SENATE RESOURCES COMMITTEE April 28, 1995 3:38 p.m. MEMBERS PRESENT Senator Loren Leman, Chairman Senator Steve Frank Senator Robin Taylor Senator Georgianna Lincoln MEMBERS ABSENT Senator Drue Pearce, Vice Chairman Senator Rick Halford Senator Lyman Hoffman ALSO PRESENT Senator Lyda Green COMMITTEE CALENDAR CONFIRMATION HEARING: Frank Rue, Commissioner Department of Fish & Game CS FOR HOUSE BILL NO. 207(FIN) am "An Act relating to adjustments to royalty reserved to the state to encourage otherwise uneconomic production of oil and gas; and providing for an effective date." SENATE BILL NO. 171 "An Act delaying the repeal of the current law regarding subsistence use of fish and game; and providing for an effective date." SENATE JOINT RESOLUTION NO. 22 Requesting research on fisheries and marine mammals in the Bering Sea. SENATE JOINT RESOLUTION NO. 23 Proposing postage stamps honoring wild Alaska salmon and centuries of continued use of wild Alaska salmon for subsistence, commercial, and sport fish harvesters. PREVIOUS SENATE COMMITTEE ACTION HB 207 - See Resources minutes dated 4/22/95, 4/26/95. SB 171 - No previous action to record. SJR 22 - See Resources minutes dated 4/26/95. SJR 23 - No previous action to record. WITNESS REGISTER John Peterson, Chief Estimator Alaska Interstate Construction 625 Highland Circle Anchorage, AK 99518 POSITION STATEMENT: Supports CSHB 207(FIN) am Tom Lakosh P.O. Box 100648 Anchorage, AK 99510 POSITION STATEMENT: Opposes CSHB 207(FIN) am Commented on SB 171 Sam McDowell 336 E. 23rd Ave. Anchorage, AK 99503 POSITION STATEMENT: Opposes confirmation of Commissioner Rue Dale Bondurant HC 1, Box 1197 Soldotna, AK 99669 POSITION STATEMENT: Opposes confirmation of Commissioner Rue Opposes passage of SB 171 George Irvin Alaska Federation of Natives 1577 C St., No. 100 Anchorage, AK 99501 POSITION STATEMENT: Testified in support of SB 171 Roger McKowan, Staff to Senator Hoffman State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Offered information on SJR 22 ACTION NARRATIVE TAPE 95-50, SIDE A Number 001 CHAIRMAN LEMAN called the Senate Resources Committee meeting to order at 3:38 p.m. CSHB 207(FIN) am ADJUSTMENTS TO OIL AND GAS ROYALTIES  SENATOR LEMAN brought CSHB 207(FIN) am before the committee as the first order of business. He stated testimony would be taken from witnesses present at the Anchorage LIO and that the committee would continue to work on a Resources SCS. Number 030 JOHN PETERSON, Chief Estimator, Alaska Interstate Construction, Anchorage, said as a 45-year resident of Alaska, he has seen all resource development diminish as a result of regulations and legislation passed by agencies that Alaskans cannot control. Alaskans are continuing to be denied access to their resources by various influences. Alaska is at a competitive disadvantage in attracting capital investments because of high transportation, exploration development costs. etc., and Alaska needs a strategy to counter these disadvantages. He believes CSHB 207(FIN) am will provide the industry with enough protection and incentives to pursue development of the smaller marginal fields by removing a portion of the monetary risks. It will also encourage the state and industry to work together to change the economic equation of marginal fields. Number 101 TOM LAKOSH, testifying from Anchorage, said he believes the proposal in HB 207 is untenable under contract law or administrative procedures, especially because it will be applicable to leases which have already been let. He believes it will open the State of Alaska to a large liability from potential lessees that have bid on those sites at a fairly competitive rate and who now find that they were bypassed by companies who had no intention of fulfilling their lease contracts. Further, it also violates the rights of Alaskans to due process, because the legislature is planning to change the conditions of those leases without proper due process for its citizens. There being no further witnesses wishing to testify, SENATOR LEMAN closed the public hearing on HB 207 and stated the committee would take a brief at ease. Number 175 The next order of business was the continuation of the confirmation hearing for Commissioner-designee Frank Rue, Department of Fish & Game. SAM MCDOWELL, a 37-year resident of Alaska testifying from Anchorage, stated he is extremely concerned about the diversion of funds and the gross mismanagement of the King Salmon license fee money, etc. The department has diverted hundreds of thousands of dollars down to Earl West Cove. He is strongly opposed to the confirmation of Mr. Rue, and has told him that an independent auditor will be hired and a court injunction will be filed against the Department of Fish & Game if this situation is not changed. Number 235 DALE BONDURANT, testifying from Soldotna, said the governor, Mr. Rue and others are willing to accept a federally imposed mandate that Alaska's Supreme Court found to be unconstitutional. Article I, Section 1 of the Alaska Constitution provides that all persons are equal and entitled to equal rights, opportunities and protection under the law, and that all persons have corresponding obligations to the people and to the state. He said