Legislature(2017 - 2018)HOUSE FINANCE 519

04/18/2017 09:45 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Continued from 4/17/17 --
+= HB 25 INSURANCE COVERAGE FOR CONTRACEPTIVES TELECONFERENCED
Heard & Held
+= SB 88 AK MENTAL HEALTH TRUST LAND EXCHANGE TELECONFERENCED
Moved CSSB 88(RES) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
CS FOR SENATE BILL NO. 88(RES)                                                                                                
                                                                                                                                
     "An Act  authorizing a land  exchange with  the federal                                                                    
     government in which certain  Alaska mental health trust                                                                    
     land is exchanged for certain  national forest land and                                                                    
     relating to  the costs of  the exchange;  and providing                                                                    
     for an effective date."                                                                                                    
                                                                                                                                
10:40:17 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:40:56 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
SENATOR  BERT  STEDMAN,  SPONSOR,   He  explained  that  the                                                                    
concept had "been  in the works for  decades." He emphasized                                                                    
that  the bill  was  a land  exchange  for approximately  20                                                                    
thousand  acres  of  Forest  Service  land  for  roughly  18                                                                    
thousand  acres  of  Alaska Mental  Health  Trust  Authority                                                                    
(AMHTA)  property.  He  reported  that  much  of  the  AMHTA                                                                    
parcels bordered  many communities  in Southeast  Alaska. He                                                                    
elucidated  that  many  parcels   were  of  high  value  for                                                                    
standing timber, view sheds, and  trails and recreation. The                                                                    
conflict  was  how  to  mitigate the  impact  of  the  trust                                                                    
harvesting large  volumes of  timber very  near communities.                                                                    
He noted  that the  land exchange  process was  underway and                                                                    
the lands were selected. He spoke  to the parcels of land in                                                                    
northern Southeast Alaska. He  described some of the parcels                                                                    
and their  locations. He mentioned  a parcel of land  in the                                                                    
"backdrop"  of Sitka  near Mt.  Verstovia  that contained  a                                                                    
high volume of old growth timber  but was in the direct view                                                                    
shed  of the  community. The  community's concern  regarding                                                                    
the  view shed  and recreational  use lead  to the  parcel's                                                                    
inclusion in the  exchange. He highlighted that  a parcel on                                                                    
Mitkof Highway in Petersburg was  targeted for the exchange.                                                                    
The   community   expressed   concern  over   impacts   from                                                                    
landslides.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  DAN  ORTIZ,  COMPANION BILL  SPONSOR,  noted                                                                    
that  the bill  had companion  legislation in  the House  as                                                                    
well as on the federal  level. He understood that action had                                                                    
to  be taken  at the  state  level before  the federal  bill                                                                    
could  be  acted  upon.  He  was  proud  to  be  moving  the                                                                    
legislation for the House and  viewed the bill as a "triple"                                                                    
win  situation  for the  tourism  industry,  AMHTA, and  the                                                                    
timber  industry.  He  mentioned  a  parcel  near  Ketchikan                                                                    
located on "Deer  Mountain" and explained that  the land was                                                                    
the primary view shed for  the community and used for hiking                                                                    
and  other recreational  opportunities.  The parcel  offered                                                                    
benefits  to the  tourism industry.  He  indicated that  the                                                                    
timber  industry  supported  the  exchange  due  to  gaining                                                                    
access  to  federal  land  via  the  exchange.  He  strongly                                                                    
supported the legislation.                                                                                                      
                                                                                                                                
