Legislature(1993 - 1994)
03/30/1994 08:15 AM House RES
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE
March 30, 1994
8:15 a.m.
MEMBERS PRESENT
Representative Bill Williams, Chairman
Representative Con Bunde
Representative Pat Carney
Representative John Davies
Representative David Finkelstein
Representative Joe Green
Representative Jeannette James
Representative Eldon Mulder
MEMBERS ABSENT
Representative Bill Hudson, Vice Chairman
COMMITTEE CALENDAR
HB 515 "An Act relating to the management of state land
and resources; relating to certain remote parcel
and homestead entry land purchase contracts and
patents; and providing for an effective date."
HEARD AND HELD FOR FURTHER CONSIDERATION
WITNESS REGISTER
RON SWANSON, Director
Division of Land
Department of Natural Resources
P.O. Box 107005
Anchorage, Alaska 99510-7005
Phone: 762-2692
POSITION STATEMENT: Gave an overview of HB 515
TOM BOUTIN, Director
Division of Forestry
Department of Natural Resources
400 Willoughby Ave.
Juneau, Alaska 99801-1724
Phone: 465-2491
POSITION STATEMENT: Gave an overview of HB 515
PREVIOUS ACTION
BILL: HB 515
SHORT TITLE: MANAGEMENT OF STATE LAND AND RESOURCES
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
02/28/94 2551 (H) READ THE FIRST TIME/REFERRAL(S)
02/28/94 2551 (H) CRA, RESOURCES, FINANCE
02/28/94 2552 (H) -FISCAL NOTE (DNR) 2/28/94
02/28/94 2552 (H) GOVERNOR'S TRANSMITTAL LETTER
03/08/94 (H) CRA AT 01:15 PM CAPITOL 124
03/08/94 (H) MINUTE(CRA)
03/11/94 2741 (H) CRA REFERRAL WAIVED
03/11/94 2741 (H) REFERRED TO RESOURCES
03/25/94 (H) RES AT 08:15 AM CAPITOL 124
03/30/94 (H) RES AT 08:15 AM CAPITOL 124
ACTION NARRATIVE
TAPE 94-45, SIDE A
Number 000
The House Resources Committee was called to order by
Chairman Bill Williams at 8:25 a.m. Members present at the
call to order were Representatives Williams, Bunde, Carney,
Davies, Finkelstein and Mulder. Members absent were
Representatives Hudson, Green and James.
CHAIRMAN BILL WILLIAMS stated there is a quorum present. He
announced the meeting is on listen only teleconference with
Anchorage, Soldotna, Homer and Ketchikan. He said HB 515 is
a Governor's bill making a number of amendments to Title 38
of the Alaska Statutes.
HB 515 - MANAGEMENT OF STATE LAND AND RESOURCES
CHAIRMAN WILLIAMS stated he had met with Commissioner Noah
about the Department of Natural Resource's (DNR) plans to
introduce a Title 38 revision bill. At that time,
Commissioner Noah said the bill would be ready to introduce
at the beginning of session and also said the bill would be
a noncontroversial, housekeeping-type bill. He stated the
commissioner said the bill was mainly to clean up and
clarify lands statutes, and would not contain significant
changes in policy or procedures. He pointed out the
Administration did not introduce this legislation until
almost halfway through this session, and it appears the bill
has several sections which are controversial. He asked if
amending the bill to remove a few of the most controversial
sections will help ensure the passage of the bill in the
remaining time left, would the Administration object to
that.
Number 035
RON SWANSON, DIRECTOR, DIVISION OF LAND, DNR, stated the
department's plan was to introduce housekeeping-type
legislation this year, go through the hearing process, and
during the interim, work on phase two which will involve
controversial sections of the bill needing changes. He said
since the process began, it has been determined there are
three controversial subjects; mariculture, shore fish, and
timber. He heard there is a plan to delete those particular
sections out of the bill. DNR is not going to oppose
deleting those sections, since the department wants to get
the housekeeping measures through this year, saving the
department a lot of administrative time, processing and
money. Mr. Swanson stated Title 38 touches every Alaskan
and is very important to everyone. The subjects included in
HB 515 are forestry, land, agriculture, oil and gas and
mining.
Number 060
MR. SWANSON explained Sections 1 and 2 will merge the former
"land disposal bank," which was required to have 500,000
acres, into the existing land disposal program. Under more
recent laws, regional land use plans are used to identify
land that will be offered for private ownership. More than
two million acres have been classified through this process,
making the land bank obsolete. Related references to the
land disposal bank are repealed in Section 35. The land
disposal bank also requires DNR to hold statewide hearings
throughout the state and in the last five years, he has
attended these hearings, and has had only one person attend.
He said the person who attended wanted to apply for land,
not nominate any land into the land bank. He stated on the
area plans, DNR goes through at least three rounds of public
hearings and land settlement is always well discussed by the
public.
