Legislature(1997 - 1998)
05/06/1997 02:31 PM House RES
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HOUSE RESOURCES STANDING COMMITTEE
May 6, 1997
2:31 p.m.
MEMBERS PRESENT
Representative Bill Hudson, Co-Chairman
Representative Scott Ogan, Co-Chairman
Representative Beverly Masek, Vice Chair
Representative Fred Dyson
Representative William K. ("Bill") Williams
Representative Irene Nicholia
Representative Reggie Joule
MEMBERS ABSENT
Representative Ramona Barnes
Representative Joe Green
COMMITTEE CALENDAR
HOUSE BILL NO. 238
"An Act amending the program of exploration incentive credits for
activities involving locatable or leasable minerals or coal
deposits on certain land in the state; and providing for an
effective date."
- MOVED CSHB 238(RES) OUT OF COMMITTEE
SENATE CONCURRENT RESOLUTION NO. 10
Supporting continued use of Alaska's renewable furbearer resources.
- MOVED OUT OF COMMITTEE
* HOUSE JOINT RESOLUTION NO. 39
Urging the United States Congress to enact legislation that
prohibits the President of the United States from extending or
establishing national monuments without the express authorization
of the Congress.
- SCHEDULED BUT NOT HEARD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 238
SHORT TITLE: MINING EXPLORATION INCENTIVE CREDITS
SPONSOR(S): REPRESENTATIVE(S) VEZEY, Foster, Ivan
JRN-DATE JRN-PG ACTION
04/08/97 1025 (H) READ THE FIRST TIME - REFERRAL(S)
04/08/97 1025 (H) RESOURCES
04/17/97 (H) RES AT 1:00 PM CAPITOL 124
04/17/97 (H) MINUTE(RES)
04/23/97 1308 (H) COSPONSOR(S): FOSTER, IVAN
05/01/97 (H) RES AT 1:00 PM CAPITOL 124
05/01/97 (H) MINUTE(RES)
BILL: SCR 10
SHORT TITLE: SUPPORTING USE OF FURBEARER RESOURCE
SPONSOR(S): SENATOR(S) WILKEN, Sharp, Halford, Taylor, Hoffman,
Lincoln, Miller, Pearce, Leman, Mackie; REPRESENTATIVE(S) Nicholia
JRN-DATE JRN-PG ACTION
04/09/97 1054 (S) READ THE FIRST TIME - REFERRAL(S)
04/09/97 1054 (S) RESOURCES
04/21/97 (S) RES AT 3:30 PM BUTROVICH ROOM 205
04/21/97 (S) MINUTE(RES)
04/23/97 (S) RES AT 3:30 PM BUTROVICH ROOM 205
04/25/97 1470 (S) RES RPT 6DP
04/25/97 1470 (S) DP: HALFORD, LEMAN, LINCOLN, GREEN
04/25/97 1470 (S) TAYLOR, SHARP
04/25/97 1470 (S) ZERO FISCAL NOTE (S.RES)
04/25/97 1494 (S) COSPONSOR: LEMAN
04/28/97 (S) RLS AT 10:45 AM FAHRENKAMP RM 203
04/28/97 1514 (S) RULES TO CALENDAR 4/28/97
04/28/97 1527 (S) READ THE SECOND TIME
04/28/97 1527 (S) COSPONSOR(S): MACKIE
04/28/97 1527 (S) PASSED Y17 N- E1 A2
04/28/97 1530 (S) TRANSMITTED TO (H)
04/30/97 1392 (H) READ THE FIRST TIME - REFERRAL(S)
04/30/97 1392 (H) RESOURCES
05/02/97 1496 (H) CROSS SPONSOR(S): NICHOLIA
05/06/97 (H) RES AT 2:15 PM CAPITOL 124
WITNESS REGISTER
REPRESENTATIVE AL VEZEY
Alaska State Legislature
Capitol Building, Room 13
Juneau, Alaska 99801
Telephone: (907) 465-3719
POSITION STATEMENT: Testified as sponsor regarding CSHB 238(RES).
JULES TILESTON, Director
Division of Mining and Water Management
Department of Natural Resources
3601 C Street, Suite 800
Anchorage, Alaska 99503-5935
Telephone: (907) 269-8600
POSITION STATEMENT: Provided department's position and answered
questions regarding CSHB 238(RES).