it is probably the best constitution in the United States, but there are still many Alaskans who do not support equality and continue to ignore their constitutional obligation in the hope that this equality will be subjugated by an amendment. He said he seeks Mr. Rue's unequivocal support of the Alaska constitutional provisions of common use and equality of the state's fish and game, and, until then, he must continue to challenge his confirmation as commissioner. Number 285 COMMISSIONER-DESIGNEE FRANK RUE, responding to Mr. McDowell's concern that fish and game funds are being diverted to Earl West Cove, said he absolutely agrees that we should not, will not divert fish and game funds. He said he does not want to jeopardize the department's other funding by diverting those funds. Responding to Mr. Bondurant's comments, Commissioner-designee Rue stated he supports the Constitution of the State of Alaska, but he stands by his statement that our management system has become more complex because of federal law. He also agrees that we need to try and resolve the issue of subsistence as Alaskans and support the governor's effort to try and achieve a meeting of the minds of various Alaskans so that we can resolve that issue in a way that Alaskans can support. He added that he very open to that dialogue and will do whatever he can to help facilitate that dialogue and help that dialogue among Alaskans. Number 321 SENATOR TAYLOR asked for clarification of a document dated October 24, 1994 relating to the identification of Pacific salmon stocks potentially at risk of extinction in Alaska. COMMISSIONER-DESIGNEE RUE responded that it was an extension of a study that was done in the Lower 48 by the American Fisheries Society to look at the status of Pacific Salmon stocks that found a number of them in trouble. That effort was moved north, basically to find out in a comprehensive way how the state's salmon stocks are doing. It is the department's belief that the results of the study have shown that, so far, Alaska's salmon resources are basically healthy. SENATOR TAYLOR asked several questions relating to the American Fisheries Society, which is a society of professional fisheries managers and biologists nationwide, however, COMMISSIONER-DESIGNEE RUE replied that he is not a member of the society so he could not respond to his questions. SENATOR TAYLOR noted the U.S. Forest Service has already done a study, and he asked the purpose of Alaska's participation in this study. COMMISSIONER-DESIGNEE RUE answered that the purpose of the professional society's study and the work the department is doing is to get a statewide look at all of our fish stocks and how healthy those stocks are. He said it could help the department and/or other managers know comprehensively where there may be problems. The study by the Forest Service was focused on the Tongass National Forest and how effective their management activities are in maintaining the health of the fish streams in the Tongass. Number 442 SENATOR TAYLOR asked what the proper riparian zone was, in his opinion, for a buffer zone in Southeast Alaska's forests. COMMISSIONER-DESIGNEE RUE replied that it depends on the size of the stream, the sensitivity of the stream and what species you are trying to maintain. Although he is not a biologist, he has read a lot of research on these buffer zones, he has been out and looked at them, and he has talked to the biologists about them. SENATOR TAYLOR asked if it is better to do site specific stream management or to have cut up buffer zones, which we have right now. COMMISSIONER-DESIGNEE RUE answered that if they had the time, the people and the proper conditions, site specific decisions are probably better, but those three conditions seldom exist, so it forces the cookie cutter approach. He pointed out that the state had 30 years of site specific management and there were a lot of systems in the Tongass where either nothing or very inadequate buffers were left. He added that part of that was because of inadequate knowledge. SENATOR TAYLOR asked to what extent he accounted for the dramatic increases in volumes of salmon in Southeast Alaska that has occurred in the last 25 to 30 years, especially when that has been the same period of time, for all practical purposes, that all of the timber harvesting has occurred on the Tongass. COMMISSIONER- DESIGNEE RUE answered that a good enhancement program in southeast has helped the number of salmon. Research has shown that it takes time for streams to unravel and become unproductive if there has been cutting to close to them. It will take about 70 years for some of the effects of poor management to be felt and the reduced productivity of these systems to start showing up. Also, the Forest Service has, in the last 10 to 15 years, started being aware of some of these things and has left buffers along streams. Number 558 SENATOR FRANK asked Commissioner-Designee Rue's definition of a "clear cut." COMMISSIONER-DESIGNEE RUE responded that he defines a clear cut as when all of the trees are removed from a certain size area as opposed to a partial cut or selective cut. SENATOR LEMAN stated the continuation of the confirmation hearing would be set aside