HOUSE RESOURCES STANDING COMMITTEE March 31, 1995 8:11 a.m. MEMBERS PRESENT Representative Joe Green, Co-Chairman Representative Bill Williams, Co-Chairman Representative Scott Ogan, Vice Chairman Representative John Davies Representative Pete Kott MEMBERS ABSENT Representative Alan Austerman Representative Ramona Barnes Representative Eileen MacLean Representative Irene Nicholia COMMITTEE CALENDAR *HR 7: Opposing a proposed international convention classifying coal as a hazardous and noxious material. MOVED HR 7 OUT OF COMMITTEE *HB 225: "An Act authorizing the commissioner of fish and game to issue permits to possess, import, or export African elephants; and providing for an effective date." MOVED CSHB 225(RES) OUT OF COMMITTEE HB 191: "An Act relating to the management and disposal of state land and resources; relating to certain remote parcel and homestead entry land purchase contracts and patents; and providing for an effective date." HEARD AND HELD (* First public hearing) WITNESS REGISTER NOEL LOWE, Legislative Assistant Representative Jerry Sanders State Capitol, Room 414 Juneau, AK 99801 Phone: 465-4945 POSITION STATEMENT: Prime Sponsor HR 7 JOHN SIMS, Vice President of Marketing Usibelli Coal Mine, Inc. 122 First Avenue, Ste. 302 Fairbanks, AK 99701 Phone: 452-2625 POSITION STATEMENT: Supported HR 7 REPRESENTATIVE VIC KOHRING Alaska State Legislature State Capitol, Room 428 Juneau, AK 99801 Phone: 465-2186 POSITION STATEMENT: Prime Sponsor HB 225 KRISTIE LEAF, Legislative Assistant Representative Vic Kohring State Capitol, Room 428 Juneau, AK 99801 Phone: 465-2186 POSITION STATEMENT: Answered questions regarding HB 225 ROBERT HALL P.O. Box 871986 Wasilla, AK 99687 Phone: 892-6555 POSITION STATEMENT: Supported HB 225 WAYNE REGELIN, Acting Director Division of Wildlife Conservation Alaska Department of Fish and Game P.O. Box 25526 Juneau, AK 99802 Phone: 465-4190 POSITION STATEMENT: Supported HB 225 SARA FISHER, Legislative Assistant Representative Gene Therriault State Capitol, Room 421 Juneau, AK 99801 Phone: 465-4797 POSITION STATEMENT: Prime Sponsor HB 191 RON SWANSON, Director Division of Land Department of Natural Resources 3601 C Street, Suite 1122 Anchorage, AK 99503 Phone: 762-2692 POSITION STATEMENT: Answered questions regarding HB 191 JERRY LUCKHAUPT, Legislative Counsel Legislative Legal Services Legislative Affairs Agency 130 Seward Street, Suite 400 Juneau, AK 99801 Phone: 465-2450 POSITION STATEMENT: Answered questions regarding HB 191 PREVIOUS ACTION  BILL: HR 7 SHORT TITLE: OPPOSE COAL AS HAZARDOUS/NOXIOUS SUBSTNCE SPONSOR(S): REPRESENTATIVE(S) SANDERS,Bunde JRN-DATE JRN-PG ACTION 03/15/95 740 (H) READ THE FIRST TIME - REFERRAL(S) 03/15/95 740 (H) RESOURCES 03/31/95 (H) RES AT 08:00 AM CAPITOL 124  BILL: HB 225 SHORT TITLE: ELEPHANT PERMIT SPONSOR(S): REPRESENTATIVE(S) KOHRING BY REQUEST,Barnes,Willis JRN-DATE JRN-PG ACTION 03/03/95 564 (H) READ THE FIRST TIME - REFERRAL(S) 03/03/95 565 (H) STATE AFFAIRS, RESOURCES 03/10/95 713 (H) COSPONSOR(S): WILLIS 03/17/95 791 (H) STA REFERRAL WAIVED 03/31/95 (H) RES AT 08:00 AM CAPITOL 124  BILL: HB 191 SHORT TITLE: MANAGEMENT OF STATE LAND AND RESOURCES SPONSOR(S): REPRESENTATIVE(S) THERRIAULT JRN-DATE JRN-PG ACTION 02/22/95 448 (H) READ THE FIRST TIME - REFERRAL(S) 02/22/95 448 (H) RESOURCES, FINANCE 03/15/95 741 (H) SPONSOR SUBSTITUTE INTRODUCED- REFERRALS 03/15/95 741 (H) READ THE FIRST TIME - REFERRAL(S) 03/15/95 741 (H) RESOURCES, FINANCE 03/22/95 (H) RES AT 08:00 AM CAPITOL 124 03/22/95 (H) MINUTE(RES) 03/29/95 (H) RES AT 08:00 AM CAPITOL 124 03/29/95 (H) MINUTE(RES) 03/31/95 (H) RES AT 08:00 AM CAPITOL 124 ACTION NARRATIVE TAPE 95-44, SIDE A Number 000 The House Resources Committee was called to order by Co-Chairman Green at 8:11 a.m. Members present at the call to order were Representatives Green, Williams, Ogan, and Davies. Members absent were Representatives Austerman, Barnes, Kott, MacLean, and Nicholia. CO-CHAIRMAN JOE GREEN announced the committee will hear HR 7, due to a witness needing to leave, hear HB 225, go back to HR 7 and then finish with HB 191. HRES - 03/31/95 HR 7 - OPPOSE COAL AS HAZARDOUS/NOXIOUS SUBSTANCE NOEL LOWE, LEGISLATIVE ASSISTANT, REPRESENTATIVE JERRY SANDERS, PRIME SPONSOR, stated if there are no immediate questions for him, he would like to go to teleconference since Mr. Sims has to leave shortly. JOHN SIMS, VICE PRESIDENT OF MARKETING, USIBELLI COAL MINE, INC., testified via teleconference and stated he is also a member of the Board of Directors of the U.S. Coal Exporters Association. He expressed support for HR 7. He said HR 7 pertains to an issue pending with the International Maritime Organization (IMO) which seeks to include coal as a hazardous and noxious material in the Hazardous and Noxious Substance (HNS) Convention, which has treaty status. He told committee members the U.S. coal industry, including the Alaska Coal Association and Usibelli Coal Mine, are strongly opposed to the inclusion of coal in the HNS Convention and the reasons are compelling. MR. SIMS said the first reason is the IMO HNS Convention on the Prevention of Pollution from Ships does not classify coal as a hazardous material subject to that particular treaty. Second, the IMO HNS Convention for the Safety of Life at Sea does not list coal as a hazardous material. Third, coal is excluded from the International Maritime Dangerous Goods Code. Fourth, the U.S. Coast Guard does not list coal in its schedule of hazardous maritime pollutants as published in the Federal Register of November 5, 1992. He stated there is no evidence that coal has created hazardous situations or pollution in the maritime environment and along coast lines. MR. SIMS stressed the message is quite clear--do not fix