MILTON WILTSE, Director
Division of Geological and Geophysical Surveys
Department of Natural Resources
794 University Avenue, Suite 200
Fairbanks, Alaska 99707-3645
Telephone: (907) 451-5005
POSITION STATEMENT: Provided department's position and answered
questions regarding CSHB 238(RES).
ELIZABETH HAGEVIG, Researcher
for Senator Gary Wilken
Alaska State Legislature
Capitol Building, Room 510
Juneau, Alaska 99801
Telephone: (907) 465-3709
POSITION STATEMENT: Presented sponsor statement for SCR 10.
DICK BISHOP, Executive Director
Alaska Outdoor Council
211 Fourth Street, Suite 302A
Juneau, Alaska 99801
Telephone: (907) 463-3830
POSITION STATEMENT: Testified in support of SCR 10.
RANDALL ZARNKE
Alaska Trappers Association
219 Slater Drive
Fairbanks, Alaska 99701
Telephone: (907) 459-7257
POSITION STATEMENT: Testified in support of SCR 10.
ACTION NARRATIVE
TAPE 97-51, SIDE A
Number 0001
CO-CHAIRMAN BILL HUDSON called the House Resources Standing
Committee meeting to order at 2:31 p.m. Members present at the
call to order were Representatives Hudson, Ogan, Masek, Dyson and
Williams. Representatives Joule and Nicholia joined the meeting at
2:36 p.m. and 2:41 p.m., respectively. Representative Green was
chairing another meeting.
HB 238 - MINING EXPLORATION INCENTIVE CREDITS
Number 0071
CO-CHAIRMAN HUDSON announced the first item of business was House
Bill No. 238, "An Act amending the program of exploration incentive
credits for activities involving locatable or leasable minerals or
coal deposits on certain land in the state; and providing for an
effective date." He asked Representative Vezey to explain changes
in the new proposed committee substitute (CS), 0-LS0845\K,
Chenoweth, 5/5/97.
Number 0086
REPRESENTATIVE AL VEZEY, prime sponsor, explained that page 2, line
22, of the proposed CS clarifies that at the discretion of the
department, a geologist may be brought in. In addition, the same
paragraph clarifies that it is the party wishing to gain the tax
credit who must retain and enter into a contract with the
geologist; however, the department retains the right to approve
both the selection of the geologist and the contract. The third
change, on page 3, "around line 28," clarifies that once the credit
is applied for under one statute, it cannot be applied for under
this.
Number 0270
JULES TILESTON, Director, Division of Mining and Water Management,
Department of Natural Resources (DNR), testified via teleconference
from Anchorage on the proposed CS. He commented, "I also have the
department's lead for the existing exploration incentive credit
bill for a new and reopened mine."
MR. TILESTON stressed the DNR's intent and willingness to work with
the sponsor, the legislature and the industry to craft this new
program. He concurs with the sponsor that HB 238 differs radically
from the existing incentive credit program. Although the work
draft goes a long way towards responding to questions raised by the
DNR, questions remain.
MR. TILESTON explained that his fundamental concern as an
administrator of the existing program is the "degrees of confusion"
that create potential risk for the existing program. He explained,
"So my comments are geared to keep the existing program and this
new program going down similar but parallel tracks. To this
extent, I strongly recommend that, as we work through this, that
the final version, whenever it comes out of the next committees,
either be as an independent chapter from AS 27.30 or, perhaps less
desirable but probably workable, a wholly independent subpart of
the existing AS 27.30."
Number 0449
MR. TILESTON referred to Section 1, which adds geological mapping
as an eligible cost for the new program. He stated, "Very frankly,
under the existing program, if an applicant came forward as a
result of a new mine or a reopened mine and presented the
department geological mapping, we would consider that an eligible
cost on its own merits. So the first question I've got is: Do we
mean something different from the new program than the existing
program? When I read the language of Section 2, which talks about
additional, supplemental information, it suggests there is a
difference. And I very honestly don't know what that difference
is."
MR. TILESTON stated, "One of the major unanswered questions in the
new program is: How will eligible exploration costs for projects
that predate enactment of the new program be treated? And page 3,
lines 1 and 3, talks about credits for work done prior to the
effective dates. Also, how will future exploration costs be
treated for work at existing mines that are not eligible for the
existing program because they now have all of their permits?"
MR. TILESTON cited examples of questions: Does HB 238 intend to
provide a credit for work last year at the Greens Creek Mine if
they produce a geologic map of their work that has not previously
been available to the public? Can past or future exploration costs
at the Red Dog Mine be deducted? He mentioned other examples,
suggesting these can be answered but that the present language
leaves uncertainty. "And uncertainty leads to litigation or
problems in the future, which we would like to resolve," he added.
