HOUSE RESOURCES STANDING COMMITTEE March 25, 1994 8:15 a.m. MEMBERS PRESENT Representative Bill Williams, Chairman Representative Bill Hudson, Vice Chairman Representative Con Bunde Representative Pat Carney Representative John Davies Representative David Finkelstein Representative Joe Green Representative Jeannette James Representative Eldon Mulder MEMBERS ABSENT None COMMITTEE CALENDAR *HB 498 "An Act providing for exploration incentive credits for activities involving locatable and leasable minerals and coal deposits on certain land in the state; and providing for an effective date." ADOPTED AND MOVED CSHB 498(RES) OUT OF COMMITTEE WITH INDIVIDUAL RECOMMENDATIONS *HB 443 "An Act relating to the confidentiality of certain records relating to fish and wildlife; and providing for an effective date." HEARD AND HELD FOR FURTHER CONSIDERATION HJR 61 Relating to the Western Alaska Community Development Quota Program and the North Pacific Fishery Management Council Comprehensive Rationalization Program. MOVED HJR 61 OUT OF COMMITTEE WITH INDIVIDUAL RECOMMENDATIONS WITNESS REGISTER REPRESENTATIVE RICHARD FOSTER State Capitol, Room 410 Juneau, Alaska 99801-1182 Phone: 465-3789 POSITION STATEMENT: Prime Sponsor of HB 498 JERRY GALLAGHER, Director Division of Mining Department of Natural Resources P.O. Box 107005 Anchorage, Alaska 99510-7005 Phone: 762-2692 POSITION STATEMENT: Supported HB 498 DAVID ROGERS, Representative Council of Alaska Producers P.O. Box 33932 Juneau, Alaska 99803 Phone: 586-1107 POSITION STATEMENT: Answered questions STEVE BORELL, Executive Director Alaska Miners Association, Inc. 501 W. Northern Lights Blvd., Ste. 203 Anchorage, Alaska 99503 Phone: 276-0347 POSITION STATEMENT: Supported HB 498 CARL MEYER, Chief of Appeals Income and Excise Audit Division Department of Revenue P.O. Box 110420 Juneau, Alaska 99811-0420 Phone: 465-2343 POSITION STATEMENT: Answered questions WAYNE REGELIN, Deputy Director Division of Wildlife Conservation Alaska Department of Fish and Game P.O. Box 25526 Juneau, Alaska 99802-5526 Phone: 465-4190 POSITION STATEMENT: Supported HB 443 DR. GORDON HABER P.O. Box 64 Denali Park, Alaska 99755 Phone: None Given POSITION STATEMENT: Opposed HB 443 KAREN BRAND, Aide Representative Carl Moses State Capitol, Room 204 Juneau, Alaska 99801-1182 Phone: 465-4451 POSITION STATEMENT: Gave sponsor statement on HJR 61 RICK LAUBER, Chairman North Pacific Fisheries Management Council 321 Highland Drive Juneau, Alaska 99801 Phone: 586-6366 POSITION STATEMENT: Supported HJR 61 PREVIOUS ACTION BILL: HB 498 SHORT TITLE: MINERAL EXPLORATION INCENTIVE CREDITS SPONSOR(S): REPRESENTATIVE(S) FOSTER,MacLean JRN-DATE JRN-PG ACTION 02/14/94 2381 (H) READ THE FIRST TIME/REFERRAL(S) 02/14/94 2381 (H) RESOURCES, FINANCE 03/12/94 (H) MINUTE(ECO) 03/12/94 (H) MINUTE(ECO) 03/25/94 (H) RES AT 08:15 AM CAPITOL 124 BILL: HB 443 SHORT TITLE: FISH & WILDLIFE CONFIDENTIAL RECORDS SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR JRN-DATE JRN-PG ACTION 02/04/94 2259 (H) READ THE FIRST TIME/REFERRAL(S) 02/04/94 2259 (H) RESOURCES 02/04/94 2259 (H) -ZERO FISCAL NOTE (F&G) 2/4/94 02/04/94 2259 (H) GOVERNOR'S TRANSMITTAL LETTER 03/23/94 (H) RES AT 08:15 AM CAPITOL 124 03/23/94 (H) MINUTE(RES) 03/25/94 (H) RES AT 08:15 AM CAPITOL 124 BILL: HJR 61 SHORT TITLE: COMMUNITY DEVELOPMENT FISHING QUOTAS SPONSOR(S): RULES BY REQUEST OF HOUSE ECONOMIC TASK FORCE JRN-DATE JRN-PG ACTION 03/09/94 2682 (H) READ THE FIRST TIME/REFERRAL(S) 03/09/94 2682 (H) FSH, RESOURCES 03/16/94 2832 (H) FSH RPT 2DP 1NR 03/16/94 2833 (H) DP: MOSES, DAVIDSON 03/16/94 2833 (H) NR: OLBERG 03/16/94 2833 (H) -ZERO FISCAL NOTE (H.FSH/F&G) 3/16/94 03/16/94 (H) FSH AT 08:30 AM CAPITOL 17 03/16/94 (H) MINUTE(FSH) 03/25/94 (H) RES AT 08:15 AM CAPITOL 124 ACTION NARRATIVE TAPE 94-41, SIDE A Number 000 The House Resources Committee was called to order by Chairman Bill Williams at 8:27 a.m. Members present at the call to order were Representatives Williams, Hudson, Bunde, Carney, Finkelstein, and Green. Members absent were Representatives Davies, James and Mulder. CHAIRMAN BILL WILLIAMS announced there is a quorum present. HB 498 - Mineral Exploration Incentive Credits REPRESENTATIVE RICHARD FOSTER, PRIME SPONSOR, stated HB 498 provides for exploration credits up to 50 percent of the qualified exploration expenditures to offset state royalty payments. He said he introduced this bill because most of the exploration moneys now within the United States (U.S.) are going overseas and he felt without an incentive, the state will not be able to provide the jobs and economies within the state. He said HB 498 will help give an incentive to larger companies to spend their money in the state. Number 031 REPRESENTATIVE CON BUNDE asked if there are specific projects which HB 498 might address. REPRESENTATIVE FOSTER replied the bill is more for preparation. He said many of the larger companies have always been present throughout the state because of the tremendous mineral resources present. REPRESENTATIVE BUNDE wondered if HB 498 will encourage development. REPRESENTATIVE FOSTER responded it will. He pointed out the state has the most massive untapped coal deposits left in the U.S. He said there are many poverty stricken people living in western Alaska and a development such as a coal deposit, in conjunction with the Red Dog, will provide an economy which will replace some of the state services currently in demand. (CHAIRMAN WILLIAMS noted for the record that REPRESENTATIVE DAVIES joined the committee at 8:30 p.m.) REPRESENTATIVE BUNDE made a MOTION to ADOPT CSHB 498(RES). CHAIRMAN WILLIAMS asked if there were any objections. Hearing none, the MOTION PASSED. Number 064 REPRESENTATIVE DAVID FINKELSTEIN recalled a constitutional issue a few years ago regarding required lease payments, where the state could not have a system which did not have lease payments. He thought applying credits to lease payments might result in a situation where the state is in violation of the Constitution again. JERRY GALLAGHER, DIRECTOR, DIVISION OF MINING, DEPARTMENT OF NATURAL RESOURCES (DNR), responded that Representative Finkelstein is referring to the 6(i) litigation. He said the Supreme Court of Alaska found that the state was required under Section 6(i) to produce a cash income from the disposition of its minerals. The