10:50:20 AM                                                                                                                   
                                                                                                                                
Senator  Stedman  relayed that  the  state  had one  sawmill                                                                    
left,  and had  lost 2  pulp mills  and other  sawmills. The                                                                    
remaining  sawmill   sitting  on  Prince  of   Wales  Island                                                                    
consumed  60 percent  of the  electricity on  the electrical                                                                    
grid. If the  state lost the sawmill, the loss  would have a                                                                    
large negative  rippling effect  through the  local economy.                                                                    
He communicated  that the large sawmill  supplied the timber                                                                    
or  "saw  logs"  to  the  smaller  sawmills.  He  noted  the                                                                    
difficulty in the "fiber supply"  that created difficulty in                                                                    
securing capital to modernize  or upgrade sawmill facilities                                                                    
if the future timber supply  was unknown. He voiced that the                                                                    
legislation was  a "time sensitive issue."  In addition, the                                                                    
legislation   ensured   "viable   timber  access   for   the                                                                    
industry." The  state had  been carrying  the "brunt  of the                                                                    
burden"   for  lack   of  timber   supply  by   the  federal                                                                    
government. The  land exchange would  afford a  direction to                                                                    
move very quickly on some  timber sales and moved the timber                                                                    
industry  to more  viable logging  land on  Prince of  Wales                                                                    
Island. He suggested that  concentrating the timber industry                                                                    
on the  southern end  of Southeast  Alaska where  the timber                                                                    
quality   was   superior    was   beneficial   because   the                                                                    
infrastructure  already  existed  and   was  closer  to  the                                                                    
sawmill. He conveyed that there  was significant support for                                                                    
the legislation  from all  of the  involved entities  due to                                                                    
the long public process and engagement on the issue.                                                                            
                                                                                                                                
10:55:28 AM                                                                                                                   
                                                                                                                                
Co-Chair Foster  indicated that there would  be a PowerPoint                                                                    
presentation by the Alaska Mental Trust Authority.                                                                              
                                                                                                                                
Representative  Pruitt   appreciated  the  bill.   He  asked                                                                    
whether passage  of the  bill helped  the bill  move through                                                                    
Congress. Senator  Stedman responded in the  affirmative. He                                                                    
pointed  out that  the bill  mirrored the  federal bill  and                                                                    
passage paved the  way for the Alaskan  delegation to garner                                                                    
support for the bill.                                                                                                           
                                                                                                                                
Representative Pruitt asked if  the land exchange areas were                                                                    
located  in  areas away  from  the  population and  did  not                                                                    
interfere with the view shed  or recreation and made it more                                                                    
likely that  the AMHTA  could develop  the land  and further                                                                    
help  its beneficiaries.  Senator  Stedman  answered in  the                                                                    
affirmative  and noted  that the  exchanged land  located in                                                                    
the center  of Prince of  Wales was a highly  active logging                                                                    
area.  He  indicated that  the  AMHTA  were acting  as  good                                                                    
stewards of the land in  participating in the exchange which                                                                    
benefitted  the  communities  but still  offered  the  trust                                                                    
marketable land to help  its beneficiaries. Additionally the                                                                    
exchange offered the Forest Service more recreational land.                                                                     
                                                                                                                                
11:00:05 AM                                                                                                                   
                                                                                                                                
Vice-Chair Gara  worried that with land  exchanges statutory                                                                    
easements  to  and along  rivers  were  lost. He  wanted  to                                                                    
ensure that  any land transferred to  the federal government                                                                    
would  be  accessible  through an  easement.  He  wanted  to                                                                    
maintain  the  public's access  to  its  own lands.  Senator                                                                    
Stedman  expounded that  Southeast  Alaskans were  sensitive                                                                    
about access to  fish streams for sport  and commercial uses                                                                    
and they  were protected. Vice-Chair Gara  wondered where he                                                                    
could  identify  the  easement   protections  in  the  bill.                                                                    
Senator  Stedman deferred  the answer  to the  Department of                                                                    
Natural Resources  (DNR) presenter.  He emphasized  that the                                                                    
state  did not  restrict  waterway  access. Vice-Chair  Gara                                                                    
wanted to confirm that his concerns were addressed.                                                                             
                                                                                                                                
11:03:23 AM                                                                                                                   
                                                                                                                                
WYN MENEFEE,  CHIEF OF OPERATIONS, DIVISION  OF MINING, LAND                                                                    
AND WATER,  DEPARTMENT OF NATURAL RESOURCES,  introduced the                                                                    
PowerPoint  Presentation:  "SB  88 -  Alaska  Mental  Health                                                                    
Trust Land  Exchange with the  USFS." He turned to  slide 2:                                                                    
"The Alaska Mental Health Trust":                                                                                               
                                                                                                                                
   A perpetual trust using its resources to ensure a                                                                        
     comprehensive integrated mental health program in                                                                          
     Alaska.                                                                                                                    
   Funding programs that serve Alaska's most vulnerable                                                                     
     populations for the past two decades.                                                                                      
 Providing programs for mental illnesses, developmental                                                                     
     disabilities, Alzheimer's disease and related                                                                              
   dementias, traumatic brain injuries & substance abuse                                                                        
     disorders.                                                                                                                 
                                                                                                                                
