Chairman Noh welcomed new members of the committee and introduced
committee staff members: Toby Rood from Emmett as Page, and Darby
Harris, Committee Secretary.

Lawrence Wasden, Attorney General, informed the committee his office is
available to provide legal advice to legislators. Upon inquiry from the
committee, Wasden explained the three levels of advice. The first is a
letter of information; second a letter of guidance; and thirdly, a formal
opinion. He noted the formal opinions of the Attorney General’s office are
published each year. Wasden noted the AG’s formal opinion does not
have any court significance. The Attorney General’s office gives the best
advice it can, but the advice has no legal standing.

He then introduced William von Tagen, Deputy Attorney General,
Division Chief, Intergovernmental and Fiscal Law Division.

Von Tagen presented to each member of the committee a copy of the
Idaho Ethics in Government Manual prepared by the Attorney General’s
office. He explained to the committee the Bribery and Corrupt Influence
Act, the Prohibitions Against Contracts with Officers statutes, and the
Ethics in Government Act. Upon inquiry from the committee, Von Tagen
noted that where two or more general statues apply to the same situation,
an attempt should be made to reconcile the statutes. Some acts are not
necessarily prohibited, but do require disclosure. The prohibitions apply
to all public servants, which is defined as any officer or employee of
government, and any juror, advisor, or consultant performing a
governmental function.

Upon further inquiry, Von Tagen stated a conflict of interest is defined as
any official action, decision, or recommendation by a person acting in a
capacity as a public official, which would result in a pecuniary benefit to
the person, a member of the person’s household or business or which the
business is associated, or would benefit more than others in the same
business. Disclosure of the conflict of interest would satisfy the
requirements under the Ethics in Government Act. Von Tagen then
replied in generalities to hypothetical situations proposed by various
members of the committee.

Following his presentation, the committee discussed various topics which
will be addressed this legislative session. Chairman Noh noted an evening
meeting has been scheduled for Tuesday, January 28, in the Gold Room
regarding off road vehicles.

There being no further business to come before the committee, the meeting
was adjourned at 3:10 p.m.

Steve Allred, Director, Department of Environmental Quality, informed
the Committee the department originated about thirty years ago, but
became a state agency July 1, 2001. He noted the department is the
twentieth state agency and the last one as the state constitution provides
for a limit of twenty. The department is guided by a seven member board.
Two members of the board have been reappointed by the Governor and
will be considered by the Senate this session. The department is divided
between two Senate Committees: the Health and Welfare Committee, and
the Resources and Environment Committee.

Allred stated the department budget is performance criteria based under a
cost control process. He proudly noted the department’s overhead is
fifteen percent of its budget. Last year’s departmental backlog of air
quality permits has been addressed and there is not a backlog at this time.
The department is on schedule with the TMDLs. He stated state water
quality has improved substantially because of volunteer citizen efforts for
implementation. Twin Falls Canal Company and North Side Canal
Company are two examples of good voluntary effort. Public health is the
highest priority of the department.

Some specific areas of interest are: Pit 9 at INEEL remains a controversial
issue with the definition of what is to be removed under the formal
agreement to be determined by the courts. Some of the problem at INEEL
is complicated by national security issues. Upon inquiry, Allred noted
there is some plutonium movement, but is infrequent and is barely
traceable. However, it is being monitored and tracked closely.

The Coeur d’Alene Basin is not anticipated to be a controversial issue this
session. Relationship with EPA remains challenging. In relation to
ground water issues, there are twenty-five areas in the state with
significant contaminated drinking water, mostly nitrogen. Two sources of
contamination are septic systems and too much fertilizer applied at the
wrong time of year. The deterioration of the ground water will take
approximately twenty years to turn around. He noted the problem cannot
be solved by regulations alone and changing citizen practices is necessary.

The environmental problems at the FMC plant in Pocatello are
problematic because some of the involved real property is tribal lands
while the remainder is non-tribal. He noted FMC has been cooperative
and has a good commitment to environmental concerns in the ponds on
private lands. The slag piles will be covered and planted with vegetation.

Allred stated there has been a significant improvement in air quality. In
connection with air quality, dairy odor management is a significant issue.
In an effort to avoid duplication of state monitoring, the Department of
Agriculture is the lead agency for dairy odor management. He
complimented the Department of Agriculture for their good working
relationship.

Upon inquiry from the Committee, Allred stated the department’s budget
is a status quo budget. Public health is the first and highest priority of the
department. Within environmental protection a determination is made
whether a budget reduction would affect the TMDL agreement or similar
issues. The next priority group was evaluated for long-term impacts,
trends, and deferment. Additionally, there were some things the
department was not required to do specifically. He noted the department
is doing less monitoring in the TMDL process which will make it more
difficult to delist. The new 303d list will be released this spring.

Upon inquiry from the Committee, Allred noted there is an effort among
state agencies not to duplicate work. The department has memorandum of
understanding agreements with the Department of Agriculture and
Department of Water Resources in an attempt to eliminate duplication. He
noted DEQ does not deal with odors; that has been delegated to the
Department of Agriculture, but maintain full authorities under EPA and
the Clean Air Act.

David Mabe, Administrator, Division of Water Quality, Department of
Environmental Quality, indicated there would be proposed legislation
forthcoming this session to address necessary changes regarding the
TMDL program. A court decision in North Idaho held TMDLs were to be
promulgated as rules. A solution has been reached with involved parties
that TMDL are plans, not rules. He noted one group feels that TMDLs
should be enforceable as rules. The TMDL (plans) would be enforced
through the different agencies and entities for water quality. Additionally,
the director should have the authority be able to develop a TMDL using
downstream state standards such as in the Brownlee/Hells Canyon
complex and the Lower Snake River/Columbia River complex. Those
water bodies are shared with border states under the Clean Water Act and
the State of Idaho will be able to develop a TMDL that will meet that
receiving state water standards. Negotiations are underway with EPA for
the adoption of the TMDLs so the state would not have to promulgate an
alternate state standard. Another issue is the allocation between watershed
advisory groups in regard to upstream nutrients. He noted the Boise River
does not indicate any significant impairment by nutrients, but it does
contribute a significant nutrient load to the Hells Canyon complex. The
department is attempting to clarify the upstream load application through
the appropriate watershed advisory groups. He anticipates the issues will
be resolved to the satisfaction of all parties and proposed legislation will
be brought to the Legislature this session.

Upon inquiry from the Committee, Mabe stated pollution trading is a tool
the department has been working on for the implementation of TMDLs.
This has been done on the Boise River with the establishment of a
management group with a pollution trading process. A market system
should enable workability for the trading process. The final step to be
settled is the permit allowing the permit holder to trade without being
liable for a violation. Mabe stated the first trade should be completed on
the Mid-Snake River this spring. There is a possibility of legislation to
allow the pollution trading plans to be adopted by reference in the rules.

There being no further matters to come before the Committee, the meeting
was adjourned at 3:05 p.m.

Scott Turlington of the Governor’s Office informed the Committee he is
the legislative liaison for environmental issues for the Department of Fish
and Game, Department of Environmental Quality, Office of Species
Conservation, Idaho Public Utilities Commission, Department of Lands,
Department of Parks and Recreation and Department of Agriculture. He
and members of his office will be most happy to assist the legislative in
whatever capacity they may.

She noted in Montana the state management plan is proceeding, but in
Wyoming assistance is needed. The position of Director for Wyoming’s
Fish and Game is vacant which complicates and delays the issue. The ICA
will continue its endeavors and resources to secure full federal funding for
state management.

Caswell further informed the Committee of OSC has a plan towards
delisting with the state management plan becoming the actual guiding
requirements. The draft will be available within the coming weeks which
he will bring to the Committee.

Jim Caswell, Office of Species Conservation, informed the Committee of
activities of his offices since the last legislative session. He noted their
offices are now fully staffed with the addition of Policy Advisor: Jeff Allen
Legal Counsel: David Hensley, and Environmental Liaison: Nate Fisher.
He stated the office’s proposed budget is frugal and he has been able to
pay ahead on fixed costs and utilize available federal funding. The role of
the Office of Species Conservation was to provide a one-stop shopping for
environmental issues and for the coordination with all state departments,
agencies and commissions.

Greg Schildwachter, policy advisor, Office of Species Conservation,
informed the Committee on the status of the wolf reintroduction/delisting
process. He noted the growth of the population has been significant with
an estimation of over 400 wolves in Idaho now. He stated there is
probably thirty actual packs in Idaho now. The state needs the ability to
have control to ensure a balanced ecological system. The effect on big
game herds had not been adequately addressed and discussed. Remedy to
depredation was to relocate a wolf, but this is not always possible. The
long term solution is for state management of wolves through the
Department of Fish and Game. He noted Idaho has a good plan and is
ready for the management task. Delisting will be a long process because
of the status of the state management plans in Montana and Wyoming.
Clarification of funding needs to be addressed; as well as statutory
changes to the Idaho Code to allow the Department of Fish and Game to
be involved in the program.

Sara Braasch, Idaho Cattle Association, reported ranchers throughout the
reintroduction area have the same concerns along with requiring federal
funding for state management. She noted the association has a good
working relationship with OSC and appreciates the exchange of
information. During a telephone conference call today on the issue of
wolves, she senses the ranchers feel the same in connection with wolves
and the problems created. The solution is believed to be state
management. However, states cannot afford to bear the costs of the
management.

Stan Boyd, Idaho Wool Growers Association, reported, as a member of the
committee drafting the state wolf management plan, there has been no
activity by the committee since the adoption of the plan last legislative
session. He expressed concern about the delay in delisting and the
resultant problems experienced within the state.

Upon inquiry from the Committee, Schildwachter stated the three state ten
pack each is not a rule or a federal regulation, but could be the basis for
litigation because it is in the federal recovery. One of the confusing areas
of the Endangered Species Act is there is no section in the law that
specifically sets out recovery and getting species off the list. The recovery
plans are written but with the knowledge they might not have the force and
effect of federal regulation. When the plan was written in 1987 it sets
forth the 10-10-10 in three states as the recovery goal. As the technical
understanding of wolves has developed, the recovery goal was changed to
reflect thirty within the three states. Today there are ten or more official
packs in each of the three states. OSC intends to have as many of the
possible issues resolved before litigation to minimize the legal delay. The
object is to meet all the possible scenarios proposed by the environmental
groups in the delisting process. He informed the Committee the last
original wolf to be reintroduced in the Yellowstone project has been killed
by the other wolves, probably his own offspring. Some people in the
environmental industry realize the overall benefit, for the credibility of
ESA and the effectiveness of wolf conservation, that delisting must take
place. Commitment delays by the National Fish and Wildlife Service and
the Department of Interior to delist is centered on the biological aspects.
They cannot propose delisting until Montana and Wyoming have their
regulatory mechanisms in place. The official proposal to delist was
scheduled for this year, but will be delayed because of the situations in
Montana and Wyoming. The decision on when Idaho would have a
regulated hunting season on wolves will be made based on biological and
professional information. He noted the difficulty will be in counting
wolves. Additionally, there is not a model depicting the interaction
between wolves and ungulates will be so the target harvest will be an
unknown. The decision will be difficult, but will be made the same as
with any other hunted species. Wolf harvest will need to be part of the
equation.

Upon inquiry from the Committee, Sarah Bigger, representating Senator
Mike Crapo, reassured the committee the state has been quite vocal in the
request for management funding because of the fiscal impacts to the states
because of the Endangered Species Act. The wolf appropriation had
proceeded through the Senate and is now awaiting the processing of the
Omnibus Bill. Senator Crapo is chairman of the federal subcommittee on
fisheries, wildlife and water and will endeavor to make changes to ESA.
The economic impact to the rural communities has been significant.

Schildwachter stated the federal request is for $2.4 million. $l.3 million to
the Department of Agriculture for wildlife services and $1.1 million to on
the ground management of wolves in cooperative programs with the
federal government and Idaho, Montana and Wyoming.

Steve Huffaker, Director, Department of Fish and Game, stated the
Wyoming Director of Fish and Game is now the Executive Director of the
International Association of Fish and Wildlife Agencies in Washington,
D.C. He noted an interim director has been appointed during the national
search. The search has been completed, but there is now a change in
Governors and there will be two new Fish and Game Commissioners.
Additionally, Wyoming Legislature would have an affect on this scenario.

He stated the Commission and Department are very concerned about the
impact of wolves on big game. Some of the outfitters have reported the
situation is better than in previous years. Biologically the wolves are
preying predominately on calf elk. National wolf experts report that
wolves are naturally lazy and will take the easiest animal to catch. Winter
conditions also affect what animals are taken by the wolves. The orderly
transition to state management is necessary to assure the management of
wolves in the back country. The intent of the reintroduction program was
game in the wilderness were there to provide forage for the reintroduced
wolf population.

Schildwachter reported the Governor has issued an invitation to Chairman
Penney of the Nez Perce Tribe to facilitate the transition to state
management of the wolves and what significant role would be the Tribe’s.
The Tribe is currently under contract with the federal government and
have hired staff, acquired equipment and knowledge. They hope to
continue to participate in the management. Negotiations are in the
preliminary stages.

Chairman Noh inquired of the status of the $300,000 contract for killing
coyotes. Huffaker reported the signed copy of the contract was sent to
John Graham, the successful bidder on the project, on December 18.
Graham now indicates he does not intend to sign the contract. He has
decided the controversy and several technical issues were of concern to
him and would affect the successful completion of the project. The State
Purchasing Division has informed the Commission of subsequent
procedures: awarding the same contract to the second bidder; cancel the
contract; or renegotiate a new contract of a similar nature. The
Commission make its decision shortly.

Upon inquiry from Senator Cameron, Huffaker stated Graham’s list of
concerns was extensive. One item was the disposition of coyotes and
whether the carcasses would need to be hauled into Idaho Falls during
business hours. Huffaker stated they could negotiate minor points such as
the carcass disposal. However, there were a number of other issues
involving the public, news media and department regarding the project.
Graham indicated he did not want to work in that kind of public scrutiny.
Minor points of the contract are negotiable as long as it did not change the
nature of the contract.

Senator Schroeder noted there has been a significant increase in the price
of coyote pelts over the past year.

Senator Cameron inquired about specifics of the contract. Huffaker stated
the contract required bidders to provide the carcasses to the Department
for disposal in facilities provided by the Department. The intent was to
ascertain a body count on number of killed coyotes and the time of year
that they were taken. Additionally, the Department would dispose of them
in an area out of public view. Senator Cameron expressed concern the
requirement would cause more problems than benefit and should be a
better way for the Department to determine how many coyotes were killed
and allow the trapper to maintain the carcass and reduce the price in the
contract and not create a public spectacle. He asked why the Department
chose to follow that line. Huffaker at the time the specifications for the
contract were released, the Department was getting sharp and direct
criticism with a demand for accountability for the expenditure of funds for
killing coyotes, along with environmental, conservation concerns. Once
the specifications for the contract were released, State Purchasing Rules
prohibit changing the contract. Huffaker stated Graham brought his
concerns forward in the final phase of the contract process. Graham was
informed by State Purchasing that the contract could not be changed at
that time. Graham then accepted the contract as had been specified.

Senator Cameron stated a number of the Commissioners intended on
removing turning in the carcasses as a provision of the contract. Huffaker
stated he was not satisfied with the way the whole process has transpired.

Chairman Noh stated the Committee was fortunate that JFAC chose not to
bring the $300,000 major policy issue to the Committee before JFAC
made the decision to go forward with the contract.

Senator Burtenshaw stated his concern the length of time for contract
negotiations. Huffaker stated if the Commission chooses to issue new
specifications it should not take a year, but would be dependent upon those
interested in doing the project. Huffaker stated he did not know about the
provision in the budget until he heard it read in JFAC meeting.
Immediately upon hearing about it, he contact Senator Hawkins. He
informed Senator Hawkins it would be much easier to accomplish this
type of a project if the Department had the ability to hire a trapper and pay
his expenses instead of a contract. He noted the state contracting process
is tedious and specific. Once the decision was made that it had to be a
contract, the Department and Commission did not have much choice.

Senator Burtenshaw stated several Senators have been trying to get that
thing going for five or six years for the Department to do this project and
got called out every time. Huffaker stated he was not aware that was what
was specifically desired. His knowledge of the proposed project started
last February.

Senator Burtenshaw commented the Department had studies on fish and
wildlife, but cannot seem to get this. Around the Idaho Falls area was the
area to prove that this thing could work. Some Senators went up and saw
what Graham does and reported it works. They felt if they could get one
time; one program they could evaluate the program. He stated the
program was important as the wolf program, because the deer population
there has virtually disappeared.

There being no further matters to come before the Committee, the meeting
was adjourned at 2:55 p.m.

Motion by Senator Pearce to approve the minutes of January 8, 2003, and
January 13, 2003; seconded by Senator Schroeder. Motion carried.

Alex Irby, Chairman, Idaho Fish and Game Commission, introduced the
members of the Commission in attendance: John Burns, Dr. Fred Wood,
Marcus Gibbs, Nancy Hadley, John Watts; Director Steve Huffaker, and
Roger Fuhrman.

Marcus Gibbs stated he was proud to be reappointed to the Commission.
He informed the Committee of his personal background and operation of a
seed potato farm with his son, the third generation. Gibbs is appreciative
of his family’s support and assistance in order for him to be active in the
community and state. He stated the Department is in the best shape it has
been in the past three and one-half years. He noted the director’s
knowledge and abilities have improved the Department’s operations and
helped to curtail controversy.

Upon inquiry from the Committee, Gibbs stated he does not favor dam
breaching. There are ways to restore the salmon and still have fish runs
with the dams intact.

Upon further inquiry, Gibbs stated he considered himself an independent
and does not truly belong to any political party. He stated in his area if he
were to run for political office he would register as a Republican in order
to win. He noted he has been approached by the Democratic and
Republican party to run for County Commissioner. His Mother still has a
“Church for Idaho” sign on her mailbox. Politically he supports individuals from both parties.

Upon motion, seconded and carried during the Committee
meeting of Friday, February 7, 2003, the following excerpt
is inserted into the committee minutes.

Verbatim transcript from Senate Resources and
Environment Committee meeting of January 17, 2003,
Room 433.

Excerpt from testimony of Marcus Gibbs reappointment
appearance before the Committee for confirmation:





Senator Williams: I see you are an independent on your
piece of paper. Is that still intact?





Chairman Noh: Yes, Chairman, that’s the party affiliation
or lack thereof.





Gibbs: Senator Williams, I was asked that question three
years ago. I am slightly more prepared today to answer
today than I was three years go. I am probably still and
independent. I am also a realist and know if I am seeking
office in Caribou County or in Legislative District 31, I
would probably run as a republican, if I had to chose. In
the last general election before I was appointed to this
position, I was approached by both the Democratic party
and the Republican party to run for county commissioner.
And I still have the good fortune of having a Mother who
lives next door to me and she still has a “Church for Idaho”
sign on her mailbox. So…. (Laughter.) I will testify to that.
Politically, I have supported people from both parties.

Senator Schroeder noted in Latah County there are several meat cutters,
who cut the meat from deer and elk carcasses. He expressed concern
whether hunters from other states, especially Washington, would be able
to bring their game into Idaho to be processed by meat cutters. Gibbs
stated the Commission has implemented an information brochure on
chronic wasting disease. The Commission’s recommendation is to leave
as much of the carcass as possible where it is shot. There is a standing ban
on importation of live animals to Idaho. Hunters are allowed to transport
game to and from the neighboring states. He noted it was not an
insurmountable problem as long as the those carcasses are properly
disposed of by meat processors. He noted the regulation is not restrictive
at this time.

Senator Kennedy stated that some of the deer and elk in Elmore County
are being fed in the winter time by the Department and should this be
done? Gibbs responded he supports feeding deer and elk in emergencies.
The Commission has a policy statement which does not support feeding
except in emergency situations. The long term solution is winter habitat
and winter range. One of the problems is the encroachment of housing
developments on winter range. Upon further inquiry, Gibbs stated that
when people move into these areas, they should adjust their lifestyles to
accommodate the game animals as the animals were there before the
encroachment. Gibbs stated winter feeding should be used as a one time
solution. Alternatives would be relocation and harvest. He noted there are
animals traveling over two and three management zones from winter to
summer range so there is not necessarily a direct correlation between range
and wintering. He thinks the policy of the Commission should remain
intact and the Department have the opportunity to feed under extreme
emergency conditions as outlined in the policy. He stated if animals are
fed three consecutive years in a given area, a feed cycle begins and
ongoing feeding would be necessary. Not all districts in the state have a
winter feeding advisory Committee. Upon inquiry, Gibbs stated some
membership on the winter feeding advisory Committee should be local.
Additionally, the Committee should be comprised of people with diverse
interests so there is a broad prospective.

Senator Kennedy inquired about a monthly publication entitled “Contact.”
Contact is a publication of the Department of Fish and Game. On page
three of the November 15, 2002, issue states: “Fish and Game will also
work towards eliminating the feeding of wild deer and elk because
concentration of animals could cause the spread of undetected chronic
wasting disease. Winter feeding operations tend to draw animals together
from more than one herd area allowing diseases to be carried back into
widely scattered populations that would otherwise rarely mix.” Gibbs
stated the quote is consistent with the policy criteria of the Commission.

Senator Kennedy requested Committee time be set aside to delve into
these matters more specifically.

Upon inquiry from Senator Pearce, Gibbs stated the Commission has a
predator policy developed about one and one-half years ago. The policy
addresses predator-prey relationships. Currently the deer herd in eastern
Idaho is suffering dramatically. The Department and sportsmen are
currently conducting meetings, gathering recommendations. The
commission will review the policy based on the information gathered.

In response to an inquiry, Gibbs stated that he was an independent to
Senator Stennett’s inquiry if there was an attachment to the official oath
requesting a declaration of political affiliation. He supports Democrats
and Republicans, but consider himself an independent.

Upon inquiry of proposed legislation pending in the Idaho House of
Representatives prohibiting landowners from feeding wildlife, Gibbs
stated he had no knowledge of the legislation. He stated one of the
problems faced by the Commission is the unauthorized feeding of game
animals in the winter. Gibbs stated that from a management standpoint, he
is opposed to allowing the feeding of game on private ground, but from an
enforcement standpoint, the issue is private property rights. He noted the
problem is very difficult for the Department to handle.

Upon inquiry from Senator Stennett, Gibbs stated the Department of Fish
and Game does not control private elk ranches; that is under the
jurisdiction of the Idaho Department of Agriculture. Currently the director
of the Department has a policy prohibiting the importation of deer or elk
into Idaho because the chronic waste disease. He noted private deer/elk
ranches in Idaho are monitored for the disease. The Commission does not
currently have a policy statement, regulation or projected costs on chronic
waste disease. He noted Wyoming and Colorado have been addressing
this problem since the early 1960’s and they still have deer hunting
opportunities where the disease has been diagnosed. Those states still sell
all the hunting permits available. Chronic waste disease at this time is a
management problem.

Senator Cameron noted Idaho representatives to the Northwest Power
Planning Council were recently able to negotiate reducing the amount of
water sent down stream. Gibbs stated the Commission has not addressed
this issue, but as a member of the Last Chance Canal Company, he is not
supportive of water leaving the state unless on the basis of willing buyer-willing seller and not adversely affecting the water rights within the state.

Sarah Braasch, Idaho Cattle Association, noted the organization’s support
of Gibbs’ reappointment to the Fish and Game Commission. He brings the
perspective of a landowner to the Commission and understands the
wildlife habitat provided by farmers and ranchers.

Jim Hagedorn, Viola, Idaho, a member of Concerned Sportsmen of Idaho,
urged the Committee’s endorsement of Gibbs because he is very open and
good to communicate with.

