 2.23 percent.                                                                           
                                                                                                                                
CO-CHAIR COWDERY  asked what  the largest  contract was  in 2002,                                                               
that  is,  "What's  the  dollar  value of  the  largest  and  the                                                               
smallest?"                                                                                                                      
                                                                                                                                
MR. O'BRIEN asked  if the question was the  largest dollar amount                                                               
of a force account project.                                                                                                     
                                                                                                                                
CO-CHAIR COWDERY  said no,  of a  project.   He reviewed  that in                                                               
2002, 2.23  percent was  in force account,  of all  the projects.                                                               
He asked  what the high  bid was  on whatever projects  that "you                                                               
made in to  this equation," what the low bid  was, and where they                                                               
were located?                                                                                                                   
                                                                                                                                
MR. O'BRIEN  answered that the  program for 2002 would  have been                                                               
roughly a $550 million total  program, of which the force account                                                               
approvals   represented  $11,242,000,   reflected  in   the  2.23                                                               
percent.                                                                                                                        
                                                                                                                                
CO-CHAIR  COWDERY asked  about there  being  hydrocarbons in  the                                                               
road, and whether  the force account would be used  to add to the                                                               
cost  of the  project, or  if the  project would  be stopped  and                                                               
there would be new funding.                                                                                                     
                                                                                                                                
MR.  O'BRIEN  responded  that  was  a  different  kind  of  force                                                               
account.  A  force account that occurs on  a construction project                                                               
is not a force account  that requires approval by statute because                                                               
the original  contract was  competitively bid.     The department                                                               
had a project  that required that kind of a  force account with a                                                               
contractor,  it's  not  found  in  these  numbers  and  it's  not                                                               
required for statutory approval.   Statutory approval is required                                                               
when  the  department  conducts  a force  account  with  its  own                                                               
employees and  does it from  the very  beginning, so there  is no                                                               
competitive bid for the work itself.                                                                                            
                                                                                                                                
SENATOR LINCOLN  stated that force  accounting is so  critical to                                                               
many small  communities.  She  mentioned the village  of Rampart,                                                               
where none  of the  employees were local  hires in  a competitive                                                               
bid.   Men and women  watched the  project, almost with  tears in                                                               
their  eyes.   She concurs  with Senator  Olson's comments  about                                                               
pride in projects done by  local hire versus projects where there                                                               
is no idea how it was put together.   She then asked for a review                                                               
of the handouts that were included in the committee packet.                                                                     
                                                                                                                                
MR. O'BRIEN referred to and  explained the three handouts, noting                                                               
that the department currently utilizes  as-needed contracts.  The                                                               
difference  between  those  contracts  and  the  contract  for  a                                                               
construction  bid is  what  is commonly  called,  a "hard  dollar                                                               
bid."  An as-needed contract,  for the purposes of a construction                                                               
project, is  not a  hard dollar bid.   There is  no amount.   The                                                               
amount comes along  after the contract is in place  with the term                                                               
contractor.   He gave the example  of winning a term  contract in                                                               
Anchorage, which entitles  one to do various repairs  on the road                                                               
surface.  DOT&PF has a  $1.5 million project involving changes at                                                               
an intersection.   That contract is already  acquired, before the                                                               
project comes  along, so he is  paid according to his  rates, not                                                               
on a hard dollar bid.  The state  doesn't have a bid for the $1.3                                                               
million  for that  job, but  has the  hourly rate,  cost for  the                                                               
equipment, overhead  profit; it is not  a hard dollar bid.   That                                                               
is primarily  the difference  between the  list of  contracts and                                                               
how the department normally contracts  for the competitive awards                                                               
for construction projects.                                                                                                      
                                                                                                                                
SENATOR LINCOLN  acknowledged that it was  probably difficult for                                                               
Mr. O'Brien to sit in the  hot seat and speak honestly about what                                                               
the effects of  this resolution might be, and a  reflection on SB
40 as  well.  She  asked if  he was representing  the department,                                                               
the administration.                                                                                                             
                                                                                                                                
MR. O'BRIEN said that was correct.                                                                                              
                                                                                                                                
