Legislature(2013 - 2014)BARNES 124

02/05/2013 11:15 AM House ECON. DEV., TRADE & TOURISM


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11:20:44 AM Start
11:21:39 AM Overviews (s): Presentations of the Alaska Regional Development Organizations
12:19:02 PM Overview(s): Presentation by the Alaska Minerals Commission
12:44:02 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentations of the ARDOR Program and the TELECONFERENCED
Minerals Commission by:
- Nicole Grewe, ARDOR Program Coordinator,
Division of Economic Development, Dept. of
Commerce, Community & Economic Development
- Andy Varner, Executive Director, Southwest
Alaska Municipal Conference (SWAMC)
- Shelly Wright, Executive Director, Southeast
Conference (SEC)
- Bill Jeffress, Chairman, Alaska Minerals
Commission (AMC)
                    ALASKA STATE LEGISLATURE                                                                                  
   HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, TRADE AND                                                                 
                            TOURISM                                                                                           
                        February 5, 2013                                                                                        
                           11:20 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Shelley Hughes, Chair                                                                                            
Representative Lynn Gattis                                                                                                      
Representative Bob Herron                                                                                                       
Representative Pete Higgins                                                                                                     
Representative Harriet Drummond                                                                                                 
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Craig Johnson                                                                                                    
Representative Kurt Olson                                                                                                       
Representative Lance Pruitt                                                                                                     
Representative Geran Tarr                                                                                                       
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEWS(S):  PRESENTATIONS OF THE ALASKA REGIONAL DEVELOPMENT                                                                 
ORGANIZATIONS                                                                                                                   
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
OVERVIEW(S):  PRESENTATION BY THE ALASKA MINERALS COMMISSION                                                                    
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
NICOLE GREWE, Program Coordinator                                                                                               
Alaska Regional Development Organization (ARDOR) Program                                                                        
Juneau Office                                                                                                                   
Development Section                                                                                                             
Division of Economic Development (DED)                                                                                          
Department of Commerce, Community & Economic Development (DCCED)                                                                
Juneau, Alaska.                                                                                                                 
POSITION STATEMENT:   Gave a  presentation on the  Alaska Regional                                                          
Development  Organization   Program  including  portions   of  the                                                              
Fiscal Year 2012 Annual Report.                                                                                                 
                                                                                                                                
LORENE PALMER, Division Director                                                                                                
Division of Economic Development (DED)                                                                                          
Department of Commerce, Community & Economic Development (DCCED)                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Answered a question during  the presentation                                                            
of the ARDOR Program.                                                                                                           
                                                                                                                                
SHELLY WRIGHT, Executive Director                                                                                               
Southeast Conference (SEC)                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Answered questions  and participated  in the                                                            
presentation of the ARDOR Program.                                                                                              
                                                                                                                                
ANDY VARNER, Executive Director                                                                                                 
Southwest Alaska Municipal Conference (SWAMC)                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Answered questions  and participated  in the                                                            
presentation of the ARDOR Program.                                                                                              
                                                                                                                                
JASON HOKE, Executive Director                                                                                                  
Copper Valley Development Association Inc.                                                                                      
Glennallen, Alaska                                                                                                              
POSITION STATEMENT:   Answered a question during  the presentation                                                            
of the ARDOR Program.                                                                                                           
                                                                                                                                
BILL JEFFRESS, Chair                                                                                                            
Alaska Minerals Commission                                                                                                      
Division of Economic Development (DED)                                                                                          
Department of Commerce, Community & Economic Development (DCCED)                                                                
Fairbanks, Alaska                                                                                                               
POSITION   STATEMENT:     Provided   a   PowerPoint   presentation                                                            
entitled, "Report of the 2013 Alaska Minerals Commission."                                                                      
                                                                                                                                
GREG BEISCHER, Member                                                                                                           
Alaska Mineral Commission                                                                                                       
Division of Economic Development (DED)                                                                                          
Department of Commerce, Community & Economic Development (DCCED)                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Answered a question during  the presentation                                                            
by the Alaska Minerals Commission.                                                                                              
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
11:20:44 AM                                                                                                                   
                                                                                                                                
CHAIR  SHELLEY  HUGHES  called  the  House  Special  Committee  on                                                            
Economic  Development,  Trade  and  Tourism meeting  to  order  at                                                              
11:20  a.m.    Representatives   Higgins,  Gattis,  Drummond,  and                                                              
Hughes were present  at the call to order.   Representative Herron                                                              
arrived as the meeting was in progress.                                                                                         
                                                                                                                                
^OVERVIEWS   (S):     PRESENTATIONS   OF   THE   ALASKA   REGIONAL                                                              
DEVELOPMENT ORGANIZATIONS                                                                                                       
 OVERVIEWS (S):  PRESENTATIONS OF THE ALASKA REGIONAL DEVELOPMENT                                                           
                         ORGANIZATIONS                                                                                      
                                                                                                                              