Mr. Menefee  elaborated that  the trust  spent approximately                                                                    
$20  million  annually  on programs,  projects,  activities,                                                                    
initiatives, and  advocacy and  helped fund  state agencies,                                                                    
and  non-profits through  grants. The  funds were  not state                                                                    
general funds (GF) in part from its land revenue.                                                                               
                                                                                                                                
11:05:21 AM                                                                                                                   
                                                                                                                                
Mr. Menefee scrolled to slide 3: "The Trust Land Office":                                                                       
                                                                                                                                
     Manages the Trust owned land and resources to generate                                                                     
     revenue, used by the Trust to improve the lives of the                                                                     
     beneficiaries.                                                                                                             
                                                                                                                                
     Our Mission: to protect & enhance the value of Alaska                                                                      
     Mental Health Trust lands.                                                                                                 
                                                                                                                                
Mr. Menefee expanded that the  trust land contained multiple                                                                    
asset  classes that  included  mining  and subdivisions.  He                                                                    
advanced to slide 4: "Trust Management Principles":                                                                             
                                                                                                                                
   1. Maximize long-term revenue & productivity from trust                                                                    
     land                                                                                                                       
   2. Protect corpus                                                                                                          
   3. Encourage   diverse    revenue-producing    uses    of                                                                  
     trust land                                                                                                                 
   4. Manage trust land prudently, efficiently & with                                                                         
     accountability to the trust and its beneficiaries                                                                          
                                                                                                                                
Mr. Menefee relayed  that the trust expected to  gain $40 to                                                                    
$60 million  in revenue over the  next 20 years as  a result                                                                    
of  the  exchange.  He furthered  that  the  exchange  would                                                                    
improve the lives of its  beneficiaries. He continued to the                                                                    
map on  slide 5: "Land  Distribution." He reviewed  that the                                                                    
Alaska  Territorial  government  had to  select  its  survey                                                                    
lands from areas located next  to communities. He delineated                                                                    
that  currently,  with  the   populous  growing  there  were                                                                    
concerns  with how  the state  managed the  land; preserving                                                                    
scenic view sheds, water sheds,  safety, etc. The trust made                                                                    
decisions  in the  best interest  of  its beneficiaries  but                                                                    
paid attention  to communities' concerns.   The trust viewed                                                                    
the  exchange  as  a  way  to  solve  2  things:  addressing                                                                    
community concerns and increasing trust revenue.                                                                                
                                                                                                                                
11:08:51 AM                                                                                                                   
                                                                                                                                
Mr.  Menefee provided  details on  slide  6: "Land  Exchange                                                                    
Details":                                                                                                                       
                                                                                                                                
     18,258 acres of Trust lands adjacent to the                                                                                
     communities of Ketchikan, Wrangell, Petersburg, Sitka                                                                      
     & Juneau would be transferred to the USFS                                                                                  
                                                                                                                                
     20,580 acres of remote land on Prince of Wales Island                                                                      
     & Shelter Cove would be transferred to the Trust for                                                                       
     development and timber harvest                                                                                             
                                                                                                                                
     Equal value exchange                                                                                                       
                                                                                                                                
     Phase I complete in 1 year and Phase II in 2 years                                                                         
                                                                                                                                
Mr. Menefee  reported that the acreages  were not finalized.                                                                    
The  land  exchanged was  of  equal  value and  surveys  and                                                                    
appraisals  were  required.  Ultimately, the  acreages  will                                                                    
adjust  according  to  the equal  value  of  appraisals.  He                                                                    
notified the committee  that not all of the  AMHTA land next                                                                    
to  communities  was  included   in  the  exchange  and  was                                                                    
retained for  future development  of subdivisions  and other                                                                    
types  of use.  He  spoke  of the  different  phases of  the                                                                    
exchange. The first phase included  exchanges in Naukati and                                                                    
Ketchikan with the  remainder in phase two.  The first phase                                                                    
accelerated timber  production and  sales. He  discussed the                                                                    
maps  on slide  7 titled:  "Trust  Land to  be Exchanged  in                                                                    
Southeast Alaska"  and "National  Forest Service Land  to be                                                                    
Exchanged." He pointed  to the areas on the map  on the left                                                                    
that depicted trust  lands in red traded  for forest service                                                                    
land on  the map on the  right portrayed in green.  He noted                                                                    
that a  packet of maps (copy  on file) were included  in the                                                                    
member's bill packets.                                                                                                          
                                                                                                                                