MR.  RICHARDS   responded  to  Senator  Lincoln's   question  and                                                               
referred to  the three lists.   One was a list  of contracts that                                                               
Mr. O'Brien  mentioned and  the second  was an  identification of                                                               
projects that  would not  be completed,  based on  certain dollar                                                               
value limitations.  The third was  the fiscal note.  He addressed                                                               
DOT&PF's force account efforts  that Co-Chair Wagoner referenced,                                                               
and said  the benefit of  utilizing federal funds  for preventive                                                               
maintenance  type work  is it  allows  for a  continuity of  work                                                               
force.   The general  fund dollars  currently used  for operating                                                               
budgets  aren't sufficient  to keep  folks  employed year  round;                                                               
there would  be seasonal  lay-offs in  the summertime  to relieve                                                               
the workforce  of those labor  costs.   The second benefit  is of                                                               
the  equipment costs.   When  the department  is able  to utilize                                                               
snowplows,  tractors,   loaders,  and  sweepers   for  preventive                                                               
maintenance  contracts,  there  is  an  ability  to  charge  that                                                               
equipment cost onto the federal project.                                                                                        
                                                                                                                                
TAPE 04-20, SIDE A                                                                                                            
                                                                                                                              
MR. RICHARDS  continued that the preventive  maintenance programs                                                               
that have been put into  place have been beneficial in preserving                                                               
the life  of the assets  that the department is  constructing, by                                                               
utilizing federal highway and aviation  dollars.  It's not always                                                               
the best  practice to  have to reconstruct,  once a  pavement has                                                               
failed, and  if preventive measures  can be done up  front during                                                               
the life of  that pavement, there will be a  cost savings overall                                                               
to state and federal programs.                                                                                                  
                                                                                                                                
SENATOR LINCOLN asked if there  have been any major problems with                                                               
force accounting.                                                                                                               
                                                                                                                                
MR.  O'BRIEN  said  he  has  been with  the  department  in  this                                                               
capacity since  1998, and is  responsible for proving all  of the                                                               
force  account projects;  he  was not  aware  of any  significant                                                               
problems.                                                                                                                       
                                                                                                                                
CO-CHAIR  COWDERY said  this is  not  about force  accounts.   He                                                               
asked, without  SB 40, what  is the limit regarding  somebody who                                                               
had a finding saying this is in the best interest of the state.                                                                 
                                                                                                                                
MR. O'BRIEN  responded the requirement is  for cost effectiveness                                                               
of finding  on the individual  project and  there is no  limit on                                                               
the size of the [project].                                                                                                      
                                                                                                                                
CO-CHAIR COWDERY said  the purpose of this resolution  is to help                                                               
out rural Alaska, and it addresses SB 40.                                                                                       
                                                                                                                                
SENATOR  LINCOLN  read from  the  last  paragraph  of SCR  25  as                                                               
follows:                                                                                                                        
     Be  it  resolved  that  the  Alaska  State  Legislature                                                                    
     respectfully  requests   that  the   governor  consider                                                                    
     directing the  Department of Transportation  and Public                                                                    
     Facilities  and  other  state  agencies  to  use,  when                                                                    
     handling construction and  maintenance projects between                                                                    
     approximately  $250,000 and  $1,500,000 throughout  the                                                                    
     state,   an  approach   under  which   a  competitively                                                                    
     selected contractor agrees  to provide construction and                                                                    
     maintenance  services  on  an as-needed  basis  over  a                                                                    
     particular period  of time  to a  specific geographical                                                                    
     area and on a 24-hour response basis.                                                                                      
                                                                                                                                
She asked what this does to force accounting.                                                                                   
                                                                                                                                
MR. O'BRIEN replied that it  is difficult to answer that question                                                               
because "be  it resolved" is not  binding on the department.   It                                                               
requests that the governor consider it.   It is difficult to know                                                               
if  the  administration  would  go  forward  with  that  request.                                                               
Assuming they  did, projects that  fall within that  category for                                                               
all state  agencies, not  just DOT&PF, would  be required  to use                                                               
this approach whereby contractors  are identified up-front.  It's                                                               
difficult  to  say   for  certain  what  this  would   do.    The                                                               
department's  concern is  since these  are not  hard-dollar bids,                                                               
not competitive, there  could be an increase in  the overall cost                                                               
to  the state  for those  same groups  of projects.   That's  the                                                               
primary concern.                                                                                                                
                                                                                                                                
