03/29/2012 09:00 AM Senate STATE AFFAIRS

         SB 206-INTERSTATE MINING COMPACT & COMMISSION                                                                      
                                                                                                                                
9:01:53 AM                                                                                                                    
CHAIR WIELECHOWSKI announced  that the first bill  to come before                                                               
the  committee  would be  SB  206,  which would  incorporate  the                                                               
Interstate Mining  Compact in state statute  and authorize Alaska                                                               
to participate  fully in the  Interstate Mining  Commission. This                                                               
commission  is a  multi-state  organization  that represents  the                                                               
natural resource interests  of its member states.  It was created                                                               
in 1970 with the entry by  four states. Since then, 19 additional                                                               
states have joined  the compact, and five  additional states have                                                               
become  associate  members.  Alaska  is  presently  an  associate                                                               
member. This is the first hearing on the bill.                                                                                  
                                                                                                                                
SENATOR CATHY GIESSEL,  sponsor of SB 206,  presented an overview                                                               
of  the  bill. She  referred  to  a  chart in  members'  packets,                                                               
Interstate Compacts and Commissions  in Alaska Statute. She noted                                                               
that  Alaska  belongs to  at  least  23 interstate  compacts  and                                                               
commissions. She  explained that the  bill was an  opportunity to                                                               
demonstrate leadership  in resource development. Becoming  a full                                                               
member of  the Interstate Mining Compact  Commission (IMCC) would                                                               
give Alaska voting rights.                                                                                                      
                                                                                                                                
She pointed  out that Alaska  has a  large deposit of  rare earth                                                               
elements, which  will become  an issue on  the national  scene in                                                               
the near future. She noted the bill enjoys bi-partisan support.                                                                 
                                                                                                                                
CHAIR WIELECHOWSKI requested a sectional analysis.                                                                              
                                                                                                                                
SENATOR GIESSEL explained  each section of the  bill. She related                                                               
that lines 5-7  say that the Interstate  Mining Compact contained                                                               
in  this  section  is  enacted  into law.  Article  1  finds  the                                                               
importance  of  mining  to  the state  and  proposes  to  support                                                               
environmentally  sound  mining.  Article   2  is  the  definition                                                               
section.  Article 3  is  state  programs and  it  ensures that  a                                                               
member state has adequate mining  regulations. Article 4 is about                                                               
powers  of the  commission  to study,  make recommendations,  and                                                               
gather  and  disseminate  information  on  mining-relate  issues.                                                               
Article  5   creates  the  commission.   Article  6   allows  the                                                               
commission  to   establish  advisory,  technical,   and  regional                                                               
committees. Article  7 details how the  commission's finances are                                                               
to be handled.  The fiscal note comes from this  area. The budget                                                               
is apportioned to the state members  and is based on the value of                                                               
mined products.                                                                                                                 
                                                                                                                                
CHAIR WIELECHOWSKI asked about the fiscal note.                                                                                 
                                                                                                                                
SENATOR GIESSEL  said that Mr.  Fogels would speak to  the fiscal                                                               
note.                                                                                                                           
                                                                                                                                
She continued  with Article 8,  which describes that  states must                                                               
enact  the compact  to participate  and  must repeal  the act  to                                                               
withdraw. Article  9 maintains that  the compact does  not limit,                                                               
repeal, or  supersede any  state laws.  Article 10  provides that                                                               
all phrases,  clauses, sentences,  and provisions  are severable.                                                               
She  related that  the bill  concludes  with a  provision for  an                                                               
alternate,  requirements  for  bylaws   and  amendments,  and  an                                                               
immediate effective date.                                                                                                       
                                                                                                                                
9:10:57 AM                                                                                                                    
ED FOGELS, Deputy Commissioner,  Department of Natural Resources,                                                               
provided  information related  to  SB 206.  He  pointed out  that                                                               
mining activity has  increased in the state. There  are now seven                                                               
major  operating  mines  in Alaska,  which  are  strong  economic                                                               
contributors.  He  opined  that  DNR  is  doing  a  good  job  of                                                               
permitting  those mines.  He  spoke of  the  controversy and  the                                                               
questioning of  the permitting process.  As part of  a permitting                                                               
review, the state  has been asked to look at  how it collaborates                                                               
with  the federal  side of  the  permitting process,  as well  as                                                               
finding out  how other states  do their permitting. He  said that                                                               
IMCC can help Alaska work with both of those issues.                                                                            
                                                                                                                                
He provided  the history  of the  state's association  with IMCC.                                                               
Alaska has  been an associate  member for six years.  IMCC brings                                                               
together  the environmental  regulatory programs  and the  mining                                                               
programs  from  24  states  and  is  a  very  robust  information                                                               
exchange. IMCC carries the full weight  of 24 states when it goes                                                               
to  Washington, D.C.,  to testify  in Congress  or to  approach a                                                               
federal agency.                                                                                                                 
                                                                                                                                