11:21:39 AM                                                                                                                   
                                                                                                                                
CHAIR HUGHES announced  that the first order of  business would be                                                              
a presentation  on  the Alaska  Regional Development  Organization                                                              
(ARDOR) program  by the  Division of  Economic Development  (DED),                                                              
Department   of  Commerce,   Community   &  Economic   Development                                                              
(DCCED).                                                                                                                        
                                                                                                                                
There followed  introductions of  ARDOR representatives  seated in                                                              
the gallery.                                                                                                                    
                                                                                                                                
11:25:29 AM                                                                                                                   
                                                                                                                                
NICOLE  GREWE, Program  Coordinator,  Alaska Regional  Development                                                              
Organization   (ARDOR)   program,   Juneau   Office,   Development                                                              
Section,  DED, DCCED,  informed  the  committee the  ARDOR  annual                                                              
report  for Fiscal  Year  2012  (FY 12)  and  an overview  of  the                                                              
program  are provided  in the  committee  packet.   She noted  the                                                              
ARDOR  Program  is a  familiar  term in  Alaska  that  is used  to                                                              
identify  the state  program  established  in statute  called  the                                                              
Alaska  Regional  Economic  Assistance Program.    Former  Senator                                                              
Arliss Sturgulewski  was primarily  responsible for the  bill that                                                              
created the program  in 1988, and this is the  silver jubilee year                                                              
for  the program.   The  statute authorizing  the program  directs                                                              
DCCED  to   encourage  the   formation  of  regional   development                                                              
organizations  to implement  economic  development strategies  and                                                              
to take responsibility  for the economic development  planning for                                                              
a  region.   The department  is  also directed  to  assist in  the                                                              
formation   of  the   geographic   regions   -  using   guidelines                                                              
established  in regulations  - to gather  information about  local                                                              
economic  issues,  to  assist  ARDOR(s)   in  carrying  out  their                                                              
responsibilities,   to  provide   technical  assistance,   and  to                                                              
distribute annual grants.   The state has 12 ARDOR(s)  and as long                                                              
as each  meets criteria  they are  eligible for a  non-competitive                                                              
grant from  the state.   The ARDOR(s) also  work closely  with the                                                              
state on  economic development initiatives.   Ms. Grewe  said this                                                              
is a small program  and a small part of her job.   The division of                                                              
economic  development  is  a  "pass-through"   on  the  grant  and                                                              
provides technical assistance.                                                                                                  
                                                                                                                                
11:30:12 AM                                                                                                                   
                                                                                                                                
CHAIR HUGHES  asked whether  federal money  was used to  establish                                                              
the program  in 1988  and if  federal money  continues to  support                                                              
the program.                                                                                                                    
                                                                                                                                
MS. GREWE was  unsure about federal funding that  was available at                                                              
that time.   Historically,  the legislature's  motivation  for the                                                              
program was  to encourage  regional entities  to form  and conduct                                                              
economic  development  planning  at  the  regional  level  because                                                              
local leaders are  best suited to organize and  carry out economic                                                              
development  planning.   Revenue  streams for  ARDOR Programs  are                                                              
primarily  comprised  of state  and  federal revenue,  along  with                                                              
private  sector  funds and  in-kind  contributions:  in fact,  the                                                              
present  level of  federal  funding is  indicated  on the  revenue                                                              
portfolio  for each  ARDOR provided  in  the annual  report.   Ms.                                                              
Grewe  advised  state  funding   for  the  program  is  small  and                                                              
flexible  to  encourage  each ARDOR  to  plan  in  a way  that  is                                                              
locally and  culturally appropriate for  each region.   She opined                                                              
federal funds have more limitations.                                                                                            
                                                                                                                                
CHAIR HUGHES asked for the percentage of state support.                                                                         
                                                                                                                                
MS.  GREWE stated  each  of the  12 organizations  receives  about                                                              
$62,000 per  year from the  state.  The  revenue portfolio  of the                                                              
12 combined was $5.5 million in FY 12.                                                                                          
                                                                                                                                
11:33:31 AM                                                                                                                   
                                                                                                                                
CHAIR HUGHES  said $62,000 x 12  is about $750,000,  and clarified                                                              
she inquired  as to the  percentage of  DED's budget that  goes to                                                              
ARDOR(s).                                                                                                                       
                                                                                                                                
11:33:48 AM                                                                                                                   
                                                                                                                                
LORENE PALMER, Division  Director, DED, DCCED, said  the DED total                                                              
budget is about $28 million thus $750,000 is a very small part.                                                                 
                                                                                                                                
CHAIR  HUGHES  said  that  was  her  point.    She  expressed  her                                                              
interest  in the  deliverables and  criteria  required to  receive                                                              
state and federal money.                                                                                                        
                                                                                                                                
