SB 307 DUDE CREEK HABITAT AREA LAND EXCHANGE TAPE 96-39, SIDE A Number 001 CHAIRMAN LEMAN called the Senate Resources Committee meeting to order at 3:38 p.m. The chairman brought up SB 307 as the first order of business before the committee. Chairman Leman asked Senator Frank if he wished to testify. Number 014 SENATOR STEVE FRANK, Co-chairman of the Finance Committee, sponsor of SB 307, stated the bill would provide for a land exchange. He said it isn't asking for any subsidies and is totally within the private sector. So he is eager to do what he can to encourage the exchange and allow it to go forward. Senator Frank stated that members have in their bill packets a copy of SJR 27, which was passed last year supporting this project. CHAIRMAN LEMAN recalled that there was no objection to SJR 27. He called Mr. Levitt to testify. Number 047 RICHARD LEVITT, President & General Manager, Gustavus Electric Co., stated the land exchange would occur between the Department of the Interior and the State of Alaska to allow the construction of a hydroelectric project to provide electricity for the community of Gustavus and Glacier Bay National Park. The land exchange is necessary because the site is within Glacier Bay National Park and Preserve, a wilderness area. The removal of land from a wilderness area must be authorized by congress. We are here today, because approval of the Alaska State Legislature is required for state land to be given up. SB 307 approves the land exchange. SB 307 is contingent on the passing of legislation in Washington, D.C., which is going forward. According to sources in Washington, D.C., the Senate Energy & Natural Resources Committee will be hearing the bill soon. We are asking for passage of SB 307 at this time, because it appears that the federal legislation will not be complete until after the adjournment of the Alaska State Legislature. CHAIRMAN LEMAN asked Mr. Levitt to remind the committee of the level of local support. MR. LEVITT responded that three public meetings have been held in Gustavus, and a vote was taken at each one. In each case, the vote was unanimously in support of the project. That is documented in minutes of the meetings and by a letter from the Gustavus Community Association, who sponsored all the meetings. Number 135 KELLIS SOULE, Governmental Affairs Representative, Gustavus Electric Co., stated he can answer any questions about the project. SENATOR LEMAN asked Mr. Soule what the expected reduction in the cost of power will be for Gustavus. MR. SOULE responded that, under a 30-year program, they estimate that the Power Cost Equalization Program will be reduced by close to $200,000.00. He believes the administration came up with a figure of $100,000.00. The discrepancy in the two figures is that Gustavus took into consideration growth in the program and a continuation of the funding of the program. There will be savings to the federal government as well. Nico Bus, Acting Director, Support Services Division, Department of Natural Resources, supports SB 307, as long as the expense for the exchange is covered. It will be about two-staff months to accomplish this project. Number 165 SENATOR TAYLOR asked if there will be any requirements of the State of Alaska to maintain any land classification, status, or use on the property, once the exchange has taken place. ANDY PEKOVICH, Regional Manager, Juneau Office, Division of Land, Department of Natural Resources, stated the process of exchange could include classification of the lands. It is his understanding that there is still chapter 50 to deal with, and the only thing SB 307 does is allow the state to do an equal acreage exchange without coming back to the legislature. It does not bypass the other elements of the exchange. SENATOR TAYLOR stated he understands that aspect of the exchange. His concern is that we are giving up state lands that right now we have the ability to classify any way we see fit. He doesn't want to go through the exchange and then find out that we've allowed the federal government to forever restrict future use of the land. Number 195 MR. PEKOVICH stated that the land is on the boundary of the national park; it is fairly wet, and it is sandhill crane area. In his opinion, it is very doubtful that the state would ever consider developing that land. SENATOR TAYLOR stated that doesn't answer his question. The question is, should there be a reason that we need to - he's not talking necessarily about development, he looked at the map and didn't think there was much to be done there, either. But should there be some need in the future, would we be precluded by the federal enabling legislation from acting in that area. Number 210 COMMISSIONER JOHN SHIVELY, Department of Natural Resources, stated Senator Taylor's concerns may depend on what the federal legislation says. We are receiving land that would come out of the boundaries of the park. He thinks the land would have no designation and that the State would be free to designate the land as they saw fit. He cannot predict what congress might do, but it would be the administration's intent to have it unrestricted. CHAIRMAN LEMAN stated Commissioner Shively was referring to the land the State would be receiving. COMMISSIONER SHIVELY responded that is correct. SENATOR FRANK stated, in other words, there would be no covenant running with the land. COMMISSIONER SHIVELY responded that is correct. SENATOR TAYLOR stated he just wanted to make sure that was the intent. SENATOR HALFORD commented as far as he is concerned, that is a condition, not an intent. Number 230 SENATOR LINCOLN asked if the analysis of the PCE (Power Cost Equalization) savings would be done in house. She also wondered why that had to be a part of the fiscal note. At one point, PCE was listed as having a 20-year guarantee. But that has been whittled away now to the point of 3-4 years. So PCE really is not long term. Will DCRA continue with that analysis? MR. BUS responded the reason that was written into the fiscal note was to figure out what the savings would be. He is not in a position to speak for DCRA, but this clearly seems like a good proposal. SENATOR LINCOLN thinks that is a good idea. Number 257 SENATOR TAYLOR asked if the exchange will allow for the construction of a hydroelectric project. SENATOR HALFORD stated that was the whole purpose behind SB 307. CHAIRMAN LEMAN reminded members of the passage of SJR 27 last year, supporting this land exchange. SENATOR PEARCE asked why they needed money. SENATOR FRANK thinks it was to hold public hearings. Number 275 MR. BUS replied that once the federal government approves the land exchange, part of the exchange process is that there will be public hearings. People in the Anchorage office will probably have to travel to Gustavus. SENATOR FRANK made a motion to discharge SB 307, and accompanying fiscal note, from the Senate Resources Committee with individual recommendations. Number 285 CHAIRMAN LEMAN, hearing no objection, stated SB 307 was discharged from committee.