11:11:34 AM                                                                                                                   
                                                                                                                                
Mr. Menefee continued to slide 8: "Land Exchange Benefits":                                                                     
                                                                                                                                
     Consolidates Trust land ownership                                                                                          
                                                                                                                                
     Replaces lands adjacent to communities with lands that                                                                     
     are more conducive to revenue production such as from                                                                      
     timber harvest                                                                                                             
                                                                                                                                
     Protects timber and tourism industries                                                                                     
                                                                                                                                
     Protects jobs and economies in SE Alaska                                                                                   
     Protects viewsheds, watersheds, and certain old growth                                                                     
     timber stands                                                                                                              
                                                                                                                                
Mr.  Menefee   conveyed  that  the  trust   was  statutorily                                                                    
obligated  to  profit  off  of  the land.  In  the  face  of                                                                    
community  opposition to  developing  some  of the  adjacent                                                                    
lands the  equal value exchange offered  the trust similarly                                                                    
valuable land  while protecting the  communities' interests.                                                                    
He emphasized  that the timber  industry was  a "multi-layer                                                                    
industry"  and  a vibrant  timber  industry  had a  positive                                                                    
multiplier effect throughout the  region that also benefited                                                                    
the trust.                                                                                                                      
                                                                                                                                
11:14:19 AM                                                                                                                   
                                                                                                                                
Mr. Menefee advanced to slide 9: "Why Now":                                                                                     
                                                                                                                                
     Result of 10 years of planning and public input                                                                            
                                                                                                                                
     Extensive negotiations with USFS                                                                                           
                                                                                                                                
     Addressing concerns from conservation groups and other                                                                     
     interests                                                                                                                  
                                                                                                                                
     Timber industry, a key revenue generator for the                                                                           
     Trust, is at risk because of low timber supply                                                                             
                                                                                                                                
     USFS timber supplies have dwindled                                                                                         
                                                                                                                                
Mr.  Menefee reported  that the  discussions began  10 years                                                                    
ago  with "Tongass  Round Table"  meetings with  35 entities                                                                    
participating   comprised   of   communities,   conservation                                                                    
groups, United States Forest Service  (USFS), etc. The round                                                                    
table group defined  the parameters of the  exchange and the                                                                    
exchange  participants remained  "true"  to the  constraints                                                                    
when  developing   the  exchange.   The  trust   engaged  in                                                                    
extensive conversations  with the  USFS during  the process.                                                                    
He indicated that one of  the latest replacements took place                                                                    
near Sitka  with the recent  exchange of Katlian Bay  for No                                                                    
Name Bay. He remarked that the  precise package in SB 88 was                                                                    
contained in the federal bill.  He discussed that the timber                                                                    
industry was  the key revenue  generator for the  trust. The                                                                    
USFS evolved  its policies on  allowable harvest  levels and                                                                    
mandated a  transition to sustainable young  growth harvest;                                                                    
both policies  had an  adverse effect  on getting  timber to                                                                    
market.    He detailed  that  the  USFS did  not  anticipate                                                                    
getting  timber  to  market  for five  years  and  were  the                                                                    
largest timber supplier in  Southeast Alaska. Other entities                                                                    
were currently counted  on for the timber  supply; i.e., the                                                                    
state's Division  of Forestry, AMHTA, and  the University of                                                                    
Alaska. He  offered that a  reliable timber  supply depended                                                                    
upon the trust's  land exchange. A disruption  in the timber                                                                    
supply  would  severely  impact the  industry's  ability  to                                                                    
restart production when supply increased.                                                                                       
                                                                                                                                
11:16:57 AM                                                                                                                   
                                                                                                                                
Mr.  Menefee  pointed to  the  example  on slide  10:  "USFS                                                                    
Forest Plan."  He highlighted that  the slide  contained the                                                                    
"Tongass National Forest  Land Use Map" and  the small areas                                                                    
shaded in  green was the  only portion available  for timber                                                                    
supply.  The   remaining  brown  and  tan   areas  were  not                                                                    
designated  for development.  The USFS  "definitely reduced"                                                                    
the  available land  for timber  and increased  recreational                                                                    
uses. He mentioned  the importance of the  trust land acting                                                                    
as a "bridge"  for timber supply during  the transition time                                                                    
to  sustainable young  growth  production.  He restated  the                                                                    
devastating  effects of  a timber  industry shutdown  due to                                                                    
lack  of supply.  He communicated  the urgent  need for  the                                                                    
legislation to get  passed in the current  year. He reviewed                                                                    
slide 11: "Federal Legislation":                                                                                                
                                                                                                                                
