SENATE RESOURCES COMMITTEE March 24, 1993 3:45 p.m. MEMBERS PRESENT Senator Mike Miller, Chairman Senator Loren Leman, Vice Chairman Senator Steve Frank Senator Drue Pearce Senator Al Adams Senator Fred Zharoff Senator Dave Donley MEMBERS ABSENT All Members Present OTHER MEMBERS PRESENT Representative Harley Olberg COMMITTEE CALENDAR SENATE BILL NO. 165 "An Act making an appropriation to the Alyeska Settlement Fund and making appropriations from the Alyeska Settlement Fund; and providing for an effective date." SENATE BILL NO. 153 "An Act relating to the exchange of certain fish for seafood products, custom processing of certain fish, and use of certain fish for charitable purposes." SENATE BILL NO. 159 "An Act prohibiting the commissioner of natural resources from classifying state land, water, or land and water so that mining, mineral entry and location, mineral prospecting, and mineral leasing are precluded or are designated an incompatible use without an act of the legislature if the area involved contains more than 640 acres except in certain situations; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SB 165 - No previous action to record. SB 153 - No previous action to record. SB 159 - No previous action to record. WITNESS REGISTER Paul Fuhs, Commissioner Department of Commerce and Economic Development P.O. Box 110800 Juneau, Alaska 99811-0800 POSITION STATEMENT: Supported SB 165. Michael Brown Chugach Alaska Corporation 560 E 34th Avenue, St. 200 Anchorage, Alaska 99503 POSITION STATEMENT: Supported SB 165. Chuck Totemoff Chenega Corporation B333 Denali St., Suite 220-H Anchorage, Alaska 99503 POSITION STATEMENT: Supported SB 165. Ann Wieland Kachemak Bay Citizens Coalition 1421 N Street Anchorage, Alaska 99501 POSITION STATEMENT: Opposed SB 165. Jerry McCutcheon Anchorage, Alaska POSITION STATEMENT: Opposed SB 165. Diane McBride Kachemak Bay Citizens Coalition Homer, Alaska POSITION STATEMENT: Supported SB 165. Hugh Doogan 359 Slater Street Fairbanks, Alaska POSITION STATEMENT: Opposed SB 165. Joe Ambrose, Aide %Senator Robin Taylor State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Commented on SB 153. Janice Adair, Assistant Commissioner Department of Environmental Conservation 410 Willoughby Ave., Suite 105 Juneau, Alaska 99801-1795 POSITION STATEMENT: Supported SB 153. Michelle Bugni Alaska Troller's Association 130 Seward Street Juneau, Alaska 99801 POSITION STATEMENT: Opposed SB 153 as written, but would support with certain changes. Richard Peifer HIRA Fisheries Joint Ventures P.O. Box 235 Klawock, Alaska 99925 POSITION STATEMENT: Supported SB 153. Rick Lauber Pacific Seafood Processors Association 321 Highland Dr. Juneau, Alaska 99801 POSITION STATEMENT: Supported SB 153. Steve Borrell, Executive Director Alaska Miners Association 501 Northern Lites, #203 Anchorage, Alaska 99503 POSITION STATEMENT: Supported SB 159. Raga Elim, Special Assistant Department of Natural Resources 400 Willoughby Ave. Juneau, Alaska 99801-1724 POSITION STATEMENT: Supported SB 159 with two amendments. Jack Phelps, Aide % Representative Kott State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Commented on SB 159. ACTION NARRATIVE TAPE 93-17, SIDE A Number 001 SENATOR MILLER called the Resources Committee meeting to order at 3:45 p.m. and announced SB 165 APPROP: ALYESKA SETTLEMENT FUND to be up for consideration. SENATOR PEARCE said this bill comes as a result of an agreement that was signed by the State and Federal Government and Alyeska Pipeline Service Company. The bill appropriates $28,200,000 to several projects around the state from the Alyeska Settlement Fund. She said since the agreement has a September 15 "drop dead date," if the legislature does not appropriate these funds, the agreement will not longer be in force. The communities who were the most affected have an opportunity for some jobs coming not only from the construction, but from the long term development. SENATOR LEMAN asked what restrictions there were on the grant to Chugach. SENATOR PEARCE answered she was interested in having the funding go as a grant to the corporation, and not go to DOTPF, because she didn't think the projects would ever get built for the amount of money that's in the agreement otherwise. PAUL FUHS, Commissioner, Department of Commerce and Economic Development, said he would feel very comfortable being the agency doing the grants. They would do it with a minimum of state overhead. He said they had already been working with several communities with their projects. Number 128 SENATOR ADAMS remarked that any money left over was to be returned to the joint trust account, yet SB 165, in Section 6 says it lapses. Where does it lapse and does this conflict with the agreement, he asked. SENATOR PEARCE said the lapse in Section 6 is "as determined by the Department of Commerce and Economic Development," because we have to follow the agreement and it would have to go back to the fund. Number 155 MICHAEL BROWN, President, Chugach