something which does not need fixing. To forge ahead and ignore that advice would be detrimental to the coal industry and unwarranted. He stated in passing HR 7, the legislature will be sending a strong message for the coal industry and the U.S. (indiscernible) currently involved in drafting the U.S. position and to the treaties. He said excluding coal is the ideal objective. He pointed out if eventually a hazardous and noxious convention emerges and comes before the U.S. Senate for ratification, Usibelli would continue to urge the U.S. Senate to reject such a treaty. Number 107 MR. SIMS stated in regard to the current status of agencies within the U.S. Administration which are involved in the framing of the U.S. position, the opinions seem to be divided. He said the Department of Justice, the U.S. Coast Guard, and the U.S. State Department are inclined to favor some form of inclusion of coal in the treaty. The U.S. Department of Commerce, the Department of Energy, and the Maritime Administration within the Department of Transportation favor exclusion of coal. He noted that reportedly, the U.S. Trade Office also favors exclusion of coal. He reiterated that the official U.S. position is currently being formulated. Therefore, the legislature's action through HR 7 could help sway the outcome of that position. He urged committee members to pass HR 7. CO-CHAIRMAN GREEN noted that Alaska's coal is good because its only real problem is water content and in some cases, high ash. He noted Alaska's coal is extremely low sulphur. He wondered if HR 7 will pick up a lot of extra baggage because of some of the high sulphur coal produced in other parts of the country, which is ultimately shipped through the Maritime Service. He asked if there was any merit in trying to exclude Alaska coal only or coals of that quality or is this a matter of all or nothing. MR. SIMS replied it is a matter of all or nothing. He said even with the more elevated concentrations of sulphur, the potential for slowly leaking sulphur or sulfuric acid into a maritime environment is minimal. He stated Representative Green makes a good observation that Alaska's coal is significantly more benign than others. He pointed out the Cook Inlet has a high concentration of coal in its sediments. CO-CHAIRMAN GREEN stated the committee would come back to HR 7. HRES - 03/31/95 HB 225 - ELEPHANT PERMIT  Number 200 REPRESENTATIVE VIC KOHRING, PRIME SPONSOR, stated HB 225 is the Moxie the elephant bill. He said Moxie is an elephant who resides in the Palmer area. A resolution was passed by the legislature last year in support of Moxie and the predicament he is in. He told committee members Moxie's predicament is he has a temporary educational permit which has allowed him to stay in Alaska but it is only temporary. He noted that Moxie has been given subsequent permits over time but now is under his last permit. If a permanent solution is not found, Moxie will have to leave the state this summer. (Representative KOTT joined the committee.) REPRESENTATIVE KOHRING stated Moxie has broad support from all over the state. He noted that Moxie is owned by James Clements from Palmer who has a business, and is trying to establish an Alaska circus. Moxie is an important part of that effort. He said he introduced HB 225 to provide a mechanism for a commercial exhibition permit for elephants as opposed to a temporary educational permit. He pointed out that current law and regulations do not provide for a commercial exhibition permit of elephants in Alaska allowing them to stay in the state on a year- round basis. REPRESENTATIVE KOHRING said HB 225 establishes a safe and reasonable method for permitting elephants to stay in Alaska as long as the elephant meets the statutory requirements contained in HB 225 and other criteria the Alaska Department of Fish and Game (ADF&G) commissioner may establish. He stated he and his staff have worked closely with the ADF&G in developing the language in HB 225. Number 254 REPRESENTATIVE SCOTT OGAN asked if it would be acceptable to add an amendment which would require a health permit for any elephant coming into the state. REPRESENTATIVE KOHRING said he did not have a problem with that suggestion. He felt the issue should be discussed with a representative from the ADF&G. REPRESENTATIVE JOHN DAVIES noted an amendment has been included in committee members folders which deletes the word "African" in HB 225. He asked Representative Kohring if he supports the amendment. REPRESENTATIVE KOHRING replied he has no problem with the amendment. KRISTIE LEAF, LEGISLATIVE ASSISTANT, REPRESENTATIVE VIC KOHRING, stated in regard to Representative Ogan's question, a health permit is currently required for elephants coming into the state. She said when an elephant is coming into the state, the Department of Environmental Conservation (DEC) is in touch with the veterinarian in the state where the elephant is coming from and under the U.S. Department of Agriculture Animal Health and Welfare Act, the elephants require a current health certificate. She noted those certificates are required currently when circus elephants come into the state. She explained HB 225 does not affect that requirement. She pointed out that HB 225 does allow the ADF&G commissioner to assess any additional health requirements. CO-CHAIRMAN GREEN asked if HB 225 would allow elephants to come from another country instead of another state, and if so, would a health permit also be required. MS. LEAF replied if an elephant is going to be imported, the elephant is required to have the import permit from the DEC and the state veterinarian in Palmer has to certify the elephant has its required papers. REPRESENTATIVE OGAN said he asked the question because