Supreme Court stated specifically that the state is required to have a cash rent and/or royalty. He stated DNR does not believe HB 498 conflicts with 6(i) because currently there is a cash rent and royalty on minerals. HB 498 does not affect the production of cash through rental. He said DNR supports HB 498. REPRESENTATIVE JOE GREEN noted the fiscal note analysis says HB 498 is retroactive to January 1, 1994, and asked if that is still DNR's intent. MR. GALLAGHER responded HB 498 is retroactive. DNR views HB 498 as looking forward for about 15 years. He said it is important to recognize as stated on page 3, lines 4-6, the credits are specific to an individual site. If a company or individual explores a site and puts that site into production, then during that 15 year period, there can be a credit back against the royalty or taxes. He noted DNR does not have a problem with the retroactive date. REPRESENTATIVE GREEN asked if there is a reason for the retroactive date. MR. GALLAGHER responded he did not know of a specific reason or project. REPRESENTATIVE GREEN referring to page 2, line 31 and page 3, lines 1-6, clarified that subsections (1) and (2) are necessary because in one instance the credits are for taxes incurred from production of a site and the other is if nothing is found and money has been expended, there will be an incentive for those dollars. Number 126 MR. GALLAGHER stated the credit is received at the site if it goes into production. REPRESENTATIVE GREEN clarified subsection (1) applies to production and (2)... DAVID ROGERS, REPRESENTATIVE, COUNCIL OF ALASKA PRODUCERS, stated the subsections being referred to say a company or individual can take the lesser of 50 percent of exploration costs as defined in HB 498 or 50 percent of the combined tax royalty obligation, whichever is less. REPRESENTATIVE GREEN expressed concern, in regard to page 4, line 27, "When authorized by AS 27.30.010, the commissioner shall allow...", about the word "shall". MR. ROGERS said the intent is to say a company or individual is entitled to the credit if the requirements of the law are met. He stated this is a conforming amendment to the tax and royalty law. Number 159 REPRESENTATIVE BILL HUDSON clarified HB 498 is an option to the explorer. MR. ROGERS said that is correct. REPRESENTATIVE HUDSON clarified if an explorer applies, the commissioner must grant an incentive credit and HB 498 says the lesser of, meaning the credit can be 50 percent to 100 percent. MR. ROGERS responded the limit is 50 percent. He said the credit is 50 percent of costs or 50 percent of taxes and royalty payments, whichever is less. Number 180 REPRESENTATIVE HUDSON asked how HB 498 will apply to nonstate land. MR. ROGERS said HB 498 will apply the same way to nonstate land. (CHAIRMAN WILLIAMS noted for the record that REPRESENTATIVE MULDER joined the committee at 8:35 a.m.) Number 187 REPRESENTATIVE FINKELSTEIN said he did not understand how HB 498 will apply to nonstate lands. MR. ROGERS responded if a mining company explores nonstate lands and pays taxes, the company can use the credit against its taxes. REPRESENTATIVE FINKELSTEIN asked in situations where nonstate land is involved, is there a problem in having enough of a relationship to know whether or not the exploration is actually being done. MR. GALLAGHER responded it is not a problem because there is a provision on page 2, beginning on line 13, which says data needs to be provided to the department as one of the requirements to grant the credits and added subsection (d), says after 36 months, the department will make that data available to the public. Therefore, the state is receiving something of real value and the public eventually will also. REPRESENTATIVE FINKELSTEIN clarified the credits can only be applied to a mining company's successor and cannot be transferred. MR. ROGERS responded that is correct. REPRESENTATIVE FINKELSTEIN clarified the applicant's successor in interest is an entity who completely buys out another entity. MR. ROGERS said that is correct. Number 221 REPRESENTATIVE JOHN DAVIES clarified that land the state grants to municipalities where the state reserves mineral rights is considered state land for these purposes. MR. GALLAGHER responded yes and stated those are still state-owned minerals and a state royalty is still paid. REPRESENTATIVE GREEN wondered if HB 498 applies to any exploration. MR. ROGERS said the bill does. REPRESENTATIVE GREEN asked if a mining company explores on land next to their present claim, will the credits apply. MR. ROGERS responded it has to be within the area. He said on page 3, lines 2 and 3, and lines 5 and 6, it states "on the parcel or site on which the exploration activity occurred." If a large area is involved and the activity occurred within that area and turned into a producing mine, the credit can be taken against income from the producing mine. MR. ROGERS clarified Representative Green's concern is where there is an existing mine in operation, the entity goes to adjacent land, explores, and tries to take that credit against the income stream from the adjacent mine. REPRESENTATIVE GREEN said that is correct. MR. ROGERS said that is not the intent, but perhaps one could read it that way. MR. GALLAGHER said DNR recognizes that concern. He pointed out in the mining license tax statute and regulations, there is a provision which says new operations receive a 3 1/2 year exemption from the mining license tax. He stated there is concern that as existing mines expand, a company might say this is not an expansion of the old mine, but rather this is a new mine enabling a 3 1/2 year exemption. He pointed out there are a whole series of regulations in the Department of Revenue's mining license tax provisions which define old mines and new mines. When regulations are established if and when HB 498 is implemented, that issue will need to be addressed. Number 278 STEVE BORELL, EXECUTIVE DIRECTOR, ALASKA MINERS ASSOCIATION (AMA), testified via teleconference and said AMA supports CSHB 498(RES). He stated changes made in the CS will provide clarification of terms and add restrictions to the applicability of the bill. For example, the definition of geochemical methods has been changed in the CS with the replacement of the term ore samples, with the new phrase, soil rock