John Watts, putting his lobbyist identification badge in his pocket,
informed the Committee of his background. He has a long family history
of hunting and respect for the land, wildlife and hunting ethics. His
biographic statement sets out his membership and activities with many
organizations. He noted the activities have been most informative and
educational. His educational background is set forth in the attached
biographical statement. He has made it a career to be involved in the
public sector on human service, natural resource and education issues. He
noted he is a partner in a private governmental affairs- political consulting,
philanthropic fund raising firm in Boise. One of these areas is lobbying.
He no longer represents the Outfitters and Guides Association because of
the potential for a conflict of interest with his membership on the Fish and
Game Commission. He stated it is a privilege and honor to be asked to
serve on the Commission. He now represents the Idaho School Board
Association and the Library Association and does not anticipate a conflict
of interest.

Chairman Noh noted his conversations with Watts about conflicts of
interest and found Watts to be willing to handle conflicts of interest openly
and responsibly. Watts stated all lobbyists are required to register with the
Secretary of State and must register for each and every one of their clients.
He is registered and has been registered since he began his lobbying
career. He noted a booklet will be available part way through the session
listing all the lobbyists. Additionally, the information is available through
the Secretary of State’s web site.

Upon inquiry from Senator Williams, Watts replied the Commission
policy is for the rivers to remain in their natural state as much as possible.
Each of the rivers are reviewed and assessed on an individual basis. The
Commission relies upon individuals who have the knowledge and
expertise of various aspects of the impacts. More specifically, Watts
stated he supports the Commission’s position and attempts to find ways to
augment the return of fish. Habitat improvement, catch ratios,
transportation alternatives and river flow augmentation. He is open to
alternatives that would keep everyone whole and supports the willing
buyer – willing seller program. The program must take into consideration
the farmers, individual water rights and public rights.

Upon inquiry, Watts reported he had a great deal of respect for Idaho’s
members on the NWPPC, Danielson and Kempton, and appreciates their
flexibility in making their determinations to keep everyone whole. He
supports Idaho’s effort to protect its water. Upon additional inquiry, Watts
expressed concern about access to private and public lands for
hunting/fishing opportunities. He supports a proposal to purchase access.
It is very difficult for farmers to make a living. As the lands disappear or
are closed for hunting or fishing, the Commission needs to be working for
ways to gain access. The Landowner Relationship program is an avenue
to be developed by the Commission. There should be some way to enter
into an agreement with landowners to purchase access opportunities for
the general public. Another problem is the purchase of hunting
opportunities through a private and exclusive arrangement, locking out the
general public. There is more pressure on landowners, especially in this
area, because of the population growth resulting in less land, habitat and
more pressure on the game animals. Watts stated predator control is one
of many tools that must be considered for wildlife. The balance must be
carefully identified, scientifically and responsibly. He noted, as a
passionate bird hunter, that foxes, skunks, coyotes and feral cats are a
problem on game birds, but there are other factors, such as the
diminishment of land, that must be considered.

Butch Olson, Middleton, chairman, winter feeding, urged the Committee
to support the appointment of Watts to the Idaho Fish and Game
Commission.

Kip Bryson, Pheasants Forever, urged the Committee to support the
appointment of Watts to the Idaho Fish and Game Commission.

Herb Meyr, Mountain Home, urged the Committee’s support of Watts’
appointment.

Steve Goddard, Mountain Home, also asked the Committee’s support of
Watts’ appointment.

Jeff Barney, Boise, supports Watts’ appointment to the Commission.

Jane Gorsuch, Intermountain Forest Association, recommends the
confirmation of Watts to the Idaho Fish and Game Commission.

Sarah Braasch, Idaho Cattle Association, supports Watts’ appointment.

Stan Boyd, Idaho Wool Growers Association, supports Watts’
appointment.

Lauren McLean, Idaho Conservation League, recommended the
Committee support Watts’ confirmation to the Idaho Fish and Game
Commission.

Senator Stennett expressed concern regarding the legality of the Oath of
Office signed by members of the Fish and Game Commission meeting the
specifications of the Idaho Code. Additionally, he would like to have a list
of Commission members and their declared political party. This
information will be obtained and provided from the Governor’s office.

There being nothing further to come before the Committee, the meeting
was adjourned at 3:00 p.m.

At the request of Senator Stennett unanimous consent for the gubernatorial
appointments of Marcus Gibbs and John Watts will be held until Wednesday’s
meeting in order to obtain political affiliation information of the members of
the Idaho Fish and Game Commission and to correct the Oath of Office by the
pending appointees to include political affiliation as provided in the Idaho
Code.

Jeff Youtz, Supervisor, Budget and Policy Analysis, Legislative Services
Office, provided to the Committee, a general fund comparison information
sheet along with a comparison of all funds. The Committee was provided a
copy of the Legislative Budget Book for the 2003 Session for the Natural
Resources Section. These provide the data on two years of actual
expenditures, the current year appropriations, the 2004 Governor’s
recommendation, and the change in the Governor’s recommendation for
changes in 2003 which sets out what the percent change represents. Overall
the Governor’s general fund budget recommendation is a 2.9 percent increase
over the current year appropriation. There is a temporary hold back, which
has just expired, which will reduce the 2003 appropriation and general fund by
3.5 percent. In 2003, there would be an actual budget reduction for the current
year. In 2004, the Governor has also recommended the 3.5 percent reduction
become a permanent base reduction for 2004 for affected state agencies.
Youtz noted that K-12 and higher education are exempt from the current year
hold back and from the 2004 base reduction.

Youtz explained the Department of Parks and Recreation budget as set forth
on page 4-51 in the Natural Resources Budget book. There are three major
appropriated programs in DPR. There were four, but there was a
reorganization process last year. About twenty-five to thirty percent of
general funds are DPR’s budget. The negative supplemental (the budget
reduction), is $301,800 for DPR. He noted there is some flexibility to allow
for transfers between programs. Vehicle replacement is an ongoing
replacement expenditure. He noted the Department of Fish and Game has a
different situation because of the fleet management system they initiated in
recent years. Upon inquiry, Youtz noted the $400,000 is for the acquisition of
Billingsley Creek State Park along with $80,000 from the University of Idaho,
which is the total bonding cost of $480,000. There is a cooperative
understanding between the University of Idaho and the Department of Parks
and Recreation for this project. After determining the base budget,
inflationary figures are added. This year there is an estimated fourteen percent
inflation for personnel costs, mostly health insurance. The Governor has
recommended covering both the employee and employer portion of the health
insurance increase. The Governor is recommending this in lieu of salary
increases as he does not want state employee salaries to go backwards because
of the increase in health insurance costs. Last year not enough was budgeted
so the benefit package was modified. The fourteen percent increase is only an
estimate. The contract will not be signed with Blue Shield until April.

The inflationary adjustments allowed state agencies to request an inflationary
increase of 2.4 percent. The Governor did not include inflationary amounts
for state agency budgets other Medicaid and higher education budgets.

Replacement items are the reinstatement of equipment needs. DPR has
maintenance projects reflected in replacement items. Youtz noted last year
there were no funds for replacement items. The Governor has recommended
spending authority for DPR’s dedicated funds which contains $2,300,000 for
equipment replacement and park maintenance projects.

FTP represents full time personnel. Seasonal positions are not reflected in
FTP, unless there are permanent part-time positions which are shown within
the FTP figure. He noted seasonal positions do not show as FTP. Seasonal
positions are shown in the personnel costs amount. There are 158.25 FTP for
DPR. The budget for DPR was reduced five percent in FTPs last year. There
will be an additional 3.5 percent reduction this year, which is reflected by
17,000 seasonal man hours. Collignon noted seasonal employees each work
approximately 500 hours per year. Youtz noted the elderly volunteers are
generally camp ground hosts. Collignon noted generally DPR hires about 300
seasonal employees. The volunteer program contains 3,500 hours.

The Governor does recommend DPR’s line item budget for the Eagle Island
State Park. Negotiations with the City of Eagle for the operation of the park
were unsuccessful because the city did not have the resources. He noted the
Eagle Island budget item is the only general fund enhancement in DPR
budget.

Youtz noted the DPR Board has made a conscious effort that capital
investments be revenue generating. The yurt program and small cabin
program are two successful examples.

Youtz stated JFAC will be looking at further reductions depending upon the
outcome of the Governor’s proposed sales tax increase. Most of the sales tax
proposal replaces the $190,000,000 (one-time general funds) supporting the
budget this year which will not be available for 2004. The proposed effective
date of the sales tax increase is May 1, 2003. It is projected to raise
$18,000,000 for the current fiscal year. Therefore, the budget stabilization
fund would not need to be used. The negative supplemental will be needed
regardless of the sales tax increase. The state is required to have a balanced
budget by the end of the fiscal year.

Ray Houston, Analyst, Budget and Policy Analysis, Legislative Services
Office, explained the Department of Environmental Quality’s budget as
reflected in the attached information. He noted the DEQ’s budget is forty
percent general funds, twenty percent federal funds, and twenty percent
dedicated with five different programs. His oral presentation reflected the
information set out in the Idaho Legislative Budget Book. Non-cognizable
funding is a state statute requiring the funds were not known at the time the
budget was set by the Legislature and the funds are not state funds.

Upon inquiry, Steve Allred, Director, Department of Environmental Quality,
said there are funds in DEQ’s budget for ongoing water pollution control
which comes from $4,500,000 sales tax funds to the water pollution control
fund.

Houston further explained DEQ’s budget noting the Department has been
reorganized and is requesting an additional 2 FTPs for programming. The
new organizational chart is shown on page 4-9. The well-defined details of
the budget are set forth in the attached Legislative Budget Book.

Upon inquiry from the Committee, Allred stated the Department is in a status
quo position and will be able to continue providing its statutory
responsibilities.

There being no further matters to come before the Committee, the meeting
was adjourned at 3:00 P.M.

Substitute motion by Senator Stennett to not confirm the gubernatorial
reappointment of Marcus Gibbs to the Fish and Game Commission
because of the Idaho Code unique requirement for Fish and Game
Commissioners to declare a political party on their Oath of Office
statement; seconded by Senator Kennedy. He noted Gibbs is doing a fine
job, but he is serving illegally on the Commission. The Secretary of
State’s office reported the political parties in the state of Idaho are:
Republican, Democratic, Constitutional, National Law, and Libertarian.
There is not an independent party recognized in the state of Idaho. There
are now four Republicans sitting on the Commission and three
independents. He stated the independents violate the code requirements.
Committee discussion noted the intention of the initiative establishing the
Commission was not to disenfranchise the majority of the citizens of
Idaho, who don’t belong to any political party, from representing those
interests on the Commission. One way to avoid the problem would be the
drafting of a different oath with different language setting forth
membership in a specific political party or have no party affiliation.
Senator Stennett requested a roll call vote on the substitute motion.

Roll call vote on substitute motion:

Ayes: Kennedy and Stennett

Nays: Brandt, Burtenshaw, Cameron, Little, Pearce, Schroeder, Williams
and Noh

Substitution motion failed.

Roll call vote on original motion:

Ayes: Brandt, Burtenshaw, Cameron, Little, Pearce, Schroeder, Williams
and Noh

Nays: Kennedy and Stennett

Original motion carried.

Motion by Senator Schroeder to approve the gubernatorial appointment of
John Watts to the Fish and Game Commission; seconded by Senator

Stennett. Motion carried on voice vote.

Pro Tem Geddes will be floor sponsor for Gibbs and Senator Little will be
floor sponsor for Watts.

Chairman Noh informed the Committee concerning a letter sent to the
Bureau of Reclamation last spring concerning the relicensing of the Lucky
Peak Reservoir and the establishment of a minimum stream flow on that
reach of the Boise River. The Director of DPR has requested the letter be
officially withdrawn from the record.

Rick Collignon, Director, Department of Parks and Recreation, provided
handouts to the Committee (attached) setting forth an overview of the
status of projects and programs. An additional handout (attached)
provided the Committee with statistics pertaining to the Department’s
various programs along with budget information. He noted the Legislative
Intent for the Department was very broad which has resulted in a wide
variety of projects and programs. The Old Mission State Park, which sets
on Trust Land under management of the Department of Interior along with
the Nez Perce and Coeur d’Alene Tribes. Mesa Falls is a cooperative
project with the U.S. Forest Service. Lucky Peak is a heavily used boating
and recreational park. Hells Gate on the Lower Snake River and Harriman
State Park are two additional parks. The Department is involved in
snowmobile trails, public campsites, trails on public lands, lakes and
rivers, especially boatable waters. The focus of the Department is to
operation a state-wide system of programs which focus on expanding
opportunities for the citizens. He noted the Department is governed by a
six-member Board appointed by the Governor. There are two trusts under
the Department: a trust for outdoor recreation camping, which is an
unfunded trust, but established under Governor Batt’s administration to
enable the Department to work with local, state and federal entities. The
other trust is a park land trust which is comprised of revenues from timber
management, grazing or resource management. These funds are
reinvested in resource management or additional lands. He noted the
Department administers the Safe Boating Act through the counties known
as the State Vessel Registration Account. Additionally, the recreational
vehicle program is under the Department and generates about $3,000,000
annually. The Sawtooth National Recreational Area mountain goat license
plate supports improvements in that recreational area. Last year the
Legislature created a new program, the cut-throat trout license plate,
which addresses a non-motoring program for anglers, which is coordinated
with the Department of Fish and Game. Collignon noted the Park n’Ski
program which provides parking for cross country skiers. The funds are
utilized by county and state highways transportation programs to remove
the snow for parking. He noted the Department is also responsible for the
management of endangered plants. There is proposed legislation this
session for changes in that responsibility. The Department also manages
three federal programs: the Land, Water, Conservation Fund, which brings
several million dollars of federal funds into the state for projects by state
and local governments; the Coast Guard Boating Safety Act is an
reimbursement for federal gas taxes; and the Recreational Trails, a federal
program, with funds also from federal gas taxes.

Collignon noted Idaho, with a tremendous amount of public land, has
many active partners in parks and recreation services and facilities. The
Department attempts to focus on public access for recreational interests.
Some of the trends in Idaho are reflected by the population growth with
interests in the state’s recreational opportunities. The recreational usage
indicates heavy use by families. Additionally, the education of all citizens
on the values and responsible use of the lands is an important program of
the Department. Economic development is vital to the rural economies in
the shifts from resource based economy to recreation and tourism. The
rural area community leaders are seeking assistance from the Department
in their economic development endeavors.

Collignon noted the 27 state parks are managed under partnership
agreements with the Bureau of Reclamation, Bureau of Land Management,
Forest Service, Corps of Engineers, Department of Lands, Department of
Fish and Game, and counties and cities. There are 8,000 public campsites
in the state. This was a record year for use of the state parks. It was a
tough year on the budget, but there was good public use. The registration
of recreational toys is a significant part of the Department’s activities.
One out of every three voters in the state has some kind of recreational
toy. This does not take into account other recreational items that do not
require registration. The general funds to the Department help in
maintaining the base line accountability so the facilities are available for
all citizens. He noted there are nine fund sources: general revenue fund,
parks and recreation fund, recreational fuels fund, parks and recreation
registration fund, public recreation fund, petroleum price violation fund,
park and recreation expendable trust fund, federal grants and indirect cost
recoveries.

Upon inquiry from the Committee, Collignon stated 36 additional camp
cabins will be added, which will generate additional revenue. These
cabins have no restrooms, showers or kitchen facilities, but are sleeping
rooms only. The Department is not going into the resort or hotel/motel
business. There is some competition with private campgrounds, but the
Department takes the economic area into consideration. The yurts are
located in back country areas with the exception of some at Winchester
and Ponderosa. The income from yurt rentals pays for the costs associated
with the cross country ski program. The only concessionaire in the park
system now is jet ski rentals at Spring Shores at Lucky Peak. He noted
there is a proposal for a marina at Lake Cascade, but will not be supported
unless there can be sustained revenue from the investment.

Upon inquiry about ATV’s, Collignon stated there is no difference in the
registration of a motor bike and trail bike which makes tracking difficult.
As of December 1, there is 29,448 ATVs in Idaho, which is a growth of
seventeen percent in the past year. However, the sales tax figures for
ATVs indicate 44,000 sold by dealers in the state. The enforcement in
connection with ATVs has required the Department to re-evaluate its role.
In the past when there has been a concentration of use, more trail heads
were created to disperse the use which enables self-governing actions.
The problem is when there is a concentration of use in one area without
the ability to develop additional areas. Then the solution becomes a
management issue.

Chairman Noh noted there will a joint committee hearing on Tuesday,
January 28, at 6:30 p.m. in the Gold Room on this issue. Invitations have
been sent to all the state and federal agencies involved in this process and
to the known organizations. Chairman Noh asked if there were any others
that should be contacted and encouraged the invitation of others.

Upon inquiry, Collignon stated there is not an state park in eastern Idaho
between Harriman and Bear Lake. Because of the population in that area,
the department is looking for a site. The budget expenditure request is to
set aside some funds for that purpose.

Ray Houston, Analyst, Budget and Policy Analysis, Legislative Services,
continued his review of natural resource budgets, focusing on the
Department of Water Resources. He recapped the information set out in
the 2003 Legislative Budget Book for the Natural Resources Section. A
copy is attached to the minutes of the past three committee meetings. He
noted the department is divided in five major budget programs. The hold
back for the Department includes $118,100 from Planning and Technical
Services, $150,600 from Water Management and $83,400 from the Snake
River Basin Adjudication. $83,400 was transferred to the adjudication
account from the Water Pollution Control fund to free general fund costs.
He noted there is federal funding available for flood plain mapping. The
department is successfully continuing a multi-year project to adjust the
calibration the Eastern Snake Plain Aquifer model because of conjunctive
management issues in surface and ground water. This project is
undertaken in conjunction with the University of Idaho. Water District #1,
and the U.S. Geological Survey Department. Funding is through the state
general fund, as well as U.S. Geological Survey, Bureau of Reclamation,
NASA, and Idaho Power.

There are four instream flow water rights yet to be adjudicated in the
SRBA. State general fund support for the SRBA is reduced by $96,500
via a fund shift resulting in a net general fund request of $512,000. The
Governor has recommended $608,500 be funded with Water Pollution
Control Funds rather than state general funds. The organizational chart of
the Department is included in the budget booklet. There are currently no
shared time (group) positions within the Department.

Upon inquiry, Dreher explained the projected costs of the SRBA have
changed significantly since the program was undertaken. The Department
is continuing to pursue legislation in respect to payment of federal claim
fees as a matter of equity.

In regard to the Silver Creek violation, Dreher stated the water users and
the water master, not in his official capacity, but as an agent for the water
users, incorrectly assumed that a permit was no longer needed. Areas
along a leaking dike were filled in which resulted in draining thousands of
acres of wetlands along Silver Creek. Dreher and Clive Strong, Deputy
Attorney General, attempted to intervene in the situation. Negotiations
with the federal attorney, Mark Ryan, for EPA resulted in having the water
users voluntarily resolve by doing the restoration work. The voluntary
restoration work was to be used as leverage for the reduction of the
penalty. However, the voluntary efforts were contingent upon an
agreement that there would be no penalty. EPA could not do that and the
end result was that the water users had to do the work anyway and still
may face a $l40,000 penalty fee.

Dreher noted there was a similar situation in connection with the Great
Feeder, a channel of the South Fork of the Snake River in the upper reach
of the Snake River Basin, used to convey irrigation water. The violation
in that area was by channeling a quarter mile of the river and dumped all
the soil into the wetlands. He noted this was a significant violation.

Both of these violations are tied to budget reductions in connection with
the Stream Channel Protection Act along with cooperative work with the
Corps of Engineers and other wet lands programs.

There are a total of 206 employees within the Department. Twenty-six
employees are temporary part-time employees which are hired on a
seasonal basis to do field work. The 26 are not included in the total.
Additionally, there are two positions on the Governor’s staff, which are
not included in the total count. The 8 Water Resource Board members are
included in the 206 FTPs. He noted the Water Resources Board for DWR
is within the Department budget, but not the governing entity for the
Department. Dreher stated there are 170 positions filled with 11 vacant.

Senator Stennett inquired why the stream channel protection program was
eliminated over the alternative fuel program. Dreher noted the alternative
fuel program is almost totally funded by federal funds that must be used
for energy conservation, alternative fuel efforts or from funds through the
Northwest Energy Alliance, which have to be used for energy
conservation. The stream channel protection program is important, but is
a small part of the work of DWR.

Senator Schroeder inquired as to the status of the Palouse aquifer study of
North Idaho. It was not included in the budget, but it is on the list of
priority aquifer studies. He noted the Palouse and Rathdrum studies are
tied in terms of importance. Dreher stated that applying for a water right
is different from actually obtaining a water right.

EXCUSED:

Chairman Noh introduced Dick Smith, Forest Supervisor, Boise National
Forest to the Committee. Smith then introduced to the Committee, the
Deputy Forest Supervisor Suzanne Rainville, who has been Acting
Supervisor until Smith’s arrival last Monday. Smith informed the
Committee of his educational and professional background, noting he
received his master’s in forest ecology from the University of Idaho. He
comes to the Boise National Forest from the Washington, D. C. office for
policy analysis for the U.S. Forest Service.

Due to the decline in timber sales, Senator Larry Craig’s legislation
proposing payment stabilization to counties has provided the counties with
two payment options. He noted Idaho counties have chosen the new
system of payment based on the high three year payment average.

Smith noted the establishment of a fifteen-member advisory committee
composed of five representatives from user groups, five representatives
from political entities, and five representatives from environmental groups.
He noted the Southwest Idaho group is now operating and working
towards a consensus agreements.

The proposed changes in the National Fire Plan will affect all aspects and
all users. Smith said the State of Idaho is faced with the same changes and
affects.

The Boise National Forest Management Plan revision should be completed
in July, as the plan is currently in the consulting process with other federal
regulatory agencies.

Upon Senator Williams inquiry concerning the fuel loads in the forests,
Smith stated management of the fuels needs to be done by all parties. The
challenge is the determination of how, when and where, but there is a
consensus concerning the problem. Senator Williams stated his area of
the state is experiencing more and more problems in regards to the use of
all terrain vehicles on public and private lands. Chairman Noh noted there
will be a hearing by the Senate and House Resource Committees on
Tuesday, January 28, 6:30 p.m. on this issue. Smith stated that two
primary issues in the west are the fuels issue and access to public lands.

Senator Little expressed concern for the loss of 320 jobs in his area
because of lumber mill closures. He noted there is not a sawmill adjacent
to the Boise National Forest. Senator Little inquired if the new forest plan
provides for reasonable allowable cuts to enable a sawmill to open.
Smith stated he had not had an opportunity to review the Boise National
Forest’s new plan. He did note the plan does provide for active
management with timber and grazing components. The levels are not the
same as they were fifteen years ago. He noted only one-third of forest
lands are being cut now compared to l989. The Chief of the Forest
Service states that where it is appropriate, trees should be cut. Senator
Little noted the loggers are gone now and the income production for
schools has decreased. Little inquired about who is representing the
timber industry now that the loggers are gone? Little urged Smith, in his
review of the Boise National Forest plan, to ascertain that timber and
grazing components are carefully considered.

Ray Houston, Analyst, Budget and Policy Analysis, Legislative Services
Office, continued his presentation to the Committee on budgets. He noted
the Department of Lands budget begins on page 4-35 of the Natural
Resources Section. Seventy-two percent of the 2003 appropriation is
dedicated funds; fourteen percent general funds; and fourteen percent
federal funds. In the federal funds for 2003, there is a big increase to
$4,500,000, a $3,000,000 increase, which represents funds provided to the
Department by JFAC for spending authority for federal fire grants.
Additionally, the $23,700,000 is comprised of endowment funds. Six
million, two hundred thousand dollars is fire suppression costs from last
year, and $6,900,000 comes from other dedicated funds. He noted group
Full Time Personnel (FTP) funds of $3,600,000; twenty-one percent of the
personnel costs are group FTPs (seasonal and part-time employees), these
are not included in the Department’s FTP count. In regard to the tussock
moth control items, it is a supplemental which has been approved by
JFAC. He noted there is $600,000 in federal funds for the tussock moth
control in the Moscow Mountain area. The fire suppression supplemental
has also been approved for $5,850,000. $3,800,00 is for the general fund.
These funds were approved as requested. A budget reduction of $166,800
from the general fund represents 3.5 percent of the original appropriation.
The largest part is for fire preparedness.