disease was an issue with the Board of Game. Number 334 REPRESENTATIVE DAVIES asked why there is a limitation to commercial exhibition on page 1, line 9. MS. LEAF responded currently the ADF&G issues an educational permit and there is a system set up for that permit in regulation. Currently, zoo elephants, circus elephants, Moxie, etc., are being permitted under the educational permit, when in fact that is not their intended use. She noted the Board of Game has also directed the ADF&G to develop a temporary commercial permit system in regulation to better suit permits for circus elephants. She added the educational permit system would remain in place and HB 225 would add a commercial permit system. REPRESENTATIVE DAVIES wondered what permit would be issued if a person wanted to have an elephant as a private pet. MS. LEAF stated HB 225 does not affect the clean list whatsoever. She said the language was proposed for exhibiting animals commercially to avoid a large number of elephants coming into the state for any purpose. She stated Representative Kohring would not object to changing HB 225 to allow individuals wanting to have an elephant and who meet the requirements to be able to have one. Number 400 ROBERT HALL, WASILLA, testified via teleconference and expressed support for HB 225. He stated Moxie is an experienced performing elephant who has performed in thousands of performances throughout the U.S. He said it has been very frustrating because Alaska is one of few states in the U.S. that does not have provisions in current statutes to allow Moxie to reside in the state permanently. He noted what is attractive about Moxie is that in Alaska, children do not get the opportunity to touch, feel, smell, and ride an African elephant. He reiterated Moxie is popular throughout the state. MR. HALL said as a business owner, he has employed Moxie to give rides to children and adults. Last year, thousands of free elephant rides were given. He stressed HB 225 is not just helping one individual who owns the elephant. He stated the time the legislature is taking to address the issue will help thousands of people who enjoy elephants. He noted the Board of Game, despite tremendous support from the department, did not put elephants on the clean list because the board did not want to set a precedent that any exotic animal brought into the state would have to be added to the clean list. WAYNE REGELIN, ACTING DIRECTOR, DIVISION OF WILDLIFE CONSERVATION, ADF&G, said the ADF&G supports HB 225 and does not feel the bill poses any risks to wildlife in Alaska. He stated HB 225 will solve a problem for the elephant which already resides in the state. Without HB 225, the ADF&G does not have the type of permit necessary. CO-CHAIRMAN GREEN noted there appears to be safeguards built into HB 225 which take care of the humanity toward the animal. He clarified the department is satisfied there are no health risks involved. MR. REGELIN replied yes. REPRESENTATIVE GREEN asked if there are any risks of disease to other animals if an elephant escapes. MR. REGELIN responded that is one of the issues he discussed with elephant breeders in Florida where most elephants in the U.S. are, and they do not feel there is a problem. He stated Moxie has been in captivity most of his life and has been tested numerous times. He said Moxie is disease free. He pointed out the chances of anyone wanting to bring an elephant to reside in the state permanently are slim. However, there are federal and DEC laws which require that any animal brought into the state be safe. REPRESENTATIVE PETE KOTT made a MOTION to AMEND HB 225 on page 1, line 2: delete the word "African"; page 1, line 5: delete the word "African"; and on page 1, line 7, delete the word "African". REPRESENTATIVE KOTT said this amendment would make the bill all inclusive to include Indian or Asian elephants. CO-CHAIRMAN GREEN stated it was his understanding there are many more domesticated Asian elephants than African elephants. REPRESENTATIVE GREEN asked if there were any objections to the motion. Hearing none, the MOTION PASSED. REPRESENTATIVE OGAN made a MOTION to MOVE CSHB 225(RES) with attached zero fiscal note out of committee with individual recommendations. CO-CHAIRMAN GREEN asked if there were any objections to the motion. Hearing none, the MOTION PASSED. CO-CHAIRMAN GREEN announced the committee would go back to HR 7. HRES - 03/31/95 HR 7 - OPPOSE COAL AS HAZARDOUS/NOXIOUS SUBSTANCE Number 500 CO-CHAIRMAN GREEN recalled his question to Mr. Sims regarding possible baggage to HR 7 because it would also be addressing poor quality coal. He wondered if Mr. Lowe thought there would be a problem. MR. LOWE replied he did not. He stated he would explain the tier structure the proposed IMO treaty would insert coal into. He thought with that explanation the committee would better understand why that is not a concern for any type of coal. He said the current structure was fashioned after an oil insurance-type of structure which is a post-disaster payment scheme. Currently, the insurance of materials shipped overseas fall into two tiers. The first tier is insurance carried by the ship owner or pilot which is up to a preset, at this time, undetermined level. The second tier is the tier which would be paid in an event or catastrophe were to exceed the first tier. MR. LOWE said the second tier is made up of two levels which include solid liquids or gases defined as noxious. The second level within the second tier contains coal, wood chips, ammonium nitrate, and other less or nontoxic, nonhazardous materials. He explained currently the first section within the second tier contributes to a fund that would kick in if a catastrophe exceeded the first tier. The second