vegetation and similar samples. He stated the term ore in the mining industry, by definition, refers to material that cannot be mined and produced at a profit. However, the geochemical sampling foreseen in HB 498 will occur during the earliest phases of exploration--long before it is known if there is a mineral deposit actually there. MR. BORELL stated the CS also clarifies that credits are for a specific site where the exploration occurs and can be transferred to a successor in interest for that site. He said the ability to transfer this credit to a future potential owner is essential. Projects often transfer hands before the ultimate mining operation takes place. The change made in the CS is more restrictive than the original bill but it appears to be a reasonable change. He pointed out the CS clarifies that only direct costs for exploration work qualify and overhead, depreciation, etc., do not. MR. BORELL said AMA feels HB 498 is an important bill and will help encourage both the small prospector and the large international mining companies to vest in the state. He noted that HB 498 comes at an important time because there is a mass exodus of exploration funds away from federal lands throughout the western U.S. due primarily to the increasingly, oppressive regulatory climate in the U.S. for all development and efforts to change the federal mining law. He stressed Alaska cannot change many of those factors but HB 498 can provide an incentive to encourage vestment in the state. MR. BORELL commented that HB 498 will send a positive message to the mining industry that Alaska is seeking to improve its investment climate and provide one more indication the state is working to encourage mineral development. He said HB 498 could not come at a more important time and gave examples of other countries encouraging mineral investments. Number 362 REPRESENTATIVE HUDSON stated he has an idea which perhaps will enhance HB 498. He said on page 3, line 23, where it indicates eligible costs "includes direct labor costs, including the cost of benefits, for employees...", specifically in regard to direct labor costs, he wondered if another subsection could be added which would say "allowable direct labor costs under (A) above may receive a 10 percent credit factor for every Alaska resident employed and used in the work described in AS 27.30.010(a)(1)". He inquired if there would be any desire for an allowable deduction for direct labor costs, as an incentive to hire more Alaska residents. MR. BORELL stated a deduction would provide an additional incentive. He said there are two categories of people who work for mining companies; the very highly technical qualified people a company will either have in state or will bring in from outside and the other work will be performed by people who are hired locally. The idea which Representative Hudson described will not change those categories of people but will provide additional encouragement to hire locally. He could think of no downside to the suggestion. REPRESENTATIVE BUNDE stated the idea is a good one, but wondered about criteria proving Alaska residency and possible constitutional problems. REPRESENTATIVE FINKELSTEIN said the issue Representative Bunde brought up is already addressed as the Department of Labor has developed techniques to differentiate between residents and nonresidents. He stated while it is true a person can come up and become a resident, they have to give up their residence in another state and state they are taking up residency in Alaska. He pointed out that many of the jobs being discussed are time on, time off type jobs. He felt the suggested idea is a good one and noted someone from the Department of Law will need to address the constitutionality of it. REPRESENTATIVE HUDSON stated the most important element is that a person has to declare they are a resident of Alaska and no other state; there is a minimum of 30 days residency; and there is a requirement of other indicia of proof that they are a resident of Alaska such as a drivers license, voter registration, etc. He did not believe it will be difficult for DNR, with the Department of Law's assistance, to define in regulations what a resident is. REPRESENTATIVE FINKELSTEIN felt the idea will not have a constitutional problem because the constitutional problem relates to restricting people's right to travel within the country. He said what was attempted to impose on the oil fields was the restriction that a person cannot work in certain circumstances which limited someone's right. With this idea, no one's rights are being limited. REPRESENTATIVE HUDSON added that the state gives a five percent credit for in-state purchases, etc. He felt the idea might be quite constructive. Number 473 MR. ROGERS felt the concept is good as long as it can be done technically and is constitutional. REPRESENTATIVE BUNDE asked what the bill sponsor thought of the idea. REPRESENTATIVE FOSTER responded he has no objection. REPRESENTATIVE HUDSON made a MOTION to CONCEPTUALLY AMEND CSHB 498(RES) adding the language, "allowable direct labor costs under (A) above may receive a 10 percent credit for every Alaska resident employed and used in the work described in AS 27.30.010(a)(1). MR. ROGERS asked how the 10 percent credit will work. REPRESENTATIVE HUDSON replied the credit will be a factor on all eligible employment costs. The credit will be elevated by 10 percent if Alaskans are hired and will increase the size of an entity's deduction. REPRESENTATIVE FINKELSTEIN said conceptually there is a problem in what it is going to take to hire Alaskans and what the threshold to get to 10 percent is. He said another approach, which will give direct benefit, is to give the credit for direct labor costs for the employment of Alaskans. Number 564 REPRESENTATIVE HUDSON said he thought about a possible threshold as to the numbers, but he would like to leave it open. The company will get 10 percent on whatever the particular labor is, get 10 percent inflation, and there is an incentive for the companies to put 100 percent in. REPRESENTATIVE FINKELSTEIN clarified if a company has a work force of 100 people and 99 of them are not Alaskans, the company still gets the credit. REPRESENTATIVE HUDSON replied the credit would be received for one person. REPRESENTATIVE FINKELSTEIN