MS.  GREWE  referred  to  page  5  of  the  annual  report,  which                                                              
included  a  map of  the  general  geographic boundaries  of  each                                                              
ARDOR, and  pointed out that the  Arctic Slope, large  portions of                                                              
the  Interior,   and  a   portion  of   Western  Alaska   are  not                                                              
represented by  an ARDOR, although  the statute allows  for grants                                                              
to 15  organizations.  Regarding  funding, a  pie chart on  page 4                                                              
of the FY 12  annual report indicated that total  funding is about                                                              
$5.5  million  of  which  state   revenue  is  about  19  percent,                                                              
including  additional grant  money.  Therefore,  state funding  of                                                              
the ARDOR  Program is less than  one-quarter of the  total revenue                                                              
portfolio.                                                                                                                      
                                                                                                                                
CHAIR HUGHES asked for examples of the additional state grants.                                                                 
                                                                                                                                
MS.  GREWE responded  that  Southeast  Conference  has received  a                                                              
grant for  timber development work.   The additional  state grants                                                              
are on  a project-by-project basis  to individual ARDOR(s).   Over                                                              
the  past two  years  ARDOR(s) have  received  about $62,000  each                                                              
from  the  state  and,  although  there is  room  for  growth,  if                                                              
additional  organizations are added,  all will  share in  the same                                                              
amount of revenue.   Ms. Grewe then explained  that state statute,                                                              
the  Alaska Administrative  Code,  and  the grant  agreement  work                                                              
together  to determine the  deliverables  from each ARDOR  Program                                                              
to  the state.    The  deliverables are:    to create  a  regional                                                              
economic  development plan  that is  updated every  two years;  to                                                              
implement activities  noted in  the plan; and  to convene  a board                                                              
of directors to provide local or regional leadership.                                                                           
                                                                                                                                
11:39:15 AM                                                                                                                   
                                                                                                                                
CHAIR HUGHES asked  whether the plans are online  and available to                                                              
the public.                                                                                                                     
                                                                                                                                
MS.  GREWE  said  yes,  and  added  that  all  of  the  plans  are                                                              
available on  individual ARDOR  web sites and  on the  state ARDOR                                                              
Program web site.                                                                                                               
                                                                                                                                
CHAIR HUGHES noted one ARDOR posted its 2006 report.                                                                            
                                                                                                                                
MS.  GREWE  advised  the  organizations  are  required  to  submit                                                              
updated  plans  to  DCCED  every  two years;  in  fact,  all  have                                                              
current plans today.  She concluded her presentation.                                                                           
                                                                                                                                
CHAIR  HUGHES   observed  there   are  many  differences   between                                                              
ARDOR(s)  regarding  the  composition  of  board  members  and  in                                                              
funding.   Some  have more  participation by  the private  sector,                                                              
and some  are more active and  successful than others.   She asked                                                              
if the  division considers replacing  the executive  director when                                                              
an ARDOR is not successful.                                                                                                     
                                                                                                                                
11:42:39 AM                                                                                                                   
                                                                                                                                
MS. GREWE  agreed each of the  12 ARDOR(s) is different,  some are                                                              
rural  and some  are  urban.   By design,  each  can be  different                                                              
because the  purpose is  for regions to  gather together  and work                                                              
collectively to  best reflect local flavor, economy,  and culture.                                                              
In urban Alaska,  for example, the Anchorage  Economic Development                                                              
Corporation   and  the   Kenai   Peninsula  Economic   Development                                                              
District are very  active in traditional ways,  such as recruiting                                                              
businesses, site-selection  work, and loan  funds.  In  many areas                                                              
the  organizations and  the communities  look different.   As  the                                                              
program  manager, she  looks  at all  12  organizations to  ensure                                                              
that regional  leaders are  gathering to  discuss economic  issues                                                              
and  develop  priorities.   Each  plan  must contain  analyses  of                                                              
social  and  economic  conditions,  be applicable  to  needs,  and                                                              
include  reasonable  strategies.     Also  considered  is  whether                                                              
recent  activities  have been  carried  out to  increase  economic                                                              
opportunities.    Ms.  Grewe  noted that  SEC  and  the  Southwest                                                              
Alaska  Municipal   Conference  (SWAMC)   are  two  of   the  most                                                              
successful  ARDOR(s)  in that  they  have active  boards,  execute                                                              
their plans  through committees,  and leverage the  state's funds.                                                              
An  unsuccessful  ARDOR board  does  not  meet,  and its  plan  is                                                              
outdated and without change.                                                                                                    
                                                                                                                                
11:46:22 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE HIGGINS  asked if the chief executive  officers are                                                              
paid.                                                                                                                           
                                                                                                                                
MS. GREWE said all board members are volunteers.                                                                                
                                                                                                                                
REPRESENTATIVE GATTIS  advised that CEOs are paid.   She disclosed                                                              
she  was  a   board  member  of  the  Matanuska-Susitna   Resource                                                              
Conservation and Development Council, but is no longer.                                                                         
                                                                                                                                