He noted there are some provisions for pickup trucks, field equipment and
computers, which were recommended by the Governor. In the
nonstandard adjustments, $428,900 is for Attorney General fees. This is
an increase from $162,800 to $598,700. The increase is due to
endangered species issues, environmental, and endowment land issues
which the Department must address. He noted the Department has two
attorneys on staff and are requiring additional assistance from the Attorney
General’s office as well.

Upon inquiry, Houston stated most of the costs for attorney fees is covered
by the endowment fund, as well as some by the general fund. These are
generally endangered species issues and endowment land issues.

Winston Wiggins, Director, Department of Lands, noted the Department
has received notices from environmental groups regarding compliance
with the Endangered Species Act. No litigation has been filed, but there is
a considerable amount of staff time and legal staff time.

Houston further stated the Commercial Leasing Program has an
enhancement for $291,000 which will be from endowment earnings to pay
for property maintenance; as well as $60,000 for commercial property in
Boise and $35,000 for contractual obligations for appraisal of the Priest
Lake cottage sites.

Houston noted the endowment earnings fund includes the public schools,
agricultural college, charitable institutions, normal school, penitentiary,
school of science, mental hospital and the University of Idaho.

The Department’s budget reflects spending authority for cumulative
watershed effects analysis on forested watersheds and in regard to national
fire plan activities. $l,000,000 is included for the national fire plan grants
for the ongoing reduction of hazardous levels of fuel on private lands in
Idaho.

A department reorganization has shifted personnel to field offices so
equipment is needed in order for them to complete their duties. The
hazardous materials division requires funding for contract engineers to
investigate the nature, origin, and extent of potential contaminants on state
endowment lands.

The new organizational chart of the Department is set forth in the Natural
Resources Section of the Legislative Budget Book. A copy of which is
attached.

The budge book also contains graphic illustrations of the funding history
for the Department, as well as endowment contributions and expenditures.

Upon inquiry, Houston noted the Mine Closure Fund has an annual
appropriation of $140,000 with a fund balance of $712,800. Houston
reported the distribution of the mine license tax has been changed in recent
years.

In regard to fires, Houston reported in 2002 there were 308 fires covering
1,670 acres for state lands, but for the entire state 4,600 acres were
effected. The ten year average indicates 400 fire a year with 13,000 acres
burned with over $3,000,000 of general fund expenditures. There are
6,200,000 acres which the state is responsible to protect. This is mixed
ownership land because of agreements with various landowners. Houston
noted the costs are only after the fire started. The pre-fire suppression
costs of $6,800,000 must be included. He noted pending legislation in the
House to increase the property tax for fire suppression from $.45 per acre
to $.60 per acre.

Wiggins further informed the Committee, there were 300 temporary
employees last season with varied times of employment based on
respective projects. The primary employment is in connection with fires,
with the balance of temporary employees preparing timber sales for
auction. He noted the average cost per acre is more efficient on larger
fires than smaller ones. The bigger the fire the higher the total costs but
the costs are lower per acre.

Wiggins noted the Endangered Species Act is a significant issue on state
lands. The Department will attempt to achieve some level of assurance
from the US Fish and Wildlife Service for the state’s endeavors on state
lands. Additionally, Wiggins stated there is a need for investment and
asset planning for the endowments to ensure maximizing revenue. Land
exchange, acquisition and disposal is important because some state lands
that do not contribute adequately to financial returns. Creative ways are
needed to enhance state land ownership to increase the asset value while
increasing the revenues for the endowments.

Upon inquiry, Wiggins stated there has not been a challenge to any of the
grazing leases in the past year. The Sand Noble Springs parcel, which is
habitat for the Columbian spotted frog, was awarded despite a challenge to
classification of the lands. The Court ruled the state should have held a
contested case hearing, which will be held in the near future. This is a
quasi-judicial proceeding with sworn testimony before a hearing officer.
The hearing officer will determine the facts of the case which will be
returned to the Land Board for consideration. Upon further inquiry,
Wiggins noted the grazing lease was not challenged, but there was a
request for reclassification of the land from grazing to conservation. The
other issue pending is a challenge on a lease on the Lewis-Clark Trail. He
noted the land is timber land with grazing as a secondary use. The Land
Board elected to award the lease to the next higher bidder. The highest
bidder challenged the Board’s decision. The Court has ruled that a
contested case hearing should be held. The hearing has been stayed at the
request of the Department because the lessee has not performed in
accordance with the lease terms. The Land Board will hear this issue in
the next couple of months. The Board will either grant the lease to the
highest bidder or continue with the lessee and have a contested case
hearing. He stated grazing land is a very steady income source, despite
not being high.

The status of the timber export law has been modified as the result of Land
Board action. The application of the Act in different parts of the state has
changed even though the Act has not changed.

Upon inquiry, Chairman Noh informed the Committee will be addressing
the WestRock Project by way of legislation pending in House State
Affairs. The House committee will be the guests of WestRock for viewing
the site and area involved in this project next Saturday. He noted this
committee has always handled this type of legislation so the legislation
will be forthcoming. There are twenty commercial parcels individually
listed in the Idaho Code. The current lease was signed for ten years with
the option to renew four times. The issue is whether the lease should be
extended to a forty-nine year lease.

Upon inquiry from Senator Stennett as to the location of the Southwest
Office, which is listed as Twin Falls, Wiggins noted that is in error; the
office is located in Gooding. He noted the Gooding office staff have been
expanded so new facilities will be needed.

There being no further matters to come before the Committee, the meeting
was adjourned at 3:00 p.m.

Winston Wiggins, Director, Department of Lands, explained the
Endowment Fund administered by the Land Board and Department of
Lands. He provided to the Committee a handout providing detailed
information on endowment land status. (A copy is attached.) He noted the
non-forested land designation has not been broken down into grazing and
other uses. The state endowment lands were granted to the state by the
federal government at statehood under the Equal Footing Doctrine. The
purpose of the lands was to provide for the support of public institutions
within the state. There are nine grants with specific on the ground
locations. Article 9, Section 8 of the Constitution of the State of Idaho
provides the basis for the management of the lands to secure the maximum
long term financial return to the institution to which granted. The money
is distributed to the public schools at the same percentages as other monies
for public education is distributed. For the public schools, the state was
granted every 16 and 36 sections in the state. There has been considerable
consolidation over the years. Subsequently there are some blocks of state
land which are very significant for the public schools. Two square miles
out of every thirty-six square miles of the state are devoted to public
schools. The other eight endowments were block grants with acreages as
shown on the handout. The state was allowed to select the acreage up to
and including a specific number of acres. Originally there were 3,600,000
acres of endowment lands which is now reduced to 2,461,181 acres. This
represents 763,985 acres of primary forest land which is actively managed
by the Department to create revenue through growth and sale of timber.
Secondary forest land of 223,114 acres is not capable of producing
significant board feet of timber per acre per year. The non-forested lands
are 1,474,082 acres which have never supported forest growth and are
primarily grazing lands. He noted some of the endowment lands have
productive timber along with grazing. The state endowment lands are not
public lands, but lands managed through a trust. The land is not managed
on a multiple use basis, but on a primary and secondary use basis. The
secondary uses must be compatible with the primary use.

The figures for endowment land revenues and expenditures by asset type
for fiscal year 2002 are set forth in the handout. (Attached.) He noted
$48,155,600 was the total net revenue to the earnings reserve in 2002.
Through the process of changing accounting practices, there were a few
expenses that overlap, but the totals are correct. After the endowment
reform, a Capitol Endowment Fund was established. 7,100 acres is
involved in this fund. The endowment is devoted to maintenance and
upkeep of the state capitol building.

The bulk of the revenues go into the earnings reserve. This fund is used to
pay Department expenses as related to endowment lands. Some of the
money is held in the earnings reserve for a savings against future down
markets. Some of the money is put into the permanent fund. Some of the
money goes directly into the permanent fund, which is real estate and
minerals asset types. The income from minerals goes into the permanent
fund. The permanent fund is invested by the Endowment Investment
Board.

Wiggins reported there are approximately 600 cottage sites involved in the
Payette Lake and Priest Lake sites. The lease provisions provide an
opportunity for lease holders to exchange equivalent value land for their
site.

Upon inquiry from the Committee, Jay Biladeau, Assistant Director,
Department of Lands, stated there have been approximately sixty land
exchanges in connection with the cottage site leases at Payette Lake. He
noted the land exchange is the choice of the lease holder. Wiggins
reported a minor backlog in process land exchange applications.

Timber harvest in the state is based on a five-year inventory. The
inventory rotates throughout the state on a year by year basis. Based on
information provided by the Department through modeling and sound
science, the Land Board is able to make the necessary decisions on timber
sales.

Ray Houston, Analyst, Budget and Policy Analysis, Legislative Services
Office, continued his report on the Department of Lands, specifically
addressing the endowment funds. His handout to the Committee is
attached.

Scott Nichols, Chief, Bureau of Surface and Minerals Resource
Management, brought the Committee up to date on the status of the
Thompson Creek Mine. His handout is attached.

Nichols then explained the status of the Grouse Creek Mine by Hecla
Mining company. His handout is attached.

John Lawson, Department of Environmental Quality, stated the water
quality meets drinking water standards, but does not meet the
qualifications for fisheries because of selenium and ammonia content.

Nick Krema, Deputy Attorney General, Department of Lands, reported the
Blackbird Mine operated briefly the summer of 2002, but operations have
stopped due to funding. Blackbird Mine is a cobalt development project
by Formation Capital. The mine is located approximately forty-five miles
north of Salmon, near the old town of Cobalt.

Chairman Noh stated there would be no formal committee meeting on
Wednesday, January 29, but encouraged attendance at a workshop in the
Gold Room on noxious weeds and pests. Additionally, he reminded the
Committee of the public hearing to be held Tuesday evening at 6:30 p.m.
jointly with the House Resources Committee concerning managing the
expanding use of all terrain vehicles on public and private lands.

Co-chairman Noh specifically thanked Representative Butch Otter, 1^st
Congressional District, and his staff for providing a copy of legislation (H
3808) introduced by Representative Scott McGinnis in the subcommittee on
Forest Health Committee. The proposed legislation endeavors to establish
uniform enforcement and penalty standards for all of the federal agencies
dealing with land management. The status and support of the legislation are
unknown at this time.

Co-chairman Stevenson expressed his concern of the abuses connected with
ATV users which effect the use by responsible ATV users. He noted the need
for better education as to the rules and regulations that apply to the respective
lands. The hearing will allow the agencies and public to express their ideas
and concerns.

Co-Chairman Noh noted the Department of Parks and Recreation and the
Board of Parks and Recreation have been accumulating constructive proposals
and ideas on how to improve this program. The Idaho Fish and Game
Department recently completed a pilot project and experiment in management
in connection with hunting. Additionally, there is representation from the U.
S. Forest Service Ogden Regional Office and Supervisors from National
Forests within the state. He noted the Supervisor for the Boise National Forest
is the liaison with the Legislature for forest issues. Additionally, the Bureau of
Land Management, Idaho office, is represented at the hearing, as well as
representations from state agencies. He noted various organizations and
individual interests are also represented.

Rick Collignon, Director, Department of Parks and Recreation, remarked of the
significant growth in off road vehicle registration and ownerships in Idaho and
the nation. The issue of off road vehicles encompasses the Department in park
and recreation, land management and wildlife, as well as conservation issues.
The issue of off road vehicle use, because of the growth, has overwhelmed
management strategies. Additionally, there is an absence of a clear
understanding of the values of management of off road vehicles. The affected
agencies do not have a clear understanding of the activity and its use. There
are several types of users: hunters, recreationalist, private landowners, and
other multiple use recreational interests.

There are 68,521 registered ATVs and trail bikes in Idaho. In 1992, there were
14,383 registered. Sixty percent of the currently registered machines are ATVs
and forty percent are trail bikes. In 2001, the industry reported the sale of
10,817 ATVs and trail bikes in Idaho. New models of ATVs are too wide for
existing ATV trails and this could lead to pressure for major costs to widen
trails. In 2002, the industry reported 15,804 sold; representing a forty-four
percent increase in the state. Every region of the state has been impacted.
Collignon displayed a chart showing the variance of growth throughout the
state, noting a 121 percent growth in eastern Idaho in the last five years, the
highest region. Another chart displayed by Collignon showed the twenty-nine
year growth in registrations in the state. The land management agencies and
the recreation agencies have been unable to adjust to the growth. There is one
ATV registered for every ten households in the state. He noted there are more
ATVs sold in the United States than highway motorcycles and off highways
motorcycles combined. This is a significant recreational group looking for
opportunities to use these vehicles on public lands.

A survey of hunters conducted in Idaho by the Forest Service, Bureau of Land
Management, Department of Fish and Game, and the Department of Parks and
Recreation, indicated that 53 percent of all hunters own ATVs, 47 percent of
those are actively used in hunting. A similar survey conducted in 1988 showed
figures of 17 percent for deer hunters and 3 percent for elk hunters. Today
those figures are 47 percent of hunters. Another question in the survey asked
hunters, if they encountered an off highway motorized vehicle, was the
hunting experience diminished. Eighty-six percent of deer hunters said yes; 84
percent of elk hunters said yes. The same survey asked about encountering
other hunters, 71 percent of elk hunters said the hunting experience diminished
and 67 percent of deer hunters said their hunting experience was diminished.
In the same survey, 68 percent of all hunters felt that the hunting experience
was compromised when they saw another motorized vehicle on a road or trail.
He noted the population growth has doubled in the past twenty years in the
state. The 46,000,000 acre public land base now has twice as many people
using the same lands. Idaho struggles with a multiple use tolerance of other
users on our public lands.

The baby boomer generation is the largest portion of the population segment to
approach retirement age. This same group have been active recreationalist
their entire lives and financially comfortable. The recreation time is very
important to this age group. He noted this group also has more knee, neck, and
back surgeries. Because ATVs are considered environmentally friendly and a
method of transportation to continue their outdoor recreation , they are very
popular.

Collignon noted a year ago, BLM, US Forest Service, Department of Fish and
Game and Department of Parks and Recreation, discussed this issue. As a
result of that meeting, the concept of a single state wide management strategy
for off road vehicles on public lands was developed. The four agencies agreed
current ATV restrictions need to be adequately signed and enforced.
Enforcement by these four agencies is limited. Additionally, it was determined
more or newer restrictions needed to be developed through the public hearings.
The hearing process would provide further education and implement
restrictions. Developing trail systems to meet the legitimate user needs of the
growing number of citizens is also basic. There is a state-wide coordinating
work group to bring a uniform approach to the issue. He explained a
demonstration project in Custer, Butte and Lemhi counties to develop a
designated trail system, even in sensitive areas. In beginning their
demonstration project, they found thirteen of the twenty-three most popular
models of ATVs do not even meet the legal definition according to the Idaho
Code. The industry and manufacturing has changed significantly. Discussion
with a manufacturer in Florida centers on pounds per square inch under tires
and turning radius for a new machine designed to carry two riders. The
industry is going to a “friendly” recreation mode. A new definition in the
Idaho Code for ATVs will be in proposed legislation this session. He noted the
many federal and state agencies with some degree of enforcement
responsibilities in regard to ATVs needs to be coordinated for responsible use.

Chairman Noh acknowledged Senator Little for providing a specific area for
ATV usage on his lands.

Ernest Lombard, Chairman, Parks and Recreation Board, stated the good thing
about an ATV is that anyone can ride one and likewise, the bad thing about an
ATV is anyone can ride one. He noted the Paiute ATV trail system brochure
which he provided to the Committee. (Copy attached.) He noted originally the
trail area was in an economically depressed area. Local recreationalist at
Richfield, Utah developed a trail system for ATVs. Through negotiations with
federal, state, county and city entities, they developed trails connecting
communities. There are now eighteen towns connected by the trail system with
services such as gas, motels, and even a private ATV camping site. The initial
system was a 230 mile loop system, which is now 1200 to 1500 miles of trails
that all connect through the use of existing trails and roads. ATVs can be a
problem, but they can also be an opportunity for economic development in
rural areas within the state. He noted the roads and trails are available within
Idaho for such a system. An ATV trail project, attempted in the
Challis/Mackay area, is an excellent example of possible economic projects for
the rural areas of Idaho, as well as meeting the needs of the users.

Steve Huffaker, Director, Department of Fish and Game, stated the Department
and Commission’s interest and support to address the concerns. He stated the
Department would like to address the issue as a hunting issue. ATV usage was
a non-issue in the Department ten years ago, but is today the number one issue
from officers in the field. The jurisdictional questions need to be resolved. As
the frustrations have grown, the Commission has struggled for several years
trying to address the problem. He noted there has been success on the Targee
National Forest with joint patrols by the Forest Service and the Department of
Fish and Game. There has been success working with private landowners
during antler pickup in the spring. At the last Commission meeting, the
restriction was lifted on antler pickup. He noted the Commission has defined
some traditional weapons and prohibited the use of motor vehicles in those
kinds of hunts. The program was well accepted by the traditional weapon
hunters. Last year the Commission designated Unit 47 and prohibited ATV
usage for the entire hunting season. The acceptance by the hunters and private
land owners has been good and is working. He anticipates the Commission
will propose some additional areas with some restrictions on ATV use during
the hunting season.

Lin Hintze, Chairman, Custer County Commissioner, explained the
coordination between the counties of Butte, Custer and Lemhi and the cities
within the counties, along with federal and state agencies, agreeing on the
development of a trail system. He provided a copy of a map of Custer county
depicting the federal, state, county and private landowners. The area
encompasses over 3,000,000 acres with 96 percent owned by the federal
government. Ninety percent of the trail system is already in existence by the
use of mining roads and logging roads. He noted there are ghost towns and old
mill sites along the trail site. There could be significant benefit to the rural
economies through the trail system.

Dick Smith, Supervisor, Boise National Forest, stated he is new to the position
and welcomes the opportunity to listen and learn.

Liz Close, Region 4, U.S. Forest Service, Deputy Regional Director of
Recreation for the Intermountain Region of the Forest Service, stated the
national recreation strategy contains strong wording about the management of
off road vehicle use. The use is a legitimate use of forest lands. The Forest
Service is working with the off road vehicle community to assure quality
motorized opportunities along with quality experiences while minimize
environmental impacts. The Forest Service will designate user trails and areas
on a site by site basis through the forest planning system. A monitoring
process will also be implemented. She compliment the efforts within the state
to address the ATV usage issue. She noted the issue must be worked through
all federal, state, county and city entities to involve and educate the public.
Enforcement issues must be clarified and implemented without boundaries

Jerry Rees, Supervisor, Caribou-Targee National Forest, stated the travel
access and noise were the issues to be clarified. He noted his forests have had
this under consideration for approximately seven years. There are more
complaints about irresponsible off trail, cross county, in meadows, uphill use
by ATVs. The forest has gone to a designated trail system and eliminated the
cross country, off trail use. He noted with a designated trail system there needs
to be enough trails for use. There are 2600 miles of trails in the Targee-Caribou Forest of which 55 percent are for motorized use. A significant
number of trails were not designed for the width required by ATVs. The
defining of an ATV trail system is highly debatable. The forest is working
with users to design a system, but he anticipates a lot of discussion, work and
investment. He noted the grant program in the State through the Department of
Parks and Recreation has helped significantly in this regard.

Rees noted education and enforcement are other issues. He stated common
brochures providing education to the public in proper and responsible use is
very important. He encouraged a statewide program with common standards.
The enforcement through joint patrols by state and counties has been most
effective.

Susan Giannettino, Deputy State Director, Resources and Planning Division,
Bureau of Land Management, stated she was representing K. Lynn Bennett, the
new State Director, who is unable to attend. She stated the growth has
exceeded expectations and they are unable to cope with the growth. She noted
BLM lands are ideal opportunities for ATV recreation, an appropriate
opportunity in proper places and in proper ways. She encourages the
coordinated enforcement that has been taking place. She acknowledged the
leadership provided by the Department of Parks and Recreation in this
program. Using existing roads and trails, a ATV trail system can be
implemented that provides a recreational opportunity for all interests. The
efforts in Custer, Lemhi and Butte counties are an excellent opportunity to
pursue.

Additionally, access information needs to be available to ATV users. She
noted a web based site is under consideration to provide the ongoing changes
in information. Giannettino stated law enforcement issues also need to be
considered. Partnership with the user community and education/information
sharing is critical. She stated another aspect is land management planning.
The older BLM land management plans provide the public the opportunity to
go almost anywhere they want. It will take some time for BLM to bring these
plans up-to-date. BLM has been working with the Department of Fish and
Game to develop strategies regarding ATV usage during the hunting season.
She noted BLM has a new position, an off road vehicle coordinator, which will
coordinate agency participation and efforts. BLM is committed to providing
quality opportunities to off road vehicle users throughout the state. She again
noted that signing and enforcement are the biggest issues.

Wayne Weiner, Island Park/Twin Falls, stated his experiences in the Island
Park area over the past few years. Hikers, bikers, motorcycles and ATVs have
eroded the trails in that area to the point where they are no longer useable in
certain areas. With the speed and reckless use by ATV users, it has become
almost impossible for others to use the trails and area. He noted there is not an
ATV organization in that area to assist in solving this problem. Someone or
some agency needs to take on the responsibility. He suggested the
implementation of a state-wide sticker with the fees going to resolving the
problem. Idaho is a beautiful state and he hates to see it ruined by just a few.

Bill Jones, President, Idaho A.T.V. Association, Boise, speaking in behalf of
the organization, stated that with the increase in off road vehicles, along with
the increasing population within the state, it is inevitable to have irresponsible
and thoughtless riders. The association was established because of that
problem and the possibility of losing the opportunity to ride on open roads and
trails. He seeks to keep the roads and trails open for all to enjoy responsible.
The association has received several grants from DPR for the development of
brochures to provide education and information. Jones noted Senator Little has
allowed an ATV park in the Emmett area on fence land set aside for that
specific purpose. He noted the members of the Association use their own
equipment for the maintenance of roads and trails for ATV use in southern
Idaho. Additionally, trail signs were placed at every intersection on 86 miles
of the Idaho Centennial Trail from the Nevada state line to Glenns Ferry. He
displayed a sample of the sign erected throughout the trail. Volunteers from
several ATV organizations participated in the project. He informed the
Committee of the other volunteer efforts by many ATV organizations in the
southern Idaho area. He noted volunteer effort results in a feeling of ownership
and pride in the project or area. Riders must be better educated on the rules
and regulations. Likewise, they should have input on the enforcement. He
proposes all ATV, trail machine, mountain bike, and snow machines be
assessed an additional $2 per machine per year for a designated fund for law
enforcement and search and rescue for specified areas of the state.

Robert Nelson, Twin Falls, stated his comments are the same as previous
speakers.

Ron Stricklin, Idaho ATV Assn., Past President, related his positive personal
experiences as a result ATV riding. He stated the complaints are caused by a
small number of people as with other sports. He questioned whether new laws
were needed or if better enforcement and better funding was necessary. He
stated cross country travel is not needed. The Mountain Home Ranger District
has created a demonstration project near Anderson Ranch Dam with a trail
system to help control abuses during hunting season. He noted the project is a
good example of what can be accomplished for recreation riders. He would
like to encourage and strive for the positive aspects of the activity.