Alaska Corporation, said he prepared a briefing document that is in the members' packets. Briefly, he said they believe this settlement would serve to protect the economic interest of these communities. A grant of this nature is exempt from the state procurement regulations which will allow these projects to proceed on a much faster basis and "get much more bang for the buck." They have done extensive negotiations with the village corporations of which all support this vehicle. Chugach Alaska Corporation would be in a position to guarantee that Alaska consultants, contractors, and laborers would be used on this project. Number 189 CHUCK TOTEMOFF, President, Chenega Corporation, supported the concepts in SB 165. MR. BROWN commented that if this appropriation is made, Chugach Alaska Corporation will not be a contractor doing the work in field on this. They would be in the role of a project manager. SENATOR LEMAN said there were a number of activities starting now and he asked how they were being funded - the permitting and design? MR. BROWN said that it was done in- house. Number 244 SENATOR PEARCE explained that the money flows in three separate checks and the first one has been received, but additional funding won't be coming in until next year. Number 282 ANN WIELAND, Kachemak Bay Citizens Coalition, said the $7.5 million for the purchase of inholdings within Kachemak Bay State Park, contained within SB 165 is an essential component of a funding mechanism of a purchase agreement that was negotiated through the state and the private owners of the surface, subsurface, and timber estates within Kachemak Bay State Park. It is supported by a broad spectrum of interests from tourism, recreation and timber industry representatives, conservation, commercial, charter, and sport fishing boats, native corporations and education interests. The purchase of these holdings will maintain the integrity of Kachemak Bay State Park and will restore it to its original configurations created in 1971. Number 296 JERRY MCCUTCHEON, Anchorage, said timber in the Kachemak Bay area has spruce bark beetles. The legislature needs to appropriate the money to selectively log and remove the spruce bark beetles. He advised they were buying an eyesore. Number 333 DIANE MCBRIDE, Kachemak Bay Citizens Coalition, Homer, supported SB 165. Number 372 HUGH DOOGAN, Fairbanks, said he wanted money spent for all Alaskans and not money spent for just a few. He spoke about the problems with spruce beetles. He said we needed to support the Alaskan people by turning down the Kachemak Bay buy back, because it would give people jobs to harvest the trees through selective clear cutting. He said no one should have the right to appropriate state money except the legislature. He thought a big chunk of the Exxon Valdez money should be put into an educational construction fund so we could build schools in the state of Alaska for all the state. Number 438 SENATOR PEARCE said she hoped he had an opportunity to vote on dedicating the funds for school construction next year. She said purchase of Kachemak Bay timber came under the "acquisition of equivalent resources" section of the agreement we made with Alyeska. She pointed out that we would lose all $31.5 million if we don't go forward with this bill and the agreement. Number 452 SENATOR ZHAROFF said he is dissatisfied with the Kachemak Bay buy back. He had reservations with classifying land in a protected status that has a potential of creating jobs or assisting the economy of a given area. Purchasing this timber causes a problem with availability of resource for the saw mill that's open in that part of the state. SENATOR PEARCE said so far the trustees have spent almost $200 million doing assessments and the six of them approve the Kachemak Bay buy back. SENATOR ZHAROFF said the trustees have secure jobs and are well secured in their retirements. The current plant has approximately 100 people employed and they want to add another 150 people. He asked if Senator Little had been contacted regarding this legislation. SENATOR PEARCE said she and her staff are fully agreed with this legislation. SENATOR ADAMS asked what the Department of Law's position was on this legislation. SENATOR PEARCE said they are supportive. SENATOR ADAMS asked if we are setting a precedent for utilizing capital projects for the purchase of land. SENATOR MILLER said the Commissioner of the Department of Commerce and Economic Development would probably not consider it so. Number 515 SENATOR PEARCE moved to pass SB 165 from committee with individual recommendations. There were no objections and it was so ordered. SENATOR MILLER announced SB 153 EXCHANGE OF RAW FISH FOR SEAFOOD PRODUCT to be up for consideration. JOE AMBROSE, Staff for Senator Robin Taylor, read Senator Taylor's statement on SB 153. SENATOR LEMAN said his concern was with the volume of seafood product that was being shipped out of state and the potential of that entering