CHAIR  HUGHES  asked  whether  the membership  of  each  board  is                                                              
directed by regulation or statute.                                                                                              
                                                                                                                                
MS. GREWE advised  that statute says the board  needs to represent                                                              
the  economic  and social  diversity  of  the  region and  have  a                                                              
private sector presence.                                                                                                        
                                                                                                                                
CHAIR  HUGHES  restated  her  question   as  to  what  action  the                                                              
division may take against a board that does not meet.                                                                           
                                                                                                                                
MS. GREWE  answered that if  an ARDOR is  reported to  be inactive                                                              
she  and the  director  investigate  and offer  support;  however,                                                              
program funds  are not  distributed to ARDOR(s)  that do  not meet                                                              
grant  agreement  requirements.    In further  response  to  Chair                                                              
Hughes,  she said  over  the years,  some  organizations have  not                                                              
received  funding or  have received  reduced awards.   In  further                                                              
response,  she   said  all   inquiries  regarding  the   executive                                                              
director  are referred  to the board.   The  program manager  does                                                              
not have the ability to remove the executive director.                                                                          
                                                                                                                                
11:50:53 AM                                                                                                                   
                                                                                                                                
CHAIR  HUGHES  asked  if  there is  any  correlation  between  the                                                              
amount of  funding an ARDOR receives  from the private  sector and                                                              
its success.                                                                                                                    
                                                                                                                                
MS. GREWE  opined a diversified  revenue portfolio is  symbolic of                                                              
an  organization that  is sustainable,  healthy, and  robust.   On                                                              
the other  hand, some areas  do not have  a significant  amount of                                                              
private sector  revenue or  a lot of  local economic  activity, so                                                              
comparing   Anchorage  or   Juneau   to  Bethel   is  not   always                                                              
appropriate.    In further  response  to  Chair Hughes,  she  said                                                              
mini-grants  and  other  funds  are available  to  ARDOR(s)  on  a                                                              
competitive  basis,  but  the  ARDOR   Program  grant  is  divided                                                              
equally between all  of the organizations, unless  funds are being                                                              
withheld.                                                                                                                       
                                                                                                                                
11:53:00 AM                                                                                                                   
                                                                                                                                
SHELLY  WRIGHT, Executive  Director,  Southeast Conference  (SEC),                                                              
in  response  to  Chair  Hughes,  said  she  did  not  recall  any                                                              
discussion about  the ARDOR Program grants being  distributed on a                                                              
competitive  basis   among  the  ARDOR(s).    Ms.   Wright  turned                                                              
attention  to Southeast  Conference  (SEC),  which  was formed  in                                                              
1958 by  a group  of community  leaders that  were advocating  for                                                              
the  Alaska  Marine   Highway  System  (AMHS).     Once  AMHS  was                                                              
established  and successful,  SEC grew into  an organization  that                                                              
became  the  federally-designated  Economic  Development  District                                                              
and the ARDOR for  the region.  In answer to  an earlier question,                                                              
she  said ARDOR(s)  that  are also  federally-designated  economic                                                              
development  districts  have  requirements  for  a  percentage  of                                                              
private  and public  board  members, which  explains  some of  the                                                              
differences  between boards.   In fact,  SEC has requirements  for                                                              
board  members in  workforce  development,  private industry,  and                                                              
public  representation.   As SEC  is  an old  organization, it  is                                                              
well-known  in   its  region  as   the  "go-to"   organization  in                                                              
Southeast  Alaska when  communities  need  advocacy or  assistance                                                              
for  their  projects.   For  its  funding,  SEC  receives  federal                                                              
funding    through     the    economic    development     district                                                              
administration,  which  is  matched  by  the  ARDOR  state  grant.                                                              
Furthermore,  SEC is  a membership  organization  and its  members                                                              
support  many of  its  special projects.    Currently,  SEC has  a                                                              
state grant  which funds an  energy coordinator to  facilitate the                                                              
development of regional energy projects.                                                                                        
                                                                                                                                
11:57:20 AM                                                                                                                   
                                                                                                                                
CHAIR HUGHES asked for more information about energy projects.                                                                  
                                                                                                                                
MS.   WRIGHT   said  SEC   provides   technical   assistance   and                                                              
facilitates  the  process  of  energy  development.    The  energy                                                              
coordinator  facilitates meetings  of the  regional utilities  and                                                              
is  very  involved   in  projects  such  as   the  Kake-Petersburg                                                              
Intertie.    In addition,  SEC  has  state  money to  complete  an                                                              
alternative  wildlife  strategy  to  present to  the  U.S.  Forest                                                              
Service for  the Tongass Land  Management Plan (TLMP)  review, and                                                              
will be working  with DCCED on a messaging program  for the timber                                                              
industry.   In response  to Chair Hughes,  she confirmed  that SEC                                                              
received $600,000 for those two programs.                                                                                       
                                                                                                                                
