Legislature(1999 - 2000)
03/06/2000 02:08 PM House RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE March 6, 2000 2:08 p.m. MEMBERS PRESENT Representative Bill Hudson, Co-Chair Representative Beverly Masek, Co-Chair Representative John Cowdery, Vice Chair Representative John Harris Representative Carl Morgan Representative Jim Whitaker Representative Reggie Joule MEMBERS ABSENT Representative Ramona Barnes Representative Mary Kapsner COMMITTEE CALENDAR HOUSE BILL NO. 204 "An Act relating to elk farming." - MOVED CSHB 204(RES) OUT OF COMMITTEE HOUSE BILL NO. 58 "An Act relating to certain audits regarding oil and gas royalty and net profits and to audits regarding costs relating to exploration incentive credits and oil and gas exploration licenses; and providing for an effective date." - MOVED HB 58 OUT OF COMMITTEE HOUSE BILL NO. 344 "An Act authorizing a land exchange between the Department of Natural Resources and Alaska Hard Rock, Inc.; and providing for an effective date." - MOVED HB 344 OUT OF COMMITTEE PREVIOUS ACTION BILL: HB 204 SHORT TITLE: ELK FARMING Jrn-Date Jrn-Page Action 4/20/99 883 (H) READ THE FIRST TIME - REFERRAL(S) 4/20/99 883 (H) RES, FIN 3/06/00 (H) RES AT 1:00 PM CAPITOL 124 BILL: HB 58 SHORT TITLE: OIL & GAS AUDITS Jrn-Date Jrn-Page Action 1/22/99 65 (H) READ THE FIRST TIME - REFERRAL(S) 1/22/99 65 (H) O&G, RES, FIN 1/22/99 65 (H) 2 FISCAL NOTES (DNR, REV) 1/22/99 65 (H) GOVERNOR'S TRANSMITTAL LETTER 3/04/99 (H) O&G AT 10:00 AM CAPITOL 17 3/04/99 (H) HEARD AND HELD 3/04/99 (H) MINUTE(O&G) 3/05/99 376 (H) JUD REFERRAL ADDED AFTER RES 3/11/99 (H) O&G AT 10:00 AM CAPITOL 17 3/11/99 (H) -- MEETING CANCELED -- 4/20/99 (H) O&G AT 5:00 PM CAPITOL 17 4/20/99 (H) <BILL POSTPONED TO 4/29>> 4/22/99 (H) O&G AT 5:00 PM CAPITOL 17 4/22/99 (H) MOVED OUT OF COMMITTEE 4/22/99 (H) MINUTE(O&G) 4/23/99 943 (H) O&G RPT 4DP 4NR 4/23/99 944 (H) DP: PORTER, SMALLEY, HARRIS, WHITAKER; 4/23/99 944 (H) NR: OGAN, KEMPLEN, PHILLIPS, BRICE 4/23/99 944 (H) 2 FISCAL NOTES (DNR, REV) 1/22/99 3/06/00 (H) RES AT 1:00 PM CAPITOL 124 BILL: HB 344 SHORT TITLE: DEPT NAT RES & AK HARD ROCK LAND EXCHANGE Jrn-Date Jrn-Page Action 2/07/00 2116 (H) READ THE FIRST TIME - REFERRALS 2/07/00 2117 (H) RES, FIN 2/07/00 2117 (H) ZERO FISCAL NOTE (DNR) 2/07/00 2117 (H) LAND EXCHANGE AGREEMENT ATTACHED 2/07/00 2117 (H) GOVERNOR'S TRANSMITTAL LETTER 3/06/00 (H) RES AT 1:00 PM CAPITOL 124 WITNESS REGISTER JOHN MANLY, Legislative Aide for Representative John Harris Alaska State Legislature Capitol Building, Room 110 Juneau, Alaska 99801 POSITION STATEMENT: Introduced HB 204 on behalf of the sponsor. BILL WARD Ward Farms P.O. Box 1087 Delta Junction, Alaska 99737 POSITION STATEMENT: Testified in support of HB 204. MARCIA WARD Ward Farms P.O. Box 1087 Delta Junction, Alaska 99737 POSITION STATEMENT: Testified in support of HB 204 on behalf of herself and Scott Miller. EDNA ANDERSON, President Kenai Peninsula Farm Bureau P.O. Box 441 Homer, Alaska 99603 POSITION STATEMENT: Testified in support of HB 204. GERON BRUCE, Legislative Liaison Office of the Commissioner Alaska Department of Fish and Game P.O. Box 25526 Juneau, Alaska 99802-5526 POSITION STATEMENT: Testified on HB 204. KEVIN BANKS, Petroleum Marketing Analyst Division of Oil & Gas Department of Natural Resources 550 West Seventh Avenue Anchorage, Alaska 99501 POSITION STATEMENT: Testified on HB 58. JIM STRATTON, Director Division of Parks & Outdoor Recreation Department of Natural Resources 550 West Seventh Avenue Anchorage, Alaska 99501 POSITION STATEMENT: Testified on HB 344. RUDY VETTER P.O. Box 70342 Fairbanks, Alaska 99707 POSITION STATEMENT: Testified in support of HB 344. SCOTT EUBANKS, President Alaska Hard Rock, Incorporated P.O. Box 2832 Wasilla, Alaska 99645 POSITION STATEMENT: Testified on HB 344. ACTION NARRATIVE TAPE 00-19, SIDE A Number 0001 CO-CHAIR MASEK called the House Resources Standing Committee meeting to order at 2:08 p.m. Members present at the call to order were Representatives Hudson, Masek, Cowdery, Harris, Morgan, Whitaker and Joule. HB 204 - ELK FARMING Number 0118 CO-CHAIR MASEK announced that the first order of business would be HOUSE BILL NO. 204, "An Act relating to elk farming." Number 0184 JOHN MANLY, Legislative Aide for Representative John Harris, Alaska State Legislature, explained HB 204 on behalf of the sponsor. He informed members that HB 204, a simple bill, would transfer the licensing requirements, oversight and fencing requirements for elk farming from the Alaska Department of Fish & Game (ADF&G) to the Division of Agriculture, Department of Natural Resources (DNR). He noted that elk are being raised in the state as domestic farm animals. CO-CHAIR MASEK announced that the proposed committee substitute (CS) needed to be adopted. CO-CHAIR HUDSON made a motion to adopt the proposed CS for HB 204, version 1-LS0528\H, Utermohle, 1/29/00, as a work draft. There being no objection, proposed CSHB 204 was before the committee. MR. MANLY addressed the changes in the proposed CS. He indicated a request had been received from the Division of Wildlife Conservation (ADF&G) to insert the language on page 1, line 11: Before issuing or renewing an elk farming license, the commissioner shall conduct a physical inspection of the elk farming facilities and determine that the facilities are in good repair and comply with the fencing standards established under (d) of this section. MR. MANLY noted that along with transferring the responsibilities from ADF&G to the Division of Agriculture (DNR), the bill also provides that fencing standards would no longer be managed by ADF&G. Instead, the Division of Agriculture would consult ADF&G. In response to questions from members, he specified that the elk are being farmed only for the meat and the antlers. The farms are in Delta Junction and in Kodiak. CO-CHAIR HUDSON wondered where the original breed stock come from. REPRESENTATIVE HARRIS indicated that people on teleconference could probably answer that question. Number 0593 BILL WARD, Ward Farms, testified via teleconference from Delta Junction. He indicated that he had requested the legislation through Representative Harris. He explained that presently there are nine elk licenses in Alaska, with ranches scattered from Kodiak clear up through Delta Junction; he estimates there are 300 to 350 elk in the state. The first elk were brought to Alaska in 1990 after the original legislation; some came from Montana and some from Canada, and all of the elk that are in the state currently came out of their herd, except for a few animals. MR. WARD explained that he had requested the [current] legislation because when the legislation first passed in 1988, it was also happening in other states; it was a new growth industry in the United States and Canada. At that time, everyone followed the same pattern that brought the dual administration about. Other states have found, however, that the administration works cleaner and easier when it is all transferred to one entity. MR. WARD noted that in Alaska the two agencies have had a good relationship, but ADF&G really has no authority with fencing regulations, for example. A couple of years back, he had met with Wayne Regelin, Director, Division of Wildlife Conservation, ADF&G; Bert Gore, State Veterinarian, Division of Environmental Health Animal Industries, Department of Environmental Conservation; and the director of the Division of Agriculture. He explained that they had discussed the whole concept, and out of it came this legislation. MR. WARD indicated that they are trying to get in line with other states. The bill transfers responsibility to the Division of Agriculture, where the regulatory authority really is. The United States Department of Agriculture (USDA) is in the process of identifying elk as domestic livestock; for the purpose of meat inspection, elk will be an identified species. Therefore, it is necessary to have the Division of Agriculture as the lead agency to do USDA inspections. Mr. Ward concluded that he is pleased with HB 204 and really has no problems with it. Number 1075 REPRESENTATIVE COWDERY wondered if most of the meat is sold in- state. MR. WARD replied yes. They are doing mostly private sales where people contact them to purchase the elk meat. REPRESENTATIVE COWDERY wondered how much it costs per pound and where in Anchorage it could be purchased. MR. WARD replied that it is sold on a hanging-weight basis at about $4 to $5 per pound of hanging weight. He indicated that if elk meat can be found in Anchorage, it is most likely from New Zealand. He explained that he can sell elk meat directly to the consumer for more money than he can sell it to the wholesaler. Number 1260 MARCIA WARD, Ward Farms, testified via teleconference from Delta Junction. She indicated that she was testifying on behalf of Scott Miller, who is president of the Delta Farm Bureau and who presides over the elk subcommittee. She said he supports HB 204 and believes that the consolidation of regulations under one heading in the Division of Agriculture will be a lot smoother for new operators coming into the business. She noted that for those same reasons she also supports the bill. CO-CHAIR MASEK