MR. SWANSON said Section 3 will combine two separate
legislative reports into one. The annual report on land
classification will include acreage of land classified for
various types of land disposal. He stated Section 4 will
put the state land disposal program on the same footing as
other natural resource sale programs. DNR will submit a
budget request each year which will be discretionary, not
mandatory, but each budget proposal will be complete. It
will request the full funding needed to get the land
disposal projects ready for sale, including any access roads
or other capital improvements which might be required.
MR. SWANSON stated Section 5 will make technical
corrections, dropping an out-of-order classification
reference, and classify land after the subdivision process
instead of before.
Number 084
REPRESENTATIVE JOE GREEN referring to Section 4, noted
homesteads will be offered again. He said there was a
period of time when homesteading was curtailed. He asked if
this section implies homesteading will get back to an active
status.
MR. SWANSON responded a small amount of homestead land is
offered each year. He said last year, approximately 70,000
acres of homestead land was offered. He explained there
have not been a lot of homestead land disposals in the past
three years because there is a need to clean up the mental
health legislation and there is also a lot of backlog to
clean up from homestead projects in the past. He stated
homesteads have been a big administrative load for DNR in
carrying past programs and trying to offer new. He is
hopeful that if the mental health legislation is passed this
year, DNR can begin offering homesteads and many sorts of
land disposal programs beginning next spring.
REPRESENTATIVE GREEN felt homestead land disposals will help
the state's fiscal problems if DNR can get that land into
private hands and begin taxing that land.
MR. SWANSON said that is a good point. He noted the only
problem with homestead programs is that most of the good
land within municipalities, suitable for subdivisions or
homesteads, etc., is long gone. He pointed out that
carrying the homestead program is a very expensive burden on
the department. The department gets $10 for the application
fee and nothing else until the land is disposed of. The
homesteader then has the option of getting the land for free
or purchase it for fair market value but because of patent
restrictions, the department usually does not get fair
market value, but rather about 50 percent.
Number 118
REPRESENTATIVE PAT CARNEY asked what the residency
requirement is for homesteads.
MR. SWANSON replied the residency requirement is one year
for all land disposal programs. Living requirements on the
homestead are 35 months within a five year period. He
explained to apply for a homestead, a person has to be a
resident for one year.
MR. SWANSON said Section 6 will make it clear that the five-
acre limit on subdivision lot sizes applies to residential
and recreational sales, not agricultural parcels, commercial
parcels, etc. This section will also allow larger lots if
they would be more profitable for the state. Section 7 will
update a list of state land disposal programs by adding the
homestead law. Section 8 will delete a reference to an
annual land demand study. Section 9 will let DNR create new
land disposal programs by regulation, so long as they
provide for competition and produce at least fair market
value for the land.
MR. SWANSON explained Section 10 clarifies the legislature's
policy that sales of public land to private individuals
should be at fair market value unless otherwise directed,
and gives further guidance on the remote cabin program.
Section 11 will help the department deal with Native
allotments in state parks. This section will let the
department reconvey substitute land, located outside the
parks, that the federal government could then grant to the
allottee. This will let the state take advantage of a 1992
amendment to the Alaska Native Claims Settlement Act.
Number 143
REPRESENTATIVE JOHN DAVIES recalled that Section 11 was
addressed in another bill.
MR. SWANSON said that is correct. He stated this section is
in a House Bill and also in a Senate Bill. He explained the
Senate Bill is different in that it allows DNR to reconvey
substitute land on all state lands.
REPRESENTATIVE DAVIES felt Section 11 should be deleted or
made consistent with the other bill.
CHAIRMAN WILLIAMS stated the committee had been asked by the
sponsor of HB 404 to hold it.
MR. SWANSON stated Sections 12-14 respond to a Superior
Court decision that it is unconstitutional to make state
land purchasers appear in person at the sale. He said
Section 12 will make it discretionary where to hold land
auctions and lotteries. Section 13 will delete the personal
appearance requirement for land auctions, allowing
purchasers to be represented by an agent. Section 14, and a
related repealer in Section 35, will delete the requirement
that purchasers appear in person at land lotteries and pay
the down payment on the spot. Instead, they will have a 30-
day period to make the payment. This section also drops
language about consulting with the local assessor to
determine land values, which is unnecessary because AS
38.05.840 requires a formal appraisal before the land can be
offered for sale. He added that Section 32 deletes the
authority to make applicants appear in person at a homestead
lottery.
Number 176
MR. SWANSON explained Sections 16-18 simplify the process of
leasing tideland for setnet fishing and aquatic farm sites.
These sections will substitute standard leasing laws for the
current special purpose procedures. He said Section 16 will
allow standard leasing methods to be used for setnet fishing
sites. If only one person applies, the lease can be issued
by negotiation. This is in contrast to the current method,
which requires that the most qualified applicant be
selected, which results in numerous appeals.
