Legislature(1995 - 1996)
02/05/1996 08:13 AM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 439 MINING BONDING POOL & ADVISORY COM'N Number 223 REPRESENTATIVE TOM BRICE said HB 439 emerged from Alaska Minerals Commission recommendations and from various miners within Alaska. He said while the commissioner may allow surface coal mining operations to participate, no surface coal mine has been able to use the pool. He said the bonding pool provides, to miners, a cheaper alternative to the reclamation bonding. REPRESENTATIVE BRICE explained that reclamation bonding is very expensive and very hard to obtain due to environmental laws and, what is hard to quantify, but what is actually reclaimed. The bonding pool was established to provide an alternative means to reclamation bonding. He said HB 439 adds surface coal mine operations to the list of participants who comprise the bonding pool without having to pay substantial sums of cash or provide certificates of deposit to meet the reclamation requirements. Number 365 C0-CHAIRMAN GREEN theorized that there are ten honorable people who form the pool, and then "Joe Sleaze Bag" wants to get involved. Is there an assurance or protection in the bill that "Mr. Sleaze Bag" cannot tap this pool? Is there an opportunity to then "blackball" him? Number 482 REPRESENTATIVE BRICE said the current laws, in Title 29, are very stringent and pretty nasty to people who do not meet reclamation requirements. He premised about a participant who does not pay reclamation, leaving it to the bonding pool to pay for. Imagine about 10-15 placer miners who are having their bonding pool sucked dry to pay for that operation. "You ain't got a friend in this town," not to mention being civilly liable for both reclamation and administrative costs to ensure that that reclamation is done. CO-CHAIRMAN GREEN further illuminated, if "Mr. Sleaze Bag" does not have a record, he may come in from another state, and he may sell 150 or 200 percent interest in a wildcat well. REPRESENTATIVE BRICE explained that to participate in a surface coal mining operation, you have to go through a permitting process and put up a substantial amount of money initially. He said there is a cap of $750.00 per acre for placer miners under this provision, but that cap does not apply to surface coal mining. Number 548 REPRESENTATIVE OGAN referred to the letter from Usibelli Coal Mine to Representative Brice, and clarified that HB 439 establishes a bonding pool. He said since Usibelli is the only active coal mine in the state, how can you have a pool of one? REPRESENTATIVE BRICE said the bill allows the surface coal miners, the Usibelli Coal Mine, to participate in an existing pool for mining reclamation that includes placer miners and various other types of mining activities across the state. Usibelli will provide a large source of income to that pool and provide financial stability to the rest of the mining operations. Number 587 REPRESENTATIVE OGAN asked who else is in the pool? Representative Brice deferred to the Department of Natural Resources. CO-CHAIRMAN GREEN surmised that there have been a number of coal leases issued and it is a matter of the market. REPRESENTATIVE BRICE said that was true, and reclamation bonding is a major hurdle in the development of those leases. Number 636 CO-CHAIRMAN GREEN asked if this also applies to private lands, that have the jurisdiction, throughout the state. REPRESENTATIVE BRICE responded that it applies to those areas where reclamation bonding is required. Number 675 REPRESENTATIVE AUSTERMAN referenced the new section on page three, line 25, Alaska Surface Coal Mining Advisory Commission, and asked if this is a new commission REPRESENTATIVE BRICE answered that was correct. The idea is to establish a commission that focuses on surface coal mine issues. Currently, within the Department of Natural Resources budget the surface coal mines are about to lose primacy in its regulatory abilities. That is an issue this advisory commission could be looking at as well as various other bonding requirements. Representative Brice referred to the items outlined in the Usibelli letter that the advisory commission could address. REPRESENTATIVE BRICE said there is a $75.0 fiscal note for the advisory commission. He said discussions were held on limiting the commission to two or three years. REPRESENTATIVE AUSTERMAN asked the sponsor if it was his intention to add a subsection (e) to limit the commission to two years. REPRESENTATIVE BRICE acknowledged that was a consideration. Number 750 REPRESENTATIVE AUSTERMAN said HB 439 has both Labor & Commerce and Finance committee referrals. He suggested that the Resources Committee send a recommendation to consider sunset regulation. Number 827 C0-CHAIRMAN GREEN announced that the committee would hear from the participants on the teleconference network. R. B. STILES, President, Armor Corporation, and President, Alaska Coal Association testified in support of HB 439 identifying first, things that the bill will not do: - HB 439 will not decrease the required level of bonding for surface coal mines. - HB 439 will not increase the risk profile of the bonding pool. - HB 439 will not necessarily decrease the bonding expense for surface