Legislature(1997 - 1998)

03/19/1997 03:40 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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              
 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                 
 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                   
  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            
 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.                           

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