Number 0617
MR. TILESTON said in summary, the DNR has worked hard to develop
the existing program. They believe this is a good idea but there
are issues of clarity they would be happy to discuss as this goes
through the legislative process.
MR. TILESTON referred to page 2, lines 22 and 29, and said that
language refers to the consulting geologist being at the cost of
the applicant. He stated, "Yet when we go back to the definition,
Section 7, of eligible costs of this bill, the costs for
consultants are expressly excluded. Is this really intended?" He
said these are the sorts of things they need to work out.
MR. TILESTON emphasized that Steve Borell, Executive Director of
the Alaska Miners Association, Incorporated, had telephoned him the
previous week to set up a meeting that included Mr. Wiltse, Mr.
Tileston, the sponsor and other stakeholders; although an initial
date of May 16 had been established, Representative Vezey was not
available. He stressed that the DNR stands ready and willing to
work with the sponsor and stakeholders as HB 238 moves forwards.
He advised that his written comments provide details of other
concerns.
Number 0742
REPRESENTATIVE VEZEY advised that the drafters had not wanted to
create a separate statute. He stated, "All the other items that I
heard, I believe we have addressed. I'm not going to say that it's
perfect, but we're a long way from being completely through the
legislative process also." He said he believes they have addressed
the problems thoroughly enough to go on to the next step of review.
REPRESENTATIVE VEZEY referred to possible credit for work done
prior to the effective date of this act. He said the bill is clear
that this is totally at the discretion of the department, which
must determine that the information is of such value to the state
of Alaska that they want to issue a credit for it. He stated,
"Everything we do in here always loops back to give maximum
discretion to the department."
REPRESENTATIVE VEZEY said, "The concern about confusion, as far as
mixing up the two: It has been put together carefully, and so far,
nobody has said anything that causes me to think that we have made
an error. I certainly encourage all the review and do intend to
work on this this summer, but I really, unless this committee just
wants to work on this more, I think it's ready to go to the next
step of review."
Number 0890
CO-CHAIRMAN HUDSON said he had heard enough to understand that the
department and the Administration were willing to work with the
sponsor. While there may be crafting to be done, he saw no reason
for not moving it to the next committee. He suggested in the
interim, the sponsor would have the opportunity to work with the
Administration to come up with a substitute bill.
Number 0955
CO-CHAIRMAN OGAN made a motion to adopt as a work draft version 0-
LS0845\K, Chenoweth, 5/5/97. There being no objection, it was so
ordered.
CO-CHAIRMAN HUDSON asked Mr. Wiltse whether he had reviewed that
version.
Number 0982
MILTON WILTSE, Director, Division of Geological and Geophysical
Surveys, Department of Natural Resources, testified via
teleconference from Fairbanks. He said the main section he was
reviewing was AS 27.30.012. Referring to page 2, beginning at line
22, section (A)(ii), he said it keeps much of the expense of
implementing this away from the DNR; he concurs with that.
MR. WILTSE stated, "I do have a little bit of reservation yet of
whether we've completely separated that financial responsibility;
it's nothing that can't be worked out. I think that we do have to
recognize that in implementing this thing, that there's going to be
some resources necessary to get it off the ground, but after that,
I think the cost of running the program can be brought back to a
very nominal amount that is not a great burden on anybody. But I
think it has to be recognized that there will be some sort of a
cost to keep this going, and there will be some start-up costs."
He agreed those can be worked out in the process, so that people do
not feel they are "trying to build a little mini-kingdom around
this bill." He applauded the intent of the bill.
MR. WILTSE referred to page 2, line 21, and said he thinks it is
possible to read that statement as if the applicant would have a
choice of "coming in and dumping his material on the department,"
in spite of language in (ii). He suggested it would be somewhat
more comforting if (i) on line 21 said something to the effect that
"the department, at the expense of the person requesting the taking
of the credit, or at the discretion of the department." He said
that would ensure that separation is clear, that the cost of
getting this information in shape to join the public domain would
be at the applicant's expense and not something the DNR would have
to shoulder. He acknowledged it is possible a lawyer would look at
it differently; however, he is uneasy about the current wording.
He stated, "If we could get that out of the way, I think we've gone
a long way to decrease that fiscal note by a lot."