Steve Gunderson, President, Idaho Trails Council, stated their organization is a
composite of all trail user groups to promote the protection and improvement
of Idaho trails. The council supports efforts to improve the ATV experience as
indicated in the brochures by the Department of Parks and Recreation. He
noted the council supports the proper use of ATVs.

Tom Judge, Idaho Bowhunters, provided a handout to the Committee
containing their recommendations to the outdoor recreation community,
legislative committees, state agencies, law enforcement and the courts and
possible legislation for the imposition of penalties, creation of an off road
vehicle account, funds of the account usage, and law enforcement
responsibilities. (A copy is attached.)

Brent Madron, President, Treasure Valley Trail Machine Association, urged
the development of a state wide trail system on public land. His two wheel off
road vehicle users support ATV usage for recreation, but would urge
consideration of a separate system for two wheel off road vehicles from ATVs.
He complimented the Department of Parks and Recreation for their efforts to
date, noting there is a definite public need for education and good information.

Brett Nelson, Ada County Green Party, urged the Committee to not overlook
the environmental impacts through ATV usage in deliberations of the issues.

Jack Fisher, President, Idaho Wildlife Federation, inquired why the issue was
of concern as ninety percent of ATV users are responsible. He noted the ten
percent causing the problems should be handled through enforcement of
existing rules and regulations. He stated his organization supports efforts to
resolve the issue.

Phil Homer, Boise, relinquished his time as his concerns had been spoken to by
previous speakers.

Clark Collins, Blue Ribbon Coalition, Executive Director, Recreation Division,
urged the Committee to keep in mind national funding for off highway vehicle
recreational use. He noted the increased number of registered ATVs and the
number of well organized user groups who are all willing to assist in solving
the problems.

Ted Howard, Shoshone-Paiute Tribe, Idaho Resources Advisory Council,
reminded the Committee people come to Idaho because of what Idaho has to
offer. He urged the Committee to remember any decisions and actions must
consider the environmental impacts and the legacy of the state. He urges
control of ATVs in designated areas and enforcement of rules and regulations
as the resource is not renewable and impacts can be irreversible.

Mike Ihli, Manager, Hewlett Farms, stated the Owyhee area has significant use
by off road vehicles and strict enforcement of rules and regulations is needed.
The damage to the Owyhee front is extensive.

Lauren McLean, Idaho Conservation League, noted their organization supports
the appropriate and responsible use of off road vehicles in designated areas.
She noted the destruction of vegetation and the spread of noxious weeds. She
urged the Committee to not convert single track trails to accommodate ATV
usage. ICL urges enforcement of regulations in the existing designated areas.

Russ Thurow stated he represents himself and other elk and deer hunters and is
concerned that unrestricted off road vehicle usage is destroying hunting. The
usage destroys habitat and drives game animals away from the hunting area.
He urged better management and enforcement of existing laws. He stated there
were too many existing trails affecting hunting.

Jim Juker said he was representing himself. He has been riding ATVs for a
number of years. He said ATV users can be and are the extra eyes and ears, as
responsible citizens, of public land usage. He urged better information on
designated area for usage.

There being no further matters to come before the joint committee; the meeting
was adjourned at 9:30 p.m.

Senator Keough introduced eighth grade students, along with their parents,
from the Sandpoint Charter School.

Senator Keough then introduced RS 12451, proposed legislation to reduce
the minimum number of meetings held by the State Board of Scaling
Practices. She noted the proposed legislation would provide for the Board
to meet more often if the need arises.

Motion by Senator Little to send RS 12451 to print; seconded by Senator
Williams. Motion carried.

Marty Peterson, University of Idaho, introduced RS 112441, proposed
legislation to establish the Idaho Geological Survey because of the
reorganization at the University of Idaho. He noted the College of Mines
was merged with other colleges. Earl Bennett is the Dean of the College
of Science, Director of the Idaho Geological Survey, and the state
geologist.

Motion by Senator Schroeder to send RS 12441 to print; seconded by
Senator Brandt. Motion carried.

Karl Dreher, Director, Department of Water Resources, explained RS
12361, proposed legislation to increase the fee for filing of a protest in
regard to an application to appropriate water or against approval of change
to an existing water right. Dreher informed the Committee of the history
of the protest fee explaining the fee was to provide funds for the
Department for personnel to process the backlog of protests. He noted the
fee needs to be adjusted to be equitable with the fee charged for an
application. Upon inquiry from the Committee, Dreher stated the fee
increase is not intended to be a deterrent for filing a protest, but is intended
to be an equitable fee in line with the fee required for filing an application.
He does not anticipate any change in the number of protests filed because
of the fee increase.

Harvey Walker stated to the Committee he felt the fee was unfair to small
operators, especially those representing themselves in the adjudication
which may need to protest many applications, and suggested waiting on
the fee increase until the Snake River Basin Adjudication is completed.

Norm Semanko, Idaho Water Users Association, stated their organizations
supports sending the proposed legislation to print.

Motion by Senator Cameron to send RS 12361 to print; seconded by
Senator Brandt. Motion carried.

Roger Fuhrman, Department of Fish and Game, introduced RS 12395,
which would authorize the Department to enter into reciprocal licensor
agreements with Indian tribes possessing reservation land within the state.

Motion by Senator Stennett to send RS 12395 to print; seconded by
Senator Cameron. Motion carried.

Fuhrman then explained H 4, legislation to fish and game to strike
requirements for the Department’s compilation and disbursement of the
list of fishing and hunting privilege and license revocations to
conservation officers and license vendors.

Motion by Senator Schroeder to send H 4 to the floor with a do pass
recommendation; seconded by Senator Burtenshaw.

After discussion by the Committee concerning the provisions of the
Interstate Compact Agreement with neighboring states, upon the
unanimous consent request by Senator Stennett, H 4 will be held in
Committee for approximately another week to obtain further information.

H 5 providing for the transfer of lifetime licenses of a deceased minor
child was explained by Fuhrman. He stated there had been an situation
where the Department and Commission was asked to allow the transfer of
a fishing license to a sibling of a deceased child. The legislation would
allow the transfer of the same class license of an unused lifetime license of
a deceased minor with specific restrictions within the fourth degree of
consanguinity to include an adopted or step child. The Committee
inquired as to the criteria for a lifetime license.

Motion by Senator Schroeder to send H 5 to the Fourteenth Order;
seconded by Senator Kennedy.

Substitute motion by Senator Cameron to hold H 5 in Committee;
seconded by Senator Burtenshaw. Substitute motion carried on a voice
vote.

H 6, allowing the Department of Fish and Game to issue permits for live
fish transportation without a fee was explained by Fuhrman.

Motion by Senator Brandt to send H 6 to the floor with a do pass
recommendation; seconded by Senator Williams. Motion carried.

There being no further matters to come before the committee the meeting
was adjourned at 2:40 p.m.

EXCUSED:

Senator Pearce, subcommittee chairman of the rules assigned to the
Committee, stated there are only a few rules to be addressed by the whole
Committee. There are two rules of the Outfitters and Guides Board which
the House Resources and Conservation Committee has rejected. These
will come before this Committee through a concurrent resolution. One
rule pertains to the requirement of personal possession of a first aid card.
The other rule addressing the definition of “term.” Another rule to be
considered by the Committee is from the Department of Environmental
Quality concerning underground storage tanks, specifically the
specifications for the leakage valve. The rejected rule concerning
reasonable access pertaining to sewage tanks will be handled by the Health
and Welfare Committee.

Chairman Noh introduced Aaron Miles, representing the Nez Perce Tribe.

Chairman Noh informed the Committee of a joint meeting with the House
Resources and Conservation Committee on Wednesday, February 5, at
1:30 PM in the Gold Room will pertain to the Governor’s strategy for
dealing with the wolf issue by Jim Caswell and Greg Schildwachter,
Office of Species Conservation, and Steve Huffaker, Director, Department
of Fish and Game.

Steve Huffaker, Director, Department of Fish and Game, and Dr. Bob
Hillman, Department of Agriculture, presented information on Chronic
Waste Disease to the Committee. Huffaker explained the disease is caused
by an agent called a prion which is a unique misfolded, small protein.
How the disease is transmitted has not been determined, but it is
transmittable. CWD was first discovered in Colorado/Wyoming about
thirty years ago. CWD was relatively unknown until twenty years ago it
appeared in the upper mid-west in white tail deer in Wisconsin. The
Wisconsin herd was concentrated in a small area with approximately fifty
deer per square mile. They were being fed artificially which is believed to
have contributed to the development of the disease in the herd.

A national strategy was then developed for dealing with CWD in wildlife
and domestic animals. He noted the communication between DPR and
DFG has been excellent in addressing the concerns about CWD. CWD is
not present in Idaho at the present time. Efforts have been exerted to keep
CWD out of the state. DA has done a good job of controlling the situation
in relation to captive cervidae and DFG is responsible for CWD in
wildlife. He noted the attempts to increase awareness and better public
education. The Commission, rather than create regulatory mechanisms, is
providing information to hunters. The disease exists primarily in the brain
tissue and spinal column of infected animals. He noted some states have
permitted transportation across state boundaries of only boned-out meat.
DFG urges hunters in CWD areas to leave the meat in the field where the
animal falls.

Upon inquiry from the Committee, Huffaker stated the disease is
spreading geographically because it is no longer just around the Colorado-Wyoming border. CWD has spread throughout Colorado and is found in
captive cervidae facilities. The only known method of containment is the
eliminate the source. All animals within a designated area are destroyed to
prevent the spread of the disease. He stated the past year, Wisconsin
attempted to kill all the deer in a 300 square mile area because of CWD.
Wisconsin biologist estimate a ten percent kill because it is heavily
wooded farm country. White tail deer are very secretive animals. He
noted it might be possible to have a “scorched earth” policy in specific
areas in the state. He noted the herds in Idaho are very migratory. He
provided to the Committee a copy of the action plan. (Copy attached.)
The main focus is to keep CWD out of the state. He noted there is not a
live animal test available. CWD has an eighteen month incubation. An
animal can be contaminated long before CWD is manifested. It is
suspected that the disease has been around for some time, but has been
manifested in wild game experiencing severe feed and overcrowded
conditions.

Dr. Bob Hillman, Department of Agriculture, informed the Committee that
mad cow disease is not transmittable to deer and elk. The outbreak in the
United Kingdom was from consumption by cattle of material containing
brain and spinal cord. In many foreign countries, those products are
consumed by humans, which is a mode of transmission. The UK imposed
a ban on utilization of those kinds of products intended for human
consumption as a means to stop the spread of the disease in humans. He
noted the material responsible for transmission to cattle was improperly
rendered product. The product was partial rendered, not fully rendered.
Another theory in the UK is that the disease just evolved and has been
around for sometime, but at low levels. Another theory about CWD is that
the disease was transmitted from sheep to wildlife. The exact cause of
CWD is unknown, but the disease has been present since 1967 in wild
game.

Chairman Noh stated in the sheep industry, the central nervous system
tissue has been banned for some time from going into ruminate livestock
feed. Dr. Hillman stated FDA has also banned cervidae material in feed
products. He noted that any animal that is slaughtered undergoes a post-mortem inspection. Any animal showing any evidence of central nervous
system disease is not slaughtered and does not go into the human food
chain. Most of the cervidae are processed at custom plants.

Dr. Hillman stated the Department was not aware of any problems, but is
aware that Food Safety Inspection Service is reviewing procedures used
on cervidae. The sampling in Idaho has not indicated a presence of the
disease. USDA and the Department of Interior are working to establish a
surveillance plan which would sample many thousands of deer and elk
through the coming hunting season. There are a small number of
laboratories that have been approved to do CWD testing. He anticipates it
will take some time for testing results. Additionally, he stated the disease
will probably be found in more areas than anticipated. The risks of the
disease has not been a deterrent for hunters in Colorado and Wyoming.

Senator Schroeder inquired as to the disposition of animal heads after
slaughter. Dr. Hillman stated under the FDA rendered, ruminate protein
cannot be put into products for human consumption. The product may be
put into feed for chickens or pet food. The past twelve years’ experience
in the US through extensive testing has not shown any indication of the
disease. Additionally, Dr. Hillman noted that there is no evidence that
muscle tissue or milk is a source of the disease. He stated that the spinal
cord and all related structures are not permissible in food for human
consumption. Hillman noted the ongoing research over the past five and
one-half years in cattle regarding CWD . The cattle were put in a pen with
cervidae infected with CWD and after a time there has been no evidence
of transmission to cattle. There is a similar study with sheep that shows no
evidence of transmission over the past three and one-half years.
Additionally there has been a cattle study wherein the cattle were injected
in the brain with the disease. A long term study has indicated that two or
three of the cattle did have brain lesions consistent with a similar disease.
In the sheep study, two of the sheep have died or been destroyed; one
sheep had lesions consistent with CWD. Under natural conditions, there is
no evidence of transmission of CWD to cattle or sheep.

Huffaker stated the concern of the Department is the transmission between
ungulates. The plan of the Department will continue and surveillance will
increase. Additionally, the Department will continue participating in the
national program. He noted field personnel and officers have been trained
in what to look for in the wild. The Department will attempt to keep up a
good source of scientific data and information for hunters.

There being no further matters to come before the Committee, the meeting
was adjourned at 3:00 p.m.

Co-Chairman Noh complimented and expressed appreciation to the
Governor, his staff, Department of Fish and Game, and Office of Species
Conservation for their efforts and coordination with the Legislature in
providing update information to the committees. He commented on the
imaginativeness and the thinking which was gone into the proposal
presented to the committees.

Jim Caswell, Office of Species Conservation, explained to the joint
committee the history and background of the Idaho Wolf Conservation
Plan. He noted past trying efforts to pass a state wolf plan. The plan was
a result of seven-years’ worth of work with seventeen drafts by the Wolf
Oversight Committee. Last year, Office of Species Conservation was
assigned the state lead in coordinating wolf issues by the Governor to
bring resolution. He noted Office of Species Conservation has been
actively involved with Wyoming and Montana in their respective
development of state wolf management plans. Caswell stated it became
evident several months ago that the biological recovery goal has been met
as of October 31 for the three-year commitment. Technically, delisting is
appropriate. The regulatory mechanisms for Wyoming and Montana have
not been finalized, but Idaho’s plan is ready. The Governor does not want
to wait for Wyoming and Montana to finalize their plans. Office of
Species Conservation has been instructed to determine how Idaho can
proceed as quickly as possible to wolf management. Accordingly, Office
of Species Conservation has been working with the Governor’s office, the
Department of Interior and others toward today’s presentation to the
Legislature. It is their intention to ask the Bush administration to
reconfigure the population segment by which Idaho’s fate and success of
delisting the species are dependent. (A copy of the letter is attached.)

Co-Chairman Stevenson acknowledged Keith Lawrence and Curt Mack,
Nez Perce Tribe.

Michael Bogart, Legal Counsel, Office of the Governor, stated the
Governor is fully aware of the emotional and value-testing components of
this issue. He noted the Governor, when he was Senator Kempthorne in
1994, was highly offended by the reintroduction of the nonessential,
experimental wolf population into Idaho. This program should not have
happened in the first place as people’s lives and property have been
impacted, on a daily basis, in some parts of the state. Today’s proposal
attempts to bring Idaho solutions to the problem. The approval of the
Legislature of the Idaho Wolf Conservation Plan is significant. The
success of the Endangered Species Act depends upon active involvement
by the stakeholders and the state. He noted the Department of Interior has
conveyed a willingness to work with the state. The challenge is to turn the
problem around so the values of Idahoans and not the bureaucrats in
Washington, D.C. The President, Idaho’s congressional delegation, and
Department of Interior are providing their support in the state’s endeavors
and the Idaho Wolf Conservation Plan. He noted four areas: (1) the Bush
administration will be asked to reconfigure the population segment; (2)
discuss with the Department of Interior reconfiguration of the existing l0j
rule for nonessential, experimental population; (3) request the Bush
administration engage in an advance notice of proposed rule making that
will accommodate Idaho’s interest and path toward delisting; and (4)
define the necessary Idaho statutory language.

Dr. Greg Schildwachter, Office of Species Conservation, reported the
wolves have been successfully reintroduced as an experimental population
and the state needs to focus on management. During his slide
presentation, he noted regardless of the exact number of wolves, there is a
steady increase in population distributed throughout the state.
Schildwachter said Idaho’s interest is to manage elk and deer, protect
livestock and private property from problem wolves and to receive fair
compensation for losses. He noted the necessity of implementing the wolf
plan, which gives immediate management authority, reaffirms the 1988
agreement with USDA Wildlife Services for killing problem wolves,
reaffirms the three state agreement with Wyoming and Montana, reaches
an agreement with the Nez Perce Tribe regarding cooperation and
oversight by the Governor’s Office of Species Conservation and the
Legislature. Schildwachter reviewed what would need to be done on the
federal level for an orderly transition to state control. He informed the
Committee of the estimated costs for Idaho control, initial and future costs
and personnel additions.

Upon inquiry from the Committee, Schildwachter responded to questions
regarding the Wyoming and Montana plan progress, the reference to
advanced rule making, funding of the management plan, the legislative
role and a proposal to update language in the Code.

Bogart stated the draft proposal for proposed legislation is still being
finalized, but will include the provision of an annual report to the
Legislature.

Schildwachter stated they are developing a time line for delisting and how
landowners and homeowners impacted by wolves will be able to deal with
problem wolves.

Steve Huffaker, Director, Department of Fish and Game, explained the
definition of “Special Species of Concern.” He noted state agencies are
coordinating their efforts on the wolf plan. Huffaker said that wolves are
well past biological recovery in the Western United States. He explained
findings of studies regarding the impacts of wolves on elk herds and the
difficulty in determining the exact number of wolves. Huffaker informed
the committee the wolves will move to areas where game herds are more
plentiful and this results in the fluctuation of the predator/prey system.

There being no further matters to come before the joint committee, the
meeting was adjourned at 3:05 p.m.

Motion by Senator Schroeder to approve the minutes of January 17, 2003;
seconded by Senator Pearce.

Substitute motion by Senator Stennett to include in the January 17, 2003,
minutes the verbatim excerpt of Marcus Gibbs’ statement, to the seventh
paragraph, to the committee regarding political affiliation; seconded by
Senator Kennedy. After committee discussion clarifying the reason for
inclusion of the verbatim excerpt was to provide an accurate record of
Gibbs’ statement as it was an important portion of his statement. Senator
Kennedy noted it was important to include the verbatim excerpt in order to
clarify the minority report filed with the Secretary of the Senate.
Chairman Noh apologized for not remembering the last three words of the
transcript; he only remembered that if Gibbs were to run for office, he
would probably run as a Republican because that’s the only way he could
get elected and the three remaining words somewhat qualify that
statement.

Substitute motion carried by voice vote of the committee.

Motion by Senator Burtenshaw to approve the minutes of January 20,
2003; seconded by Senator Pearce. Motion carried.

Motion by Senator Stennett to approve the minutes of January 22, 2003;
seconded by Senator Pearce. Motion carried.

Motion by Senator Williams to approve the minutes of January 27, 2003;
seconded by Senator Pearce. Motion carried.

Senator Stennett introduced RS 12758C1; proposed legislation to
eliminate the display on point of sale transactions, the social security
number of an individual purchasing or applying for any license through
the Department of Fish and Game. Motion by Senator Little to send RS
12758C1 to print; seconded by Senator Brandt. Motion carried.

Jim Kempton introduced himself to the Committee and provided
informational brochures pertaining to the Northwest Power Planning
Council. (A copy of each is attached.) Additionally, Kempton provided a
copy of the February 7, 2003, news release by Bonneville Power
Administration news (a copy is attached) which announces an expected
raise wholesale power rates for utilities and large industrial customers due
to poor water conditions and low secondary (surplus power) revenues.

Susan Burke, Department of Environmental Quality, explained to the
Committee RS 12894, proposed legislation setting forth the powers and
duties regarding pollutant trading requirements.

Motion by Senator Williams to return to sponsor RS 12894; seconded by
Senator Pearce.

Senator Williams requested his motion by withdrawn upon the consent of
the seconder, Senator Pearce. There being no objection the motion was
withdrawn. RS 12894 will be rescheduled for Monday, February 10.

RS 12881 was introduced by Karl Dreher, Director, Department of Water
Resources, addressing the illegal diversion and use of water without a
water right.

Motion by Senator Kennedy to print RS 12881; seconded by Senator
Brandt. Motion carried.

Norman Semanko, Idaho Water Users Association, explained RS 12842C1
is proposed legislation defining and encouraging water conservation
practices and does not subject water rights to forfeiture.

Motion by Senator Pearce to send RS 12842C1 to print; seconded by
Senator Williams. Motion carried.

Semanko then explained RS 112843, proposed legislation to ensure use of
digital boundaries to describe place of use of a water right in the Snake
River Basin Adjudication shall not increase the burden of proof on a
claimant and clarified filing of a decree with the court.

Motion by Senator Little to print RS 12843; second by Senator Kennedy.
Motion carried.

Motion by Senator Brandt to approve the minutes of January 31, 2003;
seconded by Senator Schroeder. Motion carried.

Motion by Senator Schroeder to approve the gubernatorial appointment of
Jim Kempton to the Pacific Northwest Electric Power and Conservation
Planning Council; seconded by Senator Cameron. Motion carried.

David Mabe, Administrator of Water Quality Programs, Department of
Environmental Quality, introduced RS 12894 regarding the powers and
duties associated with pollutant trading requirements. The purpose of the
change in the statute is to assure that Water Quality Standards don’t grow
unnecessarily, but that a process is maintained for Legislative oversight of
the rules and regulations to be adopted. In regard to pollution trading,
Department of Environmental Quality, along with local input, develops
basin reports to try and determine how trading should take place in the
basin. On the Boise River and the Mid-Snake River, trading programs
have been developed to enable local interests to operate a trading program.
This could also provide assistance to individuals to comply with permit
limits or Total Maximum Daily Load limits when necessary. He
expressed concern about having to adopt the extensive plans into the rules,
verbatim, Department of Environmental Quality would prefer to use a
process where they would be adopted by reference. This would save
printing and would require one page stating the reference. This makes the
reference a part of the rules; they are processed through the rule making
process. Publication and public comment and considerations of the rule by
the Legislature along with a copy of the report all occur. After approval,
they would become part of the rules in the water quality program. Upon
inquiry, Mabe stated there would be a chapter for each new basin. All the
pollution trading requirements would be in one place and not scattered
through the water quality standards. He noted the statute change would
allow Department of Environmental Quality to adopt the plans or chapters
by reference. Without specific statutory authority, the voluminous
documentation would need to be published at a significant cost. $56.00 a
page is the cost for the initial filing and then there is an annual charge of
$51.00 to maintain the administrative code.

Senator Cameron inquired about the practice of incorporation of a
document by reference. He stated the document and record needs to refer
to a specific date. Mabe replied that it was necessary to adopt a specific
document and the document could not be changed without changing the
reference. If the document is to be modified, it would be necessary to go
through the rule making process, providing the public an opportunity to
participate. Mabe noted pollution trading takes a willing buyer/willing
seller for the process to work. The pollution trading documents are the
guidance by which to operate and the value on the pounds of pollutants
being traded.

Motion by Senator Little to print RS 12894; seconded by Senator Brandt.

Motion carried by voice vote with Senators Williams, Burtenshaw and
Pearce requesting to be noted as voting “No.”

Mabe then explained RS 12925 would allow the Department of
Environmental Quality to assume the National Pollutant Discharge
Elimination System (NPDES) program from the Environmental Protection
Agency. The department of Environmental Quality has spent two years
coordinating with various interested parties to develop a consensus that the
state should pursue primacy. He noted there are some parties that have not
been able to review the proposed legislation in the essence of legislative
time. He emphasized, because of the time constraints, it is possible that
changes will need to be made. He stated that the Idaho Conservation
League had not seen the latest draft of the proposed legislation, even
though they have participated. Generally the participating group believes
that the state should be pursuing primacy.

