SB 155-EXPLORATION & MINING RIGHTS; ANNUAL LABOR  4:36:26 PM CHAIR MICCICHE announced that the final order of business would be SPONSOR SUBSTITUTE FOR SENATE BILL NO. 155, "An Act relating to exploration and mining rights; relating to annual labor requirements with respect to mining claims and related leases; relating to statements of annual labor; defining 'labor'; and providing for an effective date." He announced that there is a committee substitute (CS) before the committee for SB 155. 4:36:59 PM SENATOR COGHILL moved to adopt the CS, work order 31-LS1278/G. CHAIR MICCICHE objected for purposes of discussion. 4:37:28 PM CHAD HUTCHINSON, Senate Majority Counsel, Alaska State Legislature, Juneau, Alaska, explained that the changes from the CS came from the Alaska Miners Association working group in congruence and consultation with DNR members. The themes to keep in mind from the CS is "notice" and "due process;" the intent is to provide miners with clarity on those two fronts. He said the CS synchs the language related to all mining statutes and eliminates redundancy, which the sponsor substitute caught. The language in the bill uses terms and conditions that miners use out in the field. The legislation is for the miners and not the attorneys. He addressed the changes for Committee Substitute for Sponsor Substitute for Senate Bill 155 (CSSSSB 155(RES))-version G, as follows: 1) On February 19, 2020 the Senate Resources Committee adopted the following changes (via Committee Substitute for Sponsor Substitute for Senate Bill 155): a) In Section 3 (AS 38.05.190): i) Further language clarified that written notice shall be sent to the owner via certified mail with return receipt requested to the most recent address on file with the Department of Natural Resources. The interest will be void if the unqualified person does not cure the defect within 90 days. The department may send an additional copy of the notice by regular mail. (1) The changes are found on page 2, lines 22- 26. He paraphrased that Section 3 relates to qualifications for exploration and mineral interests in Alaska. Attention to notice and due process ensures that an unqualified person receives written notice and an opportunity to cure, and the department may send an additional notice document. 4:39:40 PM He addressed Section 6 as follows: b) In Section 6 (AS 38.05.210(a)): i) Language about "common plan of development" was changed to say, "including adjacent federal or private mineral interests held in common." The intent is to distinguish between terms used in the oil and gas industry versus mining. This language "better fit" commonly understood terms in the mining industry. (1) The changes are found on page 4, lines 13- 14. ii) or mineral interest" was also added to better encompass what one may encounter when adjacent mining interests are held under common ownership. (1) The changes are found on page 4, line 15. MR. HUTCHINSON paraphrased that Section 6 has to do with the annual labor performed to improve or develop the land. The section changes language that frequently used and better understood by miners out in the field. The section adds the term, "or mineral interest," and synchs with terminology used in the mining statutes. He addressed Section 7 as follows: c) In Section 7 (AS 38.05.210(b): i) In (7)(C) "equal to" was removed. "Applied toward" replaced "equal to." (1) So, now a statement of annual labor must include "any cash payment to the state applied toward the value of the labor required under (a) of this section. (a) Why? (i) The existing statute at AS 38.05.210(a) provides that labor may be satisfied by work performed in the current year, excess value of work performed in prior years, and cash paid equal to the value of the labor required. While this language gives the miner the opportunity to use one of the three methods to the exclusion of the others, there is no obligation that such labor satisfaction method must be exclusive to the others. In fact, existing practice by some miners is to use portions of all three. Thus, a miner may use a cash payment toward the labor requirement to top off the work performed or value of work from prior years. Any cash payments must be made before the end of the assessment year on Sept 1 and generally before the labor affidavit is filed, so referring to the payment in the past tense on the affidavit is appropriate. (2) The changes are found on page 5, line 25. 4:41:58 PM MR. HUTCHINSON explained Section 8 as follows: d) In Section 8 (AS 38.05.210(c)): i) A statement of annual labor can be corrected or amended before the 90-day period after notice was sent under AS 38.05.210(g). (1) The intent is to synch the 90 days cure provisions, throughout the statutes. (2) The changes are found on page 6, lines 10- 11. ii) "A corrected statement following notice of deficiency under (g) of this section shall be recorded within 90 days after the notice is sent[.]" was eliminated. The sentence was redundant. The sentence previously existed on Version K, page 6, lines 15-16. He paraphrased that Section 8 addresses the annual labor statement that provides due process and the ability to cure. The section synchs language with other mining statutes where the 90-day threshold appears and eliminates redundancy. He explained Section 9 as follows: e) In Section 9 (AS 38.05.210): i) "Shall" was changed to "may." On Version G, page 6, line 26. The word "may" synchs with Section 3 (which changed AS 38.05.190). ii) Text was added to protect miners against third party litigation during the cure period. (1) The changes are found on page 7, lines 3-4. iii) Section (j) from version K was deleted as it was duplicative of the new added language in AS 38.05.283 (Section 14 in Version G). He paraphrased that the section synchs annual labor notice language, protects miners during the cure period, and does not compel the department to go back in files to find inaccuracies or typos. 