SENATOR LINCOLN asked  if the force accounting  would continue as                                                               
is, under that resolve.                                                                                                         
                                                                                                                                
MR.  O'BRIEN  said  projects  in excess  of  $1.5  million  would                                                               
continue under  the normal force  account process unless  the law                                                               
changes  as  a  result of  SB  40,  in  which  case it  would  be                                                               
restricted to $250,000.  The  department would be prohibited from                                                               
doing any project in excess of $250,000 by force account.                                                                       
                                                                                                                                
SENATOR  WAGONER moved  to report  SCR 25  out of  committee with                                                               
individual recommendations and the accompanying fiscal note.                                                                    
                                                                                                                                
SENATOR LINCOLN objected.                                                                                                       
                                                                                                                                
A roll  call vote was  taken.  Senators Therriault,  Wagoner, and                                                               
Cowdery voted in favor of  the motion; Senators Lincoln and Olson                                                               
voted  against it.    Therefore,  SCR 25  moved  from the  Senate                                                               
Transportation Standing Committee by a vote of 3 to 2.                                                                          
             SB 391-DALTON HIGHWAY TRAPLINE ACCESS                                                                          
                                                                                                                              
The committee took up SB 391.                                                                                                   
                                                                                                                                
SENATOR RALPH  SEEKINS, sponsor  of SB  391, explained  this bill                                                               
will allow  trappers to  use snow machines  within the  five mile                                                               
corridor of the  Dalton Highway to access  traplines.  Currently,                                                               
Alaska  statutes ban,  with limited  exceptions, use  of off-road                                                               
vehicles within five  miles of the highway, starting  at mile 57,                                                               
at the  Yukon River  Crossing, and extending  357 miles  north to                                                               
the  Arctic Coast.   The  state  has not  actively enforced  this                                                               
statutory  ban, nevertheless,  this has  not stopped  the federal                                                               
government from co-opting the state  law, and let BLM close long-                                                               
existing  traplines and  threatening to  tear down,  or has  torn                                                               
down  cabins, unless  trappers  resort  to non-motorized  access.                                                               
This bill seeks to remedy  that situation by allowing the limited                                                               
use of snow machines within  the corridor for the express purpose                                                               
of establishing,  maintaining, and  servicing a  trapline located                                                               
outside the corridor.  To the  extent that trapping is a seasonal                                                               
activity, each trapline needs to  be re-established annually.  He                                                               
said his  intent was to provide  a measure of relief  to trappers                                                               
who  have already  been operating  in the  area.   Some of  these                                                               
traplines are  as much as  275 miles  long and the  only feasible                                                               
access is by snow machine in the wintertime.                                                                                    
                                                                                                                                
SENATOR   SEEKINS  pointed   out  this   was  an   interim  step,                                                               
specifically  designed with  the intent  of allowing  people with                                                               
already established traplines  to be able to continue  to trap in                                                               
the face  of a federal  threat to close them  down.  He  said, "I                                                               
think that's  fair and just.   There's no harm that's  been shown                                                               
by people operating in the past.   There's no good reason for the                                                               
federal government to shut them down  ... it's state law that the                                                               
federal  government is  quoting when  they say  they're going  to                                                               
shut these folks down.  Even  though Alaska's DPS and none of our                                                               
other  departments are  doing anything  to  enforce this  statute                                                               
against these people at this time."                                                                                             
                                                                                                                                
SENATOR  LINCOLN said  she didn't  believe and  didn't think  the                                                               
sponsor intended  to say there  were cabins that were  burnt down                                                               
or destroyed  because she  understands that  no cabins  have been                                                               
destroyed or  moved.  Regarding  the individual who  purported to                                                               
have 225 miles of trapline -  the local people in the area stated                                                               
this individual doesn't have 225 miles  of trapline.  He has gone                                                               
off the road  in two areas, but  is a pilot car  driver, and does                                                               
not  drive (she  referred  to a  letter) the  225  miles by  snow                                                               
machine.                                                                                                                        
                                                                                                                                
