Alaska Conservation Voters

Conservation Watch

Alaska Conservation Voters
works to protect Alaska's environment through public education and advocacy, and supports pro-conservation candidates for public office.

Conservation Watch (CW) is a weekly publication of ACV highlighting conservation issues in the AK Legislature.

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Contributing Editors

Suzanne Bostrom
Legislative & Communications Manager
suzanne@akvoice.org

David Rogers
ACV Lobbyist

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ACV- Juneau
419 6th Street, #321
Juneau, AK 99801
(907) 463-3366
(907) 463-2554 fax

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ACV- Anchorage
810 N Street #203
Anchorage, AK 99801
(907) 258-6171
(907) 258-6177 fax

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Web Resources

ACV Legislation Page
Bill position papers, back issues of Conservation Watch, and legislative updates

Legislative BASIS
Current bill text, history & committee schedules

Legislature Homepage
Find Your Legislators, party links, committee lists

State Homepage
Links to state agencies and the Governor

 ACV Homepage

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ANNOUNCEMENTS
Whoever thinks the best things in life aren't free, obviously hasn't heard of...

ACA's Legislative Fly-In
March 11 - 13
(Sunday - Tuesday)

What is Fly-In, you ask?
Fly-In is an opportunity to develop your activism skills, meet with legislators, and build up knowledge on how to make your voice heard at the capitol and in any campaign! The Fly-In is intended to be one part learning, one part practicing, and one part hands-on experience in our state capitol for anyone who is--or aspires to be--a conservation activist or advocate.

Who can go?
Your sassy activist grandmother! Actually, anyone interested in learning more about conservation issues and how to make a difference is welcome to apply. We enthusiastically invite conservation activists of all levels and all interests to apply.

Space is limited, so interested parties are strongly urged to submit their applications ASAP! For more information or to download a copy of the application, click the highlighted words above.

For more information, contact Suzanne Bostrom at suzanne@akvoice.org or (907) 463-3366

"We have incredible potential to be a world leader in alternative energy development. We've got the resources, we've got the conditions to field test new technologies, and the need to bring cheaper energy to rural areas is more pressing than ever."

In This Issue

• Mine All Mine
• Action Briefs
  • On the Move
  • New in Town
• Hearings this Week

One of ACV’s top three priorities for the session (along with establishing a renewable energy fund and protecting clean water for salmon) is to secure Alaska’s fair share of the important non-renewable resources extracted by the mining industry.

While mining provides jobs and cash to local economies, other citizens come up short since Alaska’s mining industry makes a minimal contribution to the State of Alaska’s bank account when compared to our other high value resource industries. According to the Legislative Research Agency's numbers, state and municipal revenues from mining amount to approximately 1.7% of the mined resource value. In comparison to mining, oil and gas contribute about 22% of production value to state and municipal coffers. Commercial fishing’s contribution to state and municipal treasuries is more than 5% of production value.

The state receives revenues from mining in the form of corporate income taxes, rental fees paid on claims and leases, mining license taxes, and royalties paid on mine production. Mining claim and lease rental fees have not changed since statehood, with inflation-adjusted rental fees ranging from only 66 cents to $3.30 an acre. Mineral license taxes are based on net income and mining operations are exempt from paying any license tax for the first three and a half years of production. Mining royalties are also based on net income. Because of the manner in which net income is calculated, mines are allowed to deduct both direct and indirect expenses (such as exploration costs, corporate overhead, depreciation, etc.). This, in turn, often allows for so many write offs that there is never a profit against which to levy the royalty. As a result of this revenue structure, the state collected only $8.8 million through major taxes and fees in the 2004 fiscal year on an estimated $1.34 billion worth of production value.

While there is no legislation on the table as of yet, we anticipate that there will be discussion of the issue as the session continues. Likely legislation would assure Alaskans a reasonable share of the wealth for our mined resources through many long-overdue, fair changes to the mining tax structure. Last year, provisions of Representative Seaton’s bill, HB418, included provisions to:

• Raise the graduated scale rates for the Mining License Tax by 2% and create an additional bracket for income over $500,000 to be taxed at 11%. The deduction of indirect expenses would have been disallowed under the bill, thus bringing the tax slightly closer to the amount that would be obtained under a gross system.
• Replace the current Mining License Tax exemption for the first 3.5 years of operation to a deferral that would allow the tax to be paid in equal installments over the following 10 years of production.
• Adjust the calculation of the royalty for mineral mining on state land to a 3% Net Smelter Return (NSR) tax from the current 3% of net income. This would prevent mining companies from writing off many expenses. Most private landowners in Alaska negotiate with mining companies for a NSR royalty between 2% and 5%. Alaska and Nevada are the only two states with a royalty system based on net income instead of a gross income or Net Smelter Return royalty system.
• Update the royalty for coal by setting the 5% of adjusted gross income currently in regulation as the minimum that can be negotiated with the Administration.

ACV supports fair adjustments to the state mining revenue system to ensure that private companies developing Alaska’s non-renewable resources return a reasonable portion of their revenues to Alaskans—the owners of the resources—and are being fiscally responsible to the state. While these returns from mining cannot replace oil, they could provide an additional, steady source of income to the State.

We look forward to beginning the dialogue on what changes are necessary to the mining tax structure to strike a fair balance between the benefits to the miners and the benefits to the people of Alaska.