MS. WRIGHT  pointed out  that currently the  ARDOR Program  is not                                                              
fully  funded  at  its  statutory  limit of  up  to  $100,000  per                                                              
organization, and has  not been since its inception.   In response                                                              
to  Chair Hughes,  she  indicated  by nodding  her  head that  the                                                              
funding was established in 1988.                                                                                                
                                                                                                                                
REPRESENTATIVE HERRON  asked how  ARDOR(s), individually and  as a                                                              
group, have lobbied the governor for an increase.                                                                               
                                                                                                                                
12:00:15 PM                                                                                                                   
                                                                                                                                
ANDY  VARNER,  Executive  Director,   Southwest  Alaska  Municipal                                                              
Conference  (SWAMC), said  Copper  Valley Development  Association                                                              
met with  the governor  over the summer  and presented  letters of                                                              
support from other  ARDOR(s).  Other routes of  communication have                                                              
been through the commissioner of DCCED.                                                                                         
                                                                                                                                
REPRESENTATIVE HERRON asked for the governor's response.                                                                        
                                                                                                                                
12:01:47 PM                                                                                                                   
                                                                                                                                
JASON  HOKE,   Executive  Director,   Copper  Valley   Development                                                              
Association Inc.,  relayed he met  with the governor on  9/6/12 to                                                              
discuss  issues in  his region.   He  said the  governor is  fully                                                              
supportive   of   the   ARDOR    Program   and   suggested   ARDOR                                                              
representatives  contact their  legislators about  an increase  in                                                              
funding.   Mr. Hoke said  it has been  eight years since  the last                                                              
increase and  $62,000 does not  go far in  rural Alaska.   He said                                                              
the ARDOR(s) have  collectively garnered support  from members and                                                              
stakeholders for this issue.                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON  surmised  the  following:    the  governor                                                              
would   support  an   increase   in  budget   authorized  by   the                                                              
legislature;  and it  is easier  for the legislature  to defend  a                                                              
budget number that is promoted by the governor.                                                                                 
                                                                                                                                
CHAIR HUGHES  asked SEC to  elaborate on  its task for  the timber                                                              
industry.                                                                                                                       
                                                                                                                                
MS. WRIGHT  stated  that TLMP is  under review,  and the  wildlife                                                              
strategy is not  timber-friendly, but is one  that eliminates most                                                              
of the economic  timber.  Through a contractor,  SEC is developing                                                              
an  alternative, more  timber-friendly  wildlife  strategy, and  a                                                              
threshold  analysis  to determine  the  supply  and demand  of  an                                                              
economic timber  industry.  The  messaging campaign  will convince                                                              
Southeast Alaska  residents and others  that the timber  in Alaska                                                              
is  renewable,  is  better,  and  the  timber  industry  will  not                                                              
destroy the forest.                                                                                                             
                                                                                                                                
CHAIR HUGHES  heard that the  timber industry is  burdened because                                                              
of a lack of a social license.                                                                                                  
                                                                                                                                
12:05:09 PM                                                                                                                   
                                                                                                                                
MR. VARNER  announced SWAMC is also  25 years old this  year.  The                                                              
Southwest  ARDOR region  comprises  Kodiak, Bristol  Bay, and  the                                                              
Aleutian  and Pribilof  Islands, and  covers an  area the  size of                                                              
Oregon.   His organization  has  two staff members  and the  three                                                              
areas  originally  bonded  to address  common  fisheries'  issues.                                                              
Southwest  Alaska Municipal  Conference has  signed two  contracts                                                              
with the  Alaska Energy Authority  (AEA) to complete  energy plans                                                              
for  the Bristol  Bay region  and  the Aleutians  region, and  may                                                              
commit to  energy planning  for Kodiak  also.  Energy  development                                                              
is a  huge issue for  rural Alaska and  SWAMC seeks to  make these                                                              
plans  a  reality  by  working  with  communities,  industry,  and                                                              
private  entities.     Four  other  ARDOR(s)  are   involved  with                                                              
regional energy plans, which is a big responsibility.                                                                           
                                                                                                                                
CHAIR HUGHES noted  four ARDOR(s) are working on  energy plans and                                                              
asked whether the plans will be integrated on a statewide basis.                                                                
                                                                                                                                
MR. VARNER  opined at the  end of the  process it will  make sense                                                              
to  find  the  overlaps  and opportunities,   and to  work  for  a                                                              
statewide energy  plan in  light of  the statewide energy  policy.                                                              
The contracts  that SWAMC  is working on  will have  a methodology                                                              
that gives  technical and economically  feasible analysis  for the                                                              
various projects.                                                                                                               
                                                                                                                                
CHAIR  HUGHES asked  if there  is a vehicle  so that  an ARDOR  or                                                              
ARDORs  working together  can provide  DCCED  with information  on                                                              
topics such as infrastructure.                                                                                                  
                                                                                                                                
