Legislature(1993 - 1994)
05/04/1994 08:35 AM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 310
"An Act relating to the management and sale of state
timber; relating to the classification of state land
that would preclude harvesting of timber or would
designate harvesting of timber as an incompatible use;
relating to the administration of forest land,
proposals for state forest, and the determination of
sustained yield; and providing for an effective date."
SENATOR STEVE FRANK testified in support of SB 310. He
asserted that the legislation will allow the state to favor
value added processing. He maintained that operators would
pay costs associated with timber sales and reforestation.
He stressed that Forest Management Agreements (FMA) would be
managed consistent with existing land use plans, sustained
yield principles, and comply with the Forest Practice Act
(FPA). He emphasized that reforestation would be required.
He addressed the scale of FMA's. He observed that FMA's do
not have to be large. He envisioned a 4,000 to 5,000 annual
use cut. He noted 16,000 is the current allowable use cuts
in the Tanana Valley. He observed that there are 29 million
acres in the Tanana Valley, 3.2 million are forest lands.
Senator Frank stressed that the legislation only requires
the Department of Natural Resources to solicit proposals.
He maintained that the legislation would create long term
jobs while protecting the environment and habitat. He
stressed that the Attorney General would have to sign off on
any FMA's.
TOM BOUTIN, DIVISION OF FORESTRY, DEPARTMENT OF NATURAL
RESOURCES commented that the legislation would give the
Department a tool for long term negotiated sales. The state
currently has the ability to enter into long term
competitive sales of timber. He maintained that there is no
block of timber that would be available under a FMA that is
not available under the existing competitive program. He
accentuated that the negotiated sales would allow the
passing of some forestry costs to the operators.
Representative Grussendorf referred to the Forest Practice
Act (FPA). Mr. Boutin alleged that FPA is solely contained
in Title 41. He discussed modifications made by the
legislation to AS 41.17.060 (c)(4) and AS 41.17.200.
Co-Chair Larson questioned if the legislation will enhance
state revenues from timber resources.
Representative Therriault noted that AS 41.17.230 states,
"an operational level forest inventory shall be completed
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before a management plan shall be adopted". He clarified,
in discussions with Mr. Boutin, that the state has a good
idea of its white spruce inventory and is working on
inventorying other hardwoods. He summarized that the state
would not be able to enter into a FMA until the inventory of
hardwoods is complete.
Representative Brown questioned why negotiated sales would
be preferable to competitive sales. She noted that costs
have been passed on to the operator in some long term
competitive contracts. Mr. Boutin noted that a long tern
negotiated sale in Haines did allow some cost of the sale to
be passed on to the operator. He emphasized that long term
competitive sales cannot take place unless certain criteria
is met. There are criteria covering unemployment, existing
under-utilized capacity and unutilized allowable cut.
WILL MAYO, PRESIDENT, TANANA CHIEFS COUNCIL testified via
the teleconference network in opposition to SB 310. He
expressed concern that preliminary discussions regarding
FMA's did not include concerned public parties. He noted
that the legislation may raise constitutional problems
regarding the state's ability to delegate its management of
state resources to the private sector. He maintained that
the bill lacks objective standards to evaluate competing
proposals. He stressed that much of the bill delegates
matters to the discretion of the Commissioner. He urged the
Committee to hold the legislation to allow further
development and refinement of the concept.
Mr. Mayo suggested amendments to the legislation. He
recommended that a requirement for bonding be added. He
advised that the state limit the size of FMA's to allow
small operators and users to participate.
MIKE BRONSON, CHAIR, SUSITNA VALLEY ASSOCIATION, MAT-SU
testified via the teleconference network in opposition to SB
310. He asserted that the legislation would lead to
increase demand for state administration and enforcement of
FMA contracts which will lead to increased state operating
expenses. He urged the Committee to review the FMA
practices of Canada, Washington and Oregon.
Mr. Bronson recommended that the legislation be amended. He
suggested that AS 38.05.122(e) and (f) be moved to page 7
and inserted above (h). He explained that the proposed
amendment would move the second public comment opportunity
to allow the best interest finding to be more heavily
impacted by research and public comment. He recommended
that best interest finding language be modified by an
additional sentence to be added on the top of page 5 (e).
"If the Commissioner finds that commercial timber cutting is
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compatible with other uses the Commissioner shall also
document the finding with sound scientific and economic data
that clearly proves the overall net economic benefit of
commercial logging. `Economic benefit' shall include
quantification of all the public and private costs
contributable to the FMA for a period beginning at the time
of solidification." He implied that large scale logging is
not economically feasible.
