Legislature(1997 - 1998)
03/19/1997 03:40 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 46 MINING CLAIMS ON PUBLIC LANDS CHAIRMAN HALFORD called the Senate Resources Committee meeting to order at 3:40 p.m. and announced HB 46 to be up for consideration. REPRESENTATIVE PETE KELLY, sponsor, explained that HB 46 came out of the permitting process some of the larger mining companies went through over the past few years, most notably, Illinois Creek and Fort Knox. It brings the statutes in line with procedures that are actually within DNR and is supported by industry, as well as the administration. There is no controversy to his knowledge. CHAIRMAN HALFORD asked if it eliminated the production licenses. REPRESENTATIVE KELLY replied yes. CHAIRMAN HALFORD asked what happens on tide and submerged lands without those licenses and what legislative oversight there was on mineral closing orders and what will there be with this bill. REPRESENTATIVE KELLY said he understands this bill to be a closure of future locations and legislative review remains the same on mineral closings. Number 40 MR. JULES TILESTON, Director, Division of Mining and Water Management, supported HB 46. He explained that on tide and submerged lands nothing happens. As an example the mining claims on the 40 Mile River, an inland navigable water body, have been regulated under State mining law with absolutely no problem. No one has ever requested a production license for those particular claims. Ninety percent of claim holders in production don't have a license which led them to ask why they have it in the first place. Their conclusion was that it replicates the requirements of the mining license issued by the Department of Revenue and is just a piece of paper. However, it is specific to the mining claim which is important, and is good for the life of the operation, as opposed to the mining license which is renewed annually. CHAIRMAN HALFORD said his question was from someone who had a production license interaction with tidelands. MR. TILESTON said he presumed that was a concern of Mr. Hayes and he had extensive discussions with him. He has a mining production license that was issued prior to the present law coming into place. His concern is if this is somehow retroactive and he would be at legal jeopardy and MR. TILESTON said he did not see this as being retroactive. HB 46 does not change the legislative oversight on mineral closing orders. The oversight provision kicks in when the withdrawal is more than 640 acres and that provision remains in full force. The change that is proposed is that the language in the law says a mineral closing order closes it to mining and that's not correct. It closes it to new location and, therefore, he proposed inserting "location" for "mining." Number 154 MR. TILESTON said that the Consumer Price Index (CPI) changes every ten years, which is coming up, and is an accounting nightmare for everyone. So they decided to simply change it to the nearest $5 every ten years. That's the only change. SENATOR LEMAN commented that he thought the current CPI overstates inflation and he hoped that would be adjusted sometime. Number 186 SENATOR TORGERSON asked if there were any public notice requirements. MR. TILESTON said he didn't think they were making any. There were changes of "permit" to "lease" dealing with a mill sight to be consistent. There were no changes to the overall intent. SENATOR TORGERSON asked what the changes were to oil and gas. MR. TILESTON replied there were none. This strictly deals with provisions of mining. SENATOR TORGERSON asked if it was correct on page 3, section 3 where it says the Commissioner may lease land for development that has been offered without worrying about a reoffer because the bill speaks about oil and gas throughout and he found it hard to believe they weren't affecting it somehow. MR. BRUCE CAMPBELL, Staff for Representative Kelly, explained that he was referring to changes made in section 7 where they changed the word "permit" to "lease" on lines 11 and 13. He said it is important to realize that mining leases are not subject to the same best interest findings that oil and gas leases are. So the service lease is exempted from the best interest finding in section 2, page 3, line 22. He said Senator Torgerson's question was specifically to the oil and gas numbering reference on page 3, line 26 from AS38.05.035 (e)(6)(F), but it used to be (e)(6)(G). SENATOR TORGERSON said he was particularly concerned with section (B) at the top of page 4 which refers to land that hasn't gone through any process being included if the commissioner makes a best interest finding, etc... MR. CAMPBELL agreed, but said that nothing in this bill changes anything in that section because that is the existing law. SENATOR LEMAN asked if the next amendment makes the issue of aliens consistent with corporations that have non U.S. citizens as a majority of their stock holders. REPRESENTATIVE KELLY replied that language was for consistency. CHAIRMAN HALFORD asked what their intent was and why we are offering staking ability to foreign individuals or corporations. REPRESENTATIVE KELLY replied that we are trying to open up mining in the State. CHAIRMAN HALFORD commented he thought there were two ways to fix the inconsistency. One is to go back to no aliens and the other is to say all aliens are O.K.; and his choice is to say all aliens are O.K. SENATOR LEMAN moved to adopt amendment 3/7/97 Luckhaupt 0- LSO265\F.1. He asked if other countries grant these privileges to citizens of the U.S. MR. TILESTON answered that he didn't know specifics, but it is consistent with federal law. The basic difference between federal law and this bill is that you can't get a patent if you're a foreign alien, even if the country has reciprocity. SENATOR SHARP asked if the current prohibition on the 50% rule been enforced. MR. TILESTON responded that many of the larger corporations aren't native. CHAIRMAN HALFORD asked if Canada allow U.S. citizens to stake mining claims in their jurisdiction. REPRESENTATIVE KELLY said he had only been told that there were Alaskan miners in Canada staking their own claims. CHAIRMAN HALFORD asked if there were objections to the amendment. There were none and the amendment was adopted. He added that there was some interest from the Alaska Miners Association in including some provisions in a related