More Information-

Tax Comparison Between Alaska and Other Jurisdictions

Legislative Research Report on Revenue & Employment Impacts of the Oil and Gas, Mining, and Fishing Industries in Alaska

Comparison of resource production value paid to the State and Municipalities from Oil and Gas, Mining and Fishing Industries

Rep. Seaton’s Documents on HB418 from 2006

Alaska Journal of Commerce Article on HB418

HB26 Geoduck Aquatic Farming Exemption - Rep. Seaton (R-Homer)
HB26 was heard in House Resources on Friday, February 23. The bill was held by the chair to allow for a vote on the bill to be taken when more members of the committee are present. The bill deals with geoduck aquatic farming and says that the Commissioner of Fish and Game may not use the absence of wild geoduck clams in a particular area as a reason for denying an aquatic farm permit. The bill also allows a certified hatchery to transfer geoduck seed to an aquatic farm located in an established fisheries management area that is contiguous to the Gulf of Alaska. An amendment was adopted in Fisheries to ensure that farms are located in subtidal rather than intertidal zones. Fish & Game and others still have problems with the bill. They contend that there is not enough scientific information available to adequately evaluate potential impacts of introducing fertile geoducks into areas where they are not native.

HB28 Disclosure of Power Sources - Rep. Ramras (R-Fairbanks)
HB28 was heard and held in the House Labor & Commerce committee this week to allow for further discussion. The bill would require retail suppliers of electricity to annually disclose their sources of electricity (renewables, gas, diesel, coal, etc.) to potential end-use consumers. A provision is also in the bill to allow utilities to include the cost of making the disclosure as part of the cost of generating the electricity. Concerns were cited that the disclosure requirement might harm smaller producers who might struggle to afford to meet disclosure requirements. Rep. Ramras indicated that his goal with this bill is to develop interest in and appetite for renewable energy.

HB89 Oil and Gas Production Tax - Reps. Gara (D-Anchorage), Crawford (D-Anchorage), & Guttenberg (D-Fairbanks)
HB89 was heard and held in House Oil and Gas this week and is scheduled for another hearing on Thursday, March 1. This very complicated bill would essentially rewrite the new net profits oil tax law to return to a tax on the gross value.

HB127 McNeil River State Game Sanctuary - Rep. Seaton (R-Homer)
HB127 had was introduced in House Resources on Friday, February 23, but was not discussed due to limited time. The bill will be heard again in House Resources on March 5. In 2005, the Board of Game opened portions of the Kamishak Special Use Area in the McNeil River Bear Sanctuary to a brown bear hunt in 2007. Without further Game Board action or the passage of HB127, a hunt would be allowed in this special use area this summer. Rep. Seaton indicated that his bill will have minimal impact on current uses such as commercial recreation and commercial fishing. ACV supports HB127.

HB128 Oil and Gas Production Tax: Expenditures - Rep. Olson (R-Soldotna)
HB128 was heard and held in House Oil and Gas this week. With its extensive list of bipartisan supporters, we expect this bill and its Senate counterpart, SB80, to move swiftly. For a description of the bill, see SB80 below.

SB80 Oil and Gas Production Tax: Expenditures - Sen. Wagoner (R-Kenai)
SB80 was heard and held in Senate Resources this week and will be taken up again on Wednesday, March 28th at 3:30. Like its House counterpart, HB128, the bill is designed to keep oil companies from deducting facility maintenance costs that are a result of negligence and prevents the state from having to shoulder the costs of repairing or replacing improperly maintained equipment. With the millions of dollars in costs for repairing the miles of corroded Prudhoe Bay pipeline, lawmakers are concerned that BP will try to pass the expenses back to the state through the deductions and tax credits allowed by the new Petroleum Production Tax. Recent comments by at least one oil company reinforce this concern.

HB149 Pollutant Discharge Permits - Introduced by request of the Governor
HB149 was introduced by the request of Governor Palin to align the state's permit requirements with the EPA's and move forward with efforts for the state to receive primacy. Under the federal Clean Water Act, discharges of pollutants to surface waters require a permit either from the U.S. Environmental Protection Agency or from a state that has received approval from the EPA to administer the permitting program. The EPA is currently reviewing Alaska's application to obtain approval for a state permitting program. The bill would revise several provisions of the law governing permitting and enforcement authority to bring the state's law into line with the more stringent federal law. These provisions include: changing the state permitting exemption so only sewage discharged to a publicly owned treatment works would be exempt from the permit requirement, switching language related to discharges with drilling and trenching activities from "directly into any surface water" to "waters of the United States" (removing "directly"), limiting the state's munitions exemption to discharges that do not enter waters of the U.S., providing the department with the authority to require site sampling and reporting of results analogous to what the EPA exercises under section 308 of the clean water act, clarifying that the department's permitting authority extends to all "pollutants" listed under federal law, and allowing the department to pursue criminal enforcement for negligent violations of any aspect of the permitting program.

SB91 Pollutant Discharge Permits - Introduced by request of the Governor
SB91 is the Senate counterpart to HB149 (see above). Both bills were introduced by request of the Governor on Wednesday.

Hearings this Week

Click on the date in the table below to get the most current schedule information for that day, or check the BASIS hearing schedule. Once a bill has been heard in a particular committee it may be brought up again without public notice or listing on the weekly committee schedule. You can click on a committee name to see a list of its members.