SENATE RESOURCES COMMITTEE February 5, 1996 3:35 P.M. MEMBERS PRESENT Senator Loren Leman, Chairman Senator Drue Pearce, Vice Chairman Senator Steve Frank Senator Rick Halford Senator Georgianna Lincoln Senator Lyman Hoffman MEMBERS ABSENT Senator Robin Taylor COMMITTEE CALENDAR SENATE BILL NO. 240 "An Act relating to the statewide bonding pool for the reclamation activities imposed on mining operations, and extending the pool's use to surface coal mining projects." PREVIOUS SENATE COMMITTEE ACTION SB 240 - No previous action to consider. WITNESS REGISTER Bob Stiles, President Alaska Coal Association 711 H St., Ste. 600 Anchorage, AK 99501 POSITION STATEMENT: Supported SB 240. Charlie Boddy Usibelli Coal 122 1st Ave., Ste. 302 Fairbanks, AK 99701 POSITION STATEMENT: Supported SB 240. Jules Tileston, Director Division of Mining & Water Management Department of Natural Resources 3601 C Street, Ste. 800 Anchorage, AK 99503-5935 POSITION STATEMENT: Supported SB 240. ACTION NARRATIVE TAPE 96-11, SIDE A Number 001 SRES 2/5/96 SB 240 MINING BONDING POOL  CHAIRMAN LEMAN called the Senate Resources Committee meeting to order at 3:35 p.m. and announced SB 240 to be up for consideration. He said this bill was recommended by the Alaska Minerals Commission and that it also applies to coal mining operations. BOB STILES, President, Alaska Coal Association, said he is currently involved in the development of the coal reserves in the Beluga region. He said SB 240 doesn't decrease the amount of the bonding requirement for a surface coal mining operation. Typically, a surface coal mining operation bonding requirement will be $1,000 - $10,000 per acre, he said. SB 240 would not increase the risk profile of a bonding pool, although there has never been a forfeiture of a reclamation bond by a western coal mining operation. The reason for that is if an operator ever forfeits a reclamation bond, he will never get a permit to operate a coal mine again. This bill has the potential of reducing the amount of assets an operator has to pledge in order to obtain the bond. Number 75 Most importantly, the bill makes bonding available when it might not be available otherwise. MR. STILES said SB 240 was a very good piece of legislation. SENATOR LEMAN added that this bill does not propose any additional state commissions to be established and assumes the Alaska Minerals Commission could cover it. He asked Mr. Stiles what he thought of that. MR. STILES responded that there clearly were a number of things to be addressed in the surface mining program, bonding is one of them. There needs to be some sort of mechanism for that occurring. Number 125 CHARLIE BODDY, Usibelli Coal, supported SB 240. The 1982 Surface Mining Law specifically said the commissioner "shall" develop regulations. SB 240 amended the 1990 reclamation law which addresses all other types of non-coal mining and the words used in that legislation are the commissioner "may." The coal operators thought it was imperative to change the "may" to "shall" since they didn't have a self-bonding program, yet. He hoped that the State bonding pool would be the source of recognition of bonding for all types of mining. Number 158 JULES TILESTON, Director, Division of Mining and Water Management, said he had no problem with changing "may" to "shall." As the bonding program exists today, they have a more comprehensive idea of how to fine-tune the reclamation/bonding act. The bonding pool now is comprised of mostly small placer mining operations and a few large hard-rock operations. There are approximately 400 operations involving a total of 2,500 acres in the bond pool. These small operations have contributed the total of about $500,000 in cash bonds. The Red Dog Mine has approximately a $1 million plus letter of credit to cover its 5-year reclamation obligation. Fort Knox has a $1.5 million letter of credit, in addition to a $450,000 bond with DEC to cover solid waste. Both DEC and DNR are operating on a single line, MR. TILESTON pointed out, and they needed to look at whether two bonds should be required or if one bond instrument would handle it. At present, no coal operation has requested or is in the bonding pool. There are a little over $5 million in bonds by the coal producers of the State, today. About $3.9 million of that is a collateral bond for Usibelli. The Wishbone Hill project had filed a $6.1 million letter of credit and their reclamation will be about $35 million. Number 230 SENATOR PEARCE moved to pass SB 240 from committee with individual recommendations with the accompanying fiscal notes. There were no objections and it was so ordered. There being no further business before the committee, CHAIRMAN LEMAN adjourned the meeting at 3:50 p.m.