clarified a portion of the work force gets the 10 percent. (CHAIRMAN WILLIAMS noted for the record that REPRESENTATIVE JAMES joined the committee at 9:07 a.m.) Number 590 REPRESENTATIVE FINKELSTEIN felt the amendment should be even more conceptual than just the language. When the amendment is drafted, there may be a need to even change the language. He felt the intent is clear. REPRESENTATIVE HUDSON stated conceptual is conceptual. The idea is to provide a 10 percent credit factor for mining companies who use Alaska residents in this particular process. How the attorneys decide to accomplish that is up to them. CHAIRMAN WILLIAMS asked if there were any objections to the motion. Hearing none, the MOTION PASSED. Number 621 CARL MEYER, CHIEF OF APPEALS, INCOME AND EXCISE AUDIT DIVISION, DEPARTMENT OF REVENUE (DOR), stated he is present to answer questions. REPRESENTATIVE FINKELSTEIN noted the revenue lost is indicated to be a range of $0 to $186 million. He wondered if the revenue lost will actually be somewhere between $0 and $93 million since it is only half. MR. MEYER said that is correct. The amount of the fiscal note will be up to $93 million. He thought the fiscal note had been changed but perhaps not submitted yet. REPRESENTATIVE HUDSON thought perhaps the revenue could conceivably be a positive as opposed to a negative, because the bill will help create revenue not existing if exploration was not encouraged through some sort of incentive. MR. MEYER responded that is possible, but not likely. REPRESENTATIVE HUDSON pointed out if a company does not do anything, the state gets nothing but if a company puts money into something through the incentives being provided and something is found, the state gets half of what is found. Number 680 REPRESENTATIVE FINKELSTEIN said the potential for that type of pay off is not reflected in the fiscal note because it is way off in the future. He pointed out it is unlikely the state will lose much money in the immediate future for the same reason because exploration activities are involved. He clarified that the Red Dog mine is only going to get credits for new exploration they have done since the effective date of HB 498 which is January 1, 1994, resulting in no significant reduction in an entity which is already in production. MR. MEYER responded he was not sure. He said the credit is determined by the Department of Natural Resources and DOR will apply the credit once it is determined. REPRESENTATIVE DAVIES recalled it was mentioned earlier there are currently DOR regulations which distinguish between new and old mines and asked Mr. Meyer to comment on those regulations. MR. MEYER said he is not familiar with those regulations. He stated DOR does have a provision which provides that new mining operations are exempt from tax for 2 1/2 years. There are questions as to what is a new mining operations and there have been cases before the DOR. TAPE 94-41, SIDE B Number 000 MR. MEYER did not feel those regulations will apply to HB 498. REPRESENTATIVE DAVIES thought the concepts in DOR's definitions of what is a new mine versus an old mine will be taken by DNR and rewritten into DNR regulations. He asked Mr. Meyer if the DOR concepts work. MR. MEYER replied he cannot answer the question. REPRESENTATIVE FINKELSTEIN clarified that a company in existing production, the only effect on their royalty payments is if they have started associated exploration since January 1, 1994. Otherwise, there will be no reduction. Number 025 MR. GALLAGHER responded the mining business has three fundamental phases: exploration, development, and production. He stressed HB 498 applies to exploration. On page 3, line 21, it says, "direct support of exploration activities." He felt development drilling around existing mines will not qualify as a deduction. He said HB 498 only applies to new properties not currently in production. REPRESENTATIVE GREEN said with the oil incentive credits, the costs are approved by the commissioner as being applicable under the exploration idea. He noted HB 498 does not have that provision and asked if the bill did, would it avoid any problems in the future or will DNR regulations handle the problem adequately. MR. GALLAGHER felt DNR's regulations will address the problem. He pointed out there is a big difference between the two programs. REPRESENTATIVE HUDSON made a motion to MOVE CSHB 498(RES) as conceptually amended, with revised fiscal note, out of committee with INDIVIDUAL RECOMMENDATIONS. CHAIRMAN WILLIAMS asked if there were any objections. Hearing none, the MOTION PASSED. Number 067 HB 443 - Fish & Wildlife Confidential Records WAYNE REGELIN, DEPUTY DIRECTOR, DIVISION OF WILDLIFE CONSERVATION, ALASKA DEPARTMENT OF FISH AND GAME (ADF&G), stated HB 443 addresses the confidentiality of radio frequencies and a few other types of information ADF&G feels should remain confidential. ADF&G has routinely radio collared many different animals for research and management purposes since the mid-1970s and this information has always remained confidential. He said at the request of ADF&G, the confidentiality requirement was put into regulation by the Board of Game in 1986 because tourist companies were wanting to use ADF&G's radio frequencies for flight seeing. In 1990, the legislature revised the confidentiality statutes throughout most departments. At that time, ADF&G asked the legislature to add an amendment to ensure the continued confidentiality of radio frequency information and the legislature did so. MR. REGELIN stated when that change was made, wording was added saying the department shall keep information confidential when the knowledge may be detrimental to the fish and wildlife population. ADF&G did not realize the wording was a problem until the department was sued in the summer of 1993 for refusing to release radio frequency information to an individual wishing to track radio collared wolves. ADF&G was required by a court order to release the information because the department could not prove that the information would be detrimental to the population. It might have been detrimental to the individual animals, but not to the population. He stressed it would be nearly impossible to ever prove a population detriment because only a few animals are collared at one time. He said even death to those few