level within the second tier is designed to kick in if, and only if, one of the substances within that second group were to be involved in an incident which exceeded the first tier level of insurance coverage. MR. LOWE pointed out there has never been, in the history of the transport of coal, an incident which exceeded the first tier level of insurance. Number 556 CO-CHAIRMAN GREEN asked if the tiers are based on the materials likely to get into the environment rather than a dollar amount. MR. LOWE replied that is correct. He said the tier structure is post-incident insurance mechanisms to cover personal loss, property loss, or damage to the environment. He stated within the second tier, there are two sections and items are classified either in the first or second section based on their estimated potential damage and hazardous qualities. He explained the opposition brought forward in HR 7 is to the inclusion of coal within the second section of the second tier. REPRESENTATIVE DAVIES clarified coal would be included in the first structure of the second tier. MR. LOWE said within the second tier there are two levels. Coal is being proposed to be included in the second level of the second tier. CO-CHAIRMAN GREEN asked what part of the second level. MR. LOWE replied there is only one second level. He reiterated there are two tiers of insurance. The first tier is the liability of the ship owner. The ship owners are required to carry a certain amount of liability which as of yet has not been determined. The second tier includes all of the goods being transported and they are subdivided within the second tier into a group A and group B. He stated group A are more hazardous materials and group B are solid materials which are less toxic, less hazardous, less noxious. He noted it is proposed that coal be included in the IMO treaty to be in group B of the second tier. MR. LOWE reiterated there has never been, in the history of the transport of coal, an incident that exceeded the first tier. He felt there is no insurance-wise need at this point for coal to be included. He said the inclusion of coal is based on the HNS Hazardous Materials Commission's recommendations. For example, if there was an incident involving ammonium nitrate, which is in group B of the second tier, instantly all members of group B would be determined active and from that date forward, they would be required to contribute to a fund. Their contribution to the fund would be determined on a tonnage basis. MR. LOWE said should any future incidents happen, monies from that fund would be applied, in excess of the first tier, when the ship transporter's insurance did not cover it. He stated anything over tier one would be paid out of the fund. He noted it is believed that the purpose of the inclusion of coal in group B of the second tier is because of its large tonnage quantities. He pointed out this is somewhat of a tonnage-based tax on the coal industry because of the large amount of coal shipped. Number 600 REPRESENTATIVE DAVIES clarified once the requirement to contribute to the fund is activated, then the requirement is in place forever. MR. LOWE replied that is correct. REPRESENTATIVE DAVIES clarified the fund would not end no matter how much money is generated by the fund. MR. LOWE said there is no mechanism to shut off contributions to the fund if a certain monetary level is reached. He noted the contribution to the fund is a per tonnage rate every time the coal is handled. He stated when the U.S. Department of Energy became aware of this by Senator Stevens, they concluded there is no necessity to include coal as a hazardous and noxious material in group B of the second tier of the IMO treaty. CO-CHAIRMAN GREEN felt that while support would be gained from all the coal producing states, there would also be a drag down by the negativism of the high sulphur and other impurities in coals. He thought allowing the country to know that Alaska's coal is nonpolluting as opposed to some that might be would be a good idea. MR. LOWE said the IMO's Marine Environment Pollution Committee asked the GESAMP EHS Group (he did not know what the letters stood for) to evaluate the potential marine pollution hazards from the discharge of solid bulk cargoes in July 1992 and they evaluated the hazardous properties of coal. He stated coal was given a zero rating for bioaccumulation and tainting, hazard to human health (oral intake and skin contact) and for reduction in amenities. It was noted: Coal dust may cause mild skin irritation if it comes in contact with the skin; coal, with regard to damaging living resources, is not hazardous but it may blanket the bottom of the sea; and coal, with regard to the reduction of amenities, may be slightly objectionable but will not interfere with the use of beaches. MR. LOWE stated the basic determination for the inclusion of coal is the large tonnage amount, the personal injury potential in loading and off-loading that quantity of coal and the potential for a fire to be started on a ship. He noted it is not that the sulphur content of coal makes it a noxious mineral, but rather coal in bulk. CO-CHAIRMAN GREEN noted coal dust, because of rapid oxidation, could explode. REPRESENTATIVE OGAN asked if all countries in the world who ship coal would be subject to the treaty. He also asked where the money contributed goes. MR. LOWE replied all countries who transport coal would be required, under the IMO treaty, to contribute to the fund which would begin in the event a catastrophe exceeded the first tier of the liability. He stated he did not know what bank the money would be accumulating in. He said the money would go into an insurance fund that would be utilized if a substance within group B