HB 340-PETERSVILLE RECREATIONAL MINING AREA  3:39:16 PM CO-CHAIR WAGONER announced HB 340 to be up for consideration. CO-CHAIR PASKVAN moved to bring HB 340 before the committee for purposes of discussion. CO-CHAIR WAGONER objected for discussion purposes. REX SHATTUCK, staff to Representative Mark Neuman, Alaska State Legislature, sponsor of HB 340, put himself on the record. REPRESENTATIVE MARK NEUMAN, Alaska State Legislature, sponsor of HB 340, explained that he was approached by a constituent named Michelle Stevens who had 550 acres of federal mining claims in the Petersville Mountain area and the director of the Division of Mining, Land and Water had approached her because the state wanted to acquire that land from the federal government and then give her 220 acres back; they were then going to convey the mining rights back to her after the land was conveyed to the state so she could do some recreation mining. Some complications came up during that process and to resolve those issues they have worked with the current director and Steve Borrel with the Alaska Mining Association to remove the following previous federal mining claims from recreational mining areas as described on page 2, lines 2-6, in the bill. 3:41:55 PM SENATOR MCGUIRE joined the committee. CO-CHAIR WAGONER opened the public hearing. 3:42:37 PM MICHELE STEVENS, representing herself* Petersburg, AK* said she had also submitted her testimony in writing and was available for questions. CO-CHAIR WAGONER asked her for a three-minute summary. MS. STEVENS explained that in 1994 she wanted to have a recreational mining area and to do that, she and Jules Tileston, Director, Division of Mining, Land and Water, Department of Natural Resources (DNR), decided that she would relinquish approximately 500 acres of what were previously federal mining claims with an express commitment from the division that once the federal land was conveyed to the State of Alaska, approximately 220 acres located in US Mineral Survey 2384 would be leased back to her for the establishment of a commercial recreational mining concession that would become known as the South Petersville Recreational Mining Area. They agreed to use the federal monuments named as reference points in a recent $1 million survey as boundaries for the proposed site. She said the concession would include a museum and other amenities like several historic buildings that she owned and a marine steam shovel that helped build the Panama Canal and the Alaska Railroad. MS. STEVENS said the agreement she had with the division was necessary, because there was no legal mechanism at the time for the division to allow recreational mining on state mining claims and for her, therefore, to have a recreational mining business. To ensure that the area could be managed in accordance with their agreement and that other parties could not stake the state mining claims in the affected area, Mineral Closing Order 674 was issued on June 2, 1994. And in December, 1996, Mr. Tileston drafted a letter to introduce the new regulations for the use of the Petersville Recreational Area and she wrote to her senator and representatives asking them to sign the regulations into legislation. 3:47:46 PM On May 8, 1997, HB 46 was signed into law establishing two portions of recreational mining areas: the North Petersville Recreation Area that is currently active and the South Petersville Recreation Mining area, both totaling approximately 500 acres. The intent of the DNR was that approximately 220 acres in the southern recreation area would be leased back to her when the state received conveyance from the BLM. Subsequent to the claims being gifted to the state and issuance of the mineral closing order, the DNR determined that it could not establish a non- competitive commercial lease to fulfill the agreement with her under existing state law. However, in 2006, DNR determined a legal way to allow a commercial business to be operated in portions of a state mining claim by establishing a miscellaneous land use lease provided that the state mining claim holder concurred. CO-CHAIR WAGONER interrupted her and said they pretty well got the gist of it and asked her to send her statement to his staff. She said she would do it as soon as possible. CO-CHAIR WAGONER closed public testimony. REPRESENTATIVE NEUMAN explained that a mistake was made and everyone had agreed that this was the best way out. SENATOR WIELECHOWSKI asked whether this legislation could have impacts on others outside of this individual. 3:52:41 PM ASHLEY BROWN, Assistant Attorney General, Civil Division, Oil, Gas, and Mining Section, Department of Law (DOL) representing the Department of Natural Resources (DNR), said that the bill removes certain sections from the Petersville Recreational Mining area. SENATOR WIELECHOWSKI asked if other miners could come in and stake claims to this area. MS. BROWN answered that currently a mineral closing order is still covering that area, but once it is lifted it would be possible for others to stake there. SENATOR WIELECHOWSKI remarked if the deal is that she gets full mineral rights to her claim, it will be a race. MS. BROWN responded that he was correct in understanding that there is a chance this area would not get staked by Michele Stevens. REPRESENTATIVE NEUMAN said it's not within the state's authority to guarantee anything, but some people felt sorry for Ms. Stevens and wanted to help her. So they are trying to work it through the process the best and cleanest way they can. SENATOR WIELECHOWSKI asked if there was anything in writing detailing the agreement that was reached. MR. SHATTUCH answered there is anecdotal evidence in their packets, but no contractual agreement. The department has supported it noting that either nothing will happen or they will move forward and remove the claims and work with Ms. Stevens. 