He indicated that those participating in the group should have one more
opportunity to review the proposed legislation. Reports of the activities,
statements, documentation will be provided to the Committee after the
meeting. He stated the Idaho Association of Commerce and Industry and
the Idaho Associations of Cities were participants in the process. The
majority of the stakeholders have point source discharges or specific
discharges into live water. He noted some animal feeding permits, dairies
and aqua-culture are also involved. He stated all the parties involved need
the opportunity to review the proposed legislation.

Passage of the legislation would not be the last opportunity for the
Legislature to review. This is only a preliminary step, and no funding is
now required. Final legislation will have to be considered next year, and
that is when funds will be required. State primacy requires rule making
and federal approval from EPA Region 10 and will also be subject to
consultation under the Endangered Species Act. He noted there are two
sections in the proposed legislation which require Legislative approval of
any memorandum of understanding executed by the Director of the
Department of Environmental Quality. If the proposed legislation passes,
the Department of Environmental Quality will complete the negotiated
rules, proceed through the negotiations with the Environmental Protection
Agency, National Marine Fisheries Service and Fish and Wildlife Service
to determine if a successful consultation can be accomplished. At that
time, the Department of Environmental Quality would need Legislative
approval of the program. Passage of this legislation will make changes in
the Department of Environmental Quality’s authority and indicate if the
Department of Environmental Quality should pursue primacy.

One benefit of state primacy is that it will allow the state to determine who
needs a permit or when a permit should be issued. He noted the
Environmental Protection Agency is unable to promptly process those
permits or changes or amendments to a permit, which could have a
significant economic impact on stakeholders’ operations. Primacy allows
the Department of Environmental Quality to deal with permits at the state
level. The Decision Analysis Report 2 (abbreviated) by the Department of
Environmental Quality, December 2002, is attached.

Motion by Senator Schroeder to print RS 12925; motion dies for lack of
second. Lacking further action, RS 12925 is pending in the committee.

Marty Peterson, University of Idaho, explained RS 12967 replaces S 1057
which was introduced in the committee and sent to print. He explained
due to a mixup in communications he did not receive proposed changes
from the director of the Idaho Geological Survey at the University of
Idaho. RS 12967 makes the proposed changes.

Motion by Senator Schroeder to send RS 12967 to print; seconded by
Senator Brandt. Motion carried.

Rick Collignon, Director, Department of Parks and Recreation, introduced
to the Committee the Gubernatorial candidates: Latham Williams of Sun
Valley, Idaho and Randal F. Rice of Moscow, Idaho to the Park and
Recreation Board.

Randal Rice informed the Committee of his educational background,
stating he graduated from Lewiston High School and graduated from the
University of Idaho. He was previously employed by the Idaho
Department of Parks and Recreation in the early 1970’s. Since September
of 1973, he has been the Director of Parks and Recreation for the City of
Moscow.

Latham Williams informed the Committee of his educational background,
stating he has a degree in civil engineering from University of California-Berkeley and his master’s degree in real estate from MIT (Massachusetts
Institute of Technology). He is currently President of the Sun Valley City
Council and President of Greenfield Properties. He has been involved in
real estate development since 1988. He is President-elect for the
Ketchum-Sun Valley Rotary Club, police commissioner for Sun Valley
and has served as a volunteer firefighter for Ketchum. He and his family
are very active recreationalist. Upon inquiry from Chairman Noh,
Williams stated his emphasis on the Board will be concerning ATV issues.
He reported the experimental project in the Challis area is an excellent
opportunity to determine if the same type of project can be used elsewhere
in the state. He noted the enforcement issue connected with the issue will
need to be addressed. He would like to have personnel from the
Department of Parks and Recreation be trained as peace officers and
authorized to issue misdemeanor citations. Senator Stennett noted the
opposition of the Sheriffs’ Association and the reservation by the Blaine
County Sheriff to enforcement by the Department of Parks and Recreation
through a memorandum of understanding between entities.

Upon inquiry from Senator Stennett, Williams noted his mailing address is
Ketchum, but he actually resides in Sun Valley.

Chairman Noh provided to the Committee copies of his recent
correspondence with volunteer reviewers relating to the
WestRock/Tamarack state leases. (Copies are attached.) Winston
Wiggins, Director, Department of Lands, provided a copy of the lease,
dated June 11, 2002, between the Idaho State Board of Land
Commissioners and WestRock Associates, LLC. The original is on file in
the office of the Department of Lands. Chairman Noh stated the
Committee is the last stop in connection with the $1,300,000,000 project
which is dependent upon the approval of a forty-nine-year lease of state
lands. He noted the Committee has a responsibility of diligence in regard
to the lease and the endowment and taxpayers are protected from potential
liability. Noh has consulted with representatives from the Governor’s
office, Department of Lands, Deputy Attorney General responsible for the
lease, and Clive Strong, Deputy Attorney General.

The three reviewers of the lease, Peter Johnson, former Senator Bill
Ringert and former Senator John Hansen, have submitted their responses.
(Copies are attached.) Noh noted the Deputy Attorney General and the
Land Board have constructed a very tight contract, but there have been
some concerns raised. One area of concern is the financing for the project
is now going to be the presale of real estate. Through the project, the state
of Idaho and the Legislature should not be perceived by potential investors
as given the good housekeeping seal of sound investment in the approval
of the lease. Noh noted the lease would be used in the sale of potentially
valuable real estate. He expressed concern that if investments are lost
there is no way to come back on the state with a liability or concern issue
of misrepresentation.

Another area of importance pointed out by the three reviewers is assurance
that funds from the sale of real estate are committed to meet the
requirements of the contract, the construction proposed and the obligations
for the state of Idaho. It has been recommended that the funds be placed
into an escrow account to assure the funds are not spent elsewhere.

Chairman Noh informed the Committee that the Land Board has received
a copy of these letters from the reviewers. Based upon the information
and questions from the Committee, questions will be composed to the
Land Board. The Land Board has expressed a willingness to respond to
those concerns. The information will be available to the Committee before
proceeding with the legislation. Upon inquiry, Chairman Noh explained
there are two pieces of legislation because the lease concerns two types of
endowments. One is public school endowment land and the other
nonpublic school endowment lands. Noh noted WestRock
representatives and Ken McClure have been most cooperative in providing
any information the Committee may need.

Ken McClure, representative for West Rock/Tamarack, informed the
Committee they will be available at any time to answer any questions on
the project. He noted that almost the entire project is located on private
ground. The lease is for land for the ski hill and for two and one-half
holes of the golf course.

Kevin Beaton attorney, of Stoel, Rives of Boise, (previously Deputy
Attorney General for DEQ) provided educational information to the
committee on the Clean Water Act. The history of the CWA goes back
thirty years and is comprehensive and complicated a regulatory federal
statute. He noted it is implemented at both the federal and state level. The
implementation and enforcement of CWA by the Environmental
Protection Agency have placed an increasing emphasis on water quality
and the enforcement of state water quality laws. In an effort to achieve
water quality standards, the types of pollution sources regulated under
CWA have increased significantly. The nonpoint source activities were
left to the state for regulation. He noted there has been significant
pressure to regulate the nonpoint source activities. In conjunction with
this has been an increasing interaction between the Endangered Species
Act and the Clean Water Act. Now many federal and state agencies are
involved in the regulations under the CWA.

The CWA was passed in 1972 pertains to all of the surface water in the
United States. The goal was to attain feasible or sizable water quality
standards. Additionally, the federal government and the states were to
work together to eliminate all sources of pollution by 1985. It is up to the
states to develop water quality standards, as evidenced by the criteria
developed by DEQ. Congress provided the option to the states for control
of nonpoint sources. The types of activities that were traditionally
nonpoint sources are narrowing significantly through regulations and court
cases. He noted that confined animal feed operations were historically
treated as nonpoint sources, but the EPA is now regulating them as point
sources which require a NODES permit. Additionally, the EPA is now
requiring a permit for construction activities for an acre or more on any
time of construction site. Previously a permit was required for only five
acre sites. He stated NODES permits issued by the EPA; most states have
assumed primacy under the program and issue their own permits. The
state of Idaho does not have primacy. He noted movement is toward point
sources from nonpoint sources. An area of concern would be irrigation
return flow, because the CWA specifically that irrigation return flows are
not point sources and the EPA cannot require an irrigation district to get a
point source permit at the end of the return flow. Last year, the Ninth
Circuit Court of Appeals determined that an application of herbicides by
an irrigation district into an irrigation canal required a point source permit.

Senator Little moved to approve the minutes of January 24, 2003;
seconded by Senator Brandt. Motion carried.

Senator Cameron moved to approve the minutes of February 3, 2003;
seconded by Senator Kennedy. Motion carried.

EXCUSED:

Motion by Senator Schroeder to recommend the gubernatorial
appointment of Randal F. Rice to the Park and Recreation Board;
seconded by Senator Cameron. Motion carried.

Motion by Senator Cameron to recommend the gubernatorial appointment
of Latham Williams to the Park and Recreation Board; seconded by
Senator Little. Motion carried.

Senator Keough explained S 1056 would reduce the minimum number of
meetings to be held annually by the Board of Scaling Practices. She said
presently the Board does not have sufficient issues to hold meetings more
than twice a year. If there are significant issues, the Board could still hold
a meeting. George Bacon, Department of Lands, indicated the
department’s support for the legislation.

Motion by Senator Brandt to send S 1056 to the floor with a do pass
recommendation; seconded by Senator Little. Motion carried.

Chairman Noh explained S 1106 reflects the organizational changes at the
University of Idaho establishing the Idaho Geological Survey. Motion by
Senator Little to send S 1106 to the floor with a do pass recommendation;
seconded by Senator Brandt. Motion carried.

Honorable Roger Burdick, District Judge, Snake River Basin
Adjudication, provided fact sheets to the Committee on the SRBA. (A
copy is attached.) He informed the committee of items of particular
interest, noting the court, and DWR have a very good, cooperative
working relationship. He noted this has enabled the court and the
department to make significant progress.

The SRBA Digest is almost completed which will enable a searchable
database of all SRBA decisions. This will be free of charge to all judges.
The database will be available to others on a fee basis. He noted the
efforts to enable access statewide to SRBA proceedings and decisions.
Additional measures are to hold scheduled hearings at locations
convenient to the claimants and will hold monthly information meetings at
various locations throughout the state. Judge Burdick noted they have
received favorable comments on the monthly visits which have resulted in
the development of positive public relations. Due to budget constraints,
off-site meetings will be limited to March 11 in Blackfoot, April 10 in
Orofino, and May 19 in Salmon.

Federal reserved water rights are always issues of concern. The Hells
Canyon and Wild, Scenic Rivers rights are being mediated by Merlyn
Clark. Clark has reported good progress and results until the end. Burdick
has given Clark another month to report back. There are technical issues
that the federal government, as well as the state of Idaho, wish to review.
Clark is optimistic in those two areas. Burdick noted those issues are
quantification issues. The Idaho Supreme Court ruled that there were
federal reserve water rights for wild and scenic rivers and the Hells
Canyon area. The Hells Canyon area focuses on Rapid River for fish
migration. The Scenic Rivers is a significant group of rivers throughout
Idaho that have been designated by the federal government as “Wild and
Scenic Rivers.” The only issue before the SRBA is to determine the
minimum amount of water needed for the federal reserve water rights,
known as “quantification.”

The Nez Perce’s in-stream flow claims are on appeal to the Idaho Supreme
Court. He noted the Supreme Court has been receiving progress reports
throughout the mediation by Profession McGovern, Duke University and
Stanford University, who is the mediator. McGovern is not hopeful of a
settlement in this case. Burdick noted the state of Idaho has put forth
significant efforts for a successful mediation of the issues. There are
collateral issues that interact with the main issue. If this is not settled and
goes to trial, a trial will take four to six months to complete. Unless there
is a mediated settlement, the court process could take up to five or six
years. Burdick stated a few extremists are preventing a settlement of the
case.

Upon inquiry, Burdick stated there is a split of case authority throughout
the United States. Major states have ruled that someone, who is not a
party to the stipulation, cannot be bound by the stipulation. Idaho has tried
to encourage participation by due process. Then when an individual opts
out of the mediation, they are then on notice that the mediated settlement
will be binding on all. He noted this process was used in Basin 34 and
was successful. Despite signing off on the settlement, three individuals
changed their minds. After a court hearing, they were held to the
settlement.

Burdick explained three individuals from Arco petitioned the SRBA that
the Department of Water Resources was not appropriately administering
the intent of the settlement agreement. After a court hearing, the court
ruled that the settlement was not ambiguous. The parties can proceed
through the Administrative Procedures Act for DWR hearings and to the
district court if necessary.

Burdick stated Sage Willow is an important case to determine whether
there had been a forfeiture.

In the future, Burdick stated the A & B Irrigation District case addresses
the issue of the “amnesty statute” as it pertains to the use of waste water
for enlarging irrigated acreage.

Basins 37, 36 and 57 are the first three basins considered in the SRBA.
The three basins are almost complete with the remaining issues concerning
late claims.

The off-reservation claims for springs and fountains, pursuant to the 1863
treaty, with the Nez Perce Indians, is a significant issue. He noted the
claims are on private land. The interpretation of treaty language is under
court advisement.

In Basin 29, the water right claims of the Sho-Ban Indian Reservation
have been settled, but there are water rights on former reservation land to
be determined. These claims, known as “Walton Rights” are the first time
this issue is before the SRBA.

The scope of federal reserve water rights, pursuant to Public Water
Reserve 107, was determined by SRBA. The court is currently holding
hearings to allow the federal government to prove their claims. He noted
this involves several thousands of PWR stock water claims.

Two cases that have been appealed to the Idaho Supreme Court are LU
Ranches and Nez Perce in-stream flow claims. LU Ranches has requested
the partial decrees for water decreed to the United States for grazing
allotments be set aside. They challenge the constitutionality of the notice
procedures in the SRBA. Should LU Ranches prevail, the entire SRBA
could be in question.

Judge Burdick anticipates Basin 63, the Boise area, will be contested
because of the number of prior decrees and administrative transfers in the
development of irrigation lands.

Senator Stennett then explained S 1098 will eliminate the practice of
displaying on the point-of-sale machines the social security number of an
applicant for a license through the Department of Fish and Game. He
expressed his concern for the lack of privacy and invasion of private
information made readily available to anyone operating a POS machine.

Steve Barton, Department of Fish and Game, explained to the committee
the logistics of the information and problems associated with making the
proposed change. After committee discussion, motion by Senator Stennett
for unanimous consent to hold S 1098 for one week to enable negotiations
in an attempt to eliminate the need for legislation. S 1098 will be held in
Committee for one week.

Chairman Noh expressed the Committee’s appreciation to Toby Rood for
his assistance and diligence as a Page during the first portion of the
session. He then introduced Jovina Bigelow of Rigby, who will be the
Page for the Committee for the last half of the session.

There being no further matters to come before the Committee, the meeting
was adjourned at 3:00 p.m.

Chairman Noh informed the Committee he would be making his
Chairman’s recommendations in regard to natural resource agency budgets
to Joint Finance Appropriations Committee on Tuesday, February 18. He
intends to discuss agency roles in the economy and an assessment of
where they are. Additionally, he intends to talk about importance of the
cooperative research operations to the economy. Noh will accept
comments and recommendations from committee members.

Senator Schroeder suggested the Chairman request Joint Finance
Appropriations Committee to defund the predator count contract through
the Department of Fish and Game. Chairman Noh will provide a copy of
Senator Schroeder’s letter to Joint Finance Appropriations Committee.

Senator Williams stated he wanted to be certain the Caine Center would be
discussed as the center relates to wildlife and the veterinary portion.

Chairman Noh noted the invitation from the WestRock/Tamarack
representatives for next Saturday, February 22. He has asked the
Secretary of State if there is anything the committee needs to report for
those that participate in the tour.

Jim Caswell, Administrator, Office of Species Conservation, informed the
Committee about the depredation issue. He provided a handout to the
Committee. A copy is attached to the minutes. He reminded the
Committee of the federal 2001 fiscal year wherein Senator Craig and the
Idaho Cattle Association requested appropriation for $100,000 for
depredation which is not covered through the Defenders of Wildlife
Program. In December, 2000, Office of Species Conservation was asked
to manage the funds and coordinate with the Fish and Wildlife Service to
develop an equitable program. In May, 2001, an cooperative agreement
was signed between Office of Species Conservation and Fish and Wildlife
Service. The funding was subsequently received by Office of Species
Conservation.

An advisory group was developed included the Defenders of Wildlife
Program, Fish and Wildlife Service, three ranchers from Stanley-Challis
area, and Office of Species Conservation. The group has been working for
the past eighteen months in an attempt to develop a program for the
dispersal of funds in a fair, adequate and accountability method. Sara
Braasch, Idaho Cattle Association, assisted Office of Species Conservation
in clarifying an agreement. The agreement is set forth in the attached
handout as “Idaho Wolf Depredation Compensation Plan”, as of February
3, 2003. Counties throughout the state were informed and agreed to
participate. A board was created and a memorandum of agreement was
signed between Office of Species Conservation, the state, the county
commissioners. The county commissioners will oversee the depredation
compensation plan. The Idaho Cattle Association will make the necessary
contact with producers through a bulk mailing this week. A news release
will also be issued in this regard.

Once the fund is depleted, there is no guarantee of additional funding. He
noted additional funding has been requested for 2003. The funding has
been passed by Congress, but the amount is not the amount requested.
Caswell indicated there may be some minimum funding for next season
for the program.

The proposed guidelines recognize three types of losses plus approaches
for compensation. He noted livestock is defined as set forth in the Rule
10j. Kills would be confirmed based upon field examination; as would
probably kills. There could be unconfirmed or probable kills, but with
wolves in the area. Additionally, proactive programs have been
implemented to reduce wolf-livestock interactions. Confirmed losses are
paid at one hundred percent and fifty percent of market value for probable
losses. Compensation would be prorated among filed claims. The criteria
would be actual market value as evidenced by actual sales slips.
Compensation payments would be based on a blended price per hundred
weight for steers and heifers or calves lost. Additionally, the price per
hundred weight for market cows and bulls or dollars per hundred weight
for lambs or ewes lost would be used. Caswell noted the compensation
would be based on site specific information provided by the applicant. In
instances of insufficient, reliable evidence to determine losses, a multiplier
would be used. The actual multiplier would be determined by the board
on a case-by-case basis. Caswell further stated that compensation will not
be automatic and the board’s determination will be final.

Upon inquiry, Caswell stated the funds are appropriated by Congress to
the Fish and Wildlife Service which has a cooperative agreement with the
Office of Species Conservation. There is then an agreement between
Office of Species Conservation and the counties for the implementation of
the program. Caswell noted that Fish and Wildlife Service serves on the
review board while Office of Species Conservation oversees the program.
The program was presented to Joint Finance Appropriations Committee in
2001 for the spending authority. The funding has always been in Office of
Species Conservation’s budget. Funding concerns and audits is the
responsibility of Fish and Wildlife Service. Caswell noted the Board has
broad discretion to under or over compensate dependent upon
documentation for three years, on and off counts, show the normal death
loss, confirmed wolves on site or probable. The counties are represented
by the six counties located in the center of the wolf reintroduction area.
The representation by counties could change as set forth in the
memorandum of agreement.

Upon inquiry, Caswell clarified to the Committee that the federal funds
were appropriated in fiscal 2001, but it took to May, 2001, for the transfer
to Fish and Wildlife Service and to Office of Species Conservation
through the agreement. The funding spending authority was processed
through Joint Finance Appropriations Committee in 2001 under the
understanding that the federal funds would be coming. The funds have
been in their budget since that time, but has been unspent.

Dr. Greg Schildwachter, Office of Species Conservation, informed the
Committee on the Governor’s strategy for wolf delisting. He provided to
the Committee a proposed draft, for discussion purposes only, of the
proposed strategy. In explaining the proposed time line, he noted today
the Endangered Species Act, special rule 10j, finalized in 1994 is
controlling. Under the authority of the rule, the authorized agreements and
permitting have enabled delegation of responsibility under Endangered
Species Act for on the ground management to the Nez Perce Tribe. The
document is a contract between the federal government and the Tribe to
carry out the field work. There is also a permit to the Wildlife Services
Agency, Department of Agriculture, for wolf control which is
accomplished in conjunction with the Fish and Wildlife Service.
Schildwachter noted the three documents control the program: the 10j rule
(a federal regulation), cooperative agreement (essentially a contract)
between the federal government and the Tribe, and a permit under
Endangered Species Act authorizing Wildlife Services. The Governor’s
proposal is to expedite delisting while protecting Idaho’s interest. The 10j
rule would be amended by the insertion Idaho’s wolf management plan.
In referring to the handout copy of the federal register, volume 59, No.
224, page 60281, he noted the maps of Idaho, Wyoming and Montana
depicting the area impacted by the 10j rule. The proposed amendment to
the 10j rule would make the Idaho Wolf Management Plan the rule in that
area. An identical amendment would enable Wyoming and Montana to
incorporate their wolf management plan when it is adopted. He informed
the Committee the Idaho wolf plan was to be evaluated with the other two
states, but the proposed amendment would be implemented until the three
state plans are adopted. This is an interim step to provide an avenue for the state to proceed.

Chairman Noh noted according to the maps, the portion of Idaho, included
with Montana and Wyoming, would not be affected by the proposed
amendment. Schildwachter noted this would need to be considered by
legal counsel because it is the intention that Idaho’s wolf plan would
encompass the entire state of Idaho.

There being no further matters to come before the Committee, the meeting
was adjourned at

Ken McClure, representing WestRock/Tamarack LLC, introduced David Scott,
Vice President, Commercial Operations, WestRock/Tamarack Associates.
Scott made a power point presentation to the Committee. He stated
WestRock/Tamarack is leasing more than 2100 acres in Valley County in two
separate parcels from the state. One parcel of sixty acres is designated part of
the golf course, while the second parcel is the ski hill. The present lease is for
ten years with an extension to twenty-five years. There is then an option for
renewal for an additional twenty-four years, if the Legislature amends the
statutes to provide for a forty-nine-year lease. Scott noted a resort of this
nature is quite costly. In order to fund and finance an infrastructure, a ten-year
lease is not sufficient. The cost is estimated at more than $1,000,000,000 and
is an ambitious undertaking. WestRock/Tamarack has paid $400,000 at the
time of the lease signing and will pay $600,000 when the lease term is
extended. Beginning the fifth year of the lease, WestRock/Tamarack will pay
$250,000 annually, with annual inflation adjustments. He noted the state has
the option, beginning in 2013, to convert the lease payment to a percentage of
annual gross receipts from the leased property or whichever is greater. Gross
receipts would include ski ticket revenues, ski and golf lessons, golf course fees
and equipment rental and ancillary businesses located on the leased property.
Scott informed the Committee there is a set percentage rate set forth in the
lease which begins in 2013 to the end of the lease.

Preconstruction, safety, environmental, indemnifications, taxes, assignment,
sublease, mortgage and termination requirements are more fully set forth in the
lease which he discussed with the Committee. In addition to lease
requirements, there are environmental mitigation measures to meet various
permit conditions and agreements with governmental agencies and
organizations. A list of the additional requirements is attached to the minutes of
the Committee.

An additional handout provided by WestRock/Tamarack provides an
assessment of risk for the state if the lease extension is approved by the
Legislature is attached to the Committee Minutes.

He noted some of the benefits to the state and county is the construction of a
seven-mile pipeline to the sewage facilities, which will serve the West Mountain
area at the north end of Lake Cascade. This is anticipated to reduce pollution
to the lake from existing septic tanks. WestRock/Tamarack has an agreement
with the Idaho Department of Environmental Quality for the installation of
monitoring stations for water quantity and water quality. The monitoring
information is provided to DEQ on a regular basis. Additionally,
WestRock/Tamarack will obtain DEW approval of an air quality monitoring
system and will contribute $50,000 annually for five years to DEQ to offset
costs for staffing and administration in regards to the air and water quality
monitoring at the site.