of the second tier was responsible for the accident that exceeded the first tier. He noted ammonium nitrate is very explosive and does present a hazard. Therefore, if ammonium nitrate was involved in an accident that exceeded the first tier, coal would automatically, because of its large tonnage, be taxed every time it is loaded and unloaded to pay for future incidents that will most likely not be as a result of coal but another substance being transported. MR. LOWE stressed there is international opposition to the IMO treaty. He stated there has been a couple of ideas proposed. One proposal would be to set up a separate appendix for nothing but coal and make that appendix have a zero rating until coal causes an accident exceeding the first tier. He noted coal producing countries, the Alaska Coal Association, and the Coal Export Association opposed that proposal because insurance rates for coal would go up due to coal's inclusion in a hazardous and noxious treaty. He said the cost of coal around the world is going to rise and the ability to market Alaska coal will be hindered. Number 682 REPRESENTATIVE OGAN stated it would be interesting to know who the players are in the proposal to include coal in the treaty and what their motivation is. TAPE 95-44, SIDE B Number 000 MR. LOWE indicated the oil industry does support the treaty as it currently is written. REPRESENTATIVE DAVIES recalled Mr. Lowe had stated the tier one insurance is paid by the ship owners, so presumably the coal industry contributes to the maintenance of that insurance through the tonnage paid to ship owners. MR. LOWE said that is correct. REPRESENTATIVE DAVIES said one might draw the conclusion that the industry is paying its fair share of the insurance currently. MR. LOWE agreed. He felt all people using carriers are contributing. He noted there is no other organization, worldwide, that classifies coal as noxious and hazardous. He said this will be the first time ever that coal has been classified as noxious and hazardous. CO-CHAIRMAN BILL WILLIAMS made a MOTION to MOVE HR 7 out of committee with individual recommendations. CO-CHAIRMAN GREEN asked if there were any objections. Hearing none, the MOTION PASSED. HRES - 03/31/95 HB 191 - MANAGEMENT OF STATE LAND AND RESOURCES CO-CHAIRMAN GREEN stated the committee would be using the committee substitute (CS) of the sponsor substitute, version F of HB 191 as its working draft. SARA FISHER, LEGISLATIVE ASSISTANT, REPRESENTATIVE GENE THERRIAULT, PRIME SPONSOR, stated she would review the changes from the sponsor substitute of HB 191 contained in the work draft CS of HB 191, version F. She said Section 1 reduces the purchaser's expectation of no further disposals or development in the area. This section clarifies that when the department determines separation of residences, they consider the availability of timber, firewood, and water resources but does not imply a person has exclusive use of these resources. Number 199 MS. FISHER stated Sections 2-5 are the same as the sponsor substitute. She said Section 6 is a technical amendment and is similar to Section 5 but removes references to staking. She explained Section 8 is a technical change needed as a result of Sections 22 and 23. Section 20 is a new section which allows agricultural land to be sold at true market value by making preference right to the adjacent agriculture land owners at the discretion of the department. She noted that Mr. Swanson had pointed out earlier that mandating the preference right tends to depress the competition or eliminate the competition altogether, while unaffected parcels are bid up past appraised value. MS. FISHER stated Sections 22-23 amend the remote cabin permit program. She said these permits have never been offered because of the cost to implement the program. These changes will allow the department to provide for the sale or lease of state land for remote recreational cabin sites. She explained sales must be at fair market value and the purchaser must reimburse the state for appraisal, survey, and platting costs. She pointed out this change provides that the term of a lease permit is no more than five years, which may be renewed for one additional five year period. During the term of the lease, the permittee may purchase the site by paying fair market value for the site. Number 236 MS. FISHER said Section 26 is a new section intended to clarify that a person holding a shore fisheries permit has the right to renew that permit. She stated Sections 43 and 44 are technical changes. She told committee members Sections 45 and 46 are new sections that amend the homestead entry program. These changes allow for a person to reside on the homestead land and reimburse the state for survey and platting, or within five years, pay the state the fair market value of the homestead at the time of patent and reimburse the state for the survey. She noted this change removes the staking and brushing requirements, and references to "habitable, permanent dwelling." MS. FISHER stated Section 48 is a new section which clarifies the state has no obligation to provide services to disposals of state land, and a disposal does not by itself limit further disposals. She noted Section 49 contains repealers. Number 263 REPRESENTATIVE DAVIES noted the language in Section 2 in the sponsor substitute referring to land banks is being changed and the work draft now calls it a land disposal program. He felt the use of the word "program" is inconsistent with the way the word is used later on in the bill. He thought it made more sense to use the word "inventory." He wondered if Mr. Swanson had any objections to using the word "inventory" instead of "program" on page 2, lines 6 and 9. He felt that word