MR. SWANSON stated Section 17 removes language limiting fees
for setnet leases to administrative costs. This change will
put rentals on the same fair market value basis as other
state lease rentals. Section 18, with conforming amendments
in Section 29 and several repealers in Section 35, will
streamline authorizations for aquatic farming. Leases could
be issued directly, either competitively or by negotiation,
instead of requiring a permit stage first. However,
existing permit holders will still have the right to a
lease.
Number 192
MR. SWANSON explained Section 19 modernizes requirements to
restore surface lease sites after lease termination,
protecting the state against liability and high cleanup
costs. He said because Title 38 also applies this statute
to homesites, homesteads, remote cabin permits, etc.,
special measures are retained to compensate individuals for
authorized private residential improvements that are not
removed from the site and are worth more than $10,000 net
value. He stated Section 28 clarifies that the division can
allow livestock grazing and similar low value uses by
issuing permits, an authority the Department of Law recently
questioned.
MR. SWANSON said Sections 30 and 31 clarify that lottery
procedures apply to homesites, make the application fees the
same as for lottery parcels, and require a token rental of
$100 annually. The rental requirement will not apply to
existing homesites. Section 33 will raise the fee to
receive a nonagricultural homestead entry permit to $20 per
acre. This is a one-time fee, lasting for the entry
permit's five-year term. Section 34 will ensure that the
setnet leasing changes made in Sections 16-17 will not be
affected by replacement legislation that goes into effect in
1997. This legislation requires land use plans be completed
prior to issuing any leases and it applies to all leases.
There was a waiver issued several years ago for setnet
leases in the Cook Inlet, Bristol Bay and part of Kodiak
that authorizes DNR to issue leases for existing leases
where land use plans were not in place but required the
department to get those land use plans completed by 1997.
MR. SWANSON stated Section 36 protects valid existing rights
of homesite entry permittees and aquatic farm site
permittees. Section 37 allows the department to adopt
regulations in advance of the bill's effective date.
Section 38 affects both the remote parcel program (which was
repealed effective in 1984, but with many leases still
pending conversion to purchase) and the homestead program.
This section will prohibit the department from imposing the
conditions of the former AS 38.05.078(d) in new remote
parcel purchase contracts. These conditions restricted the
sale or subdivision of remote parcel land after it was
conveyed into private ownership. He stated this section
will also allow the department to amend existing remote
parcel or homestead purchase contracts or patents to remove
these restrictions if the holder consented and reimbursed
the state for the difference in value. He noted each
parcel's purchase price was cut by 50 percent to account for
the resale restrictions.
Number 243
REPRESENTATIVE CARNEY said Section 14 says the commissioner
may sell land by lottery for less than the fair market value
of the land on a determination that scarcity of land for
private use...He felt it is odd to put in statute that the
state can sell land for less than market value simply
because somebody estimates the market value is higher than
it should be. He said normally land prices are based on
demand.
MR. SWANSON stated that particular provision on page 6, line
14, is in existing statute and has been in statute for over
a decade. He said DNR has not used this provision in years.
DNR goes to auction and lets the auction set the price.
REPRESENTATIVE ELDON MULDER recalled that Mr. Swanson had
referred to Sections 16, 17, and 18 as being controversial.
He asked Mr. Swanson to explain what the controversies are.
MR. SWANSON responded those sections are special legislation
dealing with shore fish and aquatic farming. Those
provisions apply only to those industries. For all other
types of land disposals, DNR uses other provisions in Title
38. The intent is to put everybody on equal footing and use
the same leasing laws for everybody. He stated those two
industries are accustomed to current legislation, like to
work under it and oppose any changes. Mr. Swanson said the
most qualified applicant provision for shore fish involves
two people applying for the same site, where he (Mr.
Swanson) is supposed to decide who is the most qualified for
that particular site. That provision creates many appeals
to determine who is the most qualified. He noted the
difficulty is that DNR is getting more and more of these
types of situations because many of the setnet permits are
turning over to other family members. For example, a father
is deceased and a decision has to be made as to who is the
most qualified for the site, the mother or the son.
MR. SWANSON stated DNR is also limited on shore fish sites
to charge only what it costs to administer the program.
Currently, DNR charges $300 per site statewide. DNR would
like to get the shore fish sites back under normal leasing
procedures, so in sites where the value is higher, the
program could be balanced out. He said aquatic farming
currently is under a three year permit and if the
development standards are met, they come in and apply for a
lease for seven additional years and can renew for two more
terms. DNR's proposal is to issue the lease up-front. DNR
thought that would give the industry a better chance to go
to the bank with something they have a longer term
authorization on.
MR. SWANSON said DNR wants to go to an appraisal schedule,
instead of a formal appraisal, which would cost the
applicant a lot less money. He said an appraisal schedule
will also allow DNR to change the survey standards, so if
someone is in a remote location with no competition, an
aerial photo can be used, instead of the formal appraisal.