CO-CHAIR COWDERY asked if anybody has a 225-mile trapline.                                                                      
                                                                                                                                
SENATOR LINCOLN  said the individual  being referred to  that was                                                               
reported to have a 225-mile  trapline, but in fact, trappers have                                                               
said this was not the case.   She said she has contacted Alyeska.                                                               
There is  concern for pipeline  safety; that's why the  five mile                                                               
corridor  existed.   She  said  she has  not  heard from  Alyeska                                                               
regarding the  implications, should  this bill  go through.   She                                                               
said  she was  out  of the  loop and  perhaps  the sponsor  could                                                               
explain about  the bill  the sponsor is  working on  with Senator                                                               
Olson.     She   questioned   why,  instead   of  amending   that                                                               
legislation, there is this new bill.                                                                                            
                                                                                                                                
SENATOR SEEKINS  said he  has no information  to refute  the fact                                                               
that  BLM has  told people  who are  trappers that  they have  to                                                               
remove the cabins  they are using that are outside  of that five-                                                               
mile  corridor.   He said,  "I've seen  an official  letter to  a                                                               
trapper  that says  you  cannot access,  if  this decision  comes                                                               
down, and  you will be forced  to remove the cabins  that are out                                                               
there."  If  those are accessed with something other  than a snow                                                               
machine, it  would not fit  into the restriction  being proposed.                                                               
He explained he  was still working with Senator  Olson on another                                                               
bill,  and that  this  bill eliminates  any  confusion about  his                                                               
intent; it has been introduced for  this specific purpose.  If it                                                               
was  morphed  or lengthened  to  any  extent,  he said  he  would                                                               
withdraw it.   "I want to make  clear to everyone that  this is a                                                               
specific  purpose  for people  who  have  been legally  operating                                                               
their  traplines but  illegally accessing  it according  to state                                                               
law  to be  able to  do  so."   Senator Seekins  said he  remains                                                               
working with Senator Olson to ensure  that if an agreement can be                                                               
reached  addressing how  to protect  these people,  that will  be                                                               
done, and then this bill will die.                                                                                              
                                                                                                                                
SENATOR WAGONER said he was  trying to relate snow machines going                                                               
legally from one  side to the other side, and  from the road just                                                               
to  one side.   He  asked if  Senator Seekins  and Senator  Olson                                                               
worked out another bill, that would disappear.                                                                                  
                                                                                                                                
SENATOR SEEKINS said it would disappear.                                                                                        
                                                                                                                                
SENATOR WAGONER asked if this would  then be taken care of in the                                                               
other bill.                                                                                                                     
                                                                                                                                
SENATOR SEEKINS  said similar language  was being worked  on that                                                               
would  do exactly  this,  down the  line.   Senator  Olson has  a                                                               
different  constituency  than he  does,  and  they need  to  feel                                                               
comfortable.   That bill was  expanded in  the past, and  he said                                                               
he's agreed  to restrict  it down.   This bill  is meant  to give                                                               
comfort to other people.                                                                                                        
                                                                                                                                
SENATOR OLSON asked if there was a sunset date in this bill.                                                                    
                                                                                                                                
SENATOR SEEKINS  said he didn't  know.   He said he  didn't think                                                               
there was  a sunset  on the other  one.  He  said people  who are                                                               
doing  this now  would  be  allowed to  continue,  just like  the                                                               
people currently  mining have  the right to  access, and  the oil                                                               
and  gas  industry  has  the  right to  go  out  and  explore  or                                                               
maintain.   There  is  access  available, and  the  intent is  to                                                               
perpetuate legal usage.   This is intended to  protect only those                                                               
people  who are  already engaged,  not to  allow any  increase in                                                               
trappers or  to encourage  a proliferation of  trappers.   In the                                                               
next  session,   the  intention   is  to  address   other  access                                                               
provisions after there is time to study it.                                                                                     
                                                                                                                                
SENATOR OLSON asked how many trappers were involved with this.                                                                  
                                                                                                                                