works better because it is a list of objects as opposed to events. RON SWANSON, DIRECTOR, DIVISION OF LAND, DEPARTMENT OF NATURAL RESOURCES (DNR), testified via teleconference and said he did not object to the suggested change. MS. FISHER stated if Mr. Swanson does not have a problem with those changes, then the sponsor probably will not either. She thought the word "program" was used in order to conform with the planning process the DNR has used for the past ten years. MR. SWANSON said Ms. Fisher's comments are correct. The department goes through the land planning process which creates the inventory. Once the inventory has been developed, then the inventory goes into the disposal program and actual disposal. He stated while changing the word "program" to "inventory" does not create any heartburn, he really felt "program" would be the better word because the inventory had been created in the planning process already. Number 304 REPRESENTATIVE DAVIES thought it was confusing to talk about a list of lands as a program. He felt the word "program" means a prescription of things to do or a process. CO-CHAIRMAN GREEN wondered if there was any merit to having the words inventory/program or does that further confuse the issue. MR. SWANSON thought the words "inventory and/or program" might be better. REPRESENTATIVE DAVIES stated page 7, lines 6-8, in the work draft CS of HB 191, version F, pertains to the disposal of land and where the auction sale should be located. He said he understood the arguments as to why the commissioner should have some discretion as to where the disposals are held. However, he felt as a matter of policy, the legislature should be suggesting to the commissioner that wherever it is practicable, the auction should be in a community near where the land is being sold or disposed of. REPRESENTATIVE DAVIES expressed concern that by changing the word "shall" to "may" on line 7, that policy intent is lost. He felt the same discretion on the part of the commissioner could be effectuated while leaving the policy intent in place by keeping the word "shall" and then on line 8, inserting the words "unless the commissioner issues a written finding that it is impractical." He felt that change would allow the commissioner to find in certain cases that it is not practical to have an auction in an area close by but would leave the general intent to hold the auctions close to the actual land being sold. Number 356 MR. SWANSON stated the history of this section is that previously it was required that the applicant and the department appear, in person, in the location where the land was going to be disposed of. He said the Superior Court ruled that requirement was unconstitutional. He explained the idea behind this section is why make the state spend a lot of money to appear in a particular community if the applicant is not required to be there for all types of disposals. He pointed out the department would certainly hold an outcry auction in the community where the land is being sold, but he saw no point in the state appearing if the disposal is going to be a sealed bid or a lottery and the applicant is not required to be there. REPRESENTATIVE DAVIES noted he knows it is the department's intent to hold outcry auctions in the communities. His concern is the language contained in Section 14 does not explicitly suggest that intent. MR. SWANSON suggested adding that only outcry auctions be held in the location where the land is to be sold. CO-CHAIRMAN GREEN wondered how many times auctions get submissions from people not in attendance. MR. SWANSON stated outcry auctions are normally only held for agricultural sales and usually the person or a representative of the person is always present. CO-CHAIRMAN GREEN asked if the word "may" would cause the department to not do business as usual except for streamlining it. MR. SWANSON replied the word "shall" is currently in the statute and the department is required to appear. He said the word "may" is much better for the department as it streamlines it and will provide a cost saving. REPRESENTATIVE DAVIES asked how the disposal of land is handled for homesites. MR. SWANSON responded homesites are always done by lottery. REPRESENTATIVE DAVIES questioned how the public becomes aware of homesite disposals. MR. SWANSON replied the homesite disposals are advertised in all major newspapers in the state at least once, sometimes up to four times. The department also has a land disposal sale brochure which is available to the public through department offices and some libraries across the state. He said the department also uses public service announcements on radio and television where possible. REPRESENTATIVE DAVIES asked how does a person enter the lottery. MR. SWANSON stated within the sale brochure there is an application which the person can mail in, along with the $10 entry fee. Number 412 REPRESENTATIVE DAVIES asked Mr. Swanson how he would feel about changing lines 6-8 to read, "An outcry auction sale shall be held in a community that is near the land to be sold or disposed of." MR. SWANSON stated that language is fine. He said that is certainly what the department would do. REPRESENTATIVE DAVIES made a MOTION to AMEND the work draft CS of HB 191, version F, on page 7, lines 6-8, delete the current sentence and rewrite it to read, "An outcry auction sale shall be held in a community that is near the land to be sold or disposed of." CO-CHAIRMAN GREEN announced there is no quorum present. REPRESENTATIVE DAVIES stated on page 9, lines 13-15, of the work draft CS of HB 191, version F, it says "If more than one Alaska resident qualifies for a first option under this section, eligibility for the first option shall be determined by lot