He pointed out the industry and various interest groups
worked very hard several years ago on this current
legislation and this is a compromise which they came up with
and they like it the way it is.
Number 317
CHAIRMAN WILLIAMS stated in regard to Section 12, it is very
difficult for people from rural areas to attend auctions.
MR. SWANSON stated an auction will be held in the location
where the land is located. He said there are two types of
disposals--an actual auction which can either be an outcry
or a sealed bid, or a lottery. He noted for lotteries it
does not matter what location is used to pull the names out
of the hat. This section says DNR may have the land
disposal one way or the other and it is up to the
department, using common sense, where to hold a particular
auction or lottery. He said the Superior Court decision
clearly said that the applicant does not have to be in the
location where the auction or lottery is being held.
REPRESENTATIVE DAVID FINKELSTEIN asked how Section 38
affects someone who has received a homestead in the past two
years. He assumed the homesteader is subject to a
requirement that they not sell or subdivide for five years.
MR. SWANSON said that is correct. He stated in the
transition, DNR will propose that if they want that
restriction in place, it will be left in place and the
homesteader will pay less money. If the homesteader wants
the restriction lifted, DNR will do so but the homesteader
will have to pay the difference in value.
REPRESENTATIVE FINKELSTEIN asked about future homesteaders
and asked if there will be any limitation on their right to
sell.
MR. SWANSON responded there will not be any limitation.
REPRESENTATIVE FINKELSTEIN asked why.
MR. SWANSON replied DNR has heard little, if any support,
for the current restrictions. Rather, DNR hears complaints
about the restrictions not being equal with the public and
private sector and how they do business. People are used to
paying fair market value and being able to do what they want
with their land. He said many times, a family situation is
involved--the family went out and homesteaded, the children
have grown, and now there is a desire to cut up the
homestead into smaller pieces to give to family members.
DNR cannot let them do it. He said there are also market
considerations but DNR does not hear much about that.
REPRESENTATIVE FINKELSTEIN said the analogy to the private
market does not make much sense because no one offers
homesteads. The concept of homesteads is not making as much
money as possible off the land, it is trying to give people
an opportunity to go live on the land. Homesteading is very
different than other land disposal programs. He felt the
idea of limiting homesteads from subdividing is a reasonable
limitation.
Number 408
MR. SWANSON responded everyone thinks of homesteading as
something different. DNR is trying to make the state's
homestead program comparable with the federal
(indiscernible)--once a person completes the requirements,
that person gets title to the land and can do what they want
with the land. He pointed out there are two ways to obtain
titles to homesteads in Alaska. He explained the first way
is to live on the land for 35 months within five years and
he noted those people tend not to subdivide. Other people
who do homestead can purchase the land at fair market value,
with the restriction they cannot subdivide. He stressed the
state loses 50 percent on that option.
REPRESENTATIVE FINKELSTEIN clarified the person who decides
to get title by living on the land can subdivide it.
MR. SWANSON said that is correct.
REPRESENTATIVE CON BUNDE stated the program for lease and
purchase of recreational pieces of property requires a ten
year wait before the property can be sold. He said
miniature land speculators are produced out of the program.
He felt there should be some delay when a person gets a
homestead, pays fair market value and the state loses 50
percent and then the homesteader subdivides and become a
land baron.
MR. SWANSON stated what Representative Bunde is referring to
is the remote disposal program which was repealed in 1984
and was later replaced by the homestead and homesite
programs. He noted there was a ten year restriction, but
those are coming to an end. He said if one were to look at
the state's homesteads, the majority are in remote
locations.
(CHAIRMAN WILLIAMS noted for the record that REPRESENTATIVES
GREEN AND JAMES had joined the committee at 8:26 a.m. and
8:42 a.m., respectively.)
Number 465
TOM BOUTIN, DIRECTOR, DIVISION OF FORESTRY, DNR, stated
Sections 20 and 21 in HB 515 deal with forestry. Section 20
will permit the commissioner of DNR, after making a best
interests determination, to sell timber that will quickly
lose substantial economic value due to insects or disease or
when the land is going to be cleared of timber and converted
to some nonforest use such as mining or agriculture. This
section will allow those types of sales to be put up
immediately as opposed to complying with provisions of AS
38.05.113. He said AS 38.05.113 requires the division to
annually have a five year timber sale harvest schedule and
further requires that no timber be offered for sale unless
it has been in at least the two prior years of the five year
harvest schedules. In the case of disease, insects, or
timber which is going to be cleared, salvage sales will be
allowed. Mr. Boutin stated AS 38.05.115 presently requires
that negotiated sales be no larger than 500,000 board feet
and these salvage sales will be exempt from that
requirement.
REPRESENTATIVE BUNDE asked how many board feet are in an
acre or a square mile.