some commercial market. He said that tourists ship their fish out of state and then sell it in the winter to pay for their trip up here. This is contrary to state law and it is very hard to prosecute them. MR. AMBROSE said Senator Taylor was aware of his concerns and didn't think SB 153 was the proper vehicle for some export limit. He suggested inserting on page 4, line 15 after the word "exchange" insert "during a 24-hour period a person who may exchange seafood products for raw fish under the ..." TAPE 17, SIDE B Number 580 "...section, may not accept or exchange more than one possession limit of each species of raw fish from that same person. Possession limit is determined according to regulation in effect on the date applicable to the fishery where the raw fish was taken." Senator Taylor is willing to restrict the amount of raw product that can be exchanged, he added. SENTOR ADAMS asked the definition of "wholesome." MR. AMBROSE said it meant food that was not spoiled. This is language that was suggested last year when they were discussing quality control. SENATOR ADAMS asked him to define "small-scale manufacturing." MR. AMBROSE said the intent was to address the mom and pop type operations and encourage their growth. SENATOR ZHAROFF asked on page 4, lines 8 - 9, how "sport use" was being defined. MR. AMBROSE said this would be someone with a sport fishing license in his possession whether they are in a charter boat or a dinghy of their own. SENATOR ZHAROFF asked if the fishing guides were excluded from this bill. MR. AMBROSE said the intent of that language was not to include the services provided by a charter operator. He explained that folks coming in on the cruise ships, go out fishing. The custom processing that is available in some areas is time consuming. They have to keep the fish separated throughout the entire process, so you get the same fish back. The fish has to be shipped back to the customer which is very expensive. A lot of people do not use that service because of the expense. What they want to offer is the chance to get an Alaskan processed product in exchange for the raw fish. Number 470 JANICE ADAIR, Department of Environmental Conservation, said the seafood inspection program is within their department. She said their first amendment is on page 2, line 18 after "exchanging" adding "thermally processed, vacuum packaged, smoked, cured, or pickled" to clarify what kinds of seafood products might be exchanged for raw fish. The next two amendments relate to the definition of raw fish and seafood products to exclude bivalve molluscan shellfish. SENATOR FRANK asked if she would have problems if the legislature determined what the ratios would properly be? MS. ADAIR answered that wouldn't be a problem. Number 434 MICHELLE BUGNI, Alaska Troller's Association, opposed SB 164 as written. If it is amended to include provisions which limit the amount of raw and processed seafood that can be transported from Alaska to an angler's permanent place of residence, they will endorse it. If they are pressed to compromise on the language, she suggested using, "The export of raw and processed sport-caught seafood transported to an individual's permanent place of residence be limited to one possession limit for each species harvested." They would like the Board of Fisheries to address this matter and provide an effective date after it has made a ruling on export limitations. SENATOR ZHAROFF said he wanted clarification on the definition of one possession limit as opposed to bag limit. MS. BUGNI said there is a difference between bag limits and possession limits. It is per area. SENATOR LEMAN said they were dealing with two limits - one was the bag limit and the other was the export limit. SENATOR ZHAROFF asked how this would be monitored and enforced and what would the penalties be for a processor who knowingly takes in more than an individual is allowed. MS. BUGNI said the intent of the bill would not be to encourage anglers to go out and catch more fish, but she thought they might be tempted to take more, because the whole process would be a lot easier. Number 325 RICHARD PEIFER, HIRA Fisheries Joint Venture, Klawock, said they are interested in adding value processing. There is an inequity in enforcement in current statutes that prohibits the exchange of sport caught fish. Basically, he said, it costs the tourist way too much money to process their fish in-state. Aside from the fact that many fish are shipped out of state before they are processed, he pointed out that many people throw away their catch that is too small to consider for shipping or processing and that is throwing away a resource. We lose the opportunity in these cases to expose them to value-added Alaskan products. If 30 - 50 people bring their fish in to have it processed as one normal production batch, he can do that very efficiently and pass the savings on to them, plus save the cost of transportation and shipping. MR. PEIFER added that