and the option must be exercised on the conclusion of the public auction." He asked in that instance, what happens if the person who wins the lot does not choose to exercise it. MR. SWANSON replied the next person in line would assume the role. Number 469 REPRESENTATIVE DAVIES said in Section 21, page 9, the definition of adjacent says, "a tract of land has a common boundary or corner to presently held land or is separated from the presently held land only by a physical barrier such as a road or stream." He stated there is also another configuration of land where the boundaries could be touching but not satisfy this definition. He told committee members to imagine two squares where one corner of one square is touching the center of the side of the other square. He noted they would be touching each other but would not have a corner in common nor would they have a line segment in common. He pointed out he has seen land actually divided up that way. REPRESENTATIVE DAVIES suggested the problem with the definition could be fixed by changing lines 21-23, on page 9, of the work draft CS of HB 191, version F, to read "adjacent" means that a tract of land has at least one common boundary point with presently held land or is separated from the presently held land only by a physical barrier such as a road or stream." MR. SWANSON stated that language is fine. He added that he did not read the current language as common boundary or common corner but rather read it to say common boundary or corner touching. CO-CHAIRMAN GREEN said if everyone could picture a square with a diamond sitting on top of it--adjacent at the north boundary but not at the corner. REPRESENTATIVE DAVIES asked Mr. Swanson if he has any problem with the suggested change in language. MR. SWANSON replied no. REPRESENTATIVE DAVIES referring to line 23, page 9, asked if there is going to be a problem if there is a stream paralleled by a road. MR. SWANSON responded no. Number 515 REPRESENTATIVE DAVIES asked on page 10, line 6, of the work draft CS, version F, why the words "lease permit" is used. He wondered if the word "permit" could be eliminated. MR. SWANSON replied yes. He said there must have been an error in the rewrite. REPRESENTATIVE DAVIES thought the language should say "cabin site lease" throughout Section 23. He said wherever the language says "permit", it should say "lease" and where it says "permittee", it should say "lessee". He wondered if Mr. Swanson had any problem with those suggested changes. MR. SWANSON said no. He stated the section had just been drafted the day previous and some technical changes still need to be made. REPRESENTATIVE DAVIES said his next question was in regard to page 10, line 21, of the work draft CS of HB 191, where it gives the director the discretion to invite applications. He wondered what assurance is there a public notice will be given. MR. SWANSON replied the language refers to a disposal of land. Therefore, the state Constitution requires public notice. REPRESENTATIVE DAVIES asked what the purpose is of line 21, on page 10, changing the word "shall" to "may." He thought it might be redundant since the department does that anyway. He thought the line was there to perhaps set up the next sentence. MR. SWANSON stated the department advertises a given area sale which may be open to shore fishery leases. Within that given area, the department does not necessarily say how many leases will be issued. Therefore, the department is trying to make the language discretionary. He said the department will tell the public that the department will be issuing leases or a lease within a given area but only certain people can qualify. He wondered why the department would want to advertise for applications or invite applications if people do not qualify. REPRESENTATIVE DAVIES reiterated he does not understand how the discretionary invitation works. CO-CHAIRMAN GREEN clarified if in fishery site A, a preference is given to the existing permittee or lessee and if the department had to go to the expense of publicly inviting applicants, yet fishery site A is still going to have a preference, the question becomes is there any merit to continuing the process just to establish a fair market value. MR. SWANSON said that is correct. CO-CHAIRMAN GREEN said if there is no other person wanting the permit or lease or if there are others who want it but the existing permittee or lessee wants it, would the department under a "may" go ahead and publicly invite to try and get a fair market value established or would the department have other means to determine what the fair market value is. MR. SWANSON replied the department does not currently use a fair market value for shore fishery leases. The department can only get what it costs to administer the program. He said the change on line 21, page 10, will allow the department to have the discretion to get fair market value. He was not sure how the department would do that, but added there are several options. CO-CHAIRMAN GREEN clarified having the word "shall" in the language would assist the department in establishing a fair market value or since the lease or permit is going to the person who currently has it anyway should the person want it, "may" still might be a preferable word to avoid an unnecessary notification to the public, when none of the public is going to have a chance at the lease or permit anyway, unless the owner does not want to come up with the fair market value. MR. SWANSON said that is correct. Number 610 REPRESENTATIVE DAVIES clarified the public invitation for applications, in some cases, is an additional step the department would go through to establish the fair market value. MR. SWANSON replied that is correct and added that the