Legislature(2013 - 2014)CAPITOL 106

03/21/2013 08:00 AM STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved Out of Committee
<Bill Hearing Rescheduled to 3/26/13>
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                     SB 1-ALASKA MINING DAY                                                                                 
8:04:37 AM                                                                                                                    
CHAIR LYNN announced that the  first order of business was SENATE                                                               
BILL NO.  1, "An Act establishing  May 10 of each  year as Alaska                                                               
Mining Day."                                                                                                                    
8:05:01 AM                                                                                                                    
SENATOR CATHY  GIESSEL, Alaska State Legislature,  stated that SB
1 would establish  May 10th as Alaska Mining Day.   She said that                                                               
this day  was chosen since the  General Mining Act of  the United                                                               
States was  approved on May 10,  1872.  The Act  has been amended                                                               
numerous  times, but  the essential  principles remain  in place:                                                               
If a  citizen ventures  on to federal  public land  not otherwise                                                               
designated as a park, refuge, or  set aside in any other way, and                                                               
with  his/her  own energy,  intellect,  finances,  and hard  work                                                               
finds  a valuable  mineral  deposit, then  that  citizen has  the                                                               
first right to develop that  mineral deposit, after obtaining the                                                               
required environmental  and operating  permits.   Senator Giessel                                                               
related that the Act paved  way for mineral development in Alaska                                                               
and many  of the  communities represented  by the  committee were                                                               
established  because of  mining.   Well-known, large  gold rushes                                                               
occurred in:   Juneau in  1880; Turnagain Arm in  1885; Fortymile                                                               
in 1886;  Kenai in 1888;  Circle in  1892; the Klondike  in 1896;                                                               
Nome in 1898; Fairbanks in 1902;  and Iditarod in 1908.  The Gold                                                               
Rush and  copper discovery at  Kennecott in 1905  brought miners,                                                               
adventurers, merchants  and their  families to Alaska  in droves.                                                               
They built towns, roads, dams,  ports and railroads in Alaska and                                                               
moved  Alaska to  a territory  status in  1912 and  eventually to                                                               
SENATOR GIESSEL continued as follows:                                                                                           
     If Alaska  were a country  it would  be in the  top ten                                                                    
     for  a  lot  of   our  precious  metals  and  strategic                                                                    
     minerals:   gold, zinc  - largest  zinc deposit  in the                                                                    
     world  -  silver,  copper, platinum,  molybdenum,  rare                                                                    
     earth developments,  which are used  in all of  the new                                                                    
     technology - clean energy technology.   China now holds                                                                    
     the  monopoly  on  rare  earth  elements,  but  lo  and                                                                    
     behold, Alaska has a massive deposit.                                                                                      
SENATOR  GIESSEL stated  that Alaska  Mining Day  highlights that                                                               
tremendous history and  the state's future in  this industry, and                                                               
contributes  significantly  to  communities.    For  example,  in                                                               
Juneau,  four of  the hydroelectric  projects were  built over  a                                                               
hundred years  ago by the  mining industry and  the hydroelectric                                                               
projects  still  operate  today.   Also,  hydroelectric  projects                                                               
represent  clean and  durable energy.   She  pointed out  that at                                                               
Lake Dorothy, the main purpose of  the project was to bolster the                                                               
energy needs  of Greens Creek Mine.   In fact, Greens  Creek Mine                                                               
in Juneau is now the largest  private sector employer in Juneau -                                                               
with 340  employees - and  the mine contributes  significantly to                                                               
this economy.   In  conclusion, Senator  Giessel stated  that the                                                               
purpose of  Alaska Mining  Day on  May 10th  is to  highlight and                                                               
draw  attention and  respect for  Alaska's mining  heritage.   In                                                               
response to  a comment, she said,  "If it can't be  grown it must                                                               
be mined."                                                                                                                      
CHAIR  LYNN emphasized  that Alaska  must diversify  its economy,                                                               
and one of the principal ways that can happen is through mining.                                                                
8:09:30 AM                                                                                                                    
REPRESENTATIVE ISAACSON said  he can see that some  may find this                                                               
bill  frivolous.   He wondered  if  the Alaska  Mining Day  could                                                               
become a day of education  and whether the sponsor envisions this                                                               