animals would not hurt the population. MR. REGELIN explained ADF&G is requesting, through HB 443, that those words be removed so ADF&G will not have to provide that proof. He said HB 443 will also add another section allowing the department to keep specific locations of animal capture sites for wildlife research or management confidential. The department currently has a request, under the Public Records Act, for all locations of traps and snares used in ground based wolf control operation south of Fairbanks. The request asks for the exact locations of where the department sets each trap. He stressed the department believes it is in the state's best interest and essential for good wildlife management to keep the radio frequencies and trap locations confidential. Number 112 MR. REGELIN said ADF&G feels if the department is required to release this information, it may compromise some of the department's studies because animals might be removed or displaced, altering their behavior. ADF&G feels the release of information might lead to the disturbance of sensitive locations such as den sites. ADF&G believes the information could be used to facilitate harassment of the department's research and management programs by individuals and organizations who oppose them. ADF&G feels the information could also lead to increased vulnerability of the animals and associated animals for unethical people to get the radio frequencies and use them for hunting. MR. REGELIN stated another change which ADF&G recommends is that words be added allowing the release of the information, if the requestor is under contract with the state to conduct research. This provision will allow the department to cooperate on projects with researchers, private consultants, etc., where the research is mutually beneficial to everyone involved. He pointed out that in all other states he is aware of, this kind of radio frequency information and specific locations are kept confidential. He added that federal agencies like the Fish and Wildlife Service and the National Park Service also keep this information confidential. MR. REGELIN said the individual who received ADF&G's radio frequencies under court order, also requested frequencies from the National Park Service but was denied because federal laws are more strict. He stated ADF&G is not saying that no other agency, organization, or individual should be allowed to conduct wildlife research on radio collared animals. He noted federal agencies, such as the National Park Service, routinely put on collars and often work cooperatively with ADF&G and in doing this, they do so under a permit from ADF&G. He explained consulting firms are also allowed to put their own radio collars on under a permit received from ADF&G. HB 443 will leave that decision up to the discretion of the commissioner in entering for cooperative agreement, if the agreement is in the best interest of the state. He stated in most cases it is in the best interest of the state to work with other groups and organizations to share costs, funding, and work together. ADF&G does that routinely with a wide number of people and universities throughout the country. He said ADF&G does so with almost anyone who has scientific credibility. Number 159 MR. REGELIN stated HB 443 will not change the department's obligation to provide information to the public about ongoing activities. ADF&G routinely provides summary information on almost all ongoing department activities and also provides great detail of the department's information when requested. For example, on the department's wolf control program, ADF&G has provided the Alaska Wildlife Alliance and other people, information on all of the costs, biological information, etc. He stressed what ADF&G has not given out is the exact locations of where every trap is set. The department has given out maps indicating the traps are within a certain zone, and informing them the exact locations will be given once the trapping season has ended. MR. REGELIN noted there had been discussions with several people in the House and Senate asking ADF&G to offer an amendment. He said the amendment will provide additional flexibility for the commissioner. On page 2, line 2, of HB 443 the amendment will insert "if the requestor has been authorized by the department to perform specific activities and the requestor agrees to use this information only for purposes as provided under the contractor agreement." He explained the reason for the amendment is ADF&G does not want to be, by law, not able to cooperate with someone, such as people making a wildlife film, where it would be to the state's advantage to produce a good wildlife film. This amendment will allow that to be done. Number 201 REPRESENTATIVE FINKELSTEIN said he is confused about HB 443 because there is a court order contained in each member's packet and the court decision stated the department was not required to give any information to the plaintiff organizations. He pointed out that one individual did get the information, but that individual was ordered not to release the information to any of the individuals and organizations who were the plaintiffs. He felt it is clear that the state succeeded, the current law has achieved the balance the state wanted and the court went even further and he explained the authority the state has. He thought the court order has given the department the power already and he did not understand what needs to be fixed. MR. REGELIN responded the standard of proof used by the judge was the department could not demonstrate a detriment to the fish or wildlife population. At ADF&G's request, the judge put in the confidential language. He said ADF&G remains concerned that a precedent has been set and the department will not be able to prove, if a flight seer wants to fly 100 planes a day over wildlife wearing radio collars, that it is detrimental to the population. MR. REGELIN added ADF&G currently has two requests from flight seers which the department has not acted on. He stressed the issue is broader than just the one individual who sued the department. ADF&G is concerned that a precedent has been set and if the department has to release the information, the next judge may not include the confidentiality clause. HB 443 will solve the department's problem. He stated if an