Stream channels have been restored pursuant to agreements with various
federal and state agencies. Additionally, the riparian habitat in Rock Creek and
Poison Creek has been improved for spawning habitat and Lake Cascade
water quality. He noted there is a nature preserve in the center of the site,
which was an eagle’s nest with a nesting pair of eagles until a micro burst storm
blew down the tree. They tried to restore three trees in the area in an effort to
bring the eagles back, but they did not nest there last year.

A conservation easement on thirteen acres of WestRock/Tamarack real
property and $10,000 to the Idaho Foundation for Parks and Land has been
paid for riparian habitat for Rock Creek and Poison Creek.

In connection to Valley County, WestRock/Tamarack will be responsible for 30
percent of the cost for the improvement of the main road (Roseberry Road)
between Highway 55 and the resort. $150,000 will be paid to the County upon
approval of the project. Up to $600,000 would be paid to cover costs of
improvements to the intersection of Highway 55 and Roseberry Road. They
have received their PUD permit from the Valley County. The 404 permit was
received and completed last summer. The county has given approval for a full
buildup through the sixteen-year projection. The water rights have been
granted. The only thing pending at this time is the forty-nine-year lease
extension.

To the Cascade School District, regular payments will be made to cover the
costs of new students attributable to the resort. $325,000 will be paid for new
and upgraded school facilities. He noted $65,000 would be paid initially.

For Valley County services, $525,000 will be paid within thirty days of beginning
construction with $175,000 in each of the next two years. A fire and emergency
station will be completed by the third year and $10,000 will be paid for each of
three years to emergency services.

The Committee was shown pictures of some of the buildings on the site at the
present time. The yurts are used for cross country skiing and for presentations
to prospective real estate buyers. Half and full day tours are available at the
site now. Cross country skiing is available on Friday, Saturday, Sunday and
Monday. There has been good reception to the cross country skiing course,
which is approximately twenty kilometers.

Economic predictions, based on a full build out, were made by independent
sources and verified by Valley County. Fourteen hundred plus jobs will be
available directly through the resort. The secondary jobs are predicted to be
approximately double.

Senator Burtenshaw inquired as to the status of the grazing lease.

Jay Biladeau, Department of Lands, stated the leasing right will cease because
of the development. Certainly if the Department of Lands has any other
unleased lands that would be suitable for the grazing lease, the department
would be willing to negotiate. Biladeau stated the grazing lease holder has not
asked at this time. The lease is in good standing but will be terminated
pursuant to provisions in the lease which allows the state to terminate the lease
if the ground is put to a higher financial use.

Upon inquiry from Senator Williams, Scott stated $48,000,000 has been
invested and paid out to date, with additional ongoing funding. He noted that
figure represents expenditures before the current ownership which began two
and one-half years. The private land at the bottom has been purchased and
the permitting process has been expensive and extensive. Now the costs
pertain to marketing. He stated the current owners are people of financial
means who could continue to do this for some time in the future. They are
definitely interested investors.

Senator Kennedy inquired as to the owners of the limited liability company.
Scott reported the two major owners are Jean Pierre Boespflug, an American
citizen, educated at Stanford, and originally from France. Alfredo Miguel Afif is
the other major owner. He is a second generation industrialist in Mexico with a
variety of companies in textile, automobile parts and aerospace. His company
represents Bell Helicopters, a division of Boeing in Central America.
Additionally there is a group of investors: Don Weilmunster, an Idahoan; Dan
Skillen, a former senior executive TRW; Andres Conesa, Mexican national with
a large construction company. Scott confirmed that Weilmunster owned some
of the land adjacent to the project which was purchased from Weilmunster
approximately one and one-half years ago for cash. He still owns some
property which is under option for a possible second golf course.

Upon further inquiry, the current assets of the limited liability company will be
provided to the Committee. Financial statements have been provided to the
Department of Lands in connection with the lease negotiations. In addition,
audited statements of the company have also been provided.

Upon inquiry, Scott stated they have chosen to not put housing, in general,
around the golf course. The golf course will remain open and natural. He is not
aware of any structures on the golf course. On the ski hill, two restaurants are
projected, along with the ski lift, structures at the top and bottom to house the
lifts, and a snowmobile garage are proposed.

Senator Kennedy inquired as to the indemnification for the state by the
company and whether payment and completion bonds have been procured. He
noted the lease provides for two methods for proof of financial stability. The
provision of executed contracts necessary for the completion of the project
along with performance and payment bonds insuring complete payment and
completion is set forth in the lease. The alternative provision is the payment of
cash and irrevocable loan commitments for the construction. Senator Kennedy
stated the option of either provision rests with the limited liability company. Ken
McClure stated that the option choice is up to the company, not the state.

McClure noted there were several lawyers involved in the negotiation of the
lease. His law firm and Steven Millemann of McCall were involved in the
negotiations. Upon further inquiry, McClure noted there is a one term renewal
for twenty-four years and the terms will be the same as the first twenty-five
years.

Senator Stennett inquired as to the status of the reclamation plan and the
requirement of a sufficient bond equal to the reasonable estimate of the cost for
reclamation. Biladeau stated there is not a reclamation bond at this stage, but
it is required for the phase one construction. The amount of the reclamation
bond will be determined by the Department of Lands.

The absence of an attached business plan to the lease was noted by Senator
Stennett. Biladeau stated he did not recall the prediction of skier days. Scott
stated the projection for the initial stages is less than 100,000 skier days. The
area is not solely a ski area, but an area in which to live and for recreation.
Biladeau stated the interest of the Department was primarily on reducing the
risk through the lease and to offset any kind of risk. Senator Stennett inquired
as to the sufficiency of the reclamation bond. Biladeau stated there will be ski
lifts, two restaurants, a reservoir and a couple of out type buildings. Biladeau
said the state will require a reclamation bond to cover the costs for removal and
restoration of the land to as close as possible a natural state and plant it in
trees. Stennett noted the statutes presently require a $230 per acre maximum
bond.

Upon inquiry from Senator Pearce, Biladeau stated one reservoir would be
about 20 acres. Pearce noted most of the water rights in the state are
appropriated. The water right is coming from the developer. Scott stated the
purpose of the pond is to provide a storage area for snow making and the water
would be pumped out of the valley up to the lined pond.

Chairman Noh inquired about the funding switch from Bank of America to pre-sales of real estate. Scott stated there was an exclusive arrangement with
Bank of America Securities, formerly Montgomery Securities, as the investment
banker. Bank of America was to obtain investors for the project. He noted they
encountered investors who did not want to deal with the bank. It was in the
best interest of the project to end the relationship which was ended the first of
September. It was an amicable separation with the bank agreeing to release
them from the contract. Scott additionally stated they are reviewing several
options. One would be to sell lots, allow people to make a reservation deposit
on the lots, and after the final platting they would select their lots and complete
the purchase. He noted there are still many avenues for investment money in
the limited liability company.

Upon inquiry from Chairman Noh, Scott stated he was not aware of any
shareholders with personal guarantees as it relates to the money invested in
the project or in the corporation. There is a line of credit at the Bank of
America. The previous loan with Bank of America has been paid off as they
desire to keep the property unencumbered.

McClure informed the Committee, this type of project under a limited liability
company is under the purview of the securities laws.

Upon inquiry, McClure stated he and his lobby associate, Molly Creswell,
represent Tamarack. He stated there should be no contact by anyone else
from the company with respect to the project. If Pat Sullivan or anyone has
contacted you, they would be representing Washington Group, the contractor
for the project.

Upon inquiry from Senator Stennett, Kent Nelson, Deputy Attorney General,
Contracts and Law Division, stated the goal of the lease was to make certain
there was a liability shield that could not be penetrated. He noted it would be a
very difficult process because the indemnification section is only one level of
protection. He noted the Tort Claim Act would be applicable for any
catastrophic claims. McClure noted the provision in the lease, article nine,
which requires the company to maintain $25,000,000 in comprehensive general
liability insurance.

Scott explained to the Committee that skier days represents the number of
skiers in a season. In sixteen years, a projection for Tamarack is 375,000 skier
days. He noted Snow Engineering was the company providing projection
estimates to the company.

Upon inquiry from Senator Kennedy, Scott replied there are currently five
individuals who have put down reservations on lots in the $300,000 to $500,000
range. Potential real estate buyers are visiting the site on a daily basis. For the
first offering, lots will be in that price range. There will be lots in later offerings
that will not be in that price range. He noted these are single family lots. The
types of properties included in the 2043 living units are condominiums,
fractionals, town homes and single family along with 200 units of employee
housing on site in the village. Upon further inquiry, Scott stated the deposits
are fully refundable and are being placed in an escrow.

There being no further matters to come before Committee, the meeting was
adjourned at 3:05 p.m.

Ayes: Burtenshaw, Kennedy, Pearce, Schroeder, Stennett and Nah

Nays: Brandt and Williams

Absent: Cameron and Little

Jake Howard, Executive Director, Idaho Outfitters and Guides Licensing
Board, introduced members of the Board in attendance: Ray Lyon, Scott
Farr and Will Judd.

Ray Lyon, Boise, Idaho, appeared before the Committee in behalf of his
reappointment by the Idaho Fish and Game Commission to serve as its
representative on the Idaho Outfitters and Guides Licensing Board. The
term of the appointment is June 1, 2002 to May 31, 2005. He informed the
Committee of his personal and professional background as set forth in the
attached letter.

Scott Farr of Challis, Idaho, appeared before the Committee in connection
with his gubernatorial appointment to the Idaho Outfitters and Guides
Licensing Board. Farr is a self-employed outfitter on the Middle Fork of
the Salmon River. He presently serves on the Resource Advisory
Committee which distributes federal funds to enhance federal land
opportunities for Idaho residents.

Upon inquiry from the Committee, Farr stated the impact of wolves has
been obvious with the decline in the elk population over the past five
years. He noted the population dynamics have changed from 38 calves per
hundred to 15 calves per hundred. The eighty cow elk wintering near his
place has only three calves left. The need to start managing the wolves is
significant and will affect the cow/calf ratio. The overall effect on the
outfitters has resulted in two outfitters ceasing business. One was able to
sell his business at 15 percent of his original cost, while the other still has
his business for sale and does not anticipate being able to sell the business.
Farr said early management is needed for the recognition of the areas
which have been significantly impacted.

Upon inquiry from the Committee, Farr stated he anticipates a guided wolf
hunt when they become available could cost $3,900, the same as a
mountain lion hunt.

Senator Kennedy stated he has been inundated with correspondence
opposing S 1058 alleging the sole reason for the legislation is to stop
frivolous protests from being filed. Dreher stated the legislation is not
intended to stop the filing of protests, but is intended to equalize the filing
costs for a protest compared to the costs associated with an application.

Motion by Senator Little to send S 1058 to the floor with a do pass
recommendation. Motion died for lack of a second.

Motion by Senator Kennedy to hold S 1058 in Committee; seconded by
Senator Burtenshaw.

Roll call vote:

Ayes: Brandt, Burtenshaw, Cameron, Kennedy, Pearce, Schroeder,
Stennett, Williams and Noh

Nays: Little

Motion carried.

Motion by Senator Burtenshaw to send S 1101 to the floor with a do pass
recommendation; seconded by Senator Brandt. Motion carried. Senator
Williams will be the floor sponsor.

Motion by Senator Pearce to send S 1099 to the floor with a do pass
recommendation; seconded by Senator Williams. Motion carried. Senator
Pearce will be the floor sponsor.

Time having expired; the meeting was adjourned at 2:55 p.m.

Chairman Noh introduced Joe Jordan, Chairman of the Idaho Water
Resources Board, to the Committee.

Senator Kennedy noted, with pleasure, that Rigby’s political affiliation is
listed as Democrat. Rigby responded that the Board does not work as a
political board, but works for the best interests of all citizens of the state.

Gary Chamberlain of Challis informed the Committee he ranches in the
Challis area and has served for many years in various capacities on the
Challis Irrigation Board.

Robert Graham of Bonners Ferry reminded the Committee he is still truly
an independent.

Senator Keough informed the Committee of Graham’s cooperation and
assistance in water matters and confirmed his independent political status.

Motion by Senator Stennett to send HCR 18 to the floor with a do pass
recommendation; seconded by Senator Burtenshaw. Motion carried.

Karen Gustafson, Department of Administration, Office of Administrative
Rules, confirmed the rule was inadvertently included in the pending rules,
instead of the fee rules where it should have been.

Motion by Senator Stennett to send HCR 19 to the floor with a do pass
recommendation; seconded by Senator Burtenshaw. Motion carried.

Norm Semanko, Idaho Water Users Association, stated their support of the
legislation.

Motion by Senator Little to send H 56 to the floor with a do pass
recommendation; seconded by Senator Stennett. Motion carried.

Upon inquiry from Senator Burtenshaw, Semanko stated the district would
be able to invest the surplus funds in general obligation bonds of the state
or federal or the local improvement district bond or warrant. It would not
authorize a new bond. This would avoid having to obtain other types of
financing. The legislation would apply to Title 17, Chapter 50, which are
municipal bonds. Chapter 25, Title 43, the irrigation district local
improvement district bonds would also be eligible.

Daren Coon, Nampa-Meridian Irrigation District, stated the legislation
would allow the irrigation district would utilize surplus revenues to
purchase the bonds. This would keep the financing internal and reduce
costs.

Motion by Senator Burtenshaw to send H 124 to the floor with a do pass
recommendation; seconded by Senator Kennedy. Motion carried.

Tominaga provided to the Committee a copy of two proposed amendments
to the legislation. A copy of the changes is attached. He stated on page 1
line 39 “notwithstanding any provision to the contrary” would be added.
On page 2, line 44, “and to the chairman of the water district” would be
included. At the end of that paragraph, “The Board shall provide a
verified list of the water rights that it represents at any water district
proceeding or meeting to the chairman of the water district, at that
proceeding or meeting” would be added.

Upon inquiry, Tominaga explained why the amendments are forthcoming
at this time. The legislation was passed in the House and then submitted to
the water users associations because they were having their water district
meetings during the same time period. The water users recommended
changes to the legislation. He provided to the Committee a copy of the
legislation with the proposed amendments engrossed in the legislation. A
copy is attached.

Upon inquiry from the Committee about how curtailment of use might
occur, Tominaga stated an order would be issued by the Director of the
Department of Water Resources as to who would be shutoff and the water
master would have to follow the directions of the Director of the
Department of Water Resources. It is the Director and water master who
determine who is curtailed based upon use of priority. The basic function
of the water district is to regulate the water within the boundaries of the
water district, regardless of whether you are a ground water or surface
water user.

Upon inquiry from Senator Cameron, Tominaga stated the
“notwithstanding” language was suggested by the Idaho Water Users
Association because of their concern that this provision would apply to the
water district votes. The amended language clarifies the legislation only
applies to this section of the code and does not apply to the water district
code.

Semanko stated the proposed amendment came from the legal counsel for
the Department of Water Resources. The water district code specifically
states that voting shall be by majority vote of the water users present. The
concern was that even though the ground water district code states voters
must be in attendance, the water district code does not allow that.
Therefore, there is a direct conflict between the two statutes.

Senator Kennedy expressed concern about the method being used for
exemption as set forth in the proposed amendments. Semanko stated the
IWUA legislative committee decided if the exemption was included in the
appropriate section of the code, 42-605, it would draw attention and
possibly create other exemptions.

Senator Cameron inquired, if a water district appoints a credential
committee how does the committee ascertain whether the members of the
ground water district have the credentials to vote when they are voting by
proxy? Semanko stated the credentials are the water right number and the
size of the right. The information is provided by the ground water district
to the water district at the proceedings by a verified list. Tominaga stated
the information is already available through the Department of Water
Resources. The information is submitted at the time the ground water
districts are formed. Likewise, when members are included or excluded
out of the district, the Department of Water Resources is informed.

Motion by Senator Kennedy to send H 208 to the fourteenth order;
seconded by Senator Cameron. Motion carried.

There being no further matters to come before the Committee, the meeting
was adjourned.

Motion by Senator Brandt to send HJM 2 to the floor with a do pass
recommendation; seconded by Senator Williams. Motion carried.

Upon inquiry from Senator Burtenshaw, Howard stated the legislation
does not change the requirement of a first aid card, but changes the
procedure for renewing the license certification card. It does not change
the requirement, but changes how and when the Board review the license
certification card. It does not change the requirement of a first aid card,
just the requirement that the first aid card be on their person.

Brad Hoaglun, representing Idaho Outfitters and Guides Association,
informed the Committee HCR 12 is a fair compromise and still includes
the requirement for first aid training.

Motion by Senator Pearce to send HCR 12 to the floor with a do pass
recommendation; seconded by Senator Burtenshaw. Motion carried.

The legislation would allow the Board to promulgate rules to establish fees
for expedited, electronic, resubmittal or emergency processing of
application. Approximately 3,000 applications are processed annually.
An on-line license application program is under consideration by the
Board through the Access Idaho program. Until the on-line program is
available, there is still a problem processing applications because of
incomplete or incorrect information. The Board feels the applicant should
bear the burden of the additional costs for incomplete or incorrect
application information. The processing of emergency applications has
been abused and because it is a subjective process there is not any way for
the Board to verify the emergency. The Board would like to offset the
cost for emergency applications by a specific fee for those applications.
He noted the applications are streamlined and easy to complete.

The fiscal impact would initially be approximately $20,000 maximum and
would decrease annually because the fees would discourage fewer requests
for such processing.

Hoaglun stated the Outfitters and Guides Association supports the
legislation.

Motion by Senator Schroeder to send H 36 to the floor with a do pass
recommendation; seconded by Senator Cameron. Motion carried.

Hoaglun stated the Outfitters and Guides Association supports the
legislation. He noted the license is not a property right and cannot be sold.
The license must be turned back into the Board.

Upon inquiry from Senator Kennedy, Steve Tobiason, attorney for the
Idaho Outfitters and Guides Licensing Board, stated that no license may
be sold or transferred. Section36-2108, Idaho Code, clarifies the
application process so the applicant could be either an outfitter or guide.

Senator Kennedy further inquired whether the licensure fees are used to
fund the operations of the Board. Howard stated the Board is entirely
funded by license fees. In the instance of multiple year licenses, the fees
for the multiple license would be spread out over the time of the license.
The multiple year license is being requested by the Board in concurrence
with the industry.

Motion by Senator Cameron to send H 38 to the floor with a do pass
recommendation; seconded by Senator Brandt. Motion carried.

Motion by Senator Burtenshaw to send H 40 to the floor with a do pass
recommendation; seconded by Senator Stennett. Motion carried.

Howard stated the industry will be undergoing a change because of the
impact of wolf depredation and loss of resource opportunities. Outfitters
are changing from traditionally outfitting opportunities to non-traditional
outfitting, such as, mountain biking, snowmobiling and hiking. The Board
feels there are challenges ahead to make some appropriate changes and to
work closely with the industry without being a burden. The Board will
work more closely with the Department of Fish and Game. There is
currently a memorandum of understanding being negotiated concerning
issues within the agencies. The ability to outfit on private lands is a
concern. There needs to be some appropriate ways for that activity to

continue and allow outfitters to diversify because of the changes on public
lands.

He noted the agency is working closely with the Forest Service and the
Bureau of Land Management because these agencies are becoming more
involved with outfitting activities. There is a memorandum of
understanding being renegotiated to clarify the application process and
collaboration necessary to work with outfitters on public lands to
coordinate licensing processes. An example would be the submission of a
use report to the Forest Service or other federal agencies and one to the
Board. Additionally, the agency is attempting to make opportunities to
work with the Department of Fish and Game more visible. A geographic
information system is being developed which will include the operating
areas of the respective outfitters. This system would be on the web site
and link all the outfitting activities and the appropriate outfitter for the
area. Howard noted the outfitting business is a very dynamic business and
is undergoing change.

Upon inquiry; Tobiason informed the Committee he has not had a case
where the outfitter was outfitting within tribal lands. The Board does not
license outfitters to operate on tribal lands. These lands are the tribes own
sovereign area of operation.

Upon inquiry by Senator Stennett, Howard stated the South Fork of the
Snake River is already limited on the number of boats. The Board is
currently reviewing the resource and will limit the number of outfitters. In
regard to the Jackson Hole guides, Howard noted there are a number of
licensed outfitters on the South Fork. Each outfitter is limited to three or
four boats a day. There is an issue of unlicenced outfitters in the state. He
noted one aspect is Hyde Outfitters are being confused with Hyde Boat
Company. There is a sticker issued by the Bureau of Land Management
for the guided boats in that area each year. Those outfitters are licensed.

Motion by Senator Williams to approve the minutes of February 19, 2003;
seconded by Senator Brandt. Motion carried.

Senator Noh inquired if general funds have increased since the original
appropriation and how the percentage of the general fund versus the private
portion of the fund stands? Litz stated the general fund and the assessment
have remained the same. Thirty percent of the general fund is for advisors who
administer stewardship programs which help non industrial private land
owners. Another 35 percent is funded out of the general fund and 35 percent
out of the assessment.

Jane Gorsuch, Vice President of Idaho Affairs for the Intermountain Forest
Association, stated their support. She stated she also represents the Associated
Logging Contractors which are in support of this bill. She presented to the
committee a letter to the department from the Idaho Forest Owners
Association in favor of the legislation. (See attached.) She stated the
association’s newsletter states their support of the legislation. These three
groups form the majority of forest land owners in Idaho based on an acreage
basis.

Upon inquiry from Senator Burtenshaw, Litz stated FPA inspects logging
activity to insure compliance. He further stated it is critical to validate that the
operations are performed legally and in an environmental safe manner.

Chairman Noh commented that periodically an audit tour is conducted to
evaluate procedures under the Clean Water Act and management practices.
Litz stated DEQ performs an audit every four years and during the other years,
the Department of Lands conducts an internal audit.

Senator Little noted this is a 100 percent increase and asked if the fund was
depleted because this program helped with certification for industrial timber
land owners. She responded that the companies need the reports on the
certification process for verification of compliance with Forest Practices Act.
There is an increased demand for the tracking mechanism.

Upon inquiry from Senator Burtenshaw, Litz stated the five cents were added
prior to 1993 and have not been changed.

The reason for the legislation is because of the sale of a mill operation and
land in north Idaho two years ago. The attorneys interpreted the statute
differently and even though the matter was settled, it is necessary to clarify the
statutes. The legislation has been reviewed by the Attorney General’s office
and the Department of Lands. The clarifications are basically what the
assessment year is versus the payment year.

Senator Cameron asked if the intent was to send the letter and questions to the
Land Board and wait for a response before acting on the legislation. Chairman
Noh responded that was the intent as the committee had been provided with a
prior draft of the questions. He further stated that after the response from the
Land Board, there will be a public hearing.

Senator Kennedy informed the Committee of his role in reviewing the letters
from the three outside experts and the comments in the draft questions to the
Land Board. He stated that in reviewing the three letters, several comments put
the Committee on notice to exercise due diligence as a committee or as a body
of the Senate. Chairman Noh expressed appreciation for Senator Kennedy’s
efforts.

Upon inquiry from Senator Little, it was noted the proposed lands under H 488
(2002 session) have an agricultural exemption. Additionally, there is a
stipulation that the land will be taxed at agricultural rates and only the specific
parcels on which construction takes place will be at the development rate.

Senator Pearce stated he talked with Ken McClure and the developers
recognize a certain amount of risk involved. Senator Pearce requested that the
state lease to the Indian Valley Cattle Company continue, as well as allowing
Tamarack to proceed. McClure stated Tamarack had no problem with the
proposal and he would consult with the Land Board. There was no opposition
expressed among the Committee.