 S. 131 introduced by Senator Murkowski and Sullivan in                                                                     
     January 2017                                                                                                               
  HR. 513 introduced by Representative Young in January                                                                     
     2017                                                                                                                       
   Language compatible with SB 88                                                                                           
   Directs the USFS to complete the exchange                                                                                
                                                                                                                                
11:19:25 AM                                                                                                                   
                                                                                                                                
Mr. Menefee  noted that the Alaskan  delegation believed the                                                                    
federal  bill would  pass in  the early  summer of  2017. He                                                                    
moved to the list of the  many supporters of the exchange on                                                                    
slides  12   and  slide  13   titled:  "Thank  You   to  Our                                                                    
Supporters."  He  emphasized  that  the  exchange  generated                                                                    
positive revenue for  the trust at no cost to  the state. He                                                                    
reiterated  all of  the  benefits of  the  exchange for  all                                                                    
parties.   He   referenced    Vice-Chair   Gara's   question                                                                    
concerning easement  protection and  provided clarification.                                                                    
He  elaborated  that a  "disposal"  of  trust land  did  not                                                                    
include a "to and along  easement." The trust had to protect                                                                    
the  financial  interest of  its  lands.  He cited  a  court                                                                    
ruling,  "Lassen  versus  Arizona"  [United  States  Supreme                                                                    
Court,  January  1967]  that  required  states  to  pay  for                                                                    
statutory  easements on  trust lands.  Therefore, the  state                                                                    
abided by the ruling and  easements were not included by the                                                                    
trust  unless  the easement  was  already  in existence.  He                                                                    
communicated  that  the  trust  land that  the  state  owned                                                                    
allowed   for   public   use.  In   addition,   stipulations                                                                    
maintained public road use on  the lands. Certain areas were                                                                    
excluded  due  to  conservation  concerns  and  conservation                                                                    
easements  were included  in places  like the  limestone and                                                                    
karst  areas  on  Prince  of Wales  Island  to  protect  the                                                                    
underground  fish  streams.  The  trust  was  "cognizant  of                                                                    
protecting habitat."                                                                                                            
                                                                                                                                
Vice-Chair  Gara  related  that the  state  was  statutorily                                                                    
mandated  to  maintain  to  and   along  easements  when  it                                                                    
disposed of  land. He  asked where  the trust  exemption was                                                                    
included in  statute. Mr. Menefee stated  that the exemption                                                                    
was not  included in statue.  He elucidated that due  to the                                                                    
legalities   of   including  easements   without   financial                                                                    
compensation the  Department of Law (DOL)  advised the trust                                                                    
that the to  and along easements were  not applicable unless                                                                    
the state  were to  pay for  the easements.  Vice-Chair Gara                                                                    
did not  understand the compensation aspect  since the trust                                                                    
land was awarded by the state.                                                                                                  
                                                                                                                                