individual is contracted with a group of people who the department feels are beneficial to cooperate with and work with, the department will try and work with that individual. Number 257 REPRESENTATIVE FINKELSTEIN clarified Mr. Regelin had said the court imposed a burden on the department to show detriment to the fish and wildlife population. He asked where that is indicated in the court order. MR. REGELIN said he listened to the judge and when making his decision, that was the standard. He thought the Department of Law would need to explain the court order. REPRESENTATIVE FINKELSTEIN felt there is no problem in interpreting the court order. He thought ADF&G probably has read the court order many times because it is the basis for interpreting the current law. REPRESENTATIVE HUDSON felt HB 443 is attempting to avoid future court determinations and to clearly stipulate what the department's needs are in law so as to preclude someone from going to a judge to make a determination. He said because there is a judge's decision outlining the parameters in the bill, it makes it easier to have it in the statutes. Number 395 DR. GORDON HABER, DENALI PARK, testified via teleconference and stated HB 443 was written by the state directly and is solely in response to an action he took. He clarified the state has given internal memos and other materials directed at him to committee members. He stated HB 443, even with the proposed amendment, will make it impossible for any valid scientific research to be conducted on radio collared animals except by another agency or under ADF&G contract. He noted that the person under contract will have to be someone the department feels comfortable with, meaning any project conducted will be under strict ADF&G control. DR. HABER pointed out that in June, a Superior Court judge listened to all ADF&G arguments and all of his, and did so on a level playing field. After hearing testimony, the judge awarded the ADF&G radio frequencies to him to allow him to conduct research, which the judge considered would contribute significantly to the issue of wolf control. He said in the order, the judge pointed out that the state had not challenged his credentials as a scientist and concluded that the state's arguments to the effect that this decision would set a precedent and open the flood gate for harm to the wildlife populations were unfounded. The judge determined the ADF&G commissioner already has adequate regulatory permitting authority to preclude that possibility. He pointed out there has been no indication yet of any onrush of people seeking the radio collar frequencies. DR. HABER said the judge made it very clear in his order that he or anybody else is forbidden to use the frequencies for anything but scientific research. He felt there is no additional protection for radio collared wildlife under HB 443 not already existing in present statute and the commissioner's existing regulatory permitting authority. Mr. Haber stressed the only effect HB 443 will have is to suppress the kind of scientific research he is conducting as an independent scientist, not under any ADF&G's direct control; the kind of independent research he felt will be welcomed by the legislature because the research ensures the broadest possible information base and serves as a check against biased, self-serving interpretations which might be presented by either side in a complex controversial issue of public policy. Number 353 DR. HABER commented that ADF&G has already argued that opponents to its wolf control programs do not have the data to support their arguments. He pointed out that existing statute allows opponents, through qualified scientists, to gather information independently and go to the Board of Game with the data to make their best arguments. Closing the opportunity for independent information to be collected will leave opponents of controversial programs, like wolf control, with only one alternative and that is a boycott. Mr. Haber said based on the research he has been doing in and near the current and recently proposed wolf control areas, with the aid of the frequencies, he has already been able to generate several major technical reports. DR. HABER noted that ADF&G has received several of his reports and will be receiving more. The reports are available to anyone who requests them. He said the reports represent over $100,000 of research he has conducted since April. He felt the information received from his research is a bargain for the state as none of the money used to conduct the research is state money. He stated the results he has collected thus far represent a different interpretation than what ADF&G has provided to Alaskans. For example, his research indicates the moose population in game management 20-A south of Fairbanks, is almost certainly past its most productive size presently, where maximum sustainable harvest for hunters could be derived. (Indiscernible) wolves as the state is trying to do now (indiscernible) will increase further through a range of densities where recruitment and sustainable yields will continue to decrease which is somewhat self-defeating since the objective in 20-A is to increase hunting opportunities. He gave other examples. Number 399 DR. HABER stated the material which ADF&G has given to committee members paints him as a wildlife greenie. He reminded committee members that the judge in his court order emphasized ADF&G did not challenge his scientific credentials. He explained he has a Ph.D and Masters Degree based on management oriented wolf/bear research which he has been doing for 29 years. He has several technical publications. He is a permanent resident of game management area 20-A where wolf control is being carried out. Local resident there strongly support his efforts. DR. HABER said the People magazine article clearly defines what he thinks about the current wolf control program, although it does not say much about his technical arguments. He pointed out that contrary to the picture which ADF&G is trying to paint, he does not oppose wolf control across the board which can be seen if his technical publications are read. He stated back in the 1970s when the western Arctic caribou herd crashed in Northwestern Alaska, he was one of the strongest supporters and defenders of wolf control in that