SENATOR  SEEKINS said  it was  his understanding  that there  are                                                               
less than 10.                                                                                                                   
                                                                                                                                
SENATOR OLSON  asked when  the trapping  season takes  place, and                                                               
how  many months  out of  the  year was  this expected  to be  an                                                               
issue.                                                                                                                          
                                                                                                                                
SENATOR SEEKINS  responded, only  when there was  sufficient snow                                                               
cover to get out there.   He thinks the trapping season is during                                                               
the coldest  few months of the  year; most of the  traps are shut                                                               
down now.                                                                                                                       
                                                                                                                                
SENATOR  OLSON  asked if  people  were  trapping by  using  four-                                                               
wheelers.                                                                                                                       
                                                                                                                                
SENATOR SEEKINS replied no, not to  his knowledge.  He added that                                                               
this was strictly for snow machines.                                                                                            
                                                                                                                                
SENATOR LINCOLN read  [page 1, line 13] as follows:   "the use of                                                               
a snow  machine to travel  across the highway corridor  from land                                                               
outside the  corridor to  access land outside  the other  side of                                                               
the corridor or the use of  a snow machine to travel from within,                                                               
or  into,   the  corridor  for   the  purpose   of  establishing,                                                               
maintaining,  or  servicing a  trapline  located  outside of  the                                                               
corridor."   She said  a trap  license is  $15, and  this doesn't                                                               
address existing traplines, but says it  can be used to service a                                                               
trapline.   So, with a $15  license, one could throw  a couple of                                                               
traps on a snow machine and  go trapping; it doesn't prohibit the                                                               
use of  that corridor to the  10 people, but opens  it to anybody                                                               
who  throws  traps on  their  snow  machine.   She  reminded  the                                                               
sponsor that while the concerns are  in one part of the corridor,                                                               
that corridor affects a number of villages as well.                                                                             
                                                                                                                                
SENATOR  SEEKINS  said  a  resident   trapping  license  is  $15,                                                               
although he buys  his as part of a regular  hunting, fishing, and                                                               
trapping license.  He said the  safety issue was bogus, as people                                                               
drive up  and down  that road  all day long;  a terrorist  is not                                                               
going to  drive with  a snow  machine on the  back of  the truck,                                                               
take the snow  machine off, and then drive 15  yards off the road                                                               
to get  to the pipeline to  destroy it.  People  from outside the                                                               
corridor, as Senator  Wagoner indicated, can drive  from one side                                                               
to the other with  no problem at all and evidently  this is not a                                                               
safety risk.  He repeated, for  the record, that the intent is to                                                               
protect people who  already have traplines there.   He emphasized                                                               
that  until this  issue is  settled,  we don't  want the  federal                                                               
government to enforce our law against our residents.                                                                            
                                                                                                                                
SENATOR  THERRIAULT asked  how this  was tied  to an  established                                                               
trapline.                                                                                                                       
                                                                                                                                
SENATOR SEEKINS said a trapline  could be established now, but it                                                               
has  to be  re-established in  the next  trapping season,  so the                                                               
word  "established"  is  a  little  confusing.    In  one  sense,                                                               
established trappers  have been  trapping there  for a  period of                                                               
time, but  that trapline expires  and needs to  be re-established                                                               
the next year.                                                                                                                  
                                                                                                                                
MR.  MATT  ROBUS,  Director   of  Wildlife  Conservation,  Alaska                                                               
Department  of Fish  and Game  (ADF&G) said  he was  available to                                                               
answer questions.                                                                                                               
                                                                                                                                
SENATOR THERRIAULT asked how someone establishes a trapline.                                                                    
                                                                                                                                
MR. ROBUS responded  establishment of a trapline  is the physical                                                               
act of  cutting the trail,  but there  is no legal  precedence as                                                               
there is in other jurisdictions.                                                                                                
                                                                                                                                
CO-CHAIR COWDERY said  he homesteaded in 1952 and  asked if there                                                               
were any grandfather rights, wondering  if one could start at the                                                               
same location today and do the same thing.                                                                                      
                                                                                                                                