bill - HB 173. REPRESENTATIVE KELLY said he had no objections to that. MR. TILESTON said that the Administration supports HB 173 whether it's incorporated in this bill or remains separate. There are two broad sections of the bill, itself. The first part amends AS 27.21.120, the coal program, which deals with what you can use a federal grant for on a small coal mine. It does two things: first, it changes the definition of a federal small coal mine from 100,000 tons to 300,000 tons. The second part liberalizes what you may use those grant monies for. Existing federal regulation was very restrictive, he explained, and subsistence is now included as well as archeology studies. The federal government has recognized there are costs to small coal miners and they are willing to fund those costs. Alaska statute still has the restrictive language and they are proposing to make the two statutes compatible. The second broad group of amendments deals with the exploration incentive credits bill which was passed two years ago. That bill, which is doing very well, has had $57 million worth of credits applied for. The problem was in starting to implement it, they used existing staff; and there is a requirement for annual filings with an automatic approval process. This means if someone applies, and the division doesn't do something, that application is automatically approved - a paper process. They are proposing to eliminate the annual filing requirement and have set some thresholds that deal with when a person should file. One is if you have spent more than $250,000 or you are ready to cash in the entire amount regardless of what it is. Recognizing the cost to the State of processing this, industry agreed to do some of the work by attaching a CPA statement to any exploration incentive in excess of $40,000 for any mineral property in any one year. This fits nicely with what industry has to do as part of their tax filings, anyway. The third item is a fee that is based upon the amount of the application being filed. If it's under $1 million, it's a $500 fee; if it's over $1 million, it's a $1,000 fee. This, again, was negotiated with the industry and has the support of both. Number 444 SENATOR TAYLOR said they have had some problems with people in other areas where they utilized mining claims for other purposes than mining. He thought they might be opening themselves up to additional misuse. MR. TILESTON responded no. The credits can only be accrued through detailed exploration work as defined by statute. It does not give any property right. It is just a data collection thing. MR. ROGER BURGGRA F , Director, Alaska Miner's Association, supporte HB 46. This is a case where government and industry have worked together to clarify and streamline regulations. He said there is probably one correction that should be made where it refers to the Petersville Recreational Mining Area of 540 acres which is actually 520 acres. SENATOR TAYLOR asked if he opposed melding HB 173 into HB 46. Mr. Burggraf said he thought it could be done. MR. DAVID ROGERS, Council of Alaska Producers, supported HB 46 and they also strongly support the marriage of HB 173 with HB 46. SENATOR LEMAN moved to adopt the contents of HB 173 into SCS HB 46 (RES). There were no objections and it was so ordered. CHAIRMAN HALFORD noted that he thought the 520 acres in the Petersville area was supposed to be created as a recreational mining area when they did the mineral closing order. MR. TILESTON said that area is part of a large block of federal mining claims completely surrounded by State land at this point. Those mineral claims were going through the process of mineral patent and a technical mistake was made. The federal claims were closed and lost at which time the State selection automatically falls in place. (You can't relocate a federal claim.) The area was a producing gold area with a good history, and their first thought was to close the whole area, but what they did was pick two cites for a total of 520 acres; one at the south end of the canyon and the other at the north end. The one at the south end has the old gold mining facilities and an airstrip and the concept of a recreational mining area came at that time. Ownership of the facilities is being cleared up now. It's the administration's feeling that they have committed to doing an update on the existing land use plan that looks at that corridor and decides if it should go commercial or not. They would then come to the legislature with what they want to do with the specific north and south pieces. MR. BURGGRAF said he thought the concept was good and there weren't many areas in the State where recreational mining was available and he thought it would be a good commercial venture to have. CHAIRMAN HALFORD announced an at ease from 4:27 - 4:32 p.m. TAPE 97-20, SIDE B CHAIRMAN HALFORD said he thought it was appropriate to add the Petersville Recreational Mining Area to the bill and asked if they added this to the Caribou Creek Recreational Mining Area section, would DNR still be in charge with regard to a commercial permit for tourist operations vs. non-tourist operations. MR. TILESTON replied they would. SENATOR TAYLOR moved to conceptually add the Petersville Recreational Mining Areas to Caribou Creek Recreational Mining Area that is in existing law. It would also add section 23.625 which would be a legal description of the Petersville Mining Area. MR. TILESTON said there may be a simpler way to refer to the mineral closing orders because there's a legal description that goes with it. That way there is absolutely no confusion as to what pieces of land they are talking about or why it was withdrawn. CHAIRMAN HALFORD said it would be whatever drafting tells them would be the most concise, reasonable description of the 520 acres that is contained in that mineral closing order. He said he would have it drafted as a CS and it would come back not before the Committee, but before any of them to look at to see if they agree with the wording before it's actually transmitted to the next committee. There were no objections and it was so ordered. SENATOR TAYLOR moved SCS HB 46 (RES) with individual recommendations, assuming that members of the Committee will have an opportunity to review it before the chairman releases it. There were no objections and it was so ordered. CHAIRMAN HALFORD adjourned the meeting at 4:40 p.m.