11:23:37 AM                                                                                                                   
                                                                                                                                
Mr.  Menefee recounted  that the  original trust  lands were                                                                    
awarded   to   the   trust  by   the   federal   government.                                                                    
Mismanagement  of the  lands occurred,  which resulted  in a                                                                    
lawsuit  that was  settled  in 1994.  He  reported that  the                                                                    
settlement specified  that the land  was to be used  for the                                                                    
beneficiaries' financial  benefit. Another condition  of the                                                                    
settlement  required that  the state  replaced the  original                                                                    
land awarded  the trust.  He pointed  to "the  enabling act,                                                                    
the settlement,  and HB 201  in 1994" [HB 201  Mental Health                                                                    
Trust Amendments  - Chapter  5 FSSLA  94 -  06/23/1994] that                                                                    
directed  the  matter  of  easements.  Vice-Chair  Gara  was                                                                    
"disappointed"  and stated  that  the  statute mandated  the                                                                    
state maintain  to and  along easements when  it was  in the                                                                    
public's interest.  He felt that  it was  inconceivable that                                                                    
periodic access to  fishing streams was not  in the public's                                                                    
interest. He asked  whether the trust maintained  the to and                                                                    
along easements  in the  land transferred  to the  USFS. Mr.                                                                    
Menefee answered  in the negative.  He elaborated  that only                                                                    
"existing encumbrances at  the date of the  enactment of the                                                                    
bill" were included.                                                                                                            
Representative   Grenn  thanked   the   bill  sponsors   and                                                                    
characterized  the legislation  as "inspiring."  He referred                                                                    
to slide 6 and remembered  that the amount of acreage listed                                                                    
would  change based  on valuations.  He asked  what type  of                                                                    
land was  sought after by  the trust. Mr.  Menefee responded                                                                    
that  the lands  listed on  the slides  were the  only lands                                                                    
that were included  in the exchange. He  delineated that the                                                                    
adjustments  were required  within  the  demarcated land  to                                                                    
ensure the exchange was of  equal value. He exemplified that                                                                    
if there  was more value  to USFS  land than trust  land the                                                                    
exchange  "shaved  off"  some   federal  land  to  make  the                                                                    
exchange equal  and visa versa. An  equalization process was                                                                    
delineated in both state and federal bills.                                                                                     
                                                                                                                                
Co-Chair  Foster acknowledged  the presence  of Senator  Mia                                                                    
Costello.                                                                                                                       
                                                                                                                                
Representative  Pruitt asked  what type  of tree  growth was                                                                    
included  in the  trust's land  from the  USFS. Mr.  Menefee                                                                    
responded that the land included  a 50 percent to 50 percent                                                                    
mix of young and old growth  trees and the young growth were                                                                    
in different  stages of age  from 25  to 50 years.  He added                                                                    
that  some of  the  young growth  stands  were already  pre-                                                                    
thinned and some logging roads  remained intact. The initial                                                                    
harvest would be  comprised of old growth and  over time the                                                                    
timber   would  transition   to   sustainable  new   growth.                                                                    
Representative  Pruitt  deduced  that the  exchange  created                                                                    
more of a sustainable  harvest opportunity in the long-term.                                                                    
Mr. Menefee agreed with the statement.                                                                                          
                                                                                                                                
11:29:42 AM                                                                                                                   
                                                                                                                                
Co-Chair Seaton mentioned  that a few years  prior there was                                                                    
legislation that  lengthened the time of  valuation surveys.                                                                    
He wondered whether  the bill passed and  inquired about the                                                                    
time frame  of the  valuations. Mr.  Menefee noted  that Co-                                                                    
Chair Seaton  was thinking  of the  land exchange  bill that                                                                    
lengthened  the time  of  the  appraisals, which  previously                                                                    
expired   in   one   year.  He   explained   that   "dynamic                                                                    
administrative  problems" had  occurred with  administrative                                                                    
exchanges under  AS 38.50 and  the one year time  period. He                                                                    
clarified  that  SB   88  was  not  subject   to  AS  38.50,                                                                    
therefore,  time  restraints  did  not  apply  to  the  land                                                                    
exchange.                                                                                                                       
                                                                                                                                
Co-Chair Foster OPENED Public Testimony.                                                                                        
                                                                                                                                
11:31:53 AM                                                                                                                   
                                                                                                                                
LARRY EDWARDS,  SELF, SITKA  (via teleconference),  spoke in                                                                    
favor of amending  SB 88. He submitted  a proposed amendment                                                                    
to the committee and recommended  its inclusion in the bill.                                                                    
He explained  that the amendment  proposed a  federal buyout                                                                    
versus  a land  exchange and  provided a  different kind  of                                                                    
beneficial resolution  for all parties. He  claimed that the                                                                    
Alaska Forest Resources and Practices  Act allowed clear cut                                                                    
logging of  unlimited size.  He referenced  the organization                                                                    
called  "Greater  Southeast  Alaska  Conservation  Community                                                                    
(GSACC)" which  had provided testimony  (copy on  file) that                                                                    
included  photographs of  recent clear-cut  logging of  4000                                                                    
acres of  trust land in  the center of  Revllagigedo Island.                                                                    
He reported  that the land  exchange included  an additional                                                                    
nine square mile  parcel adjacent to the clear  cut land. In                                                                    
addition, the  parcels on Prince of  Wales Island designated                                                                    
for the  trust amounted  to 19 square  miles in  three large                                                                    
blocks. He voiced that none  of the previous committees that                                                                    
heard  SB 88  considered the  impacts of  logging on  such a                                                                    
large  scale  in  those  locations.  He  believed  that  the                                                                    
legislature  was  "obligated"  to  analyze  the  impacts  of                                                                    
logging  the areas.  He believed  that a  buyout was  a "far                                                                    
better solution."   He contended that much  of the community                                                                    
testimony for  HB 55  was not  included in  SB 88  and noted                                                                    
that  some  of residents  of  Prince  of Wales  Island  were                                                                    
distressed  over  the  proposed  exchange.  He  thanked  the                                                                    
committee and  urged members to  reconsider the bill  in its                                                                    
present form.                                                                                                                   
                                                                                                                                