GAIL STEVENS, NENANA testified via the teleconference
network in opposition to SB 310. She recounted her personal
use of the forest resource. She emphasized the damage to
the resource that could occur as the result of clear cut
logging. She expressed concern that clear cut logging could
result in erosion and destruction of salmon habitat. She
noted the potential jeopardization of the tourism industry.
She maintained that the legislation would bring in outside
interests at the expense of local operators.
RANDY MAYO, 1ST CHIEF, STEPHENS VILLAGE COUNCIL testified
via the teleconference network. He urged that SB 310 be
held for further study. He alleged that the legislation
would encourage negative development. He emphasized the
adverse effects of logging on the fisheries, trapping,
hunting and the tourism industries. He questioned who would
benefit from the creation of FMA's. He stressed the need to
protect the environment for future generations. He
contended that local residents will not be beneficiaries.
WILLIAM WOOD, DR., FAIRBANKS testified via the
teleconference network in support of SB 310. He expressed
concern with the economic health of Interior Alaska. He
commented on the need to develop available resources in
order to provide jobs. He estimated that FMA's will
represent less than 10 percent of the forest.
(Tape Change, HFC 94-155, Side 2)
Mr. Wood suggested that the University of Alaska be involved
in research to assure that a sustained harvest be maintained
for an indefinite period of time.
JOHN MCINNIS, FORMER LEGISLATOR, ALBERTA, CANADA stated that
he was a member of the Alberta legislature during the
implementation of seven FMA's. He noted that Canadian FMA's
allow the holder to automatically renew thier contract after
20 years. The proposal contained in SB 310 would require
the holder to bid for renewal of the agreement. He urged
the Committee to balance what is gained by what is given.
Mr. McInnis observed that the major economic impact of
Canadian FMA's came in the first 18 months. He acknowledged
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FMA's as a way to encourage investment. He observed that
Canada has experienced a lack of local hire in FMA
situations. He advised the Committee to focus on, who will
be employed, what type of on going employment will be
created, and what guarantees exist to assure that the
employment criteria takes place.
Mr. McInnis questioned the economic return. He observed
that Canadian FMA sales do not cover the administrative
costs associated with the contracts. He stated that Canada
is in a long term subsidy position in regards to their
FMA's. He identified the central question, as whether the
value is placed on the certainty of the fixed price contract
over the flexibility of an open market situation. Mr.
McInnis accentuated that other uses, such as tourism, may be
hindered by the long term fixed contract.
CHARLIE COLE, FORMER, ATTORNEY GENERAL, FAIRBANKS testified
in opposition to SB 310. He referred to a letter he wrote
to Representative Williams, dated April 19, 1994 (copy on
file).
Mr. Cole discussed section 3 (G). He noted that the bill
provides that if "a tentatively successful proposed
agreement is designated under (e)... the commissioner, after
considering comments and recommendations... may proceed to
develop a proposed final agreement between the proposer and
the state." He emphasized that a proposed final agreement
"shall provide for terms, conditions, and limitations
determined by the commissioner to be in the public
interest." Subsections (a) through (o) enumerates the
subject matter the agreement must contain. He asserted that
there is no restrict in the bill's present form with respect
to the terms, conditions, and limitations. He maintained
that the commissioner of the Department of Natural Resources
is given unfetted power to enter into FMA's on whatever
terms he alone determines to be in the public interest. He
alleged that the legislature has abdicated its power.
Mr. Cole referred to page 6, line 16, stumpage price. He
noted that there is no restriction on the commissioner's
ability to determine the stumpage price. He suggested that
the legislation be amended to provide that the commissioner
not sell the resource for less than fair market value.
Mr. Cole referred to statements by Christopher Gates,
Department of Commerce and Economic Development regarding
the use of 50 percent of fair market value contracts as an
inducement to investment.
Mr. Cole asserted that it is fundamental bad policy to
subsidize mega-international corporations. He emphasized
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that the legislature should maintain control over the
agreements.
ED PACKIE, FORESTRY PROFESSOR, FAIRBANKS testified via the
teleconference network support of SB 310. He asserted that
fears concerning the effects of SB 310 are largely
unfounded. He maintained that Alberta FMA's are not
currently over cutting. He emphasized that a sliding
stumpage rate can be used based on current market
conditions. He noted that a lower ceiling could be set.
Mr. Packie alleged that forest jobs pay better than tourism
jobs. He saw the opportunity for several FMA's.