MR.  ROBUS said  this  was  correct and  if  another trapper  had                                                               
established  and  traditionally run  a  trapline  since then,  it                                                               
would  basically   involve  negotiating  with  the   trapper  and                                                               
hopefully coming  to a friendly  agreement.  There are  no rights                                                               
to  be  grandfathered  in,  nor   does  the  other  trapper  have                                                               
exclusionary rights.                                                                                                            
                                                                                                                                
SENATOR  LINCOLN referred  to the  individual  with the  225-mile                                                               
trapline; entrapping  on an  established line is  a taboo,  as is                                                               
leaving no  wood at a remote  cabin.  The individual  went to BLM                                                               
and BLM  told him to find  his own area.   He went up  to another                                                               
area.    So there  is  sort  of  a  gentlemen's agreement.    She                                                               
expressed concern that with this  legislation, someone could just                                                               
throw a  trap on  their snow  machine, with a  permit, and  go in                                                               
there, even if this is not the sponsor's intent.                                                                                
                                                                                                                                
MR.  ROBUS said  yes,  the  way the  bill  is  written, there  is                                                               
opportunity  for an  additional  trapper  to go  in  there.   His                                                               
testimony on the First Haul Road  bill, SB 298, was to the extent                                                               
there  is a  rise  in  the number  of  people  going through  the                                                               
corridor on  snow machines as a  result of the SB  391, ADF&G and                                                               
the Board of Game have management  tools to ensure the impacts to                                                               
the  populations  of  animals  are controlled.    ADF&G  has  the                                                               
ability  to deal  with management  issues, emergency  orders, and                                                               
board regulations  for different  bag limits  and seasons  and so                                                               
forth.                                                                                                                          
                                                                                                                                
SENATOR LINCOLN  asked, if somebody  said, "I'm  going trapping,"                                                               
how this would  be managed, as that person couldn't  be cited for                                                               
doing anything wrong.                                                                                                           
                                                                                                                                
MR.  ROBUS said  ADF&G wasn't  the  enforcement agency.   He  was                                                               
referring  to   management  regarding  an  increase   of  hunting                                                               
pressure on  caribou or  moose due to  more people  going through                                                               
the corridor.   ADF&G could adjust bag limits,  seasons, or issue                                                               
emergency   closures  to   protect  the   resource.     Regarding                                                               
enforcement, Senator Lincoln was correct  in that if somebody was                                                               
going to  run a  trapline, and  they have  a snow  machine, you'd                                                               
basically have to take them at their word or investigate.                                                                       
                                                                                                                                
SENATOR OLSON asked for clarification of Mr. Robus's position.                                                                  
                                                                                                                                
MR. ROBUS  said he was  involved with ADF&G  wildlife management;                                                               
enforcement is with the state troopers.                                                                                         
                                                                                                                                
SENATOR OLSON asked what types of animals are being trapped.                                                                    
                                                                                                                                
MR. ROBUS said the Haul  Road crosses many different habitats and                                                               
includes  wolves,  marten,  wolverine,  fox,  lynx,  and  a  wide                                                               
variety of fur-bearing animals.                                                                                                 
                                                                                                                                
SENATOR  OLSON asked  if the  department  has a  position on  the                                                               
bill.                                                                                                                           
                                                                                                                                
MR. ROBUS said he didn't think so.                                                                                              
                                                                                                                                
SENATOR WAGONER asked  if it was correct that  anybody wishing to                                                               
buy a license  can trap in any given area  and that basically the                                                               
department does  not regulate  where they trap  or how  many furs                                                               
are produced per year.                                                                                                          
                                                                                                                                
MR. ROBUS  responded this  was basically  correct, but  wanted to                                                               
put some sideboards on this.  He  said if it got to a point where                                                               
indications  were  such  that  populations  were  suffering  from                                                               
pressure, ADF&G would shorten seasons  or even close those areas.                                                               
The Board  of Game  has a  few trapping  closures where  it's not                                                               
appropriate for  trappers to  go.  Other  than that,  trapping is                                                               
basically  self-regulating.   Trappers have  to sort  out amongst                                                               
themselves where  they're going  to operate in  order to  make it                                                               
worthwhile to go trapping from year to year.                                                                                    
                                                                                                                                