as a day that students would have a day off from school.                                                                        
SENATOR  GIESSEL   highlighted  the  Alaska   Resource  Education                                                               
Program, which is a program that  has been developed, in part, by                                                               
the  Alaska  Miners  Association,  with  packets  distributed  to                                                               
teachers throughout the  state.  In fact,  the program emphasizes                                                               
the significant role that minerals  play in the everyday lives of                                                               
Alaskans.  She referred to a  video in which fifth graders select                                                               
and showcase a  mineral.  She offered her belief  it is important                                                               
for students to understand that  mining is not detrimental to the                                                               
environment,  can be  done  safely, and  can  coexist with  other                                                               
8:11:35 AM                                                                                                                    
REPRESENTATIVE   ISAACSON  referred   language  [in   a  sentence                                                               
beginning  on line  10 through  line 13  of SB  1, which  read as                                                               
     Alaska Mining  Day may be  observed by  educational and                                                                    
     celebratory   events,  projects,   and  activities   to                                                                    
     increase  public  awareness  of  and  appreciation  for                                                                    
     mining and  miners in the  state and the many  uses for                                                                    
     the minerals mined in the state.                                                                                           
REPRESENTATIVE  ISAACSON  suggested  that if  the  language  were                                                               
amended  to  change "may"  to  "shall",  it could  ensure  mining                                                               
education would get into the school system.                                                                                     
CHAIR  LYNN  asked  whether  the sponsor  was  amenable  to  such                                                               
SENATOR GIESSEL  advised that  such a  change should  be pondered                                                               
and  she  would  consider  it.   In  response  to  Representative                                                               
Isaacson, she  answered that the Alaska  Mining Association, Inc.                                                               
(AMA) is  active in all  communities, and she feels  confident it                                                               
will  move   forward  with  [the  methods   of  promoting  public                                                               
awareness listed in the  aforementioned language], "regardless of                                                               
what this resolution says."                                                                                                     
REPRESENTATIVE ISAACSON said he  wants to ensure school districts                                                               
[observe  Alaska Mining  Day], because  [to do  so] is  "a proper                                                               
role of education."                                                                                                             
CHAIR LYNN  said he is  not opposed  to any changes,  but pointed                                                               
out  that any  change to  the  bill at  this point  may slow  the                                                               
8:15:25 AM                                                                                                                    
REPRESENTATIVE HUGHES  acknowledged Alaska  is a  resource state,                                                               
and said she  likes the pun, "We've barely  scraped the surface."                                                               
She said she  has had an opportunity to tour  Usibelli Coal Mine,                                                               
Inc.   She  asked to  put on  the record  that prior  to all  the                                                               
environmental laws  being adopted, the Usibelli  family for three                                                               
generations has shown  stewardship.  She offered  her belief that                                                               
the reclamation  the mine performs  is impressive.  In  fact, the                                                               
care and stewardship  by Alaskans has also been  impressive.  She                                                               
mentioned  she  attended  a  recent  Energy  Council  meeting  in                                                               
Washington,  D.C., and  she enjoyed  telling members  of Congress                                                               
how Alaskans take care of  Alaska's environment.  She asked about                                                               
the  rare earth  elements and  if there  has been  any effort  to                                                               
encourage the rare earth metals industry in Alaska.                                                                             
SENATOR GIESSEL  answered that Niblack  Mining Corporation  has a                                                               
mining project,  which is located  just south and west  of "here"                                                               
[on the southeast side of Prince  of Wales Island].  She deferred                                                               
to Ed Fogels for more information.                                                                                              
CHAIR  LYNN  remarked that  he  gets  nervous  when China  has  a                                                               
monopoly on anything.                                                                                                           
REPRESENTATIVE GATTIS said  that she thinks Alaska  Mining Day is                                                               
a great thing to do to  ensure Alaskan kids recognize the effects                                                               
of mining  on Alaska.   She also said she  is going to  be voting                                                               
yes today.                                                                                                                      
CHAIR  LYNN related  that he  is the  first cross-sponsor  in the                                                               
House for SB 1.                                                                                                                 