until later in the meeting so that the committee could take up two pieces of legislation that were on the agenda. SB 171 EXTEND CURRENT SUBSISTENCE LAW  Number 570 SENATOR LEMAN introduced SB 171 , which will extend the sunset date for the subsistence law for one year, as the next order of business. He said it is his understanding that the agreement to extend the date by one year is an agreement reached between the administration, our committee and corresponding committees on the House side. COMMISSIONER-DESIGNEE RUE stated the administration is in agreement with the one-year extension, and they will be working with the legislature and various interest groups to try to come up with a resolution of this issue that Alaskans can support. GEORGE IRVIN, representing the Alaska Federation of Natives, testified from Anchorage in support of legislative action to extend the sunset of the 1992 state subsistence statute for one year. He said AFN is convinced that the Knowles Administration fully intends to conduct the public process of evaluating the 1992 statutes implementation and to make recommendations to the legislature, which is something the previous administration failed to do. TAPE 95-50, SIDE B Number 001 Mr. Irvin said AFN has concluded that no administration could complete the process in the next five months, and in order to bring justice to the critical issues and to coordinate the formulation of future state subsistence policy with its effort to resolve the ANILCA impact, the Knowles Administration must be given sufficient time to get the work done. Mr. Irvin stated the AFN supports the governor's twin goals of a rural preference and the return of state management, and the entire Native community will help in any way it can and in any appropriate manner to assist the administration to fulfill the original commitments of the 1992 law and its review. Number 030 DALE BONDURANT, testifying from Soldotna, stated his opposition to extending the sunset date for one year. He said there was a lot of effort put in during the Hickel Administration to try to come up with some kind of a conclusion. He added that the McDowell decision said that all Alaskans would be treated equal as far as subsistence so he does not see the need for these laws. He suggested everybody get together and consider that we are all Alaskans and we all have the same equal right to take fish and game. Number 062 TOM LAKOSH, testifying from Anchorage, said one thing that has not been identified in the law which makes it unconstitutional and a violation of his rights is that the Supreme Court found that subsistence is inherently a local use of the resources. He said he would very much like to use his local subsistence resources and it is a violation of his rights to consider his area a non-subsistence use area. There being no further witnesses wishing to testify on SB 171, SENATOR LEMAN directed attention to an amendment being offered by Senator Lincoln. Number 100 SENATOR LINCOLN moved the adoption of the following amendment to SB 171: Amendment No. 1 Page 1, line 1: After "Act" insert "extending the date for a review of and a report on the current law regarding subsistence use of fish and game and" Page 3, after line 3: Insert new bill sections to read: "*Section 1. Section 9(a), ch 1, SSSLA 1992, is amended to read: (a) The legislature acknowledges and recognizes that this Act deals with a subject of vital concern and that the subject merits review. Therefore, it is the intent of the legislature that the operation of this Act and the regulations adopted under this Act be fully reviewed by the governor no later than December 31, 1995 [JUNE 1, 1994]. *Sec. 2. Section 9(d), ch 1, SSSLA 1192, is amended to read: (d) No later than February 1, 1996 [SEPTEMBER 1, 1994], the governor shall provide a report to the legislature on the results of the review and proposed recommendations for statutory amendments." Page 1, line 4: Delete "Section 1." and insert "Sec. 3." Renumber the following bill section accordingly. Hearing no objection to the amendment, SENATOR LEMAN said it was adopted and would be incorporated into a Resources CS. SENATOR TAYLOR moved that CSSB 171(RES) be passed out of committee with individual recommendations. Hearing no objection, it was so ordered. SJR 22 FISH & MARINE MAMMAL RESEARCH BERING SEA   Number 140 SENATOR LEMAN brought SJR 22 , which had a brief hearing on April 26, back before the committee. ROGER MCKOWAN, staff to Senator Hoffman, explained the resolution requests Congress to provide funding for appropriate federal agencies to conduct studies of the Bering Sea ecosystem. The Bering Sea is one of the most productive fishing areas in the world. In 1994 the catch totaled over 4 billion pounds which equated to a net worth of approximately $893 million. Mr. McKowan noted that paragraphs in the resolution illustrate a number of examples where stocks have either declined or fluctuated dramatically, so it is obvious what the potential negative economic impact is if there is not proper information on the Bering Sea ecosystem. Senator Hoffman believes there are a great many questions out there and not enough answers at this point. Mr. McKowan said Senator Hoffman