MR. BOUTIN said the best timber he has seen in Alaska is
75,000 board feet to the acre. He stated he has seen many
stands in the Interior which run 20,000 board feet to the
acre, which is good. In the Mat-Su area, 3,000 board feet
is the norm.
Number 523
REPRESENTATIVE CARNEY wondered about clearing timber for
conversion to nonforest uses. He said in many cases, if a
person is going to put together a farm on state land, that
person will want to have some control over when the trees
are cut. He asked if the intent of this section is to clear
land prior to disposal for agricultural purposes.
MR. BOUTIN replied that decision is up to the Division of
Agriculture, but added there have been situations where
because of AS 38.05.113, timber could not be sold in a
timely manner and so timber which would have been put up for
sale was instead chained and burned. He said these sales
will be sold at a positive value but agreed that in some
instances, it would be better if the timber went with the
land.
MR. SWANSON said DNR recently went through the
permitting/leasing process for the Fort Knox Gold Mine in
Fairbanks. DNR was able to issue all of the permits and
leases. One of the problems which DNR faced was the trees.
None of the trees had been on the five year schedule and DNR
wanted to be able to sell the trees to make a little money,
but because the timber was not in the five year schedule,
DNR could not sell it. DNR worked with the Fort Knox people
who cut and stacked the trees enabling local people from
Fairbanks to pick up the logs for personal firewood use.
REPRESENTATIVE JEANNETTE JAMES asked if salvage sales might
be due to fire.
MR. BOUTIN responded occasionally salvage sales do follow a
fire. Timber left standing after a burn loses it value
slowly but sometimes can bring in an insect epidemic. He
said often insects and disease will follow a buffer.
REPRESENTATIVE DAVIES said the discussion about having
timber sales on a five year plan leads people to believe
that the plan has to be noticed for five years but in
reality, the sale only has to be on the plan two times,
which actually means a total of 12 months.
MR. BOUTIN said many people say the two prior years can mean
a year and a day, but that is not true. He stressed there
has not been one instance where these five year plans have
actually been done on time. Every timber sale requires two
separate public processes: AS 38.05.113 which is the five
year harvest schedule which every sale has to be in it at
least the two prior years; and then separately, the forest
land use plan under AS 38.05.112 which is a decision
document and a grocery list of considerations completely
distinct from the five year harvest schedule process. Each
sale has to pass through both of those processes. He cannot
envision getting out the five year plan in a timely manner,
let alone being able to get one out in 12 months, and then
the next one out in the first day of the fiscal year.
REPRESENTATIVE DAVIES felt it should be possible under the
five year plan to get a sale on the offering blocks in less
than two years.
MR. BOUTIN asked Representative Davies if there is a way to
not comply with AS 38.05.113.
REPRESENTATIVE DAVIES stated he will discuss the issue at a
later date. He observed Fort Knox has been around for a
long time and he felt it could have been on the normal
schedule.
MR. SWANSON stated in regard to Fort Knox, DNR did not know
the exact layout of where things were going to be, but only
knew up front where the hole in the ground was going to be,
which was easy to deal with. The rest of the facilities,
which are four times the size of the hole in the ground,
were not determined until later in the process.
REPRESENTATIVE FINKELSTEIN stated one of the reasons Section
20 is difficult to envision is because it is such a complete
exception. He felt there may be some portions of the law
which should be exempted but wholesale exemption may not be
appropriate.
TAPE 94-45, SIDE B
Number 000
MR. BOUTIN stated the public process in the forest land use
plan will still be required for the salvage sales.
Therefore, it is only the separate five year harvest
schedule process in AS 38.05.113 which is being discussed.
REPRESENTATIVE FINKELSTEIN wondered if the controversy on
the Kenai Peninsula was about AS 38.05.113 provisions.
MR. BOUTIN stated the controversy was the state's five year
plan which proposes going from what has been a normal two
million board feet a year offered on the Kenai Peninsula, to
what the Division of Forestry proposes for this year, which
is 75 million board feet, in response to the spruce bark
beetle. That proposal first came out in the five year plan,
so that plan was controversial and examined quite
thoroughly. If the forest land use plans had come out
instead with that 75 million board feet, and if there was no
AS 38.05.113, then the forest land use plan would have
received that level of examination. The five year plan was
the first time people had an opportunity to examine the
Kenai timber sales and he added it was not just this year's
75 million board feet, but also sales in the future since it
is a five year plan.
REPRESENTATIVE JAMES stated in many areas, the state has
opportunities for something the state can not foresee. It
seems in other laws there are plenty of protections and
particularly with the commissioner finding the determination
which is in the best interest of the state. She felt there
is a need to have some way of dealing with emergency
situations that the state is not aware of when doing the
best laid plans.
MR. BOUTIN said all the protections in Title 41, the Forest
Practices Act, protecting fish habitat, water quality, etc.,
remain for salvage sales. What is being discussed is
exemption from the five year planning process in instances
where the timber is going to lose its value within a couple
of years and there is no way to get the five year planning
process speeded up.
