Legislature(1995 - 1996)

02/05/1996 08:13 AM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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"            
 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            
 - HB 439 will make bonding available to Alaskan surface coal                  
 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            
 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                
 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           
 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.               

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