REPRESENTATIVE KREISS-TOMKINS commented that  the Prince of Wales                                                               
Niblack  and Bokan  Mountain mines  are in  his district.   These                                                               
communities are excited  about the potential of  these mines, and                                                               
he is excited about this bill and the companion bill.                                                                           
8:20:14 AM                                                                                                                    
DEANTHA CROCKETT, Associate  Director, Alaska Miners Association,                                                               
Inc. (AMA), stated that making  Alaska Mining Day a state holiday                                                               
would increase  the popularity  of the  industry.   She expressed                                                               
appreciation  for Senator  Giessel's sponsorship  of SB  1.   She                                                               
said  it is  important not  to  forget the  contributions of  the                                                               
mining industry.   Ms. Crockett related that  the mining industry                                                               
employs about  5,000 people directly and  about 9,000 indirectly,                                                               
with an  average industry wage of  $100,000.  Many of  these jobs                                                               
are in  rural areas that  do not offer many  other opportunities.                                                               
She stated that  AMA helps fund local governments  and the Alaska                                                               
Native   corporations.     She  emphasized   the  importance   of                                                               
recognizing the presence that mining  has in the state, including                                                               
its rich  history in communities  such as Juneau,  Fairbanks, and                                                               
Nome.   She offered her belief  that having an Alaska  Mining Day                                                               
is a great way to recognize the mining history in Alaska.                                                                       
8:21:53 AM                                                                                                                    
EDMUND FOGELS,  Deputy Commissioner, Office of  the Commissioner,                                                               
Department   of  Natural   Resources  (DNR),   stated  that   the                                                               
department supports the  bill, which would establish  May 10th of                                                               
each year as Alaska Mining Day.   He acknowledged that mining has                                                               
played a critical role in  Alaska's history and continues to play                                                               
a critical role.   While mining may seem overshadowed  by oil and                                                               
gas in economic contributions, it  is still very significant.  He                                                               
echoed Ms.  Crockett's statement that mining  provides over 5,000                                                               
jobs, with  an average  wage of $100,000.   He  characterized the                                                               
jobs  as   being  highly   skilled  jobs,   including  engineers,                                                               
environmental   scientists,   heavy  equipment   operators,   and                                                               
mechanics.   In  fact, these  are career  building jobs.   Mining                                                               
provides  economic benefits  to some  of the  poorest regions  in                                                               
rural  Alaska.   For  example,  the  Red  Dog  Mine is  the  only                                                               
taxpayer in the Northwest Arctic  Borough (NWAB).  He pointed out                                                               
that mines  like the mine  proposed by  Donlin Gold LLC  have the                                                               
potential  to  really carry  the  economy  for generations.    He                                                               
stated one  aspect of his  job has been  to ensure that  a strong                                                               
environmental permitting  process exists for these  projects.  He                                                               
said  all seven  of the  currently operating  mines have  a sound                                                               
environmental  record with  agency people  monitoring the  sites.                                                               
He offered his  assurance that Alaska's water and  fish are being                                                               
protected, as well as other  environmental resources.  He pointed                                                               
out that the  division has been working to  strengthen the mining                                                               
sector.   He  said the  governor  has initiated  a strategic  and                                                               
critical  minerals initiative,  including a  statewide assessment                                                               
for  strategic  and  critical   minerals,  including  rare  earth                                                               
elements.   He noted that  rare earth elements are  also referred                                                               
to as REE.   He described the Bokan Mountain  project on southern                                                               
Prince of Wales Island as very promising.                                                                                       
8:24:11 AM                                                                                                                    
MR. FOGELS explained there are  two types of rare earth elements:                                                               
heavy  rare earth  elements and  light rare  earth elements.   He                                                               
pointed  out that  one  of the  biggest mines  in  the nation  in                                                               
California  contains  light rare  earth  elements,  but the  more                                                               
valuable and  important ones are  the heavy rare  earth elements.                                                               
He   indicated  that   Bokan  Mountain   is  blessed   with  high                                                               
concentrations of heavy rare earth elements.                                                                                    