12:09:32 PM                                                                                                                   
                                                                                                                                
MR.  VARNER  said ARDOR  regions  meet  twice  a year  to  discuss                                                              
issues  across regional  borders.   Topics such  as the  railroad,                                                              
fisheries,  and agriculture  and  food, are  discussed in  working                                                              
groups,  and  ARDOR(s) are  trying  to  reach across  regions  and                                                              
borders,  looking for business  opportunities.   He observed  this                                                              
is a recent focus.                                                                                                              
                                                                                                                                
12:11:24 PM                                                                                                                   
                                                                                                                                
CHAIR HUGHES surmised  integration occurs when a  need arises, but                                                              
plans are not formally integrated.                                                                                              
                                                                                                                                
MR. VARNER  said  correct.   In fact,  there is an  effort by  the                                                              
Alaska  Partnership   for  Economic   Development  to   develop  a                                                              
statewide  economic  development  plan.    In  response  to  Chair                                                              
Hughes, he  agreed that  an integrated  statewide plan  would make                                                              
tasks easier  because his group  has ideas on shipping  and Arctic                                                              
support  industries,  as  do other  western  coastal  communities.                                                              
Organizations that have common interests would specialize.                                                                      
                                                                                                                                
CHAIR  HUGHES noticed  that some  ARDOR(s)  have more  of a  local                                                              
focus and  others bring in outside  "primary dollars."   She asked                                                              
if this decision is left to the individual boards.                                                                              
                                                                                                                                
MR. VARNER  opined  ARDOR(s) must  think small  and big.   Because                                                              
SWAMC represents  a large  region that  is expensive to  traverse,                                                              
it  thinks  big.   Although  SWAMC  assists small  businesses  and                                                              
individuals,   its  board  directs   attention  to   transshipping                                                              
through   the   Aleutians,   partnering    opportunities   between                                                              
community development  quota (CDQ) areas that want  to expand, and                                                              
regional energy plans.                                                                                                          
                                                                                                                                
MS. WRIGHT  added  that SEC  is driven  by its board  and its  174                                                              
members   and    their   municipalities,   organizations,    small                                                              
businesses,  and individuals.    The SEC  board  is influenced  by                                                              
what its  members want; in fact,  the board encourages  members to                                                              
"think local  and plan regional."   There are exceptions,  but SEC                                                              
is  concentrating  on building  infrastructure  and  lowering  the                                                              
cost of energy in Southeast.                                                                                                    
                                                                                                                                
12:18:26 PM                                                                                                                   
                                                                                                                                
^OVERVIEW(S):  PRESENTATION by the ALASKA MINERALS COMMISSION                                                                   
  OVERVIEW(S):  PRESENTATION by the ALASKA MINERALS COMMISSION                                                              
                                                                                                                              
12:19:02 PM                                                                                                                   
                                                                                                                                
CHAIR HUGHES announced  that the final order of  business would be                                                              
a presentation by the Alaska Minerals Commission.                                                                               
                                                                                                                                
12:19:17 PM                                                                                                                   
                                                                                                                                
BILL  JEFFRESS, Chair,  Alaska Minerals  Commission, informed  the                                                              
committee the  commission was created  by the legislature  and its                                                              
charter is to report  to the legislature and the  governor on ways                                                              
to mitigate  potential  impacts affecting  mineral development  in                                                              
Alaska; the  following report fulfills  that mandate.   Members of                                                              
the commission  are appointed  by the  governor, the president  of                                                              
the  Senate, and  the speaker  of  the House.   Currently  members                                                              
represent  exploration,  hard-rock mining,  coal  mining, and  all                                                              
facets  of   the  industry.     The   commission  also   considers                                                              
information  provided  by  resource agencies,  the  University  of                                                              
Alaska  (UA),  and  other  organizations   on  issues  related  to                                                              
mineral development.                                                                                                            
                                                                                                                                
CHAIR HUGHES  relayed there is  pending legislation to  extend the                                                              
commission's authorization, which is about to expire.                                                                           
                                                                                                                                
12:22:45 PM                                                                                                                   
                                                                                                                                
MR. JEFFRESS  said the  commission is  an all-volunteer  board and                                                              
clerical work  is well  supported by  the Department of  Commerce,                                                              
Community  & Economic  Development  (DCCED)  staff.   The  mandate                                                              
tasks  the commission  to identify  issues  that affect  potential                                                              
mineral   development,   and   he  extended   accolades   to   the                                                              
administration   and   the   legislature   for  acting   on   past                                                              
recommendations  from  the  commission.     This  is  critical  to                                                              
sending  a  message  to  the industry  that  Alaska  is  open  for                                                              
business.   The first  action item  recommended by the  commission                                                              
this year  is to improve  tax climate  for mineral investment  and                                                              
resource revenue sharing [slide 3].                                                                                             
                                                                                                                                