4:44:29 PM MR. HUTCHINSON explained Section 10 as follows: f) In Section 10 (AS 38.05.240): i) "Prospecting" was replaced with "exploring" to provide more consistency throughout the statutes. (1) The change is found on Version G, page 7, line 14. ii) The words "in support of prospecting for, developing, or producing minerals" were deleted in AS 38.05.240(1) because the text was redundant when read with the rest of the statutory language. (1) The removed language previously existed in Version K, on page 7, lines 18-19. He paraphrased that the section defines labor to synch with statutes and eliminates redundancy. He explained Section 12 as follows: g) In Section 12 (AS 38.05.270): i) "Evidence of" was included at the beginning of the statutory language. One can record evidence of a transaction, but not the act itself. (1) The change is found on page 9, line 18. ii) The language involving "heirs and assigns" was eliminated. Given existing property law, the language did not add much value. This request for removal came from the Department of Nature Resources (DNR). There was no objection from the Alaska Miners Association (AMA) working group. (1) The "heirs and assigns" language previously existed under Version K, page 9, lines 25-26. He paraphrased that the section deals with transfers to unqualified and qualified interested parties. The section focuses on mining by eliminating language involving heirs because the process already exists throughout Alaska law. He addressed Section 14 as follows: h) A new Section 14 has been added (AS 38.05.283): i) The section emphasizes, broadly, that the Department is not required to go back and review for compliance to these mining laws. ii) This language was recommended by DNR. AMA does not object. AMA does not expect DNR to review notices or affidavits/statements. (1) See Version G, page 10, lines 10-13. 4:47:34 PM MR. HUTCHINSON detailed Section 15 as follows: i) Section 15 Applicability: i) Language was added for a clear understanding of applicability: (1) It now reads: (a) "APPLICABLITY. (a) AS 38.05.210(a), as amended by sec. 8 of this Act, and AS 38.05.210(e)-(i), enacted by sec. 9 of this Act, apply to statements of annual labor filed before, on, or after the effective date of this Act, if, before the effective date of this Act, a final decision or judgment has not been entered invalidating the mineral interest and, after the final decision or judgment, a claim has not been located or a leasehold granted on the affected land." (b) See Version G, page 10, lines 16-21. ii) In (b), the effective date of section 13 is now "effective the date of this Act" instead of "July 1, 2020. (1) See Version G, page 10, line 23. SENATOR KAWASAKI said the changes from the CS are good. He pointed out that the CS specifies that the 90-day cure for an annual labor statement starts when the department sends the notice. He asked if starting the 90-day cure would make more sense when the miner receives notice via certified mail. MR. HUTCHINSON agreed that starting the 90-day cure period when the department mails the notice is not necessarily fair to the miners. The court system deals with statutes based on sent out versus actual receipt. In the grand scheme of things, proper notice should be when received, something for future consideration. 4:49:44 PM SENATOR KIEHL asked what prompts the department to send a noncompliance notice if the departmental review language specifies that the department is not determining whether there is someone out of compliance. MR. HUTCHINSON answered third parties. He reiterated that the emphasis is on not compelling the department to look for typos or noncompliance if there is nothing else that gives probable cause that there is some sort of problem. SENATOR KIEHL agreed that there is no need for the department to go through every file for the last hundred years of mining. He said he is not clear on the language where the department decides whether there is a problem when a third party brings an issue to their attention. MR. HUTCHINSON answered that Senator Kiehl's instincts are correct. He said the vision is the department does have to review the issue and respond accordingly if there is probable cause. He explained that the emphasis is not requiring the department to go back unilaterally if nothing exists. CHAIR MICCICHE asked if there were comments on the fiscal note. He said he might have some questions before the next meeting. 4:51:40 PM He removed his objection and announced that the committee adopted the working document, version G for SB 155. He said the fiscal note does not apply to the CS and that is why he asked if there were questions. MR. HUTCHINSON stated that he believes the new fiscal note does apply to the CS. CHAIR MICCICHE asked Deputy Commissioner Goodrum if the new fiscal note applies to the CS. 4:52:13 PM BRENT GOODRUM, Deputy Commissioner, Alaska Department of Natural Resources, Anchorage, Alaska, confirmed that the department revised the fiscal note to synch with the CS for SB 155. The department submitted the new fiscal note for the current meeting. CHAIR MICCICHE asked that the department review the fiscal note and explain the changes to confirm that the committee is looking at the right fiscal note. DEPUTY COMMISSIONER GOODRUM explained that the modified fiscal note reflects the departmental requirement to reduce three fulltime positions to two positions. Money would also come from designated general funds that the mining section generates. CHAIR MICCICHE asked what the net reduction is. DEPUTY COMMISSIONER GOODRUM replied that the reduction is about $120,000 from the original fiscal note. 4:54:02 PM CHAIR MICCICHE noted that public testimony remains open for SB 155. 4:54:38 PM DAVID WRIGHT, representing self, Fairbanks, Alaska, testified in support of the CS for SB 155. He said he and his partners own a small mining operation in its fifteenth year. He disclosed that DNR required the company to re-stake its mining claim. DNR and the mining company incurred costs to address the problem. He added that the re-staking also reset the rent clock to the start so there was a loss of revenue to the state. 4:55:51 PM CHAIR MICCICHE closed public testimony on SB 155. 4:56:02 PM CHAIR MICCICHE held SB 155 in committee.