case. DR. HABER stated some of his support has come from environmental organizations, but ADF&G has not mentioned he has also received grants from the opposite side. He has received grants in the past from the National Rifle Association and the Boone and Crockett Club. He noted he is currently a member of the National Rifle Association and a member of the Alaska Outdoor Council. Number 467 REPRESENTATIVE HUDSON stated it appears Mr. Haber's testimony is going to be lengthy and there will be additional questions. He suggested to Chairman Williams that HB 443 be moved to the bottom of the calendar and allow the committee to hear HJR 61 which will be fairly expeditious. REPRESENTATIVE JAMES asked if there will be enough time for Mr. Haber to complete his testimony. MR. HABER said he only wants to comment on the memos which ADF&G included in committee member's folders. He felt the memos are relevant because they have implied he has created major disturbances in the wolf population. MR. HABER continued in regard to the memo from Mr. Regelin to Mr. Kelleyhouse and the memo from Mr. Boertje to Mr. Regelin, it is clear to him that the department is attempting to imply that having been forced to release the radio collar frequencies, there has been disruption to the wolf populations where the radio collared wolves are located. He stressed that is untrue. He said he has conducted two major surveys in that area since the survey Mr. Boertje is referring to in his January 24 memo and has not seen what is described in that memo. Mr. Haber, referring to a photograph which he took of one of the radio collared packs, which was published in the Fairbanks Daily News and is in committee member's folders, asked committee members to look at the photograph and determine if there is even the slightest hint those wolves in any manner were responding to the aircraft. He gave other examples of photographs taken which do not indicate any disturbance. Number 537 MR. HABER stated since he has received the frequencies from the state, he has been monitoring 21 radio collared wolf packs. Upon thinking about how many of the wolves have reacted to his airplane in any kind of significant way, he can only recall about six cases where wolves responded. He added the response is usually very brief. In four of those six cases, the response was usually after the department had flown over. He stressed if there is any evidence of disturbance, the overwhelming evidence indicates that the department is disturbing the wolves. He said there really is no evidence of widespread disturbances as ADF&G is trying to imply. Mr. Haber commented in the memo from Mr. Boertje to Mr. Regelin, in regard to wolves being afraid of helicopters, the last survey he flew was two months prior to the mid-January survey. MR. HABER concluded that by only seeing the People magazine article, and being denied the opportunity to read the other technical publications he has written, committee members are being presented a slanted, inaccurate picture as to Mr. Haber's effect on the wolves. He urged committee members to not pass HB 443. CHAIRMAN WILLIAMS announced HB 443 will be held. He said it is his understanding that the department is trying to work with Mr. Haber to get his questions and concerns taken care of. He told committee members they will take up HB 443 again if there is time remaining after the next bill is heard. Number 611 HJR 61 - Community Development Fishing Quotas KAREN BRAND, AIDE, REPRESENTATIVE CARL MOSES, stated committee members have a copy of the January 1994 newsletter from the North Pacific Fisheries Management Council in their folders which contains background for HJR 61. She said HJR 61 first outlines some of the facts relative to the Western Alaska Community Development Quotas (CDQ) groups and then addressed the North Pacific Fisheries Management Council's comprehensive rationalization plan for groundfish and crab. HJR 61 requests the council to allocate groundfish and crab to the Western Alaska CDQ groups under any comprehensive plan which the council will develop in the future. MS. BRAND pointed out HJR 61 asks that fairness and equity be exercised by the council towards the CDQ groups. The CDQ groups have already received sablefish and halibut shares through the Individual Fishing Quota program currently being administered by the National Marine Fisheries Service. She stated the further addition of groundfish and crab will complete the allocated procedure under current consideration of the fishery resources for the CDQ groups. She noted that Representative Moses respectfully requests the committee to consider HJR 61. Number 659 RICK LAUBER, CHAIRMAN, NORTH PACIFIC FISHERIES MANAGEMENT COUNCIL (NPFMC), stated the council currently has under consideration the comprehensive rationalization plan which will include an individual fishing quota consideration as well as vessel licensing and other means of rationalizing the fishery. He said with the options under discussion, CDQs are included as an alternative for consideration by the council. He felt among the Alaska delegation, there is strong support for the CDQ program, regardless of the type of program put in place. He noted at the January meeting, NPFMC decided to move ahead with a vessel licensing program. The vessel licensing program has a provision which will set aside various percentages for community development programs. He felt HJR 61 is appropriate. REPRESENTATIVE HUDSON made a motion to MOVE HJR 61 with zero fiscal note out of committee with INDIVIDUAL RECOMMENDATIONS. CHAIRMAN WILLIAMS asked if there were any objections. Hearing none, the MOTION PASSED. TAPE 94-42, SIDE A Number 000 HB 443 - Fish & Wildlife Confidential Records CHAIRMAN WILLIAMS stated he would like to amend HB 443 and get suggestions from committee members. REPRESENTATIVE JAMES made a MOTION to AMEND HB 443 on page 1, line 14: delete the word "or" and on page 2, line 2, insert ", or if the requestor has been authorized by the department to perform specific activities, and the requestor agrees to use the information only for purposes as provided under contract or agreement." Number 020 REPRESENTATIVE FINKELSTEIN said he cannot determine the relationship of the amendment to the concerns being expressed by Dr. Haber. DR. HABER stated there is a problem because the