12:24:50 PM                                                                                                                   
                                                                                                                                
CHAIR HUGHES,  referring to the  first action item,  asked whether                                                              
there is pending legislation on the tax climate.                                                                                
                                                                                                                                
MR.  JEFFRESS said  no, and  clarified that  the commission  makes                                                              
recommendations.                                                                                                                
                                                                                                                                
REPRESENTATIVE  GATTIS asked what  recommendations are  being made                                                              
regarding the tax climate issue.                                                                                                
                                                                                                                                
MR.  JEFFRESS  said there  is  a  mining  license tax  imposed  on                                                              
producing mines,  and other fees are  paid by the industry.   In a                                                              
manner similar  to taxes on fishing,  he suggested that  a portion                                                              
of  that tax  could  be returned  to  local communities  that  are                                                              
affected by exploration, mining, or development activities.                                                                     
                                                                                                                                
CHAIR  HUGHES  asked  whether  local  communities  approached  the                                                              
commission.                                                                                                                     
                                                                                                                                
MR. JEFFRESS  explained this  recommendation  is a combination  of                                                              
members' experience  in the industry  and impacts  to communities;                                                              
for example, the  City of Nome (Nome) has defined  boundaries, but                                                              
impacts  from a  resurgence  of  offshore mining  and  prospecting                                                              
occur in Nome.   In further response to Chair Hughes,  he said the                                                              
amount of  fees and taxes collected  from mining would  need to be                                                              
obtained from the Department of Revenue (DOR).                                                                                  
                                                                                                                                
12:27:17 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   GATTIS   confirmed   that   the   commission   is                                                              
recommending resource  revenue sharing, and the  recommendation is                                                              
not for tax reform.                                                                                                             
                                                                                                                                
MR. JEFFRESS  said no.   Returning  to the  second action  item of                                                              
transportation  infrastructure,  he said  the commission  supports                                                              
the governor's policy  on strategic and critical  metals; however,                                                              
energy corridors  are needed to  reach known deposits such  as the                                                              
Donlin  Creek project.   Infrastructure  is a  hurdle to making  a                                                              
mine  economic  [slide  4].   In  response  to  Chair  Hughes,  he                                                              
expressed   the  commission's  support   for  all   transportation                                                              
options, including  the rail  extensions from  North Pole  to U.S.                                                              
Army Fort Greely, and to Port MacKenzie.                                                                                        
                                                                                                                                
12:30:13 PM                                                                                                                   
                                                                                                                                
MR.  JEFFRESS  directed  attention   to  the  third  action  item,                                                              
education.    Alaska has  the  potential  to  become a  leader  in                                                              
producing  mine  engineers  and   professionals  who  support  the                                                              
mining industry;  in fact,  UA has one  of the few  mining schools                                                              
in  the   country.    The  president   of  UA  responded   to  the                                                              
commission's  recommendations  from  last  year  and  created  the                                                              
Consolidated  Alaska Minerals  Initiative (CAMI)  which will  keep                                                              
the  mineral  development  programs   at  the  three  campuses  in                                                              
communication,  and  able  to  accept   credit  transfers  between                                                              
campuses,  although   the  effective  date  for   this  change  is                                                              
unclear.  Another  factor of education is to  educate young people                                                              
and  adults  as to  the  importance  of resource  development  and                                                              
especially  mineral   development.    The  commission   urges  the                                                              
legislature to  continue its current  level of funding  for Alaska                                                              
Resource   Education  (ARE)   and   its  Google   Earth   minerals                                                              
curriculum.    This  is  an  interactive   program  to  see  where                                                              
minerals  come  from  and  all of  the  schools  in  Alaska  could                                                              
benefit from its  use.  Mr. Jeffress said the  commission supports                                                              
ARE's request  for an  additional $100,000  in funding  [slide 5].                                                              
The fourth  recommendation  is for legislative  funding to  oppose                                                              
federal  intervention  on  mining   projects,  in  particular  the                                                              
Environmental  Protection   Agency's  (EPA)  overreach   into  the                                                              
authority of the  state and other federal agencies.   He said this                                                              
interjection   has  complicated   permitting   by  other   federal                                                              
agencies and Alaska's  ability to develop its resources.   Another                                                              
issue  is   the  [United   Nations  (UN)  International   Maritime                                                              
Organization (IMO)]  designation of Emission Control  Areas (ECA),                                                              
affecting  Southeast  and the  coast  up  to the  Kenai  Peninsula                                                              
[slide 6].                                                                                                                      
                                                                                                                                
12:35:15 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  HIGGINS disclosed he  is a miner.   He  brought up                                                              
the   U.S.  Department   of   Labor,   Mine  Safety   and   Health                                                              
Administration  (MSHA), and said  its overreach  is on  "small mom                                                              
and  pop operations"  because it  considers  all mines  to be  the                                                              
same;  for  example, a  two-man  operation  must have  an  office.                                                              
Along with the seven  major mines in Alaska there  are hundreds of                                                              
small operations that need assistance in this regard.                                                                           
                                                                                                                                