coal miners. - HB 439 will reduce the amount of assets that have to be placed as surety in support of these bonds. Number 950 MR. STILES said he would like to cover items that the bill will do. - HB 439 will increase the assets of and the income to the bonding pool. - HB 439 will make bonding available to Alaskan surface coal miners. Number 980 MR. STILES said if a guy is a "scuzzball," he will never obtain a bond or a permit. Number 1017 MICK MANNS, Paradise Valley Mining, also testified on HB 439 stating that the bill will definitely increase the capability of the bonding pool. He related an instance in Alaska where certain individuals had refused to give bonding money back to people they did not like even though the reclamation was complete. Mr. Manns recommended that oversight was needed to ensure that this cannot happen in future. Number 1061 CHARLES P. BODDY, Usibelli Coal Mine, Inc., testified on behalf of Usibelli Coal Mine, he interpolated -Alaska's only current producing coal mine- and referenced the session laws of 1982, the Alaska Surface Coal Mining program, saying that part of that law included different forms of bonding that were to be part of that program. One requirement was that a self bonding program shall be developed. He said that law was passed in 1982, and in February of 1996, we are still without the ability to self bond in this state because the regulations for self bonding called for in 1982 have not been pushed through. He discussed a concern with the session laws of Alaska of 1990 which created a bonding pool that was used for all mining other than surface coal mining. Number 1155 MR. BODDY requested that one sentence be added to that law, "the commissioner may allow coal mining individuals to bond through the pool." Number 1218 MR. BODDY continued, the second part of HB 439 pertains to the creation of the Alaska Surface Coal Mining Advisory Commission, and it is a very positive part of the bill. He said the Governor's budget is turning primacy back to the federal government by abolishing the surface coal mine permitting program in Alaska. He recommended that a two year life for the newly formed commission would be adequate. MR. BODDY discussed sections of the federal Surface Coal Mining Control and Reclamation Act and the inconsistencies in those sections. He said one task of the commission could work on clarifying the relationship of the state and federal agencies in applying the regulations developed for use in the coterminous United States, to the unique environment we experience here in Alaska. Number 1319 MR. BODDY said he would like to see legislative involvement on the proposed surface coal mine commission and recommended that the chairmen of the Senate and House Resources Committees serve as ex- officio members on the commission. Number 1473 REPRESENTATIVE OGAN asked Mr. Boddy why the Alaska Minerals Commission is not addressing this bonding issue rather than creating a new commission at the expense of $75,000. MR. BODDY said from the Alaska Coal Association's point of view, the Alaska Minerals Commission would not be an appropriate group to do this. This is a sufficiently, industry and program specific initiative where the coal industry is willing to pay its own way so that the cost can be minimized except for the Administrative and legislative sides. Number 1590 NICO BUS, Acting Director, Division of Support Services, Department of Natural Resources commented that the department does not have a problem with the bonding part of HB 439, but the DNR does have a problem with the fiscal impact of creating a new commission, in a time of fiscal constraint. He said the DNR would be happy to work with the sponsor and the industry to resolve this issue. Number 1658 REPRESENTATIVE BRICE responded that his office is always open to these types of negotiations and he is more than happy to resolve these issues. CO-CHAIRMAN GREEN asked Representative Brice for his preference of working on the bill in the Resources Committee or passing it to the next committee of referral, House Labor and Commerce. REPRESENTATIVE BRICE said his preference was to move the bill to Labor and Commerce and, in the meantime, prepare an appropriate committee substitute. Number 1751 REPRESENTATIVE PETE KOTT said, in the spirit of cooperation, he knows exactly what he wants to do with HB 439. He said the House Labor and Commerce is charged with the oversight of boards and commission, and would work with the sponsor in drafting a committee substitute. REPRESENTATIVE OGAN expressed his concern with the fiscal impact. He said if this commission is established, he is emphatic that its life be no longer than two years. Number 1809 CO-CHAIRMAN GREEN said there have been several suggestions to amend HB 439 including Representative Austerman proposal for sunset regulations. Chairman Green felt that the House Labor and Commerce Committee could address these changes including Mr. Manns concern where the jurisdiction did not return the bonding money. He said he would entertain a motion to move the bill. Number 1858 REPRESENTATIVE AUSTERMAN moved that HB 439 move from the House Resources Committee with individual recommendations and the attached fiscal note. Hearing no objection, it was so ordered.