amendment still says that research will not happen if the department decides not to give him a contract. He pointed out that he made a request for the radio collar frequencies before he went to court, laid out a research plan, and wrote a letter to the ADF&G commissioner several months before and he was flatly denied. He felt the amendment will still leave it under the control of the department, precluding independent research. Number 040 MR. REGELIN stated ADF&G has some of the best experts in the world on collecting biological data on wolf populations and the department stands by what has been done and what has been published. He said ADF&G did not challenge Mr. Haber's credibility in court because the department did not feel it was pertinent. He pointed out that for decades, standard scientists have used the number and quality of peer review publications in scientific journals to ascertain a scientists credibility. He commented an examination of the publications record of Mr. Haber will show he has not published in any peer review journals. MR. REGELIN stated Mr. Haber has an impressive list of titles but close examination shows that his publications are published by the Xerox machines of extreme animal rights groups. He agreed the amendment will not solve the concerns and problem which Mr. Haber has because the department will not issue him a permit if they are not required to. He said ADF&G wants to work with people they have confidence in and ensure the people can distinguish between scientific fact and personal opinion. Number 068 REPRESENTATIVE FINKELSTEIN asked if there is any evidence indicating that any of the information Dr. Haber collected has been released to anyone the court order said it should not go to. MR. REGELIN responded none of the information has been released. He stated HB 443 is much broader than what is required for one person. HB 443 will keep the department from having to provide the exact locations of traps and snare sets to people during the trapping operation and providing information in future court orders, making it clear that the information is confidential and not to be used for flight seeing, unethical guides, etc. REPRESENTATIVE FINKELSTEIN stressed nothing in the court order precludes ADF&G from keeping the information out of people's hands. He felt there is no issue. MR. REGELIN stated ADF&G's concern is that a precedent has been set and a certain standard has to be met. The court order says ADF&G can keep the information confidential but the next judge can change that order. ADF&G wants to have a policy established like every other state has and like all the federal agencies have to keep this type of information confidential. He stressed ADF&G feels the information needs to remain confidential for the best interest of the state. When ADF&G feels it is in the best interest of the state to release the information, they will do so. REPRESENTATIVE BUNDE agreed. He said the more people who have the information, the potential for the information no longer being confidential goes up. Number 075 CHAIRMAN WILLIAMS asked if there were any objections to the motion. REPRESENTATIVE FINKELSTEIN OBJECTED. REPRESENTATIVE FINKELSTEIN made a MOTION to AMEND the AMENDMENT, on page 2, line 2, inserting after the word "activities", the words "or is conducting scientific research". He felt the amendment only addresses areas where someone is working on the side of the department. The amendment does not change what is already proposed in HB 443. He said whether or not a person is conducting valid scientific research is the issue. He pointed out the requestor will still have to agree in writing to whatever terms the department requires about the information. CHAIRMAN WILLIAMS asked if there were any objections to the motion. REPRESENTATIVE HUDSON OBJECTED. He clarified the proposed amendment to the amendment will read, ", or if the requestor has been authorized by the department to perform specific activities or to conduct scientific research, and the requestor..." REPRESENTATIVE FINKELSTEIN stated he wanted the amendment to the amendment to read "specific activities or is conducting scientific research, and the requestor..." He pointed out HB 443 already covers situations where requestors are doing research in agreement with the department. The issue is someone who does not agree with the department but is still an entity in the state conducting valid scientific research. REPRESENTATIVE HUDSON clarified that the maker of the amendment to the amendment is not precluding the conducting of scientific research from the need to be authorized by the department under contract or agreement. REPRESENTATIVE FINKELSTEIN said he is because that is the issue being discussed. The department decides they do not agree with a requestors policies so they do not want to authorize that particular research, but the department can make the decision whether or not it is valid scientific research. REPRESENTATIVE HUDSON pointed out that specific activities can include scientific research or any number of other things. REPRESENTATIVE FINKELSTEIN clarified that Representative Hudson's suggestion is to change the words to "or to conducting scientific research" and then it would be authorized by the department. REPRESENTATIVE HUDSON clarified the amendment to the amendment will read, "perform specific activities, or to the conduct of scientific research and the requestor agrees to use..." He felt that amplifies scientific research as a part of the provision but it still indicates the research will have to be authorized by the department. REPRESENTATIVE FINKELSTEIN said the language is becoming very confusing. He stressed the issue he is trying to address is somebody who the department does not want to authorize because that person has a different viewpoint. He felt the state should not be precluding people just because they do not have the same viewpoint as the department. CHAIRMAN WILLIAMS announced he will hold HB 443 until a later date. REPRESENTATIVE FINKELSTEIN WITHDREW his MOTION. ANNOUNCEMENTS CHAIRMAN WILLIAMS announced the committee will meet on Monday, March 28 at 8:15 a.m. to hear HB 286 and HB 436. ADJOURNMENT There being no further business to come before the House Resources Committee, Chairman Williams adjourned the meeting at 10:12 a.m.