Legislature(1993 - 1994)
05/04/1994 08:35 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 2 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 3 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 4 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 5 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 6 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 7 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.