SENATOR OLSON  asked if besides  this bill, there is  another way                                                               
to keep these  trapping cabins from being torn or  burned down to                                                               
ensure that  these sanctuaries of  safety would be  available, in                                                               
addition to  being used  by the  people who put  them up  and who                                                               
have a financial investment in them.                                                                                            
                                                                                                                                
MR. ROBUS said he wasn't equipped  to answer that since state law                                                               
doesn't have  a penalty  clause and it  has never  been enforced.                                                               
The state  law is not the  proximate problem and he  doesn't know                                                               
much about BLM regulations or recent actions.                                                                                   
                                                                                                                                
SENATOR OLSON  said state  law may  not be  in question,  but the                                                               
sponsor is stating  that the federal [government]  is using state                                                               
law as a justification.                                                                                                         
                                                                                                                                
MR.  ROBUS confirmed  he's heard  the same  statement in  several                                                               
hearings and gathers  that state statute is allowing  BLM to make                                                               
attempts at enforcement.                                                                                                        
                                                                                                                                
SENATOR  LINCOLN referred  to  a gentleman  in  her district  who                                                               
noted  there are  two  real established  trappers  in this  large                                                               
area, saying, "I was not opposed  to access permits to areas that                                                               
do not  conflict with  established traplines  for these  two real                                                               
trappers."   She  said  there is  expressed  concern with  people                                                               
other than these trappers.   She asked why the five-mile corridor                                                               
was established.                                                                                                                
                                                                                                                                
MR. ROBUS  said it was to  protect the pipeline itself  and there                                                               
may have  been intent to  protect wildlife populations  along the                                                               
Haul Road.                                                                                                                      
                                                                                                                                
[Co-Chair Cowdery left the room and  the gavel was turned over to                                                               
Co-Chair Wagoner.]                                                                                                              
                                                                                                                                
SENATOR LINCOLN  asked Senator  Seekins if  he intended  to amend                                                               
this, acknowledging  that his intent was  for SB 391 to  apply to                                                               
those who were already established trappers.                                                                                    
                                                                                                                                
SENATOR SEEKINS responded, "Go ahead and propose the amendment."                                                                
                                                                                                                                
SENATOR  LINCOLN suggested  conceptually,  "That  a trapper  must                                                               
have received a  BLM permit for snowmobile access in  the past 24                                                               
months to access their - or - this trapline."                                                                                   
                                                                                                                                
4:00 p.m.                                                                                                                       
                                                                                                                                
SENATOR  SEEKINS said  he'd  just  as soon  leave  BLM  out.   If                                                               
someone can show they've trapped  there, they should have access;                                                               
to the best  of his knowledge, based on talking  with people from                                                               
the Trappers' Association,  this amounts to less  than 10 people.                                                               
He said only  the BLM is enforcing the restriction  and he wanted                                                               
to  protect people  actually trapping  there now  because they're                                                               
not causing any  huge disruption.  Conceptually,  he said, "Those                                                               
people who  can show that  they have  trapped there, you  know in                                                               
the last  24 months, something  like that, that  adequately meets                                                               
my intent.   But  we've had troubles  struggling with  this, with                                                               
the drafters,  as well, to  make sure  that we're taking  care of                                                               
those folks  who have been  doing this from this  federal threat,                                                               
without opening it  up to somebody who says, 'I've  got two traps                                                               
in the back of my snow machine  and I'm going out there.'  That's                                                               
not our intent, and I think you know that."                                                                                     
                                                                                                                                
CO-CHAIR  WAGONER  asked  if  this   addresses  people  who  have                                                               
currently  either  constructed or  taken  over  and maintained  a                                                               
cabin.                                                                                                                          
                                                                                                                                
SENATOR  SEEKINS said  probably some  people.   He said  he's not                                                               
sure  of the  permitting process  but  BLM said  they would  cite                                                               
people using the  cabins, under state law.  If  we can show these                                                               
people  have  trapped  there  in  the past  24  months  and  have                                                               
established traplines,  this might allow them  the opportunity to                                                               
continue without federal interference.                                                                                          
                                                                                                                                