department may go through. REPRESENTATIVE DAVIES stated his next question is in regard to page 18, lines 14-17, of the work draft CS of HB 191, version F. He asked someone to explain the changes contained in the language. TAPE 95-45, SIDE A Number 000 MS. FISHER replied Section 32 of the sponsor substitute clarifies the department can allow livestock grazing, commercial berry picking or mushroom harvesting, and similar minimal-value consumptive uses by issuing permits, an authority the Department of Law recently questioned. MR. SWANSON stated that is correct. The Department of Law said if a person removes a resource in any way, a lease has to be issued, not a permit. He said the language Representative Davies has asked about allows the department to do some basic things under the permit process which are not so time consuming. For example, after a forest fire, mushrooms come up and people like to harvest them. He explained because the mushrooms are harvested, the department would have to issue a lease and by the time the lease is issued, the mushrooms would be long gone. REPRESENTATIVE DAVIES asked if all the repealers in Section 49 are conforming to other things done in the bill and also questioned if there is anything substantive in the repealers. MR. SWANSON stated the intent was to not do anything substantive but just conform to everything else in the bill. Number 063 JERRY LUCKHAUPT, LEGISLATIVE COUNSEL, LEGISLATIVE LEGAL SERVICES, LEGISLATIVE AFFAIRS AGENCY, stated Mr. Swanson is correct to a certain extent. He said many of the repealers are necessitated by changes made in the bill. He explained there are a few repealers that work on their own which were requested by the department such as the removal of the requirement for bonding. He noted the repealers were all a part of the original bill. REPRESENTATIVE DAVIES asked if there are any other substantive things in the repealers. MR. LUCKHAUPT replied AS 38.05.040 is the bonding requirement. AS 38.05.035(e)(6)(F) removes the requirement for a written finding before a public hearing related to a production license issued under AS 38.05.207 which is a change necessitated by the repeal of AS 38.05.027, which was necessitated by the oil and gas changes made last year. He said the AS 38.057 changes are reflected by changes made to AS 38.05.057 in the bill. The changes to AS 38.05.855 and AS 38.05.856 are not necessarily reflected by things going on in the bill but relate to the fact that AS 38.05.855 and AS 38.05.856 are repeals of the aquatic farm sites program--the identification program the commissioner must go through in the tideland land use permits for aquatic farming. REPRESENTATIVE OGAN made a MOTION to ADOPT CSSSHB 191(RES), version F. CO-CHAIRMAN GREEN asked if there were any objections. Hearing none, the MOTION PASSED. Number 150 REPRESENTATIVE DAVIES noted for the record he still has concerns on page 2 about the distinction between program and inventory. REPRESENTATIVE DAVIES made a MOTION to AMEND CSSSHB 191(RES) on page 7, line 6, insert "outcry" after "An" and delete ", a". On line 7, page 7, delete "lottery sale, or a disposal of land for homesites may" and insert the word "shall". He said lines 6-8 would now read, "An outcry auction sale shall be held in a community that is near the land to be sold or disposed of." MS. FISHER said the proposed amendment might pose a conflict with Section 15. MR. LUCKHAUPT stated an outcry auction is not defined anywhere in statute. Therefore, a term is going to be contained in the bill which is not defined anywhere. Secondly, in Section 15, sections are being repealed which require the presence of bidders at auction sales. He thought maybe Mr. Swanson had an idea of how these two sections could be put together to accomplish Representative Davies' purpose. MR. SWANSON said he did not have an idea how to accomplish Representative Davies' purpose. He stated he understands his concerns. He noted the department would do what he is suggesting anyway, but he was not sure how to put that in statute. REPRESENTATIVE OGAN clarified that Section 15 is for sealed bids. Number 206 MR. SWANSON replied the department does two different types of auctions. The majority of the auctions are sealed bids but occasionally the department does an outcry auction. REPRESENTATIVE OGAN asked if it is most cost effective to do a sealed bid auction. MR. SWANSON responded yes. He stated sealed bids are normally what the department does. REPRESENTATIVE DAVIES WITHDREW his MOTION. REPRESENTATIVE DAVIES made a MOTION to AMEND CSSSHB 191(RES) on page 9, line 21, delete "a" and insert "at least one"; delete "or" and insert "point". On line 22, page 9, delete "corner to" and insert "with". He said the line would read "(2) "adjacent" means that a tract of land has at least one common boundary point with presently held land or is separated from the presently held land only by a physical barrier such as a road or stream." CO-CHAIRMAN GREEN asked if there were any objections. Hearing none, the MOTION PASSED. REPRESENTATIVE DAVIES made a MOTION to CONCEPTUALLY AMEND CSSSHB 191(RES), page 10, lines 6-16, deleting the word "permit" everywhere it appears in Section 23 and where appropriate substitute the word "lease." He added where the word "permittee" appears, change it to the word "lessee." MR. LUCKHAUPT said he understood the sense of the amendment and would make the changes. REPRESENTATIVE DAVIES thought line 6, page 10, would read better if it said "cabin site lease". CO-CHAIRMAN GREEN noted there was no quorum present. REPRESENTATIVE DAVIES WITHDREW his motion. ADJOURNMENT There being no further business to come before the House Resources Committee, Co-Chairman Green adjourned the meeting at 9:53 a.m.