pointed out that Scott Miller's letter of support had been included in the committee packet. REPRESENTATIVE COWDERY wondered what kind of a diet the farmed elk utilize. Number 1368 MR. WARD replied that elk are both browsers and grazers. He explained that they are a little bit seasonal in their diet. In the spring they eat a lot of brush and boughs; in the summer they graze on short grasses; in the fall they eat leaves; and in the winter they are fed hay, which is supplemented with oats. He pointed out that they do adapt well to captivity in that regard. He also noted that three elk can be put in the same amount of pasture as one beef cow. REPRESENTATIVE JOULE wondered about the size of the farms. MR. WARD indicated that elk farming lends itself to smaller farms, because they don't need quite as much area as a beef operation. He explained that elk do need enough space to go out and roam, because they are still wild animals. He said that people have started out with as little as 10 acres and have gone up from there. He noted that [his farm] has about 150 to 160 elk about 300 acres of fenced ground. CO-CHAIR HUDSON wondered if they have to be concerned with natural predators, such as wolves and bears. MR. WARD said that they do have to be concerned, because those are their natural predators, but [elk] are herd animals and work in a tight social unit, so they band together to protect themselves from predators. Number 1630 EDNA ANDERSON, President, Kenai Peninsula Farm Bureau, testified via teleconference from Homer. She stated that she and her husband have been in Alaska for 42 years, and they started out with cattle. She said her husband died in 1995, and she and her sons decided to buy some elk, so they went to Ward Farms. They started out with about 6 elk, and they have 25 elk now. She explained that [elk] eat far less than the cattle did, and she certainly supports HB 204. GERON BRUCE, Legislative Liaison, Office of the Commissioner, Alaska Department of Fish and Game, thanked Representative Harris for working with them on HB 204 and stated that they have no problem with the bill. Number 1755 CO-CHAIR HUDSON made a motion to move CSHB 204 from committee with individual recommendations and attached fiscal notes; he asked for unanimous consent. There being no objection, CSHB 204(RES) was moved out of the House Resources Standing Committee. HB 58 - OIL & GAS AUDITS Number 1771 CO-CHAIR MASEK announced that the next order of business would be HOUSE BILL NO. 58, "An Act relating to certain audits regarding oil and gas royalty and net profits and to audits regarding costs relating to exploration incentive credits and oil and gas exploration licenses; and providing for an effective date." KEVIN BANKS, Petroleum Marketing Analyst, Division of Oil & Gas, Department of Natural Resources (DNR), testified via teleconference from Anchorage. He said he had worked on the interagency project team that recommended the transfer created by HB 58, and had helped draft the language of the bill with the Department of Revenue and the Department of Law. A technical bill, HB 58 transfers the authority to audit royalties and revenues from net profits that are created in the leases from the Department of Revenue to the DNR; in transferring that authority, the bill also imposes on DNR staff the same kind of confidentiality requirements that now govern the information gathered in audits conducted by the Department of Revenue. He explained that they are recommending HB 58 for consideration because of the efficiencies that it should achieve for DNR and for the government. Number 1961 CO-CHAIR MASEK agreed that HB 58 is a simple, straightforward transfer of authority from the Department of Revenue to DNR. She closed public testimony on HB 58. REPRESENTATIVE COWDERY made a motion to move HB 58 from committee with individual recommendations and the attached fiscal note; he asked for unanimous consent. There being no objection, HB 58 was moved out the House Resources Standing Committee. HB 344 - DEPT NAT RES & AK HARD ROCK LAND EXCHANGE Number 2045 CO-CHAIR MASEK announced that the next order of business would be HOUSE BILL NO. 344, "An Act authorizing a land exchange between the Department of Natural Resources and Alaska Hard Rock, Inc.; and providing for an effective date." Number 2107 JIM STRATTON, Director, Division of Parks & Outdoor Recreation, Department of Natural Resources, testified via teleconference from Anchorage. He stated: For those of you that are not familiar with Independence Mine State Historical Park, it's located about 90 minutes from Anchorage, up past