SENATOR  LINCOLN asked  if conceptual  language could  be that  a                                                               
trapper must have received a  permit for snowmobile access in the                                                               
past 24 months to access the trapline.                                                                                          
                                                                                                                                
SENATOR SEEKINS suggested that a  trapper who has taken fur needs                                                               
to tell the state where he's trapped or took the animal.                                                                        
                                                                                                                                
MR. ROBUS said this was correct.                                                                                                
                                                                                                                                
SENATOR SEEKINS  said it would solve  his problem if it  could be                                                               
shown  through ADF&G  trapping forms  or some  documentation that                                                               
people  have been  trapping there,  because then  this law  would                                                               
exempt them from that restriction.                                                                                              
                                                                                                                                
SENATOR LINCOLN  said this was  her concern  as well.   She asked                                                               
Mr.  Robus  about ensuring  that  nobody  would get  around  this                                                               
conceptual language.                                                                                                            
                                                                                                                                
SENATOR  SEEKINS said,  "That's  up to  us to  do  that, not  Mr.                                                               
Robus."                                                                                                                         
                                                                                                                                
SENATOR LINCOLN said, "Mr. Robus  said that this would work, that                                                               
there's a  way that they can  show that they have  indeed trapped                                                               
in the  area.  And  if you're saying  that there  is a way  to do                                                               
that, then  I want assurance that  there is no way  that they can                                                               
get around this."                                                                                                               
                                                                                                                                
MR. ROBUS  said that on state  sealing forms, the trapper  has to                                                               
report the locality where that fur  was taken.  There is a little                                                               
fuzziness because people don't want to reveal this.                                                                             
                                                                                                                                
TAPE 04-20, SIDE B                                                                                                            
                                                                                                                                
MR.  ROBUS  continued  that  those records  are  stored  and  are                                                               
available to enforcement in the future.                                                                                         
                                                                                                                                
SENATOR LINCOLN moved the conceptual amendment.                                                                                 
                                                                                                                                
SENATOR SEEKINS said he believes  he and Senator Lincoln were now                                                               
on the  same page.   If it can be  shown through the  state forms                                                               
that someone actually  trapped within that vicinity  and the Haul                                                               
Road  was  used   as  access,  then  they're   exempt  from  this                                                               
restriction;  "if that's  where we're  going, I  have no  problem                                                               
with that, it's a friendly amendment."                                                                                          
                                                                                                                                
CO-CHAIR  WAGONER  asked  if  there  was  any  objection  to  the                                                               
amendment  and   acknowledged  that   there  was   no  objection.                                                               
[Amendment 1 was treated as adopted.]                                                                                           
                                                                                                                                
SENATOR  LINCOLN referred  to Senator  Seekins's comment  that SB
391  just be  incorporated into  the other  piece of  legislation                                                               
that he  and Senator Olson were  working on, and asked  if SB 391                                                               
should have a sunset clause.                                                                                                    
                                                                                                                                
SENATOR SEEKINS said for the record  that if he and Senator Olson                                                               
work out  a committee substitute  (CS) that fits  this conceptual                                                               
language, he would just not pursue SB 391 any longer.                                                                           
                                                                                                                                
SENATOR LINCOLN said  SB 391 might move along and  the other bill                                                               
might not.                                                                                                                      
                                                                                                                                
SENATOR SEEKINS said  the differences could be worked  out in the                                                               
Senate Finance committee.                                                                                                       
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
CO-CHAIR COWDERY  moved to report SB  391 as amended to  the next                                                               
committee of referral.                                                                                                          
                                                                                                                                
SENATOR OLSON objected.                                                                                                         
                                                                                                                                
A  roll  call  vote  was taken.    Senator  Therriault,  Co-Chair                                                               
Cowdery,  and Co-Chair  Wagoner  voted in  favor  of the  motion;                                                               
Senators Lincoln and Olson voted  against it.  Therefore CSSB 391                                                               
(TRA) moved from the Senate  Transportation Standing Committee by                                                               
a vote of 3 to 2.                                                                                                               
                                                                                                                                
There being no further business to come before the committee, he                                                                
adjourned the meeting at 4:10 p.m.                                                                                              

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