8:24:49 AM                                                                                                                    
CHAIR LYNN  remarked that  someone said China  has a  monopoly on                                                               
rare earth  elements.  He  asked whether any rare  earth elements                                                               
are being produced in the U.S.                                                                                                  
MR. FOGELS offered  that Mountain Pass in California  is the only                                                               
mine  he is  aware of  at  this time.    Most of  the rare  earth                                                               
elements  are being  produced by  China so  it is  imperative for                                                               
other sources to be developed.                                                                                                  
CHAIR LYNN asked  for the impact if China were  to "cut off" rare                                                               
earth elements.                                                                                                                 
MR. FOGELS  offered his belief that  it would be a  bad situation                                                               
if that  were to happen;  the minerals are important  for defense                                                               
and  alternative  energy  purposes.   One  interesting  fact,  he                                                               
noted, is  the color red in  flat screen televisions can  only be                                                               
produced by  the rare earth  element europium.   He characterized                                                               
these metals as being very important.                                                                                           
CHAIR LYNN asked whether this is critical to the U.S. defense.                                                                  
MR. FOGELS answered yes.                                                                                                        
CHAIR  LYNN asked  how close  Alaska is  to producing  rare earth                                                               
MR.  FOGELS answered  that in  Alaska,  the company  is close  to                                                               
submitting  permit applications.   He  estimated an  average time                                                               
frame  for permitting  something  like the  Bokan Mountain  mine,                                                               
which is  anticipated to be a  small mine, would be  two or three                                                               
years in permitting - including  federal permitting - and another                                                               
year in construction.                                                                                                           
CHAIR LYNN asked  whether any other locations in  Alaska may have                                                               
rare earth elements.                                                                                                            
MR. FOGELS  answered that about  70 known locations  contain rare                                                               
earth  elements, but  the department  has  not investigated  them                                                               
enough  to know  if  the minerals  are  economically feasible  to                                                               
develop, so right  now Bokan Mountain is the only  one.  In fact,                                                               
the Division of Geologic and  Geophysical Surveys (DGGS), [within                                                               
DNR],  is in  the process  of  reviewing rare  earth elements  in                                                               
8:28:41 AM                                                                                                                    
REPRESENTATIVE  HUGHES asked  whether  the department  has put  a                                                               
price tag on REE in Alaska.                                                                                                     
MR. FOGELS answered no.                                                                                                         
REPRESENTATIVE HUGHES asked whether any work has occurred.                                                                      
MR. FOGELS  explained that  exploration companies  drill, perform                                                               
assay reports, and develop an  exploration model.  He stated that                                                               
the value  is unknown,  but he  predicted the  state has  so much                                                               
unexplored land that  many more mining deposits are  likely to be                                                               
REPRESENTATIVE HUGHES  said she  thinks it  would be  helpful and                                                               
supportive if the information was available.                                                                                    
8:31:16 AM                                                                                                                    
REPRESENTATIVE  KELLER asked  whether  the  legislature needs  to                                                               
work on the royalty tax structure.                                                                                              
MR. FOGELS responded that a number  of years ago AMA brought up a                                                               
leading expert  on mining  taxes who  reviewed the  state's taxes                                                               
and royalty taxes  as compared to other  countries and determined                                                               
that Alaska  was "in the  middle of the  pack."  Beyond  that the                                                               
state has not done significant  work on tax structure evaluation.                                                               
He  stated the  primary economic  benefit  of mining  is that  it                                                               
benefits the local  economies.  For example,  mining benefits the                                                               
community of Fairbanks  with the Fort Knox mine;  Juneau with the                                                               
Greens  Creek  and Kensington  mines;  and  the Northwest  Arctic                                                               
Borough with  the Red Dog mine.   He pointed out  that while some                                                               
people focus  solely on the  state treasury as a  benchmark, some                                                               
mines, such  as the Red  Dog Mine,  are located on  private land.                                                               
Kensington  mine and  Greens Creek  mine are  located on  federal                                                               
