SB 175-STATE MINING LAW MR. STEVE BORELL, Executive Director of the Alaska Miners Association, said that SB 175 is the result of several years of work between the mining industry and the Department of Natural Resources (DNR). The changes in it only affect the process required to locate and stake mining claims. They do not increase or decrease the rights that are established by the claims. The primary catalyst for the review was the on-going state budget challenge combined with technological advances regarding land records, Internet access to land records, and global positioning systems (GPS). The advances make it easier to post the data in a timely and efficient manner, which was the primary issue for DNR. Mining claims will be put into a format that can be electronically entered on the state land status plats, which should improve accuracy, accessibility, and timeliness of the data. From the standpoint of the mining industry, the changes will simplify the claim staking process and reduce errors. They will also make it possible to use global positioning systems to establish claim corners in the field. SB 175 will also allow the use of a larger size of mining claim, which will decrease the amount of "pick work" for both the miner and DNR. The existing claim location system will continue to be available for situations in which the new positioning method is not practical. The bill also establishes rent for prospecting sites which do not have a rental rate on them now. It also adds some restrictions on using the new system: Meridian, Township, Range, Section, and Claim, (MTRSC). If that system is used, it must be done in a way that will facilitate the process for DNR. Mr. Borell said the mining industry believes SB 175 makes appropriate changes. Number 115 CHAIRMAN HALFORD asked if the bill allows for claim locations that are not posted on the ground. MR. BORELL answered no, the post in the ground is the essential starting point according to the state mining law. SB 175 does not change that. SENATOR TAYLOR asked, if it doesn't change the requirement to post on the ground, what savings are involved and how SB 175 will improve the system. MR. BORELL explained that an aliquot grid, based on meridian, township, range and section, covers the entire state. If a miner goes out and establishes claim corners and tells DNR the location defined by MTRSC, DNR's cost is significantly less because a draftsman will no longer have to enter it onto the land status plats. The claim can be highlighted on the appropriate plat with a computer cursor. DNR staff would confirm the data and hit the enter button; the claim would then be on the land status plat and almost instantaneously available anywhere in the state or world. SENATOR TAYLOR commented that DNR is willing to use aliquot parts and GPS with mining claims but it has been totally resistant to do anything like that when it comes to land sales in the state. SENATOR LINCOLN requested a fiscal note. MR. BOB LOEFFLER, Division of Mining, DNR, stated support for SB 175. The Division has a problem providing the services the mining industry relies upon. This bill is a partial solution to that problem. In the early '90s, the Division did about 3,000 mining claim stakings per year. In FY99, there were 15,000 and in the late '90s there have been 10,000 to 11,000. The Division expects that number to continue. The Division is pleased with that level but when it receives more than 10,000 applications per year, the Division can't turn them around fast enough. It has a four to six month back log in terms of creating a record for each mining claim. This bill solves the problem in two ways: it allows for larger mining claims, which will require fewer to be processed and it allows the miners to stake the claims in a way that helps the division automate the system. MR. LOEFFLER said the fiscal note is a bit odd and he doesn't want to mislead the committee. SB 175 applies rents to prospecting sites. The Division believes it will generate new revenue of about $150,000; half would go to the treasury and half to the Permanent Fund. At the same time, the Division isn't able to provide the services to make use of this information. To reduce the backlog, the Division will need approximately $75,000 to process the claims. The Division attempted to demonstrate in the fiscal note that the bill will create a new revenue source but it will need to capture some of those funds to provide the services to generate the funds. He said DNR would support the bill in any form. Number 598 SENATOR TAYLOR asked Mr. Loeffler if he ever talked to anyone in the Division of Lands regarding the sale of land, because the allowance to stake a claim is a conveyance of an interest in state real property. He thought there should be some coordination between the Division of Land and the Division of Mining. He applauded Mr. Loeffler for the changes he worked out with the miners and for using technology to locate these points. He questioned why the Division of Lands couldn't use the same method of aliquot parts and location by GPS for land sales. MR. LOEFFLER answered that the Division of Mining, Land, and Water is now one division. He explained that when a claim is staked on aliquot parts, the record will reflect aliquot parts; however, the on-the-ground post prevails. Therefore, if the post is off the aliquot parts by 100 feet, the location on the ground may not be the aliquot parts. The mining industry was willing to say that the record may reflect the aliquot parts, but the actual on-the-ground location is, in fact, whatever the post says it is. Therefore, if you want to know exactly where that mining claim is on the ground, you have to survey it. The aliquot part reflection is just a paper location. The same is true of land sales. While the use of GPS is very helpful, the physical location on-the-ground prevails. SENATOR TAYLOR said he understands that, but the land sales section has not been willing to even talk about GPS or aliquot parts. They are insisting on on-site surveys before anything is actually noticed. He thought the same system could be applied to land sales. He encouraged Mr. Loeffler to work with them to utilize the aliquot parts and GPS to provide notification to the public of lands available for sale and then require the land to be surveyed before any transaction takes place. CHAIRMAN HALFORD said, based on the way DNR handled the unallocated cuts in its last budget, he isn't sure he would encourage the Finance Committee to give it any more money, but he said this does look like a proposal that could work. CHAIRMAN HALFORD noted one section of the bill deletes the requirement that boundaries of the claim remain clearly marked. He asked how sections 7 and 8 work, as well as the prohibition on the prior locator, and how that applies to both prospecting sites and claim locations. He said he was wondering how it would apply to a person who did not submit all of the paperwork and can no longer locate on that prospecting site, while anyone else can. MR. LOEFFLER responded if a person does not complete the work required to keep a prospecting site in good order, he may not stake the prospecting site for a year but the person can stake a claim. That is consistent with existing law and was designed to prevent people from staking prospecting sites or claims on speculation. Number 1959 MR. BORELL explained that under current law, a person can stake a prospecting site and not pay rent and, at the end of one year, automatically extend it for a second year. At the end of the second year, if the individual was unable to get the work done because of extenuating circumstances, the law allows the person to request another extension from DNR. The fact of the matter is that every time DNR receives such a request, it involves quite a bit work of work to decide if an extension appropriate. During the discussions between DNR and the industry, they decided to set the life of a prospecting site at two years and to prohibit any extensions. At the end of the two-year period, the owner of the prospecting site can stake a mining claim or a lease hold location on top of that prospecting site and convert the site into a mining claim. That conversion must occur prior to the expiration of the prospecting site's two-year life. Anyone holding a prospecting site who fails to convert to a mining claim would be prohibited from staking another prospecting site. They could stake a mining claim, but not a prospecting site. They could stake a mining claim, however. The idea behind it is that there is a two-year period in which you have to follow the rules for a prospecting site and, after that, if you don't convert, you are out of luck for a year. If no one else has staked it after a year, the person can come back and stake it. CHAIRMAN HALFORD asked if they could do anything to provide a valid discovery on a piece of property on which one doesn't have a prospecting site. MR. BORELL answered yes. You can do work on any ground that is not restricted. The prospecting site provides legal protection against someone else who would come along and stake the claim, which does happen. Number 2198 SENATOR TAYLOR moved to pass SB 175 from committee with individual recommendations. There were no objections and it was so ordered.