Number 062
MR. BOUTIN said Section 21 will modify existing AS 38.05.118
which allows a long-term negotiated sale if certain
conditions exist such as a high level of local unemployment,
underutilized timber manufacturing capacity, and an
underutilized allowable cut of state timber. Section 21
will allow the commissioner to negotiate that type of sale
if it is determined these conditions will exist within two
years, and adds, as a circumstance, that timber will lose
substantial economic value due to insects, disease, fire, or
land use conversion.
REPRESENTATIVE FINKELSTEIN wondered since all of the
conditions mentioned are necessary in order to make this
determination, how is the commissioner going to know two
years ahead of time what the local employment is going to
be.
MR. BOUTIN said that is a valid question. He stated the
wording in Section 21 was worded with respect to
Southcentral Timber Development versus the state of Alaska
which threw out the state's primary manufacturing
requirement in its timber sales. He pointed out that
currently the state does not have a way to put together a
timber sale for an underutilized resource.
REPRESENTATIVE FINKELSTEIN thought the Southcentral suit was
the primary manufacture suit.
MR. BOUTIN replied that is correct.
REPRESENTATIVE FINKELSTEIN said Section 21 does not relate
to primary manufacture.
MR. BOUTIN responded underutilized timber manufacturing
capacity is a primary manufacturing... If the state can
require in its timber sales that bidders must have timber
manufacturing capacity, it will be helpful.
REPRESENTATIVE FINKELSTEIN stated Section 21 does not
require primary manufacture, it only notes there is some
sort of manufacturing capacity.
MR. BOUTIN said many people, including mill owners on the
Kenai, have looked at AS 38.05.118 and in talking with a
person in research at the Department of Labor to determine
if the Kenai Peninsula would meet the test, that person said
the Kenai Peninsula will always meet the test because
Anchorage is such a high part of the sample.
Number 152
REPRESENTATIVE DAVIES said there are areas in the state
where the unemployment rate is chronically high due to the
seasonal nature of employment and therefore, the
unemployment rate does not really reflect true market
conditions. He asked what the definition of high level of
local unemployment is in Section 21.
MR. BOUTIN responded in regulation, the high level of local
unemployment is set out as 135 percent of the statewide
average.
REPRESENTATIVE DAVIES clarified there could be a situation
where there is a chronic high unemployment which is
reflective of a normal economy of an area that will always
qualify for the standard in Section 21.
MR. BOUTIN replied the area Representative Davies is
describing is similar to the Kenai Peninsula.
REPRESENTATIVE CARNEY stated the Mat-Su valley will always
qualify also.
Number 185
MR. SWANSON stated Section 22 of HB 515 amends existing AS
38.05.180(c) to remove restrictions on DNR's ability to
delay an oil and gas lease sale for more than 90 days after
the sale's scheduled date in the five year oil and gas
leasing schedule submitted annually to the legislature.
Under the existing statute, an oil and gas lease sale may be
delayed only for a maximum of 90 days after the last day of
the calendar quarter for which the sale was scheduled.
After that time, the sale must be delayed until the sale has
again appeared in the annual five year leasing schedules
submitted to the legislature for two calendar years.
MR. SWANSON said although the purpose of the 90-day
restriction was to prevent arbitrary delays in lease sales,
that has not been shown to be a problem. DNR has concerns
that administrative appeals and court challenges to lease
sales might cause the 90-day limit to be exceeded. Also,
DNR might wish to extend the comment period for a lease sale
beyond 90 days to facilitate unique needs of residents in
the area. For example, the comment period might otherwise
occur during peak subsistence hunting or fishing seasons.
This amendment will delete the 90-day restriction to
accommodate unavoidable delays, while still allowing for
timely scheduling of lease sales. He stated timely
scheduling of future sales is important in encouraging
development.
Number 201
MR. SWANSON explained Section 23 of HB 515 amends existing
AS 38.05.185(a) to eliminate overly broad provisions
allowing land to be closed to mining. The existing statute
allows DNR to determine which state land should be closed to
mining or mineral entry. The commissioner of DNR must first
find that mining would be incompatible with significant
surface uses of the land. Although not defined in AS 38.05,
the term mining generally refers to the activities and
operations involved in extracting, processing, and marketing
minerals. He stated mining presupposes the existence of
valid mining rights under mining claims or losses.
MR. SWANSON said existing AS 38.05.185(a) is overly broad
because it allows land to be closed to mining without
provision for valid existing mining rights. The existing
statute could be viewed as effecting a taking of valid
mining rights, since it authorizes a mineral closure without
requiring an eminent domain action or providing for
compensation; and may therefore run afoul of
AS 37.05.170 and Article 6, Section 13 of the Alaska
Constitution. This amendment will provide that land may be
closed to location under AS 38.05.185 - 38.05.275, which
will prevent the acquisition of new mining rights, thus
avoiding these potential pitfalls.