Representative Navarre commented on problems on the Kenai
Peninsula. He suggested that the FMA's will result in below
market value stumpage fees. He observed that the state will
be left with additional roads to be maintained as the result
of FMA's.
JIM HITCHCOCK, PALMER testified via the teleconference
network in opposition to SB 310. He disagreed with Mr.
Packie that forestry jobs necessarily pay better than
tourism associated jobs. He questioned if FMA's would be
the best use of the Susitna Valley forest resource. He
accentuated the importance of tourism and fishing in the
Susitna Valley. He compared the management of state land
through FMA's as "turning the hen house over to the fox."
He questioned if FMA's would create unfair competition with
small operators. He observed that there will be additional
administrative costs associated with FMA's.
He underscored the detrimental effect of cutting timber that
would otherwise be used for local mills. He doubted that
the legislation will be economically sound.
Mr. Hitchcock referred to section 4 (8), page 9. He
counseled that "economically fair price" be determined prior
to the sale. He felt that the state and municipalities
should continue to manage the land. He emphasized that
smaller local operators have a more positive and lasting
effect on the economy.
DARYL DOUTHAT, SUSITNA VALLEY ASSOCIATION testified via the
teleconference network in opposition to SB 310. He stressed
the importance of trapping and tourism in remote areas. He
emphasised the negative impact of large scale timber
operations on these industries. He highlighted that the
principle attraction to tourists is the absence of large
scale impact due to industrial activities. He emphasized
that this characteristic is unique to Alaska. He maintained
that tourism is a rapidly growing renewable resource that
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will only increase if the quality of the product is
protected. He noted that remote tourism is compatible with
and compliments other current uses and directly benefits
local economies.
Mr. Douthat asserted that large scale timber industry
operations would import workers and export round logs. He
alleged that profits would go to multinational corporations.
He counseled that the depleted salmon stocks would be the
result of FMA activity.
Mr. Douthat quoted statements by Chris Gates, Department of
Commerce and Economic Development. Mr. Douthat compared SB
310 to a sledge hammer. He noted the lack of assessments
regarding the long term impacts of the legislation.
STEVE KALLICK, ALASKA RAINFOREST CAMPAIGN testified via the
teleconference network in opposition to SB 310. He noted
that he worked to create FPA. He emphasized that FPA
represents a consensus by involved parties. He asserted
that SB 310 is a "giant step in the wrong direction."
(Tape Change, HFC 94-156, Side 1)
Mr. Kallick contended that SB 310 will result in a loss of
state revenues. He stressed that Alaska timber prices are
raising.
Mr. Kallick spoke in regards to long term contracts. He
observed that long term timber contracts have resulted in
extensive litigation and contract claims.
Mr. Kallick corrected a statement by Mr. Boutin, by
clarifying that FPA is contained in AS 38.05.112 and 113.
He emphasized that changes to the Forest Practice Act would
reopen a settled controversy. He advised that the
Department of Natural Resources create a Forest Practice
Round Table to work out a consensus proposal.
LANE THOMPSON, ENGINEER, FAIRBANKS testified via the
teleconference network. He proposed that FMA's be limited
to 6,000 acres a year. He expressed concern that job
estimates are too high. He highlighted the need for
guidelines to provide clear direction to the Department of
Natural Resources. Mr. Thompson spoke in favor of the
creation of a Forest Practice Round Table.
Mr. Thompson referred to "sustained yield". He asserted
that "sustained yield" has come to mean whatever the timber
interest and regulatory agencies want it to mean. He
maintained that SB 310 would circumvent the rules on
sustainability. He concluded that SB 310 would provide
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access, without control, to mental health lands. He
concluded that there are avenues to reach a strong timber
industry in interior Alaska, under FPA.
STEVE GIBSON, OWNER, SMALL LOGGING OPERATION, KENAI
testified via the teleconference network in opposition to SB
310. He discussed the condition of the timber industry on
the Kenai Peninsula. He stressed that small logging
operators are depending on small state sales. He stressed
that spruce beetle timber sales on the Kenai cost the state
more to administer than is gained through sale of the
timber. He added that a control area outside of the clear
cut showed that more than a third of the trees were still
thriving after the spruce beetle ran its course. He stated
that 20 years after the 66,000 acre spruce beetle cut in the
Westside, of Cook Inlet, more than half show no
regeneration.
Mr. Gibson urged the Committee to reject SB 310.
SB 310 was was HELD in Committee for further discussion.
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