He gave an  example of the Environmental  Protection Agency (EPA)                                                               
and  their pending  decision  to provide  bonding  for hard  rock                                                               
mining. The  issue relates to the  Super Fund Law. Mining  is the                                                               
first to  be considered. There  is a risk  if EPA takes  over the                                                               
responsibility for  bonding for  hard rock  mining that  it would                                                               
negatively  impact the  state's  ability to  regulate mining.  He                                                               
stated that IMCC  has done a great job of  bringing mining states                                                               
together  to  meet  with the  EPA  in  an  effort  to work  on  a                                                               
solution. He  said he  was the  governor's representative  to the                                                               
IMCC.                                                                                                                           
                                                                                                                                
9:15:22 AM                                                                                                                    
CHAIR  WIELECHOWSKI asked  what  benefits Alaska  would get  from                                                               
full membership.                                                                                                                
                                                                                                                                
MR. FOGELS explained  that after five or six years  the state has                                                               
to make a decision whether to  become a full member because it no                                                               
longer can be  an associate member. He described  the benefits of                                                               
full  membership,  such  as  being   able  to  vote  and  sit  on                                                               
committees. The  more full  members IMCC  has, the  more powerful                                                               
the voice in Washington, DC.                                                                                                    
                                                                                                                                
SENATOR PASKVAN asked how  Alaska's membership contribution would                                                               
rate compared to  other states. He understood that  50 percent of                                                               
membership dues is based on the value of the state's ores.                                                                      
                                                                                                                                
MR. FOGELS  explained that the  first half of membership  dues is                                                               
pro-rated equally  to all member  states, and the second  half is                                                               
pro-rated  base on  the state's  mineral valuation.  He suggested                                                               
asking Greg Conrad for more details.                                                                                            
                                                                                                                                
9:18:00 AM                                                                                                                    
SENATOR  PASKVAN noted  a favorable  letter from  the Council  of                                                               
Alaska  Producers.  He  asked  if  industry  contributes  to  the                                                               
membership fees, or if there is a policy against that.                                                                          
                                                                                                                                
MR. FOGELS  reported that industry  does not contribute  to IMCC.                                                               
It is an organization of state governments that pay dues.                                                                       
                                                                                                                                
SENATOR KOOKESH said he was  interested in more information about                                                               
the dues structure.                                                                                                             
                                                                                                                                
MR.  FOGELS pointed  out that  IMCC  dues would  not continue  to                                                               
increase; the  state would pay  more of  the share as  the mining                                                               
industry grows. The cap is structured on IMCC's annual budget.                                                                  
                                                                                                                                
SENATOR PASKVAN asked if Nevada was a member.                                                                                   
                                                                                                                                
MR. FOGELS said Nevada is not  a member. He related that the IMCC                                                               
began with  the coal  states in  the East Coast  in the  60's and                                                               
70's. Now,  Western states are  associate members. Alaska  is the                                                               
first to  consider full  memberships. He  said there  was growing                                                               
interest for IMCC in non-coal states.                                                                                           
                                                                                                                                
9:22:22 AM                                                                                                                    
SENATOR GIESSEL  clarified the states' membership  status using a                                                               
chart.                                                                                                                          
                                                                                                                                
CHAIR WIELECHOWSKI asked  if there are any  negatives to Alaska's                                                               
joining the IMCC.                                                                                                               
                                                                                                                                
MR. FOGELS didn't  see any downsides except for  the fiscal cost.                                                               
The IMCC  does not  bind states  to anything, but  is more  of an                                                               
advisory commission.                                                                                                            
                                                                                                                                
CHAIR WIELECHOWSKI  asked for examples  of issues IMCC  has dealt                                                               
with in the past that Alaska would have wanted to weigh in on.                                                                  
                                                                                                                                
MR.  FOGELS brought  up the  EPA  bonding issue  and also  issues                                                               
related to the  merger of the Office of Surfaces  Mining with the                                                               
Bureau  of  Land  Management.  The   proposed  merger  was  being                                                               
conducted without state  input. He also listed  federal hard rock                                                               
mining  issues and  key  federal legislation,  such  as the  Good                                                               
Samaritan legislation, which would  allow non-profits to clean up                                                               
old mine sites.                                                                                                                 
                                                                                                                                
9:25:25 AM                                                                                                                    
GREGORY  CONRAD, Executive  Director,  Interstate Mining  Compact                                                               
Commission  (IMCC), provided  information related  to SB  206. He                                                               
explained that  in today's regulatory climate  in Washington, DC,                                                               
it is  important for states to  have a say. IMCC  is an important                                                               
entity when dealing with federal  requirements. He listed several                                                               
issues  that  IMCC  has  testified on,  such  as  Good  Samaritan                                                               
Protections,  stream  protection  requirements for  surface  coal                                                               
mining  operations, hard  rock financial  assurance requirements,                                                               
and the  impacts on the  federal budget on state  grant programs.                                                               
He noted in IMCC's annual  report, recommendations on many issues                                                               
which  are developed  by the  states.  Without the  input of  the                                                               
states,  none of  this would  be possible.  The ability  to speak                                                               
with  one  voice  on  common concerns  gives  meaning  to  IMCC's                                                               
purpose.                                                                                                                        
                                                                                                                                