11:35:34 AM                                                                                                                   
                                                                                                                                
REBECCA  KNIGHT,  SELF,   PETERSBURG  (via  teleconference),                                                                    
spoke in  opposition of  SB 88.  She shared  that she  was a                                                                    
member  of  a  long-time   fishing  family.  She  completely                                                                    
understood  the  needs  of   AMHTA  beneficiaries  having  a                                                                    
relative who was  a beneficiary. She believed  that the bill                                                                    
was "a  timber industry  bill using  the beneficiaries  as a                                                                    
prop  to get  timber  legislation passed."  She opposed  the                                                                    
legislation  for  a  variety of  reasons  and  believed  the                                                                    
exchange  was  a "travesty."  She  asserted  that a  federal                                                                    
buyout of  AMHTA land  was a  "far better  alternative." She                                                                    
recommended that the committee change  the bill to a federal                                                                    
buyout with the lands deeded  to the Tongass National Forest                                                                    
and  the proceeds  going to  the trust.  She noted  that the                                                                    
Petersburg Assembly  supported the buyout option  and stated                                                                    
that  AMHTA   supported  a  buyout   option  as   well.  She                                                                    
maintained that  much of the  bill's support was based  on a                                                                    
threat  by the  AMHTA to  immediately log  its lands  if the                                                                    
federal  legislation was  not adopted  by January  15, 2017.                                                                    
She  believed  a  buyout option  would  help  beneficiaries,                                                                    
avoid impacts  to Ketchikan  and Petersburg  landowners, and                                                                    
avoid landscape  impacts. She voiced that  the Alaska Forest                                                                    
Resources  and  Practices  Act   was  antiquated  and  would                                                                    
continue to  allow clear-cutting  of up to  several thousand                                                                    
acres  on multiple  parcels of  exchange land.  She wondered                                                                    
why   experienced  Department   of  Fish   and  Game   (DFG)                                                                    
biologists were  not consulted on  the exchange.  She listed                                                                    
the benefits of a buyout  versus a land exchange. She opined                                                                    
that  "the  lands could  be  purchased  for  a few  tens  of                                                                    
millions of dollars at a fair market value?."                                                                                   
                                                                                                                                
Co-Chair  Seaton remarked  that the  opposition letter  that                                                                    
Mr.  Edwards  referred  to  as  well  as  Ms.  Knights  were                                                                    
included in the member's bill packets.                                                                                          
                                                                                                                                
11:40:20 AM                                                                                                                   
                                                                                                                                
CHARLES   WOOD,  MITKOF   HIGHWAY  HOMEOWNERS   ASSOCIATION,                                                                    
PETERSBURG (via teleconference), spoke in  support of SB 88.                                                                    
He  related  that   the  association  was  a   group  of  95                                                                    
homeowners  that resided  below  the slide  prone slopes  of                                                                    
Mitkof  Highway.   He  reported   that  there  had   been  9                                                                    
landslides on the  slopes and 5 had  occurred since December                                                                    
2005. He believed that logging  the slopes of the slide area                                                                    
would further accelerate the  landslide potential. The group                                                                    
of  residents  had  been  living   with  stress  because  of                                                                    
potential landslides and their  efforts in opposition to the                                                                    
trust's logging  plans cost  the association  over $135,000.                                                                    
He  asked for  the committee's  support  of SB  88 to  avert                                                                    
trust logging  on landslide  prone slopes  above residential                                                                    
areas.                                                                                                                          
                                                                                                                                