processors are very experienced at recognizing contaminated or decomposing fish. He said that wholesome means fit for human consumption. The negative issues revolve around how many fish people are taking out of this state. This is a management issue. It doesn't change the jobs that are going to create the additional revenues we are going to keep in the state. Custom processing is one of the ways small business can get started and grow. He discussed the product recovery rates due to differences in individual processing techniques. Number 117 RICK LAUBER, Pacific Seafood Processors Association, asked them to not put the product recovery rate in statute, because it is very hard to change a statute. One of the things he likes about this bill is that it is going to bring custom processors under DEC, because one of the fears established processors have is that someone could get sick from eating salmon processed in a new uninspected mom and pop operation which would hurt the whole industry. SENATOR LEMAN asked if he thought this was the right vehicle for export limits and whether this would encourage abuses which may or may not conflict with commercial fisheries. MR. LAUBER said he wasn't sure that issue needed to be addressed. If it does, then it needs more study. In the mean time, this bill could pass. TAPE 93-18, SIDE A Number 001 SENATOR ZHAROFF said processors are very possessive of their records and wouldn't make them available to just anybody. In the bill it just says an "employee of the Department" so he thought that needed to be made tighter. He also thought the Department of Revenue should be added to the list since that is where a lot of the licensing and bonding is put together for the licensing of the processing. SENATOR MILLER said it was his intent to put this bill into a subcommittee of one, Senator Leman, and have him get it ready for Monday and pass it out at that time. Number 61 SENATOR MILLER announced SB 159 LIMIT ADMINISTRATIVE LAND CLOSURES to be up for consideration. SENATOR FRANK, sponsor, said the purpose was to limit the power of the Commissioner of the Department of Natural Resources in closing lands to mineral entry. The current theory is that land should be used for the maximum benefit of the people and all the land should be open for multiple use. There is a provision saying the Commissioner can close lands to multiple use under 640 acres. He said the power should be reserved for the legislature. STEVE BORRELL, Alaska Miners Association, supported SB 159. He told them there were actually three mechanisms by which state lands can be closed to mineral entry. The first way is for the legislature to pass bills establishing parks, refuges, etc. The second mechanism is the application of Title 16 by ADF&G in areas where anadromous fisheries resources may be affected. The third mechanism is the focus of this bill. Passage of this bill would send a positive signal to the international mining industry. Number 191 RAGA ELIM, Department of Natural Resources, said the administration will support this bill with the two amendments he passed to the committee. He explained that the first one tightens up some of the wording so that the term contiguous is inserted helping to define "area." The second one was designed to maintain the Commissioner's flexibility in proper land management when time is of essence in issuing some of these mineral closing orders while recognizing the appropriate role of the legislature in certifying any mineral closing orders of over 640 acres. The Commissioner could issue the mineral closing order effective immediately and the legislature would be asked to ratify that. If that didn't happen, the order would automatically lapse. Number 238 SENATOR FRANK and MR. BORREL supported both amendments. MR. BORRELL said it should be clarified that there could be several 640 acres blocks 2 feet apart. SENATOR FRANK agreed. SENATOR FRANK moved to adopt amendment #1 and asked for unanimous consent. SENATOR LEMAN objected to say that the language should be run by the bill drafter because it is different than what he normally sees. Amendment #1 was, then, adopted. Number 320 JACK PHELPS, Aide for Representative Pete Kott, sponsor of HB 2135 which contains the "contiguous" amendment offered by DNR, wasn't a problem. Although there is potential for abuse, he pointed out that, as it is proposed, it would also apply to the closures of multiple-purpose use lands which is a change in the existing statute. SENATOR FRANK said they would check with the Department of Law to make sure it wouldn't raise additional points. MR. PHELPS said he thought amendment #1 was a good amendment. SENATOR LEMAN moved to adopt amendment #2. There were no objections and it was so ordered. Number 362 SENATOR LEMAN moved to discharge SB 159 as amended with accompanying fiscal notes from committee with individual recommendations. There were no objections and it was so ordered. SENATOR MILLER adjourned the meeting at 6:42 p.m