He addressed a  specific matter as to why Alaska  should become a                                                               
full member  of IMCC. He  listed the advantages of  membership: a                                                               
formal vote, committee memberships,  and access to communications                                                               
and  programs. He  continued  to say  that  Congress and  federal                                                               
agencies will recognize  Alaska's interest in issues  as a member                                                               
of IMCC. He said participation  opens avenues. He noted that IMCC                                                               
is focused solely on mining issues.                                                                                             
                                                                                                                                
9:30:14 AM                                                                                                                    
CHAIR WIELECHOWSKI  asked about financial implications  to Alaska                                                               
with  the increase  of  mines in  the state  and  how that  might                                                               
affect IMCC dues.                                                                                                               
                                                                                                                                
MR. CONRAD explained that dues are  based on the value of mineral                                                               
production  based  on figures  provided  by  the U.S.  Geological                                                               
Survey  for non-coal,  and by  Energy Information  Administration                                                               
figures for coal.  The dues are proportioned over  two years. The                                                               
dues cap is two times the  equal share amount allocated among the                                                               
states. For 2014 and 2015 the  maximum amount any one state would                                                               
pay would  be $57,000.  Currently, Alaska's  dues would  be about                                                               
$35,000 to  $40,000. They could increase  up to the cap  as it is                                                               
reached. He  noted that  West Virginia's  share was  $72,000, but                                                               
the cap  brought them down  to $57,000. He concluded  that Alaska                                                               
would not be one of the larger dues-paying states.                                                                              
                                                                                                                                
9:33:10 AM                                                                                                                    
CHAIR WIELECHOWSKI asked what IMCC's total budget was.                                                                          
                                                                                                                                
MR.  CONRAD  related that  the  information  is found  in  IMCC's                                                               
annual report,  which he offered  to make available.  He believed                                                               
that  IMCC's projected  expenses for  FY  2014 and  FY 2015  were                                                               
about $520,000.                                                                                                                 
                                                                                                                                
CHAIR WIELECHOWSKI inquired how many staff IMCC employs.                                                                        
                                                                                                                                
MR. CONRAD said two.                                                                                                            
                                                                                                                                
9:33:51 AM                                                                                                                    
SENATOR PASKVAN asked why Nevada was not a member.                                                                              
                                                                                                                                
MR.  CONRAD  reported that  Nevada  has  made  a request  to  its                                                               
governor  to join  IMCC. IMCC  is also  working with  Montana and                                                               
Arizona to  join. In the  past, during  the first 20  years, IMCC                                                               
was not involved  in hard rock issues.  Currently, Western States                                                               
have expressed an interest in  becoming members. IMCC's strategic                                                               
plan now includes Western States' issues.                                                                                       
                                                                                                                                
SENATOR PASKVAN  asked if  there have  been policy  issue reasons                                                               
for states' not joining.                                                                                                        
                                                                                                                                
MR.  CONRAD related  that the  only concern  has been  related to                                                               
fiscal expense,  but not  to policy  issues. Most  states realize                                                               
that membership dues are reasonable.                                                                                            
                                                                                                                                
9:37:45 AM                                                                                                                    
TIM MUSGROVE,  representing himself, Soldotna,  Alaska, testified                                                               
in  support  of  SB  206.  He urged  the  committee  to  continue                                                               
responsible  development of  mining-related natural  resources by                                                               
joining IMCC as a full member.                                                                                                  
                                                                                                                                
9:38:43 AM                                                                                                                    
JIM DUFFIELD, Chairman, Alaska  Miners' Association, testified in                                                               
support of SB  206. He said he  has seen the benefits  of IMCC in                                                               
other states. He encouraged full membership in IMCC.                                                                            
                                                                                                                                
CHAIR WIELECHOWSKI  asked if membership  would bind the  state or                                                               
have any negative ramifications.                                                                                                
                                                                                                                                
9:40:09 AM                                                                                                                    
ASHELY  BROWN,  Assistant Attorney  General,  Oil,  Gas &  Mining                                                               
Section,  Department of  Law, answered  questions  related to  SB
. She replied  that no new laws would have  to be enacted. She                                                               
referred to Article  3 which she opined is  sufficient to fulfill                                                               
the terms  of the compact. Article  9 states that nothing  in the                                                               
compact shall  be construed  to limit,  repeal, or  supersede any                                                               
laws  of the  state. She  stated that  the bill  would not  limit                                                               
sovereignty. There  is an option  for the state to  withdraw from                                                               
the compact.                                                                                                                    
                                                                                                                                
SENATOR  PASKVAN  asked  if  IMCC  was  an  advisory  group  that                                                               
addresses issues of importance to the mining industry.                                                                          
                                                                                                                                
MR. FOGELS clarified that it is  an advisory body for the states,                                                               
not for the industry, as they deal with mining issues.                                                                          
                                                                                                                                
CHAIR WIELECHOWSKI closed public testimony. He set SB 206 aside.