Palmer in the Hatcher Pass region. It's a historic mining operation that was closed down during World War II, and it came to "Parks" as a state historical park from the mining interests in about 1980. Independence Mine State Historical Park has about 52,000 visits a year; it's road-accessible, and it's accessible year-round when the snow is plowed in the winter, and it's near the new proposed ski area at Hatcher Pass. So, we're talking about a park that is already a well-identified and well-used visitor destination. It is one of the most significant tourist attractions for the [Matanuska-Susitna] Borough, as it sits on one of the few roads off of the major highway system, and provides Alaskans and visitors alike to drive above treeline for hiking and historical tours in the summer and skiing and snowmobiling in the winter. The main attraction at the park are the historical mining structures and the beginning of one of the mining tunnels that goes into the side of the mountain. But maintaining these historical buildings is very expensive, and we are not able to do that, given our current capital authorization. So, we held a public meeting in March of '97 to discuss options with the community for how we could adaptively reuse the buildings at Independence Mine in a way that would provide an income flow to ensure that the buildings would remain standing. Through that meeting we found that adaptive reuse of the structures as a visitor destination was acceptable by everybody who was there, and that visitor destination could include things like overnight lodging, food service, gift shop and tours. We found that this was compatible with the purposes for which the park was established, in a finding that I signed in June of 1998, but during that process we learned from prospective private partners - who were interested in coming into Independence Mine and working with the division to reuse the buildings in Independence Mine as a visitor destination - that there's not enough cash flow in the lodging and food service alone to support the investment needed to adapt and protect the historic buildings. Three things needed to occur: there needed to be some improvements to the roads, and we've been working with the [Department of Transportation & Public Facilities] and the Mat-Su Borough to make that occur; the state needed to make as much investment as they could in the area, and this summer we have a TRAAK [Trails and Recreational Access for Alaska] project that is rebuilding the elevated walkway to the mine tunnel, rebuilding the tunnels through the historical building and providing ADA [Americans with Disabilities Act] access to visitors center; and there needed to be an opportunity for underground mine tours. Underground mine tours were seen as the cash flow opportunity to make this whole public-private partnership work. The problem is the state didn't own beyond the first few hundred feet of the tunnel; Alaska Hard Rock, Incorporated, owned the tunnel, but we knew that they were interested in pursuing an exchange for property that the state owns on the Willow Creek side of Hatcher Pass that Alaska Hard Rock is currently using for their mining operations. So, we signed a preliminary exchange agreement last June. We spent last summer doing the surveys and the appraisals; the costs were split between the state and Alaska Hard Rock, and in the end, the state is to receive 118 acres of underground mine tunnel valued at $87,000, and Alaska Hard Rock will receive 107 acres valued at $66,500. And because of the unequal values involved in this exchange, we need legislative approval, and we would ask that today. Number 2314 RUDY VETTER testified via teleconference from Fairbanks. He stated that he supports HB 344. He said there needs to be a lot more diversification, and more state land needs to be put into operation. Number 2387 SCOTT EUBANKS, President, Alaska Hard Rock, Incorporated, testified via teleconference from Wasilla. He asked for the committee's support on HB 344. He pointed out that if the bill passes, it will allow [the company] to protect a large investment that it already has in the area. He stated that he believes it is good for both parties involved. CO-CHAIR MASEK closed public testimony on HB 344. REPRESENTATIVE COWDERY made a motion to move HB 344 from committee with individual recommendations and the attached fiscal note; he asked for unanimous consent. There being no objection, HB 344 was moved out of the House Resources Standing Committee. ADJOURNMENT CO-CHAIR MASEK adjourned the House Resources Standing Committee meeting at 2:45 p.m.