Bennett noted some of the issues in the Bureau area include a proposal to
review grazing regulations. There will be a federal notice of purposed rule-making to ask for suggestions, as the rules have not been formulated. There
will be four meetings held in the west to give the director and secretary some
idea of the scope of the changes. These meetings will be held in Reno,
Nevada; Billings, Montana; Santa Fe, New Mexico and Washington, D.C., and
Idaho should have input into those regulations. Some of the ideas are to
extend the time of non use from three years to five years. Also, a reserved
common allotment is being considered where land could be held for ranchers to
use during times of burnout or drought. Another option is looking at
eliminating the conservation use grazing permits that were put in place in 1994.

Another issue of high priority is off road vehicles. BLM has developed a
statewide off highway vehicle strategy document, which is now in draft form.
The first section contains the policy which would be a good source book for the
off highway vehicle policies. The second section will be an action plan. In a
meeting with the resource advisory council, the issue of statewide off highway
vehicle use was the top priority. BLM is working with Forest Service,
Department of Parks and Recreation, and the Department of Fish and Game
toward that effort. Another issue is implementation of national fire plan and
healthy forest initiatives. He noted there is a considerable hazardous fuel
reduction program underway. This year seven-two projects will cover 116, 000
acres. In addition there are another sixty-one projects in the planning stage.
Another issue is the stewardship contract, which provides an opportunity to
trade goods for services. He also stated if there was a hazardous fuel situation
in the community, it could be cleaned up and the materials would be provided.

Upon inquiry from Chairman Noh, Bennett stated stewardship contracting
could include rangelands with the contracting tied to healthy forest and healthy
rangelands. Bennett stated there is value there that can be traded for services,
such as trading forest and grazing fees. He stated there are examples on range
lands where stewardship contracting would definitely work in weed control.
BLM and Forest Service representatives have contracted to use sheep and goats
to graze obnoxious weeds. He stated there is a citizen-based group trying for a
consensus on wilderness, grazing, range improvement issues in Owyhee
County and Senator Crapo is working on legislation to make that permanent.
Bennett noted that BLM is not a member of that committee, as it is citizen
drive, but BLM is in support of the efforts.

Senator Noh thanked Bennett for the review and asked how the committee
could help to prevent listings of species. Bennett stated one area would be to
allow for a state group work to formulate practices for the management. He
stated is important to manage the species to protect them from potential
listings. Chairman Noh asked about the relationship of working with the
Department of Fish and Game without the additional funding. Bennett has met
with the director of the Department of Fish and Game, but has yet to meet with
the Office of Species Conservation.

Chairman Noh stated in view of the tight budget year, there had been talk of a
closer working relationship and sharing resources between the Forest Service
and BLM. Bennett said that there was currently an effort called “Service
First” to co-locate a number of officers along with a change of boundaries and
management to combine offices.

There being no further matters to come before the Committee, the meeting was
adjourned at 3:00 p.m.

She noted the commission would have the authority to study, investigate,
develop and select strategies with the Department of Water Resources, the
Department of Environmental Quality, U.S. Fish and Wildlife Service and
the U.S. Army Corps of Engineers in relation to native fish, scenic beauty,
health, recreation, transportation and commercial purposes necessary and
desirable for all the inhabitants of the state. The legislation also sets out
that the commission shall have the authority to receive and direct any
mitigation monies into the fund created by the commission.

Keough noted the legislation does not authorize the commission to
establish or require minimum stream flows or lake levels which may only
be established pursuant to Idaho Code.

Further, the legislation creates in the state treasury the fund which shall
consist of monies from appropriations, federal funds, mitigation monies,
donations or monies from any source. Monies in the fund are to be
perpetually appropriated and may be dispersed for corrective actions to
complete the measures which pertain to the duties of the commission. The
release of any mitigation funds shall be authorized by the State Board of
Examiners. Monies in the fund may be used to pay administrative costs.

Keough stressed the concern of the communities of uncertainty of lake
levels and the inability of the communities to participate in discussions
regarding the lake levels. The establishment of the commission would
provide an avenue for consensus building and negotiations by the
concerned communities. She noted because the Department of Fish and
Game is already involved in the management, the department was not
included in the list of state agencies. She stated the legislation is intended
as a tool to enable participation by the affected communities.

Representative George Eskridge informed the committee that it was
important for the affected communities to have a higher degree of standing
in relation to the determination of lake levels. He informed the committee
of the uncertainty of lake levels two years ago due to the drought and the
difficult negotiations necessary to have input into the decision making
process. Ultimately, the Corps of Engineers decided that no further water
from the lake was necessary, but the economic concerns should have had
more influence.

Chairman Noh noted the dam was built as a flood control project by the
Corps and because of the Endangered Species Act, the federal agencies
have been able to open the head gates and lower lake level.

Michael Bogert, Legal Counsel, Office of the Governor, stated the
biological opinion of December 2000, by the Fish and Wildlife Service is
the guiding document regarding the lake level because of considerations
under the Endangered Species Act. He noted the Fish and Wildlife
Service has jurisdiction over the fresh water fisheries that have ESA
species implications on or around the lake and the operation of Albany

Falls. The operation by the Corp. is contained in the biological opinion
issued by the Fish and Wildlife Service. There is one provision in the
biological opinion which refers to the lake levels and a direction to the
Corps. on the operation of Albany Falls. The primary species of concern
is the bull trout. The other species are listed in the legislation. Upon
inquiry, Bogert stated the anadromous fish which come under the
jurisdiction of the National Marine Fisheries Services do not pertain until
the confluence of the Salmon, Clearwater and the Columbia Rivers. The
operation of the Albany Falls project is believed to have some flow
implications. In this case, the NMFS biological opinion, related to Albany
Falls, is part of the Federal Columbia River Power System. He noted there
are two separate documents: one by the National Marine Fisheries Service
for sea going fish and one by Fish and Wildlife Service for resident fish.

Upon further inquiry from Chairman Noh, Bogert stated the water right,
held by the Governor for the benefit of the public, is protected by
legislative action placing all of the unappropriated waters in the lake in
trust. One of the legal issues to be determined is the scope of the trust.
The operation of Albany Falls and the directives by Fish and Wildlife
Service could have some impact on the issue. At this time, the issue is not
significant enough to warrant judicial interpretation of the water right.

Senator Keough stated there is an outlet dam, managed by Avista, on
Priest Lake which would allow water to go into Priest River and then
downstream.

Larry LaBolle, Manager, Avista Corporation, informed the committee that
the outlet dam at Priest Lake is owned by the State of Idaho. The water
right to the storage is owned by the state and is operated by agreement
with Avista.

Chairman Noh noted the first apparent threat to Idaho water was the
potential for developing agriculture in the Columbia Basin in Oregon and
Washington. Concern for the appropriation of the lakes resulted in the
Legislature created the first minimum lake level water rights in the nation.

Bogert noted the handout provided to the Committee, (a copy is attached)
and the graphic comparison of H 110 with H 254 from the 1993
Legislative Session and H 256aa from the Legislative Session of 2001,
which established commissions for Big Payette Lake and Lake Coeur
d’Alene projects. He noted there is precedent, through these projects,
for the cooperation of state and federal agencies for the local communities
who are impacted by the such projects to participate in the management
decisions. There is a clear role for the Department of Fish and Game to
advise the Fish and Wildlife Service on the lake levels.

Chairman Noh stated Bogert’s letter, provided to the Committee, is an
attempt to respond to the opinion of the Deputy Attorney General (a copy
is enclosed). He stated the essence of the opinion was that it is not legally
possible through H 110 for the commission to get in the way of other
existing legal authorities which have statutory responsibility to fulfill
certain obligations. The commission would not be able to take the place of
or conflict with any of those entities. Bogert stated he was in agreement
with the Deputy Attorney General’s opinion. He referred to two specific
provisions of H 110 which set forth clear direction that the commission
shall have the authority to study and investigate and select ways and
means with the Department of Water Resources and with the Department
of Environmental Quality and with the U.S. Fish and Wildlife Service and
the Army Corps of Engineers. Additionally, subsection two sets forth a
disclaimer of any ability to set lake levels and minimum stream flows,
which is a process left to the Water Resource Board. He stated there is no
effort by H 110 to amend any of the organic statutory provisions of any of
the state agencies that are implicated in the coordinated effort.

Senator Kennedy noted H 110 is one page long while the Attorney General
opinion is twelve pages and the representations from the Governor’s office
is seven pages. He further noted the Department of Fish and Game is not
included in the commission responsibilities. He inquired why the services
of the U.S. Fish and Wildlife Service and not the Department of Fish and
Game would be used? Bogert responded that the fact the Fish and Game
Commission is not mentioned is not an indication that the legislation can
succeed without the department. If the commission is enacted into law, it
would be a complete failure not to have an active participation by the
Department of Fish and Game. The five appointments to be made by the
Governor will in all likelihood, include the Department of Fish and Game,
who have the best understanding of the conservation measures.

Senator Kennedy stated according to H 110 the commission does not have
authority to enter into negotiations with the Department of Fish and Game.
The legislation specifically authorizes the commission to enter into
strategies with the Department of Water Resources, the Department of
Environmental Quality, U.S. Fish and Wildlife Service and the U.S. Army
Corps of Engineers. The Idaho Department of Fish and Game is not even
recognized. Senator Keough responded that it was not intentional. She
noted there were five different people involved in drafting the legislation
under a consensus. The omission was an oversight and the intent was to
provide another tool in the effort.

Upon inquiry from Chairman Noh, the five individuals who drafted the
legislation were Representative Eskridge, Representative Campbell and
Senator Keough along with Michael Bogert and Ford Elsaesser, a
Sandpoint attorney, who has been active with local groups in litigation on
the lake level issue.

Senator Kennedy inquired regarding the membership of the commission
and the inclusion of the regional director of the U.S. Fish and Wildlife
Service. If there is no objection to the Department of Fish and Game as
one of the partners, why would it not be appropriate to amend H 110 and
so indicate the Department replace the regional director of the U.S. Fish
and Wildlife Service. Senator Keough stated it may be appropriate under
the duties of the commission, to include the Department of Fish and Game
along with the other state departments. Designation of the regional
director of the U.S. Fish and Wildlife Service is for the need to have
someone from that agency on the commission in order to have some
weight with the Army Corps of Engineers and National Marine Fisheries.

Upon further inquiry from Senator Kennedy, Senator Keough stated there
are a variety of sources for mitigation funds that are ongoing through the
construction the Albany Falls Dam and also through the Northwest Power
Planning Council or Bonneville Power Administration. If the commission
was established, it might be able to avail themselves of some of those
funds. Senator Kennedy inquired if there would be any effort to use the
mitigation funds now on deposit in any of the special accounts under the
control of the Department of Fish and Game. Senator Keough stated there
was no effort to use those funds nor is there an effort in connection with
the funds from Avista on Cabinet Gorge Dam.

Bogert stated the mitigation monies are going into conservation projects
and the state agencies impacted by the legislation have contractual
obligations. He noted the Department of Fish and Game has contractual
obligations with the Bonneville Power Administration. The legislation
does not propose to interfere with those contractual obligations. They are
hopeful of including all stakeholders into the commission for the dialogue
to ascertain the types of projects to be funded.

Senator Kennedy further inquired as to the funding sources for the
proposed commission. Bogert stated the legislation does not authorize the
commission to interfere with any contractual relationship with any of the
departments or agencies. He further stated the Attorney General’s opinion
sets that out. There is no intent to breach those contracts. Senator Keough
stated the proposed legislation is to establish a separate fund for the
commission which would not take funds from some places. She stated she
there was not a need to change the legislation.

Chairman Noh inquired whether future funds that would normally go to an
agency as mitigation funds from future relicensing agreements or from
Bonneville Power funds would be available for the new commission.
Bogert responded affirmatively.

Senator Stennett inquired as to why a prohibition on commission
establishment of minimum stream flows is not contained in the legislation.
Bogert stated there were two amendments to the legislation which are
contained in the engrossed version of H 110. Copies of the engrossed
legislation were obtained for the committee.

The first amendment describes the establishment of minimum lake levels.
Keough noted that Idaho law already sets out how they are established.
The other amendment changes a “shall” to “may” in regard to membership
of the commission. The reason for the change was because the southern
tip of Lake Pend Oreille is actually in Kootenai County. This would allow
the Governor to appoint citizens that live around the lake regardless of the
county in which they reside.

Senator Stennett inquired as to the term “perpetually appropriated.”
Keough stated monies could come from a variety of sources. Senator
Cameron explained that JFAC could appropriate funds, but is not
mandated to do so. He further explained perpetually appropriated would
have the effect of preventing the commission from the impact of hold
backs or reversions. Any money generated by appropriation or other funds
would stay in the commission’s control and there would not need to be
additional spending authority.

Time having expired; the discussion was continued to Wednesday, March
12, 2003. The meeting was adjourned at 3:05 p.m.

EXCUSED:

Upon inquiry from Senator Pearce, Collignon responded the oversight and
management of the fifteen plant species on the list will be officially turned
over to the Department of Fish and Game. He noted, through an
agreement, between the departments this was already taking place. The
legislation would simply clarify and officially shift the oversight and
management and would omit the Department of Parks and Recreation
from the process.

David Hensley, Office of Species Conservation, stated OSC supports the
legislation.

Virgil Moore, Department of Fish and Game, stated upon inquiry from
Senator Stennett, the department would process the list of species through
the Fish and Game Commission with the management planning process.
This would mean the list of species of concern would be included
specifically in the management plan, would go through the public process
to the Commission through the Governor’s Office for review legislation is
then proposed annual for Legislative approval. There would essentially be
no change from the current process.

Roger Fuhriman, Department of Fish and Game, upon inquiry from
Senator Pearce, stated the legislation has been considered and is supported
by the Commission and the Director’s Office. He noted the same issue has
been recommended by the Governor’s Blue Ribbon Task Force.

continuation

After discussion by the Committee, Senator Burtenshaw proposed deletion
of “are perpetually appropriated and” language on line 16, page 2, of the
proposed amendments to H 110aa. Senator Keough stated she had no
objection to the deletion.

Sandra Mitchell, representing State Snowmobile Association,

The issue of a lapsed license and a violation need to be addressed because
by the time the alleged violation is investigated, the license could have
lapsed or expire. The legislation would allow jurisdiction to continue with
the Board. He noted some may seek to be relicensed in the future, but
after they sit out for a time and there has not been a determination on the
alleged violation, the Board would only have a complaint without an
investigation. Additionally, the legislation changes the statute of
limitations to a time either from the date of violation or the date of a
conviction. Upon inquiry, Tobiason stated the advantage of being able to
obtain injunctive relief would provide for an immediate remedy which is
not afforded under the current process.

Jake Howard, Executive Director, Idaho Outfitters and Guides Licensing
Board, stated there are approximately 430 outfitters in the state. There are
not a large number of unlicenced outfitters, but they do receive a number
of complaints. A lot of the complaints are unfounded because people do
not understand or distinguish between a personal trip and a guiding trip.
There are a few operators from other states that operate within Idaho. He
estimated there were ten to fifteen last year. Those complaints have not
been pursued because a case has not been developed, but the ability to get
injunctive relief will assist in investigation and to stop the activity.

Howard noted that the problem of alleged violations by a licensed operator
is also of concern. One case involves approximately twenty-five alleged
fish and game violations. The operator could let his license lapse and then
the Board would not have jurisdiction under the present statutes. The
proposed legislation would continue the Board’s jurisdiction and allow for
injunctive relief through the courts.

Brad Hoaglun, lobbyist, representing Outfitters and Guides Association,

stated the organization supports the legislation. He noted the association
feels the advantage of injunctive relief is a minimum authority the Board
should be able to exercise. The ability of the Board to expedite and handle
the alleged violations gives the industry a better perception by the public.

Access Yes is a proposal developed by the Fish and Game Advisory
Committee, appointed by the Department of Fish and Game and the
Department of Agriculture, to review depredation, land owner
appreciation permits and Access Yes. The advisory committee has been
working on Access Yes for three years by reviewing programs from
sixteen different states. The sample programs pay land owners who allow
hunters and fisherman access to their land. The types of access relate to
upland birds, big game hunting, fishing and also to access private land to
public lands. The program would be voluntary and landowners would bid
into the program. He noted this is similar to some of the agriculture
programs of USDA. Landowner compensations could be direct funds,
trade for conservation development or access development on the land.
The land would be leased from the landowners. Landowners would have
an opportunity each December to enroll in the program. A landowner
proposal would be submitted by the landowners to the department which
would make an evaluation based on historic knowledge or onsite review.
The proposals would then be evaluated by a five-member sportsman’s
advisory team in each region. Proposals would be evaluated on a variety
of issues: amount of acreage, type of access, the hunter numbers, and
regional needs. After the bids are selected, prioritized and funded the
properties would be identified on the internet and in an informational
brochure. The properties would be statewide. There would be different
kinds of projects in each of the regions. It is anticipated the funding would
be split in half, with one-half equally divided among the regions, one-quarter of the funds would be divided based on the number of properties
enrolled, and the remaining one-quarter would be held for administrative
purposes and any unfunded regional projects.

He noted the programs in other states cost between $1-2,000,000 which
are the proposed levels for Idaho. The Fish and Game Advisory
Committee proposes the sale of lottery tags over the possum system with
marketing by specific interest groups. Another funding source could be a
small across the board fee increase or a habitat stamp. He noted the
habitat stamp is a good source because it is a user based. Legislation
would be needed next session. Presently existing funds would be used to
begin the program. One source would be the $150,000 generated from the
secondary depredation account that goes into the designated funds and
also from year end savings from a variety of programs. He estimates the
need for approximately $250,000 for this year for the program.

Some of the sample proposals are 1200 acres in the Panhandle for white-tailed deer and turkey hunting; 14,500 acres of pheasant hunting land in
the Genesee-Lewiston area bid at $1.50 per acre which would be used to
hire a land manager; in the Emmett and Squaw Butte area use would be for
upland bird, mule deer, and elk hunting; and Owyhee County, access to
private land through public land. He noted the bids range from $1 to $5 an
acre, but a significant group was free with some help in developing
parking or fence crossovers. A large grazing association in the Shoshone
Basin, south of Twin Falls, 10,200 acres bid $.25 per acre for sage grouse
and antelope hunting access. From Rockland to Preston, a couple miles of
Bear River, would provide fishing access. Additionally there are 4,000
acres interspersed with 4,000 acres of school land and 20,000 acres in the
Blue Ridge area for access. In the Idaho Falls area, about 16,000 acres in
the Tex Creek area could be for grouse and mule deer hunting. In the
Salmon region, there are bids for river access to the Salmon for steelhead
and salmon fishing. The total acreage is approximately 70,000 acres.

Upon inquiry from Senator Little, Unsworth stated under current statutes
there is an exception for leasing to the state in relation to liability. He
stated an Attorney General’s opinion reports that liability should not be a
concern. Upon further inquiry, Unsworth stated the land access is not
wide open as the landowner may bid with any restrictions. He noted some
restrictions on the sample bids were walk-in only, vehicles restricted to
designated routes, and five hunters per week with check-in with a
landowner.

Upon inquiry from Chairman Noh, Unsworth stated the Department of
Fish and Game is doing an internal review of the wildlife health lab. The
functions of the lab and how it interacts with department employees and
with the Department of Agriculture, as well as if the department should be
doing live animal research at the facility are some of the issues under
review. He noted the facilities are expensive to maintain and a good
portion of funding is one-time monies. The veterinarians must continually
seek funding from other areas. Being able to work with the Department of
Agriculture has facilitated better work on projects over the last several
years. They are currently working on chronic wasting disease, brucellosis
and West Nile virus. The Department of Fish and Game is determining
from employees how the laboratory is being used and how it could be used
differently. He noted the conservation officers use the lab for forensic
purposes and for DNA analysis. The internal review is about 50 percent
completed at this time.

Senator Williams inquired about the feasibility of joint facilities.
Unsworth noted there is probably some duplication of efforts. The
veterinary closely monitors issues for both departments. In relation to
animal holding facilities, there is a potential for joint facilities but budget
considerations do not permit such at this time. He noted it is expensive to
maintain individual facilities.

Chairman Noh noted the lease by the Department of Fish and Game from
the University of Idaho was entered into without the knowledge of the
Department of Agriculture or the Legislature by the Director ten years
ago. He stated this would be a good time for a review of facilities.
Unsworth noted the majority of research is in connection with the
Department of Agriculture and the Caine Center. The advantage of having
a separate facility is better control of experiments and there are some
established diseases on the Caine Center premises.

EXCUSED:

Upon inquiry from the committee that approval of the lease would
significantly increase the likelihood of the project succeeding. One of the
primary concerns of some members of the committee is that the approval
by the Legislature of the forty-nine-year lease will be interpreted as an
endorsement of a sound investment or that the investment is likely to
succeed. Biladeau stated the legislation would allow long term leasing for
the land which would give this use of the land a better opportunity to
succeed. He stated the Department of Lands is not endorsing the project.
The lease sets out that the state is not in partnership with the developers.
The lease is a landlord-tenant relationship only. Biladeau noted that an
investor cannot assume that the state is taking a position on the risk or
soundness of the investment.

Senator Cameron inquired as to how many committee members submitted
questions for the Land Board. Chairman Noh stated the committee was
invited to submit questions; three committee members and Chairman Noh
submitted additional questions along with the responses from the three
outside reviewers. Senator Cameron expressed concern that the questions
are portrayed as concerns of the committee when a majority did not submit
concerns. He stated one of the outside reviewers was an opponent of the
project for some time. Cameron stated he did not want to be portrayed as
one who submitted questions. Chairman Noh noted before the questions
were submitted to the Land Board, the Committee had an opportunity to
review and discuss them several times. There has been no indication to
Chairman Noh that a committee member did not want to be associated
with the questions. Chairman Noh stated the questions were forwarded to
the Land Board from the committee and they represent questions which
were raised by the committee members or the outside reviewers.

Senator Stennett stated the lease presented to the Committee can be
amended at any time by the Land Board without legislative review.
Biladeau stated the legislation is not approval of the lease but approval of
the land for long term leasing. The lease has been executed. He noted
long term leasing would be a benefit for the lease, but there could be
modifications if the parties agree. The Land Board has had considerable
experience in dealing with various types of leases and contracts. The lease
is viewed as a landlord-tenant relationship between the Board and the
developer.

Senator Stennett noted the project has been presented on a positive note,
but there is no certainty in the proposal. Biladeau stated the question of
certainty has been addressed as much as possible within the lease by
protecting the endowment and risk reduction while maximizing the return
to the endowment.

Chairman Noh noted the email from Archie Banbury, Valley County
Assessor (a copy of which is attached) stating the exemption lost by
Tamarack is for timber, but the exemption for agricultural is on 398 plus
acres in Valley County. Banbury stated the land, if subdivided, would
qualify for partial exemption under H 488.

Gestrin stated he agrees with the assessment, but noted there has not been
a final plat filed. He further stated that if the project goes forward, the
potential to double the tax base in Valley County, even though the project
has been downsized from its original concept. He noted Valley County
has taken a conservative approach to the revenue projection.

Chairman Noh indicated the due diligence conducted by the Land Board
on the project in relationship to the major investors is a Dun & Bradstreet
report (a copy of which is attached) from 1999 and includes information to
1966 on a major enterprise in Mexico by Mr. Afif. Chairman Noh
inquired if there was any other due diligence done on the backgrounds of
the major investors. Gestrin stated he had no formal information on the
assets of the principals. He stated he has met the principals and is aware
of those reports and the assets in Mexico. The review by the Valley
County Board of Commissioners is based on land use planning not success
or failure of the project.

Chairman Noh noted that the state and the Legislature, by approving the
legislation, are not endorsing the project for success or failure. Gestrin
noted that Valley County is in the same position and agrees with the
assessment.