MR.  JEFFRESS agreed  and noted  there  is also  support for  this                                                              
issue from members of the Senate.                                                                                               
                                                                                                                                
REPRESENTATIVE  HERRON disclosed  he is  a gold  miner with  eight                                                              
mining claims.   He  stated a  member of  the commission  has been                                                              
appointed to the  Alaska Arctic Policy Commission.   He then urged                                                              
for a recommendation  to the federal government  that Alaska needs                                                              
to  be  a  full partner  in  decisions  about  Alaska  and  Arctic                                                              
policy.                                                                                                                         
                                                                                                                                
MR.  JEFFRESS said  the fifth  recommendation is  funding for  the                                                              
Department of  Natural Resources  (DNR), Division of  Geological &                                                              
Geophysical  Surveys  (DGGS).     The  state  lacks  a  geological                                                              
materials  center  where  industry  can see  core  [samples]  from                                                              
mining  and   petroleum   for  further  study   to  identify   new                                                              
discoveries.   As this time, the  DGGS materials center  is housed                                                              
in shipping  containers that  are insufficient  for viewing,  even                                                              
though  400 to  500  visitors come  every  year.   The  commission                                                              
supports the  administration in its  efforts to obtain  a facility                                                              
in Anchorage  to house  the materials  center  so the material  is                                                              
available to potential investors [slide 7].                                                                                     
                                                                                                                                
CHAIR HUGHES recalled  her visit to the materials  center - noting                                                              
the state  of disrepair  - and  asked whether  there are  funds in                                                              
the governor's budget for a building.                                                                                           
                                                                                                                                
12:39:51 PM                                                                                                                   
                                                                                                                                
MR.  JEFFRESS  said  yes.    In  addition,  DGGS  is  tasked  with                                                              
mapping; however,  high prices in  the minerals industry  have led                                                              
to  high  salaries  and  a  loss  of  DGGS  employees  to  private                                                              
companies.    The  commission  recommends  that  the  DGGS  salary                                                              
classification system  be treated as is the Division  of Oil & Gas                                                              
(DOG)  in  order  to keep  talented  employees  to  prepare  maps,                                                              
identify  resources,   and  provide  information   to  exploration                                                              
companies.   In response  to Chair  Hughes, he  was unsure  if the                                                              
governor's budget addresses DGGS salaries.                                                                                      
                                                                                                                                
12:41:06 PM                                                                                                                   
                                                                                                                                
MR.  JEFFRESS,  in  conclusion,   displayed  a  map  that  located                                                              
existing properties  in operation, advanced  development projects,                                                              
and  advanced  exploration  projects  throughout  the state.    He                                                              
pointed out  the distances between  projects and that the  lack of                                                              
infrastructure   plays  a   critical  role   in  exploration   and                                                              
development, and  the promotion of investment in  the state [slide                                                              
8].                                                                                                                             
                                                                                                                                
CHAIR  HUGHES asked  for the percentage  of mining  that has  been                                                              
"tapped" in the state.                                                                                                          
                                                                                                                                
12:42:14 PM                                                                                                                   
                                                                                                                                
GREG  BEISCHER,  member, Alaska  Mineral  Commission,  said as  an                                                              
exploration geologist  he has studied  mineral occurrence  maps of                                                              
British  Colombia, Canada  (B.C.).   In  B.C., there  is a  higher                                                              
density  of plotted  mineral  deposits per  square  mile, but  the                                                              
reason is not geological  - because Alaska has the  same geology -                                                              
but  because Alaska  is less  accessible  and mineral  discoveries                                                              
have yet  to be  made.  In  further response  to Chair  Hughes, he                                                              
estimated eight to ten times more mines will be discovered.                                                                     
                                                                                                                                
12:43:24 PM                                                                                                                   
                                                                                                                                
CHAIR  HUGHES said  the  committee  wants to  do  what  it can  to                                                              
ensure that there are no barriers to the mining industry.                                                                       
                                                                                                                                
12:44:02 PM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being  no further business  before the committee,  the House                                                              
Special  Committee  on  Economic Development,  Trade  and  Tourism                                                              
meeting was adjourned at 12:44 p.m.                                                                                             

Document Name Date/Time Subjects
2013 Alaska Minerals Commission Report FINAL.pdf HEDT 2/5/2013 11:15:00 AM
AMC2013 Presentation 5Feb13.pdf HEDT 2/5/2013 11:15:00 AM
DED - ARDOR Program - EDT&T 020513.pdf HEDT 2/5/2013 11:15:00 AM
ARDOR
FY12 ARDOR Report.pdf HEDT 2/5/2013 11:15:00 AM
ARDOR