land.   He reported  that Pogo  and Usibelli  mines are  the only                                                               
ones on general state land, while  Fort Knox is located on Mental                                                               
Health Trust Land.   Therefore, it really isn't  fair to consider                                                               
mining based solely on mining tax contributions to the treasury.                                                                
REPRESENTATIVE KELLER  asked where  he could find  a copy  of the                                                               
report on the tax structure.                                                                                                    
MR.  FOGELS answered  there wasn't  a specific  report since  the                                                               
aforementioned royalty tax analysis was  performed in a series of                                                               
meetings with  a tax  specialist, although he  offered to  try to                                                               
locate a PowerPoint on the matter.                                                                                              
REPRESENTATIVE  KELLER  commented that  when  he  hears the  term                                                               
"Roads to  Resources," it reminds him  of the big deposit  at the                                                               
Ambler mineral project.   He remarked the  legislature is working                                                               
on the preliminary stages of this mining project.                                                                               
8:35:29 AM                                                                                                                    
MICHAEL SATRE,  Executive Director,  Council of  Alaska Producers                                                               
(CAP), stated that the council  is a non-profit trade association                                                               
that represents the  large producing metal mines  and major metal                                                               
development projects in  Alaska.  He emphasized  that the council                                                               
supports  establishing  Alaska Mining  Day.    He reiterated  Ms.                                                               
Crockett's  comments on  the  significant  economic benefits  the                                                               
industry provides to the State of  Alaska.  He offered his belief                                                               
that Deputy Commissioner Fogels has  done a wonderful job talking                                                               
about many aspects of the  mining industry and has emphasized the                                                               
importance of the industry today.   He also reminded members that                                                               
establishing Alaska Mining  Day is about honoring  the people who                                                               
have  built the  mining industry  over the  years.   He mentioned                                                               
former Deputy Commissioner David  Stone, Department of Labor, who                                                               
unexpectedly died  last year.   He remarked that Mr.  Stone would                                                               
have loved  to share  his stories  with the  committee.   He also                                                               
mentioned  contributions   by  other   Alaskans,  such   as  Earl                                                               
Beistline,  Fairbanks; Bartlett  Lee  "Bart"  Thane, Juneau;  and                                                               
Peter Miscovich, Flat, Alaska.   He said that through their sweat                                                               
equity,  they helped  build the  mining industry  and the  state.                                                               
Further,  mining has  allowed  him  to work  in  his hometown  of                                                               
Juneau.   In closing, he remarked  that Alaska Mining Day  is not                                                               
just  about infrastructure  and the  economics, but  about people                                                               
that have built the state, as well.                                                                                             
8:37:40 AM                                                                                                                    
CHAIR  LYNN,  after  first  determining no  one  else  wished  to                                                               
testify, closed public testimony on SB 1.                                                                                       
8:38:00 AM                                                                                                                    
REPRESENTATIVE KELLER moved to report  SB 1 out of committee with                                                               
individual  recommendations  and  the  accompanying  zero  fiscal                                                               
note.   There  being no  objection, SB  1 was  reported from  the                                                               
House State Affairs Standing Committee.                                                                                         

Document Name Date/Time Subjects
01 SB 1 - Version 28-L0001U.pdf HSTA 3/21/2013 8:00:00 AM
SB 1
02 SB 1 - Sponsor Statement.pdf HSTA 3/21/2013 8:00:00 AM
SB 1
03 SB 1 - Overview of Mining in AK LR13-156.pdf HSTA 3/21/2013 8:00:00 AM
SB 1
04 SB 1- FN ADM-N.pdf HSTA 3/21/2013 8:00:00 AM
SB 1
05 SB 1 - Support - 2011 Gov Parnell Mining Day Proclamation 041411.pdf HSTA 3/21/2013 8:00:00 AM
SB 1
06 SB 1 - Letters of Support H STA.pdf HSTA 3/21/2013 8:00:00 AM
SB 1
01 HB59 ver A.pdf HSTA 3/21/2013 8:00:00 AM
HB 59
02 HB59 ver N.PDF HSTA 3/21/2013 8:00:00 AM
HB 59
03 HB0059 ver P.pdf HSTA 3/21/2013 8:00:00 AM
HB 59
03a HB59 Explanation of Changes.pdf HSTA 3/21/2013 8:00:00 AM
HB 59
04 HB59-Sponsor Statement(pdf).docx.pdf HSTA 3/21/2013 8:00:00 AM
HB 59
05 HB 59 Quick Statistics.pdf HSTA 3/21/2013 8:00:00 AM
HB 59
06 HB59 Silver Alert States List 1-22-2013.PDF HSTA 3/21/2013 8:00:00 AM
HB 59
07 ARTICLE HB 59 Fairbanks News Miner 12-3-2011.PDF HSTA 3/21/2013 8:00:00 AM
HB 59
08 ARTICLE HB 59 Juneau Empire 1-25-2013.PDF HSTA 3/21/2013 8:00:00 AM
HB 59
09 HB 59 Fiscal Note -DPS.pdf HSTA 3/21/2013 8:00:00 AM
HB 59
10 HB 59 Fiscal Note -MVA.pdf HSTA 3/21/2013 8:00:00 AM
HB 59
11 HB 59 Legal Memo -Strasbaugh 3-11-2013.PDF HSTA 3/21/2013 8:00:00 AM
HB 59
12 HB 59 Letter Chief Tom Clemons 2-2-2013.PDF HSTA 3/21/2013 8:00:00 AM
HB 59
13 HB 59 Letter John Lucking Jr 2-12-2013.PDF HSTA 3/21/2013 8:00:00 AM
HB 59
14 HB 59 Letter Ken Helender 2-11-2013.PDF HSTA 3/21/2013 8:00:00 AM
HB 59
15 HB 59 Letter of Support Marianne Mills.pdf HSTA 3/21/2013 8:00:00 AM
HB 59
16 HB59 Letter Denise Daniello 2-25-2013.PDF HSTA 3/21/2013 8:00:00 AM
HB 59
17 HB59 Letter Patrick Cunningham 3-4-2013.pdf HSTA 3/21/2013 8:00:00 AM
HB 59