has reviewed the amendment proposed at the previous hearing and agrees with the new language. Number 175 SENATOR TAYLOR moved the adoption of the following amendment to SJR 22: Amendment No. 1 "BE IT FURTHER RESOLVED that the Alaska State Legislature respectfully requests that Congress direct the National Marine Fisheries Service to work with federal and state agencies, and institutions whether private or public, to ensure that efforts are not duplicated and studies are not redundant in addressing this important issue." Hearing no objection, SENATOR LEMAN stated the amendment was adopted and would be incorporated into a Resources CS. SENATOR TAYLOR moved that CSSJR 22(RES) be passed out of committee with individual recommendations. Hearing no objection, it was so ordered. SJR 23 POSTAGE STAMP HONORING ALASKA SALMON SENATOR LEMAN stated the committee would not take up consideration of SJR 23, and, instead, would take up consideration of a comparable resolution that would be coming into the committee from the House. Number 195 SENATOR LEMAN stated the committee would return to the confirmation hearing on Commissioner-designee Frank Rue. SENATOR TAYLOR asked if Mr. Rue personally supports the opening of ANWR, and COMMISSIONER-DESIGNEE RUE answered that he does. SENATOR LEMAN asked if Mr. Rue would present a brief overview on the status of the shellfish and bottom fish fisheries in the state. COMMISSIONER-DESIGNEE RUE informed the committee that the herring stock is in pretty good shape, except for Prince William Sound which continues to be a real problem. One of the biggest problems with the shellfish fishery is with the Bering Sea which is an area of significant concern. He said it is one of the initiatives that he tried to forward this year in the budget because they need to get a handle on the stocks and the status of those stocks so that the fishery is not over-harvested or under-harvested. Number 235 SENATOR TAYLOR stated his concern with the Prince William Sound area being a problem, and he asked when it became a problem. COMMISSIONER-DESIGNEE RUE answered that right around the Exxon Valdez oil spill was when things began to go downhill. SENATOR TAYLOR wondered if the department generated most of the destruction that actually occurred to the salmon runs in Prince William Sound by refusing to allow openings of salmon on a huge return that came back in the year of the spill. COMMISSIONER-DESIGNEE RUE said there was a theory that the over-escapement of reds on the Kenai River put too many fish into the system, but they have seen much better returns on reds than they expected from that "over- escapement" so it has not been the devastating problem that was predicted. SENATOR LEMAN asked Mr. Rue what changes he has made so far and if he has any additional organizational plans. COMMISSIONER-DESIGNEE RUE responded that he has not made any structural changes in the couple of months that he has been in the commissioner position and he does not have any particular structural changes in mind for the organization of the department. A couple of things he would like to look at that he thinks will be important parts of the resolution of the subsistence issue will be will be how the boards function and strengthening the communication within the divisions of the department. He wants to make sure that when working on an issue, the divisions that are effecting that issue are involved and have a part in resolving the issue, as well as making sure that area managers within the divisions are communicating well. SENATOR LEMAN asked Mr. Rue what his role was in Governor Knowles announcement that the Cook Inlet Management Plan needs to be changed and he would be promoting an approach that puts more fish in the streams and on Alaskans' tables. COMMISSIONER-DESIGNEE RUE acknowledged that he was one of the advisors that helped the governor put together the three-part framework for that plan: permit coordination and facilitation; habitat protection; and a review of the management of the fisheries of Cook Inlet. The intent is to develop a process where the various users of the Inlet can discuss with each other how to best manage those resources. SENATOR LEMAN asked if Mr. Rue has any personal feelings about the existing management plans for the Kenai River salmon and the Susitna stocks and whether he would be promoting a significant change for those areas. COMMISSIONER-DESIGNEE RUE answered that he does not have a personal agenda or personal opinion on where we need to go with these management plans. SENATOR LEMAN commented that when he sees very articulate letters from former board members about efforts being made to change the board and its direction and doing some things that could be damaging, he gets concerned about the outward pressures on a board to accomplish other goals. SENATOR TAYLOR said the federal government's recent estimate that 20 million trees died last year while Mr. Rue was responsible for the Habitat Division makes him wonder if the Habitat Division is really prioritizing its work very well under his leadership. He asked if we can continue to expect to watch bug kill devastation march through the state while the Habitat Division wrings its hands and worries