Number 224
MR. SWANSON stated Section 24 clarifies the qualifications
for mining claim ownership by aliens and foreign
corporations. Under the existing statute, an alien at least
18 years old from a country that grants like privileges to
United States citizens may acquire or hold exploration and
mining rights. He said a corporation in which more than 50
percent of the stock is owned or controlled by aliens whose
country does not grant reciprocal rights to U.S. citizens
may not acquire or hold exploration and mining rights.
However, determinations of which countries grant like
privileges to U.S. citizens have never been made or enforced
in any consistent manner due to the number and complexity of
mining laws worldwide.
MR. SWANSON explained that the federal mining laws, upon
which Alaska laws were initially based, allow an alien to
form a domestic corporation that would be qualified to
obtain mining rights, without inquiry into like privileges.
The Alaska laws governing the acquisition and holding of oil
and gas rights also do not inquire into like privileges. He
said amending AS 38.05.190(a) to delete these requirements
will be consistent with modern business practices, similar
federal laws, and state laws affecting other types of
mineral rights.
MR. SWANSON said HB 515 makes several changes regarding
mining operations. Section 35 of the bill repeals AS
38.05.207 in its entirety. That statute requires a
production license for every mining operation. This
provision was added in 1982 in an effort to resolve issues
arising under Section 6(i) of the Alaska Statehood Act. He
pointed out that in Trustees for Alaska v. State, AS
38.05.207 was held not to satisfy the Statehood Act
provision and the existing rent and royalty measures in AS
38.05.211 and AS 38.05.212 subsequently were enacted. The
production license requirement in AS 38.05.207 is thus
outmoded and serves no public purpose at this time.
MR. SWANSON stated Section 25 of HB 515 will repeal and
reenact AS 38.05.211(d) to simplify the adjustments to be
made in the annual rental amounts due on mining claims and
leases. The existing statute requires the rental amounts to
be adjusted every 10 years based on changes in the consumer
price index for Anchorage. He said this statutory
adjustment would most likely result in odd rental amounts
that would make calculating, accounting, and collection more
difficult. Additionally, adjusting rental amounts only at
10-year intervals could result in large changes at one time.
MR. SWANSON explained the repeal and reenactment will allow
rent adjustments to be made whenever the change in the
consumer price index for all urban consumers in the
Anchorage area equals or exceeds $5, and will restrict the
change to multiples of $5. Both DNR and the mining claim or
lease owners will appear to be better served if changes can
be made more often, and in smaller increments than at
cumulative 10-year intervals. This amendment also more
clearly identifies the consumer price index on which changes
are to be based.
Number 267
MR. SWANSON stated Section 26 amends AS 38.05.255 to provide
a more workable surface use authorization for mine
millsites. The existing statute requires a millsite permit
for millsites and tailings disposal. Millsites and tailings
disposal sites involve large, long-term structures such as
mills, dams, and tailing impoundments, often constructed or
installed at considerable expense. He said the permit
traditionally refers to an authorization to use land for a
limited purpose, with the authorization revocable at the
will of the grantor of the permit. A permit does not
accommodate the realistic needs of a mining project, which
requires long-term surface occupancy and some certainty of
continuance if the authorization is maintained in good
standing.
MR. SWANSON continued that a prudent operator would be
reluctant to invest the large amounts of capital and time
necessary for a major mining project if the millsite
authorization can be revoked without cause at any time.
This amendment substitutes lease for permit in AS 38.05.255
and provides other conforming changes relating to that
change of term. A lease provides for use of the land for a
definite period of time if the leasehold is maintained in
good standing. A lease generally requires good cause and
notice for cancellation.
MR. SWANSON said this amendment also exempts millsite leases
from the requirements of AS 38.05.070 - 38.05.105, which
govern leases not for the extraction of natural resources.
Those statutes require competitive bidding as the disposal
method. A millsite lease, however, should not be
competitively bid since there will almost always be only one
party, the mine operator, applying for a particular tract
for a millsite lease, and the characteristics of each mine
probably will not generate more than one or two acceptable
millsite tracts for disposal. Instead, HB 515 requires the
commissioner of DNR to adopt regulations establishing
appropriate procedures and annual rent amounts for millsite
leases.
MR. SWANSON stated Section 27 of HB 515 amends AS 38.05.265
to eliminate the failure to file a lease application within
a prescribed period of time as grounds for abandonment of a
mining claim. In areas open to mining only under lease, a
person who locates a mining claim first must record the
certificate of location with DNR under AS 38.05.205(a). DNR
then issues a public notice of the proposed mining lease and
mails a lease application to the locator. The locator of
the mining claim is required to return the lease application
within 90 days after receipt of it. Under existing AS
38.05.265, if a lease applicant fails to file the
application within 90 days after receipt, the mining claims
included within the proposed lease area are abandoned.