Number 1163
CO-CHAIRMAN HUDSON commented that when he looked at that, he felt
it could be left to the regulatory process rather than added in the
statute. "But that is, again, something that can be fine-tuned, I
think, over the interim," he commented.
MR. WILTSE agreed.
Number 1195
REPRESENTATIVE BEVERLY MASEK asked whether the DNR believes this
will provide an incentive to increase the state's data base on
minerals, without the state giving up more than it should to mining
businesses.
Number 1227
MR. TILESTON replied that it is the belief of the department that
the concepts that the prime sponsor has set forth and has testified
on will indeed result in data that is not now available to the
public being made available; he believes that is to the advantage
of the state as a whole. What the long-term consequences of the
trade-off of that data against the tax credit will be, he cannot
say.
Number 1267
CO-CHAIRMAN HUDSON asked, "And Mr. Tileston, doesn't that rest
entirely with the commissioner as to whether or not it is in the
state's best interest to offer, as well as the application of a
potential minerals explorer? Is that the way you read it?"
MR. TILESTON replied, "This is one of the areas that we need to
explore very carefully, because the present language that this bill
has now incorporated provides that an application is automatically
approved if the commissioner takes no action. And these are the
sort of things that we need to work through, taking your statement
and the prime sponsor's statement that this is something that if
it's not of value, it would not be accepted. And those are things
that we can craft in, in making sure that it does not do something
that's undesirable."
CO-CHAIRMAN HUDSON said that is how he reads it as well.
Number 1319
REPRESENTATIVE MASEK stated concern over whether there is quality
control on data coming in and whether there are problems with
conflicts over raw data and the interpretations of that data.
Number 1336
MR. WILTSE said what establishes data quality in his business is
peer review. He stated, "And what we would be doing by going out
to the consulting community would be establishing sort of a
private-sector peer review process that the applicant would bear
the cost of. But there are clearly professional consultant
geologists within the state that have the training and the
experience to conduct a peer review of this data for the department
at the expense of the applicant, and who are knowledgeable and
ethical professionals, that we have no qualms about engaging in
this process. And we then, of course, would have oversight on the
type of report that they return to us and the format of the data
that was returned to us, so it would go seamlessly into the public
data base and be available to the public. That's a procedural
thing that I think that we can craft. And I feel comfortable that
we can get to that end in an objective and professional manner."
MR. WILTSE said he did not see a conflict of interest issue because
there are many consultants in the state who work for many clients,
and there are ways of handling conflict of interest issues through
contract language, for example. He said that is something any
professional engineer deals with all the time. "I don't think that
that is a major concern in this area," he stated.
Number 1454
REPRESENTATIVE VEZEY advised that there is another change in the CS
as a result of similar comments made earlier. He referred to page
3, beginning at line 20. He stated, "We clarify that the time
schedule set out for submission and approval of data for
exploration tax credits do not apply for this type of a tax credit.
So basically, we've given the department an unlimited amount of
time to review the data."
MR. WILTSE said while in practice there would be a practical limit,
he appreciated the fact that the sponsor recognized that evaluating
that data may take a significant amount of time.
Number 1520
REPRESENTATIVE REGGIE JOULE asked if there was another committee of
referral in the House.
CO-CHAIRMAN HUDSON advised that the only fiscal note is from the
DNR, for $270,000. As they had heard, probably that would be
reduced once the DNR sits down with the sponsor and determines some
of the cost factors that are still unclear to the department. He
suggested it would probably go to the House Finance Committee.
REPRESENTATIVE VEZEY concurred.
Number 1586
REPRESENTATIVE JOULE noted that everybody agrees with the concept
but nobody has come out in support of the bill itself. He said
this can have important impacts on shallow gas and other mining
activities, and he asked whether perhaps the committee should do
further work on it.
Number 1677
REPRESENTATIVE MASEK asked what Representative Vezey plans to do
during the interim to work out some of the problems, and which
areas he plans to work on.
REPRESENTATIVE VEZEY stated his belief that there is concern
because of getting into the state's tax code. He had worked a lot
on the bill and its predecessor, and he suggested it was ready to
go to the next committee.
Number 1752
CO-CHAIRMAN HUDSON said he believes from a policy perspective, the
bill had been adequately reviewed by the committee. He said even
the testimony of Mr. Tileston and Mr. Wiltse indicates they see it
as a valuable tool, although an imperfect one at this stage. He
suggested the House Finance Committee's review of the tax
implications would address whether the credits offered are of
sufficient value to encourage development of the mineral resources.