3:56:38 PM CO-CHAIR PASKVAN asked if there was a better way to correct this problem, assuming a mistake was made more than a decade ago. MS. BROWN replied that Ms. Stevens could go through litigation, but she couldn't advise her on that and the DNR had determined there was no way they could assist her. CO-CHAIR PASKVAN said he understood that the state couldn't guarantee her anything and asked if the state made a mistake would it rather respond in money damages or correct the mistake. MS. BROWN explained that this legislation removes land from the Petersville Recreational Area and at some point Ms. Stevens had staked "at risk claims" on this land, but there is a legal question as to whether or not those claims would be valid; and if they were determined to be not invalid, then that land area would be open to staking by anybody. CO-CHAIR PASKVAN asked if the state could declare its own conduct null and void based upon a mistaken fact going back to 1996. MS. BROWN replied that she didn't understand what conduct would invalid - the decision to make the claims part of the Petersville Recreational Area? CO-CHAIR PASKVAN said yes; that was done by the state - only with a waiver of a mining interest. So, if you go back before the declaration of the recreational mining area to the mining claims that were in existence, wouldn't that get back to where there was any harm done to anyone? MS. BROWN said she didn't understand the question. MR. SHATTUCK said one of the issues that would have to be overcome in any court would probably be the fact that she voluntarily relinquished her federal claims, and consequently the standing would be difficult because she was party to that. After the fact, she went back and staked claims on state- selected land which the state can either allow or have a mineral closure. There is no guarantee those claims will ever come to fruition in terms of giving the right to the individual. 4:02:20 PM SENATOR WIELECHOWSKI said Ms. Stevens had the right to get an attorney and file whatever lawsuit and go through whatever judicial means she could, but she chose not to. But they as lawmakers should analyze whether opening this area up for recreational mining was good public policy, and he wanted to hear from DNR about that. CO-CHAIR WAGONER said before they go there, he wanted to chip in his two cents. It's up to her to reclaim the land the best way she can if this bill passes, but the state is basically neutral. His experience was that mining claims are not a lot of fun. 4:03:39 PM KERWIN KRAUSE, Geologist, Division of Mining, Land and Water, Department of Natural Resources (DNR), Anchorage, AK, explained that federal claims that existed (referenced in 1997 legislation) were actually closed by the Bureau of Land Management (BLM). Because the state had a selection on that area at the time, the former owner (before Ms. Stevens) had arranged for state selected claims to be located there. Portions of those state selected claims are the ones she relinquished. The only reason the legislation referenced the federal claims is because a mineral survey had been conducted and they were on the plat records that the state and BLM had. Once the mineral closure is lifted, she or anyone can stake claims on it, he said, and Ms. Stevens could pursue litigation if she wanted to. CO-CHAIR WAGONER asked if the department supported this bill. MR. KRAUSE answered yes. SENATOR WIELECHOWSKI asked what the rationale was for closing this to mineral leases in the past. MR. KRAUSE answered to eliminate the risk that someone could inadvertently acquire exclusive rights to the minerals by creating a recreational mining area there. SENATOR WIELECHOWSKI asked if anyone uses this land now for anything. MR. KRAUSE answered they do not use the southern area because the BLM hadn't conveyed it to the state yet; therefore, it's still federal land and they don't have any provision for recreational mining on it. But the northern area has been open for a number of years and it is used by recreational miners and construction dredgers, panners and such. SENATOR FRENCH joined the meeting. 4:07:23 PM SENATOR WIELECHOWSKI asked how many people use that northern area and if they would be precluded from using it in the future by passing this. MR. KRAUSE responded that all of the use has been in the northern area since the recreational area was created and with the price of gold going up in the last few years, usage has increased. Because Peters Creek is a fish stream, dredging is allowed only from mid-May to mid-July and on average, several dozen dredgers are in there during that period. SENATOR WIELECHOWSKI asked if this law passes, will it affect their ability to continuing using it. MR. KRAUSE answered no, because the northern area is not part of the area that would be removed. SENATOR WIELECHOWSKI asked if it would have an impact on anyone. MR. KRAUSE answered no. CO-CHAIR WAGONER asked the sponsor how many hearings this had in the other body and what their reaction was. REPRESENTATIVE NEUMAN replied that the House had two hearings, and members of both bodies contacted Mr. Tileston to ask him what happened. He explained that Ms. Stevens wants to open up a business operation up there - a museum - and allow people with families to go up there and she would assist them with supplies and equipment to do some recreational mining. But it can't move forward until the state gets claim rights. Removing federal claims allows the state to actually get lands and move forward with the recreational mining areas. CO-CHAIR WAGONER asked what the vote in the other body was. REPRESENTATIVE NEUMAN replied 39 to 1. Representative Tuck found some information about some contaminated areas, but a memo from the Department of Environmental Conservation (DEC) stated there was no contamination. A 55-gallon drum could have been overfilled at one time, but the area had been cleaned up and certified as such by the department. CO-CHAIR WAGONER asked the pleasure of the committee. CO-CHAIR PASKVAN said he was trying to figure out a better solution. REPRESENTATIVE NEUMAN said that everybody worked on this looking for the best solution, but moving this forward was the "simple solution" they came up with. CO-CHAIR PASKVAN moved to report HB 340 from committee to next committee of referral with individual recommendations and attached fiscal note(s). CO-CHAIR WAGONER removed his objection. SENATOR FRENCH apologized for being late and said he assumed the committee went over the letter from Mr. Tileston and Marty Rutherford, because they were his constituents and had a lot of creditability. It looked like the committee was conforming with their wishes in the letter. CO-CHAIR WAGONER indicated that was the case and finding no further objections, he announced that HB 340 moved from the Senate Resources Standing Committee.