MR. SWANSON said the 90-day deadline for return of the lease
application appears to be for the purpose of issuing a lease
timely after the required public notice, so that the notice
is not stale when the lease is finally issued. However, if
the application is not timely filed, the notice period could
be repeated without the severe penalty of loss of the mining
applicant's leasehold property rights. Under HB 515, an
applicant would still be prohibited from mining the claims,
except for testing or sampling purposes, until a lease is
issued and other filing requirements are met.
Number 314
REPRESENTATIVE FINKELSTEIN asked where in the law is the
provision mining cannot begin until the lease is issued.
MR. SWANSON said he will have to figure that out later.
REPRESENTATIVE DAVIES asked if no time limit is involved, is
it possible for a person to sit on this process
indefinitely.
MR. SWANSON responded that is possible but added the lease
is being driven by the applicant. DNR will not force
someone to go to a lease.
REPRESENTATIVE DAVIES wondered if that does not open up the
possibility for speculations.
REPRESENTATIVE FINKELSTEIN said one of the unintended
outcomes of the changes made based on 6(i) was that not only
did it lead to some revenue to the state but it also helped
clear up paper claims. He recalled claims dropped by a huge
percentage because people had to take some action.
MR. SWANSON stated once the department started getting
payments, the first year drop was tremendous. He said the
annual turnover currently is about 20 percent.
REPRESENTATIVE FINKELSTEIN said his point is that there is
value to future miners who can look at an area that does not
have a lot of nonworking paper claims cluttering up the
area, keeping them from prospecting. He stated he can
understand the argument for eliminating the 90-day
requirement but if there is no time limit set, there may be
more nonworking paper claims. He felt there should be some
sore of cutoff date.
MR. SWANSON said he will check with the Director of Mining.
He stated if a person wants to file a mining claim, he can
file a mining claim, as long as he makes his annual payment
and does his labor, and he can continue that forever. He
stressed moving a mining claim up to a lease is a higher
level of protection. If a person really wants a lease, he
will pursue it.
Number 387
MR. SWANSON stated Section 15 repeals and reenacts AS
38.05.069(e)(2). This particular statute defines
approximate vicinity, a term that is not used elsewhere in
AS 38.05.069, the agricultural preference right statute. HB
515 will replace approximate vicinity with a definition of
adjacent, a term that is used elsewhere in that statute.
REPRESENTATIVE CARNEY asked what adjacent really means. He
knows of situations where a farmer has exercised preference
rights for land a mile or two away. He asked if HB 515 will
eliminate that option.
MR. SWANSON said it will not.
REPRESENTATIVE DAVIES pointed out Section 15 says "or is
separated from the presently held land only by a physical
barrier such as a road or stream." He thought land a mile
or two away will not be adjacent.
MR. SWANSON responded it says physical barrier and if the
barrier is a mile away then yes you can do it, but otherwise
no. He reiterated this section is the preference rights
statute.
REPRESENTATIVE CARNEY felt Section 15 will not work the way
it is written because it will be difficult to find state
land that borders or is adjacent to existing farm land and
is available for purchase or lease.
MR. SWANSON stated he needed to talk to John Cramer about
the issue.
Number 440
REPRESENTATIVE JAMES said there may be quite a bit of that
type of land in the Delta area and perhaps in the North Pole
area. She expressed concern about the language in Section
15 as it is very restrictive.
REPRESENTATIVE CARNEY stated the intention of that
particular law is to allow farmers to increase their land
base so they can function more economically, and he thought
the limitation was up to 640 acres total land mass.
MR. SWANSON thought that is correct.
REPRESENTATIVE CARNEY felt Section 15 is too restrictive.
REPRESENTATIVE DAVIES asked if the salvage sale language in
Sections 20 and 21 is redundant with what may happen if SB
310 passes.
MR. BOUTIN said he did not believe so. He stated arguably,
Section 21 is a less useful tool than the forest management
agreement under SB 310.
REPRESENTATIVE DAVIES felt whatever is desired in Section 21
can be accomplished through the forest management agreement.
MR. BOUTIN agreed and said Section 21 is certainly more
cumbersome and has unanswered questions.
REPRESENTATIVE DAVIES clarified there is a provision in SB
310 allowing the department to go forward with an
abbreviated process if the sale is less than 500,000 board
feet.
MR. BOUTIN said yes but with a limit by region.
REPRESENTATIVE DAVIES asked if small scale salvage sales can
be conducted under that provision.
MR. BOUTIN said that is correct.
CHAIRMAN WILLIAMS stated the committee will schedule HB 515
again in the near future to take public testimony.
ANNOUNCEMENTS
CHAIRMAN WILLIAMS announced the committee will meet next on
Wednesday, April 6 at 8:15 a.m.
ADJOURNMENT
There being no further business to come before the House
Resources Committee, Chairman Williams adjourned the meeting
at 9:45 a.m.
| Document Name | Date/Time | Subjects |
|---|