Senator Stennett inquired as to an easement to the property and if the
county would be maintaining the road across private property to the state
property. Gestrin stated the county has not been involved in that process.
The county would not be involved in building the road but would only be
involved in its maintenance if it became a public road. Valley County
would only accept the road if the road met the county standards.

Upon inquiry from Senator Little, Gestrin stated the developers paid to
cover the impacts until the property tax increases take effect. Most of the
increases were based on new construction and not necessarily on the land
value. The land value is an unknown at this time. He noted the school
districts were comfortable with the up front funding.

Chairman Noh noted the statement by Mr. Eaton that an affirmative vote
by the Legislature would give the area some assurances that the economy
will improve is inaccurate. The vote is only an expression that the school
endowment funds will benefit and not a judgment as to whether economic
conditions are going to improve or not improve.

Hart further stated that reconsideration of the financial capabilities of the
WestRock/Tamarack is necessary. Currently WestRock has no financing.
Every bit of financial data submitted with the proposal is no longer valid.
He stated there is a need for more answers and a reassessment of the
current proposal.

Motion by Senator Cameron to approve the minutes of February 24, 2003;
seconded by Senator Brandt. Motion carried.

Motion by Senator Cameron to approve the minutes of February 26, 2003;
seconded by Senator Pearce. Motion carried.

Motion by Senator Burtenshaw to approve the minutes of February 28,
2003; seconded by Senator Williams. Motion carried.

Motion by Senator Williams to approve the minutes of March 3, 2003;
seconded by Senator Burtenshaw. Motion carried.

Steve Allred, Director, Department of Environmental Quality, informed
the Committee that the changes in regard to the voting were intended to be
in the legislation last session. The legislation now addresses that proposed
change. The change has been agreed to in a memorandum of
understanding among all the parties on the commission. It provides that
all of the members vote on the plan. He stated he is not aware of any
controversy on that issue. He noted the federal government has taken the
position that because the federal commissioner, appointed by the President
and is also the regional administrator of the Environmental Protection
Agency, there is a conflict interest from a fiduciary responsibility between
EPA, which provides the majority funding and his responsibility on the
commission. The issue was negotiated with the Department of Justice so
that the fiduciary responsibility is to the appointing authority.

Motion by Senator Pearce to send H 149 to the floor with a do pass
recommendation; seconded by Senator Brandt. Motion carried.

Collignon stated H 65 revises the list of state parks under the jurisdiction
of the Department of Parks and Recreation. He noted the eight sites to be
added to the list have not been added to the list, but have been added onto
responsibilities for the department. The state parks to be added are Trails
to the Coeur d’Alenes, Coeur d’Alene Lake Parkway State Park, Box
Canyon, Billingsley Creek, Glade Creek State Park, Ashton-Tetonia Trail
State Park, Land of the Yankee Fork State Park, and Castle Rocks State
Park. Old Mission State Park will be renamed to Coeur d’Alene’s Old
Mission State Park because the ownership of the land changed.
Additionally, the Packer John Cabin site in Adams County is no longer a
state park.

Collignon provided to the committee a copy of the proposed amendment
to the legislation removing the word “abandoned” from the legislation
because, according to an Attorney General opinion, the legal definition of
the word does not fit the intended use of the word. The word “abandoned”
from lines 37 and 44 on page two of the bill.

Chairman Noh noted Senator Calabretta has expressed concern regarding
trespass on private lands adjoining the trail, as well as lands with high lead
content. Calabretta had indicated by the creation of a state park it would
invite people using the trail to stray away from the trails. She expressed
concern and a desire to minimize the potential problem.

Collignon stated the issue of whether or not the department has more or
less liability does not depend on the name or kind of area. The
department’s legal counsel has stated the risk to the department does not
change with respect to the name. The responsibilities are with the state
and the department has the management responsibility for the state. There
is no more risk or limit the risk.

Motion by Senator Burtenshaw to send H 65 to the fourteenth order for
amendment as proposed; seconded by Senator Cameron. Motion carried.

Collignon noted the situation in state parks is that some parks are purely
resource parks that are not intended to generate high recreation volumes
and do not have a significant revenue stream. That is appropriate, but
there are also parks that are major revenue generators from camping and
entrance fees. The system is viewed as a balance. The balance state wide
with the current budget is 20 percent general funds supporting an agency
with 80 percent from dedicated or self-generating revenues. The
department is reviewing possibilities for increasing the self-generating
revenues such as though camping cabins.

EXCUSED:

Chairman Noh noted Lynn Tominaga of Idaho Ground Water
Appropriators; Jane Gorsuch of Intermountain Forest Products; Dick
Rush of Idaho Association of Commerce and Industry; Roger Fuhriman,
Department of Fish and Game, have indicated their support of H 273.

Motion by Senator Little to send H 273 to the floor with a do pass
recommendation; seconded by Senator Stennett. Motion carried

Benson presented a slide presentation to the Committee explaining the
background for the proposed legislation. He noted the direction Potlatch
is taking in the new area of working forest conservation easements. It is
the goal of Potlatch to continue forest management along with the
preservation of activities that are rapidly becoming very significant in the
state. He noted Potlatch owns 2.2 million acres of land between St.
Maries and Kamiah of which Potlatch manages 670,000 acres. Potlatch
has entered into a partnership with the Trust for Public Lands to utilize
their expertise for conservation easements and the associated funding. He
noted the Department of Lands, the U.S. Forest Service, north Idaho
communities, conservation groups, tribes and the wood products industry
have been supportive of this endeavor. Potlatch anticipates other land
owners will be considering conservation easements in the future. Potlatch
has publicly stated 600,000 acres are candidate acres for conservation
easements. What happens over the next few years will determine how
much of that land is placed into conservation easements. Conservation
easements would convey development rights, public access and special
forest management prescriptions. The monetary value of the conservation
easements could be significant. In a five or a six-year time frame, Potlatch
would put large parcels of land into conservation easements. The natural
resources available on Potlatch lands are fisheries, sport fishing,
anadromous streams, fresh water streams, big game wildlife, thousands of
miles of riparian areas and many acres of wetlands areas. The recreation
available on Potlatch land is multifaceted with hunting, mountain biking,
and all kinds of recreation yet to be discovered. People are increasingly
wanting to use the lands because they are nearer to communities than the
national forest lands.

He stated the economic resources derived from the land which has been
owned by Potlatch since 1903 has been a main stay of north-central
Idaho’s economy for many years. He noted the company would celebrate
100 years this year. Potlatch is the largest produce of timber in the state of
Idaho and they desire to manage the lands for that purpose. There are
three production facilities in Idaho: Post Falls, St. Maries and Lewiston.
In addition to the mills operated by Potlatch, many loggers, truckers and
other mills are affected by the presence of Potlatch in North Central Idaho.
Potlatch forest management has grown with the responsibilities that come
with owning a large land base. Potlatch desires to be environmental
responsible and to sustain all of the use of the land.

Potlatch certified their lands through the International Organization
Standardization 1401 standard for environmental management systems. He
noted this is not just for forest land managements it is for anyone having
an environmental consideration in the management of their business. The
certification is for meeting the standards of an international body by
identifying the environmental risks and hazards and placed protocols and
standards in place to assure environmental considerations. Additionally,
Potlatch lands were certified under the sustainable forestry initiative,
which is a specific forestry set of standards. The two certifications
provide to Potlatch a very sound, solid and sustainable forest management
of the lands to move into the conservation easement program. Potlatch is
the first publically traded company to do a comparison of the sustainable
forestry initiative and forest stewardship counsel. Potlatch will have an
open discussion of its performance under these two programs. He noted
this is an aggressive step on the part of Potlatch toward the standard
desired for forest land management.

Potlatch is moving toward conservation easement because much of the
land is located within 100 miles or less of large metropolitan areas and the
lands are increasingly become encroached upon by people who would like
to purchase parcels of land for subdividing. A conservation easement, by
conveying the development rights, will divert the efforts of carving up the
landscape into small parcels of land. When population encroaches upon
the forest, fire suppression becomes a significant issue because of the
importance of saving structures in the forest.

Potlatch contemplates granting their conservation easements to the state of
Idaho. During the past year, Idaho successfully enrolled in the U.S. Forest
Legacy Program. The administrative responsibilities of that program have
been delegated to the Department of Lands. He noted the ten-year-old
federal program, administered by the Forest Service, ha2 33 states enrolled
in the program. The funding the past year for the Forest Legacy Program
was $63,000,000 and in the current budget proposal the amount is
$93,000,000. Congress continues to increase the amount of funding for
the program and each year additional states enroll. He noted the
competition for funding through the program is becoming greater and
greater each year. The funding for conservation easements would be from
the Forest Legacy Program along with other sources. He noted the
easements could be granted to others organizations, but Potlatch has
chosen to work with the state and thus enable participation in the Federal
Legacy Program funding. Part of the requirements of the Forest Legacy
Program requires a 25 percent match which can include an in-kind
donation.

Benson then introduced Dennis Murphy from Potlatch, who assisted in
answering questions from the Committee.

Senator Little inquired if there had been any official affirmative action by
anyone duly elected by the state of Idaho to take on the project. Wiggins
replied he was not sure that there was. There was not a vote of the State
Board of Land Commissioners to take this on. The office of the Governor
was involved. In the recognition of a liability, Wiggins stated the liability
by the state will be paid by funds from the legacy grant. He noted it is
possible that the Legislature would be asked for resources for personnel
out of federal funds to support the program. Upon further inquiry,
Wiggins stated it was conceivable that there would be litigation for
violation of the terms of an easement. He noted there are significant
penalties within the program to address violations. The funds necessary to
support the program will be federal funds and probably private funds. One
of the uses Potlatch wants to sustain is public use and not all levels of
public use are sustainable. One of the challenges is controlling public
access and use. It will be necessary to determine the number of people
individual areas will be able to handle without incurring abuse. Potlatch
retains the responsibility to sustain all uses.

Ruth Wooding, Lands Forester, U.S. Forest Service, Sawtooth National
Recreation Area, informed the Committee that part of her duties is the
administration of conservation easements. Sawtooth National Recreation
Area has $36,000,000 worth of conservation easements on 18,000 acres.
Conservation easements began thirty years ago with poorly constructed
easements which resulted in some problems in the administration of those
lands. In the last ten years, the contractual requirements for conservation
easements have been revised and now meet administration requirements.
She noted that conservation easements must additionally require that
dispute costs be born by the party conveying the easement. Conservation
easements provide an opportunity and benefit to a generation of land
holders who did not have sufficient funds to protect and keep the land.
There have been problems with second and third generation easement
holders because they don’t always respect the value of the easement which
they have inherited or purchased. Ninety-five percent of the easement
holders are respectful of the easements while 5 percent pushes the limits.
She noted the most recent conservation easements are very protective and
binding contracts.

Upon inquiry, Wooding stated in the first conservation easements, the
landowner got everything the government could not think of. In the
modern contracts, government gets everything the landowner couldn’t
think of. The current easements are reservement deeds where the
government reserves all the interests in the property and nothing is left to
chance. The SNRA was enacted by public law and has private land
regulations. She noted the conservation easements restrict subdivision and
protect all the values of the SNRA. Many of the conservation easements
have public fishing along the banks and the landowner has to protect the
riparian zones of the property if cattle are grazed on the land. The goal is
to protect the overall scenic environment.

Upon inquiry from Senator Stennett, Wooding stated Custer County has
strong attitudes and feelings, but the tax needs of the community have
been somewhat buffered. She noted there is only 4 percent private land in
Custer County. She stated the NRA does not acquire additional lands but
does obtain conservation easements so the taxes still go to the county. The
land stewardship program is a tax-free program for twenty or more acres
because if there is a land management plan the landowner can get a tax
break for ten years. She noted the SNRA is working with state foresters to
determine the private land regulations which will go into the stewardship
contracts. Over the years, the tax issue becomes significant when the third
generation has ownership of the land. There are no safeguards in place for
the payment of taxes in those instances where they cannot or are not paid.
There has been discussion regarding the establishment of a slush fund with
the initial conservation easement to meet the future tax requirements. She
noted under zoning classifications the property is zoned agricultural,
residential or commercial and then taxed according to those
classifications.

Will Whalen, Director of Government Relations in Idaho for The Nature
Conservancy, provided to the Committee a copy of an article from the
New York Times and his written statement for the record. (The copies
are attached.) Conservation easements are a tool in the protection of
habitats. One of the advantages is to keep land in private ownership and
keep the land and the stewardship intact. He noted a well-defined
conservation easement helps to maintain the agricultural and ranching
economy in an area. Whalen stated that in the Picabo area into the Wood
River Valley there are ranches and farms making a rapid transition to strip
development and major housing sites. However, he noted in the Silver
Creek Valley the ranches and farms in that area are still intact with
conservation easements. Conservation easements in Idaho are voluntary
actions that do not change the tax status of the land. As the area moves
from a ranching or farming use to other uses, there is a significant
environmental impact. He noted the programs growth in Idaho is
significant because many of the timber companies have been redefining
management for other potential uses.

Upon inquiry from the committee, Whalen stated the Internal Revenue
Service has specific rules regarding tax benefits in regard to conservation
easements. The easements must show specific purposes and the extent.
The Nature Conservancy must enforce the easements so there is not an
impact to the organization’s tax status.

David Genter, Director for the Northern Rockies Region of the Trust of
Public Lands, Montana, noted their organization has assisted the state in
the development and implementation of the Forest Legacy Program. The
catalyst for Idaho’s participation a year ago was a letter from the Governor
to the Chief of the U.S. Forest Service requesting that Idaho be enrolled in
the program. He noted there were seven states vying for enrollment in the
program and Idaho was the only state to successfully be considered. There
has been some initial startup money this year. The program is very
positively received and an effective program stemming the conversion of
forest lands to non forest uses.

Senator Cameron stated he was concerned about the disclosure of financial
documents to the public and competitors. The documents are available to
the committee for private review upon signing a statement of non
disclosure. He stated he had not a problem with addressing concerns
through a letter of legislative intent.

Senator Little stated it is the not Legislature’s responsibility to guarantee
that the project is successful, but the Legislature does have the
responsibility to assure that the state’s funds are protected and the assets
are protected. The State Land Board should assure that the state will be
not be jeopardizing the resources for the long term maximum yield.

Chairman Noh stated the meeting was an informational session with well-qualified water attorneys in connection with H 284 and the application of
the local public interest criteria in water rights administration. Chairman
acknowledged Chairman Representative Bert Stevenson and the
background of the proposed legislation. He noted there have been
concerns expressed over the past several years by the dairy industry and
others water users that there have been legal expansion in the application
of the local public interest criteria. There has been legislation introduced
over the past two years which would have made radical changes to the
local public interest criteria. Clive Strong, Deputy Attorney General, was
asked to review and draft proposed legislation that is intended to leave in
place all of the provisions as set forth in Shokal v. Dunn, 109 Idaho 330
(S.Ct. 1985). Additionally, Strong was requested to determine if there
would be added economic risks and the degree to which the local public
interest criteria would continue to provide a maximum of public
participation in the processes. Concern was expressed that larger
economic interests not move water across basins or out of state, that local
public interest is well protected and there are intended consequences.

Semanko noted another case is the Rocky Mountain Land & Cattle
Company in the Glenns Ferry area. This was a case where the hearing
officer of DWR recommended denial of an application based in part on the
traffic hazards of increased vehicles on a road. This is something the
county should review and did review. He noted the county ultimately
denied the application but it did not stop DWR from having to review the
identical issue of an increase in traffic. All the issues being raised under
the local public interest are important but are not issues that DWR should
be considering. The proposed legislation would specifically recognize
DWR is to review the impacts on the public water resource. The
legislation retains the language stating “the people in the local area
directly affected.” This language is historically significant and must be
retained. The clarification contained in the proposed legislation is “on the
public water resource.” He noted the proposed legislation codifies the
requirements for consideration of local public interest as set forth in the
Shokal v. Dunn case. The director of DWR must review fish and wildlife
habitat, aquatic life, recreation, aesthetic beauty, navigation,
transportation, water quality and alternative use of water. The proposed
legislation is intended to clarify that the local public interest is very broad
when it relates to the impacts on the public water resource, not just water
rights or water supply, but all of the attributes of the public water supply.
Semanko stated the local public interest should be retained as historically
set forth by the Supreme Court.

Additionally, Semanko informed the Committee the legislation does not
eliminate any one’s right to file a protest to a water right application. He
further stated the right to file a protest provides for a hearing before
DWR. If a protest is filed, a hearing will be held. What would be changed
is a clarification for one of the criteria that must be reviewed by the
director of DWR. The applicant must demonstrate that the application is
in the local public interest. Local public interest would mean the impacts
to the people in the area directly affected in the potential impacts on the
water resource and all of the water users in the broadest sense.

He further summarized the cases set out in his handout (a copy is
attached). He noted the K&W Dairy case was an example of protests
resulting in the application being done right. The regional problems of
impacts to recreation will not be solved through local zoning boards
because of county boundaries. The Department of Water Resources can
take a wider view under the current law to consider the regional impacts to
potential regional problems. The air quality in the area of the K&W Dairy
has already been substantially impacted by the existing dairies in the area.
The protest also concerned water quality and quantity problems even
though the center of the concern was air quality.

He stated the Salmon Falls Land and Livestock operation was recently
permitted by Twin Falls County without any public hearings. H 283
companion legislation to H 284 will solve the problem of absence of a
public hearing. It is important to continue a broad review under the
current local public interest procedures. He stated Salmon Falls and Box
Canyon Dairies are located very close to the Snake River in the Thousand
Springs area. These two businesses propose operations in an area where
there is already a substantial air quality impact along the scenic highway
and an area that are heavily used for recreation. He noted this area is
along the border of Twin Falls County and Gooding County. There would
not have been any way that county commissioners in the two counties
could have made a decision.

The Bloxham Diary at Hagerman, west of the National Monument, would
have prevented further economic development of the tourist industry by
the city of Hagerman. This application was based on an attempt to transfer
water from Bingham County to western Twin Falls County. The
department denied that application based on the impossibility of
transferring water that distance from one aquifer to another.

The Eagle View Dairy near Castleford would have had an impact on the
local school district because of the size of the proposed project.
Negotiations resulted in benefits to the area through the local public
interest criteria. Through the negotiations, the application was approved
with a lower number of animals along with a financial contribution to the
school district to offset the increased enrollment impact. He noted this is
an example of benefits as a result of protests.

Rocky Mountain Land and Cattle at King Hill were denied a permit by
Elmore County before the hearing by DWR. This is an example of an
applicant who attempted to relitigate the county denial before the
department. He noted there are other cases of a similar nature where the
county denies the application but the applicant proceeds to relitigate the
denial before the department. He stated there is a case pending before the
department from Canyon County of this nature.

Carlson stated the Idaho Rural Council has supported protests in transfers,
but now is selective about the transfers they will be involved in. He noted
that although the organization is small there is a lot of support from
individuals who cannot show their support in public. He urged the
committee to hold H 284 because the public interest portion of water law
is not broken and does not need to be fixed. The current law provides a
safety net for Idaho citizens.

Rassier stated the Shokal case centered on the extent the local public
interest should be defined. He noted much of the debate today concerns
the proposed amendment to the local public interest and if it is consistent
with the Shokal decision or if it narrows that decision. He stated the facts
in Shokal, the water quality issues on Billingsley Creek, were the issue and
the language proposed in the amendment would allow those issues to be
considered. The Supreme Court decision attempted not only to resolve
that case but went beyond that and gave direction to the director of
Department of Water Resources in how the local public interest standard
was to be applied in future case. The court referred to the minimum
stream flow statutes and other water related issues along with other
matters that would reasonably be included in local public interest. He
stated that is the language which gives the director broad discretion to
determine what factors that affect the people in the local area should be
considered, such as health or economic issues.

Rassier stated that the applicant presents testimony or evidence describing
the economic benefits of the proposed project. On the other hand, reason
or fairness should allow citizens to present economic detriments associated
with the project. This then opens the decision to considerations of odors
and flies. He noted the department, in making determinations on
applications, listened to the testimony and the department’s expertise is in
water not odors and flies. It is inappropriate for the department to be
considering these issues. The issue for the Legislature to decide if this is
something the Legislature wants to provide a forum for its citizens to have
considered, but it does not have to be before the Department of Water
Resources. If the state or the Department of Water Resources does not
provide a forum, then the alternative is to the court. He stated the current
law does not interfere with the department’s ability to carry out the Snake
River Basin Adjudication. The staff assigned to the SRBA is not involved
with the hearing process. The burden falls upon the hearing officer and
whether a decision is appealed to the director. Then there is an additional
burden on the director and the attorneys representing the department, but it
does not interfere with the department’s ability to carry out its normal
responsibilities. Another issue to be considered is how the proposed
amendment would affect pending matters before the department in
connection with the local public interest standard. If the Legislature
changes or amends the local public interest, the pending filings are rights
that are being transferred, but it is not the applicant who would be
objecting to the change in law. The change in law is of benefit to the right
holder because it would reduce the burden imposed upon the applicant.
Any burden associated with the proposed change in law would fall upon
the protestants.

Senator Stennett stated the proponents state the reason for the proposed
legislation is to focus on the issues and extemporaneous issues not be
considered. Reed stated issues related directly to water are the issues that
should be considered by DWR.

Carlson further stated under the current law the applicant has the burden of
proving all the elements, including the local public interest. In Shokal, the
local public interest places the burden on the protestants to present
evidence that the proposal is not in the public interest. Carlson stated H
284 would limit consideration of issues by DWR. Upon inquiry from
Senator Stennett, Carlson stated everyone and everything in Idaho has a
direction connection to water on some level but the purpose of the
legislation is to limit the secondary effects considered by DWR, even if
the secondary effects constitute public nuisances.

Chairman Noh brought to the Committee’s attention the memorandum of
March 24, 2003 by Laura Bettis, a senior law student, regarding Idaho
Code Section 58-307(4) and the current proposed amendment. A copy is
attached. He stated that she advises the committee to proceed cautiously
with the legislation and to understand exactly how it relates to the existing
code. He noted 58-307(1) applies to school endowment lands, (3) non-school endowment lands and (4) notwithstanding any other provision of
law only the state public school endowment lands described may be leased
for commercial purposes for a term not to exceed ten years. There are two
parcels of land in question; one school endowment lands and one non-school endowment lands, both to be used for a commercial lease for period
greater than ten years. This raises the question whether the Land Board
was in error in issuing the ten year lease for state school endowment lands
prior to the parcel being approved by the Legislature. This section of the
code and how the Legislature addresses these issues may need some
discussion next session.

Chairman Noh also noted the need to discuss the possibility of a trust
account. There is a lack of clarity in the lease as to such provision.
Another issue to be considered is related to the issue of water rights. State
law requires evidence presented to the director of the Department of Lands
that financing is adequate for the purposes of the project. Chairman Noh
noted he has discussed the issue with Peter Anderson, the hearing officer
for DWR. Anderson made his decision based solely upon the evidence
presented to him. He noted that Anderson had one concern, in retrospect,
that the primary compelling element of the evidence presented in favor of
adequate financing was from the Bank of America representative. The
Bank of America representative stated he felt the financing they would
participate in would be adequate and effective. However, soon thereafter
Bank of America no longer involved with the project.

Chairman Noh provided to the Committee a proposed draft of a letter of
intent or committee report to be included with the legislation as set forth:

LEGISLATIVE INTENT

In approving H 83, the Idaho Senate is only authorizing a long-term
commercial lease on the parcels of state lands described therein, with the
expectation that any leases executed by the Board of Land Commissioners
will best serve the interests of the endowed institutions. This action
should in no way be interpreted by the public, potential investors, lenders,
local citizens or others, as making any statement or endorsement as to the
merits or risks of any development which may be undertaken as a result of
or in conjunction with such leases.

______________________________________

Laird Noh, Chairman

Senate Resources and Environment Committee

Legislative Intent ­ H 83