Number 1788
REPRESENTATIVE BILL WILLIAMS made a motion to move the committee
substitute, version 0-LS0845\K, Chenoweth, 5/5/97, from committee
with individual recommendations and the attached fiscal note.
CO-CHAIRMAN HUDSON asked if there was any objection. There being
none, CSHB 238(RES) moved from the House Resources Standing
Committee.
CO-CHAIRMAN HUDSON turned the gavel over to Co-Chairman Ogan.
SCR 10 - SUPPORTING USE OF FURBEARER RESOURCE
Number 1809
CO-CHAIRMAN OGAN announced the final item of business was Senate
Concurrent Resolution No. 10, supporting continued use of Alaska's
renewable furbearer resources. He called on Beth Hagevig to
present the resolution on behalf of the sponsor.
Number 1834
ELIZABETH HAGEVIG, Researcher for Senator Gary Wilken, read a
portion of the sponsor statement into the record:
"Senate Concurrent Resolution 10 calls for the Alaska State
Legislature's endorsement of continued harvest and use by Alaskans
of the state's renewable furbearer resources, consistent with the
principles of sustained yield. ... We in Alaska are blessed with
many renewable resources, including abundant furbearer populations.
Not only is trapping an important management tool for helping to
maintain healthy furbearer populations, it is also a traditional
activity for many Alaskans and helps promote self-reliance by
providing income, food and clothing. Trapping ties Alaska to its
pioneer roots and helps to keep alive the very values that build
this state."
Number 1914
DICK BISHOP, Executive Director, Alaska Outdoor Council, came
forward to testify in support of SCR 10. He said this resolution
is appropriate for reasons mostly documented in materials he had
provided to the committee.
TAPE 97-51, SIDE B
Number 0006
(NOTE: MALFUNCTION CAUSED TAPE TO FLIP EARLY. NOTHING IS MISSING.
LOG NUMBERS REFLECT ELAPSED TIME, NOT POSITION ON TAPE. THERE IS
BLANK TAPE AT END OF SIDE A AND BEGINNING OF SIDE B.)
MR. BISHOP recommended sending the resolution to the U.S. Fish and
Wildlife Service. He referred to a letter he had written to that
agency, which documents reasons the council believes trapping
should be continued on wildlife refuges. He said it is important
for the legislature to emphasize that they recognize and respect
the values that Alaskans attach to trapping. He referred to other
materials he had provided, which indicate that animal rights
protectionists have mounted a campaign to discourage or eliminate
trapping. He said the council disagrees with that and believes
trapping is a legitimate use that should be continued.
MR. BISHOP advised that roughly 86 percent of the U.S. Fish and
Wildlife national refuge system is in Alaska. If that agency or
the Department of Interior restrains trapping in some fashion, the
effects fall mostly in Alaska, on Alaskans. He pointed out that
those refuges routinely surround communities in outlying Alaska.
Therefore, it is especially important to emphasize trapping as a
traditional pursuit and means of livelihood.
Number 0139
RANDALL ZARNKE, Alaska Trappers Association, testified via
teleconference from Fairbanks in support of SCR 10, stating that
the association has several hundred members. They are encouraged
by the powerful sentiments expressed in the resolution and the
powerful message that will be conveyed by adopting it. He said
trapping is important statewide and cited examples. He said it
also helps build and maintain a relationship between humans and the
land on which they live. He emphasized that the species are not
threatened or endangered, due in no small measure to professional
management by state biologists. He said for these reasons and
others, they encourage support of SCR 10.
Number 0239
REPRESENTATIVE NICHOLIA asked to whom the resolution will be sent.
MS. HAGEVIG said although they had not amended the resolution to
say, they had in mind various newspapers in the state and, as Mr.
Bishop mentioned, the U.S. Fish and Wildlife Service.
REPRESENTATIVE NICHOLIA stated that, coming from a long line of
trappers, she believes it is a good resolution.
Number 0296
CO-CHAIRMAN HUDSON made a motion to move SCR 10 out of committee
with individual recommendations. He asked unanimous consent.
CO-CHAIRMAN OGAN asked if there was any objection. There being
none, SCR 10 moved from the House Resources Standing Committee.
ADJOURNMENT
Number 0302
CO-CHAIRMAN OGAN adjourned the House Resources Standing Committee
meeting at 3:12 p.m.
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