Legislature(1993 - 1994)

05/04/1994 08:35 AM FIN

Audio Topic
* first hearing in first committee of referral
+ 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.                                                                   
  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                 
  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.                                    
  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                 
  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.                                            
  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                 
  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.                                    
  in opposition to SB  310.  He referred to a  letter he wrote                 
  to Representative Williams,  dated April  19, 1994 (copy  on                 
  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                 
  that  the  legislature  should  maintain  control  over  the                 
  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                 
  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                 
  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                 
  access,  without  control,  to  mental  health  lands.    He                 
  concluded that  there are avenues  to reach a  strong timber                 
  industry in interior Alaska, under FPA.                                      
  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                 
  Mr. Gibson urged the Committee to reject SB 310.                             
  SB 310 was was HELD in Committee for further discussion.                     

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