about water quality, or is he going to turn that around and change that attitude within his department. COMMISSIONER- DESIGNEE RUE responded that the division worked with the Division of Forestry on state timber sales on beetle kill areas to make sure they had a timber sale that they felt was good for wildlife, protected fish and got trees out. He pointed out that most of beetle kill timber was on the Kenai Wildlife Refuge and that is under federal management. SENATOR TAYLOR said there has been 90 years of harvesting timber on the Tongass, and he asked why there has been a generation of the fears about the deer populations when the deer populations are today at their highest levels. COMMISSIONER-DESIGNEE RUE answered that the most significant timber harvesting in the Tongass has happened in the last 30 years. A clear cut can be useful to deer, and it takes about 30 years for those early clear cuts to become unproductive for wildlife. The time from initial cut to canopy closure, which really has the most significant negative effect on deer, is now just going to start kicking in. He added that he would provide Senator Taylor with the research that shows where populations have gone down. TAPE 95-51, SIDE A Number 035 SENATOR TAYLOR asked if Mr. Rue supports clean water regulations that will require the water returning to a stream after its use be cleaner than the water that came out of the stream initially. COMMISSIONER-DESIGNEE RUE replied that the department's comments on the DEC regulations were that a user of water should not be required to make it cleaner than it is naturally occurring. SENATOR LEMAN pointed out that's not always how that has been applied. For example, the Municipality of Anchorage, discharging into Knik Arm, has had problems meeting levels of copper. COMMISSIONER-DESIGNEE RUE related that he wrote a letter to EPA suggesting they not fine Cominco for exceeding water quality standards when they had a discharge from their tailings pond that was actually helping the background, but EPA did not listen to him. SENATOR TAYLOR stated that in the past, there has been no consistency in policy within the department, and he asked Mr. Rue if under his leadership there was going to be a change in policy and direction. COMMISSIONER-DESIGNEE RUE responded that as a general policy direction, he will expect people to be professional, to tell the truth and to do their job with those two fundamental guiding principles. When that doesn't occur, he will deal with it appropriately. SENATOR TAYLOR concluded that he wants a chief at the head of the department who is not going to run it in the way it has been run in the last four years, and he hopes Mr. Rue will make some changes and apply a little common sense. Number 260 SENATOR GREEN spoke to frustrations of many of her constituents with the management of fisheries and a desire to see some changes and improvements. She said as they have tried to get some real information to see what they can do to improve things in their district, the department always comes back to the response that there is too little data to base decisions on and the need to get more data. She asked Mr. Rue if there is something in place that is going to provide that mechanism to gather data for the upper Cook Inlet and the northern district. COMMISSIONER-DESIGNEE RUE responded that they will be tagging fish on the Deshka River, where there was particular concern, so that they will have a better understanding of where those fish are caught. However, he couldn't say that they have a handle on all of the different species that use the upper Susitna, that may be of concern. He added that it is hard to get a grasp of how big this issue is because of the many systems that may have five different species and many different users on them. He noted that the department has one habitat biologist for every 1,000 rivers in the state, so their ability to understand these issues is limited, particularly for commercial fishing or sport fishing. SENATOR GREEN said it was her understanding that there is going to be a big investment of energy and money in a sonar system for the Kenai River, and she asked when her area could expect something similar to that. COMMISSIONER-DESIGNEE RUE replied that the sonar system they have in place is old and antiquated. There is money in the capital budget and one of first places where they will probably replace the system is the Kenai River. The reason they want to do it on the Kenai is that they can calibrate any new system in a high-density fish return situation. He told Senator Green he would get back to her with further information on the prioritization of those sonar systems. Number 350 SENATOR LEMAN pointed out that the committee held hearings in Soldotna, Fairbanks and Juneau on SJR 19 (ASK FEDS TO AMEND ANILCA) and he asked Mr. Rue if he supports the concepts behind SJR 19. COMMISSIONER-DESIGNEE RUE answered that he supports the concept of amending ANILCA to clarify the definition of "public lands," which is part of a larger package on how we fix this issue. There being no further questions from the committee, SENATOR LEMAN thanked Mr. Rue for his participation and then adjourned the meeting at 5:45 p.m.