11:41:57 AM                                                                                                                   
                                                                                                                                
DENNIS   WATSON,   MAYOR,   CITY  OF   CRAIG,   CRAIG   (via                                                                    
teleconference), spoke  in favor of  SB 88. He  relayed that                                                                    
he  participated  in  commercial  salmon  fisheries  for  43                                                                    
years. He believed that the bill  would help to pave the way                                                                    
for a  stable revenue  stream for  the beneficiaries  of the                                                                    
Alaska  Mental Health  Trust.  He noted  the  benefits of  a                                                                    
stable  timer supply  for the  timber industry,  the region,                                                                    
and    for     Craig.    He    thanked     the    committee.                                                                    
11:44:21 AM                                                                                                                   
                                                                                                                                
OWEN GRAHAM, ALASKA FOREST ASSOCIATION, KETCHIKAN (via                                                                          
teleconference), spoke in favor of SB 88. He read from a                                                                        
prepared statement:                                                                                                             
                                                                                                                                
     The  Alaska   Forest  Association  supports   the  land                                                                    
     exchange  between the  Alaska Mental  Health Trust  and                                                                    
     the  US  Forest Service.  It  is  vital to  our  timber                                                                    
     industry that  the State enact  SB 88  this legislative                                                                    
     session.                                                                                                                   
                                                                                                                                
     The  Alaska Forest  Association (AFA)  is a  non-profit                                                                    
     business  association   that  was  formed  in   957  to                                                                    
     represent  the  interests  of the  timber  industry  in                                                                    
     Alaska. The AFA currently  manages a pension program, a                                                                    
     group health  insurance program, a  scholarship program                                                                    
     for the  timber industry  and sponsors  the Sustainable                                                                    
     Forestry Initiative program for Alaska.                                                                                    
                                                                                                                                
     The  Forest  Service  manages  more  than  90%  of  the                                                                    
     commercial  timberland  in  Southeast Alaska  and  that                                                                    
     federal agency has failed  to provide sufficient timber                                                                    
     to  keep  our  manufacturing facilities  operating.  We                                                                    
     have lost  two pulp  mills, several large  sawmill over                                                                    
     the last 20+ years, and  we have only a single mid-size                                                                    
     sawmill remaining. Now that last  sawmill is at risk of                                                                    
     closure because  the Forest Service has  mismanaged its                                                                    
     timber  sale program  again and  has provided  a timber                                                                    
     sale schedule that indicates there  will be very little                                                                    
     federal timber  available to our last  sawmill until at                                                                    
     least  2020.   The  State  Division  of   Forestry  has                                                                    
     continued to  supply timber for  our industry,  but the                                                                    
     State manages  only 2% of the  commercial timberland in                                                                    
     the  region. The  State alone  cannot  supply our  last                                                                    
     surviving sawmill.                                                                                                         
                                                                                                                                
     If  the   Alaska  Mental   Health  Trust   exchange  is                                                                    
     completed  this legislative  session, our  last midsize                                                                    
     sawmill  should be  able to  utilize  timber from  that                                                                    
     exchange  to keep  the mill  operating until  2020 when                                                                    
     the Forest  Service projects it  will again be  able to                                                                    
     supply timber.                                                                                                             
                                                                                                                                
     This  value-for-value exchange  has  a  lot of  support                                                                    
     within  the  region  because  in  addition  to  helping                                                                    
     preserve our  remaining timber manufacturing  jobs, the                                                                    
     exchange will enable the Alaska  Mental Health Trust to                                                                    
     avoid harvesting land adjacent to Ketchikan and                                                                            
   Petersburg that the local communities want preserved.                                                                        
                                                                                                                                
11:46:38 AM                                                                                                                   
                                                                                                                                
DAVID  LANDIS, MAYOR,  KETCHIKAN GATEWAY  BOROUGH, KETCHIKAN                                                                    
(via teleconference),  spoke in support  of SB 88.  He noted                                                                    
his familiarity with  the local issues. He  relayed that the                                                                    
people  of   the  community  of  Ketchikan   had  repeatedly                                                                    
supported a  land exchange. He  listed the many  benefits of                                                                    
the  land  exchange.  He  offered  that  the  land  exchange                                                                    
benefited  the   timber  industry,  the  residents   of  the                                                                    
Ketchikan Gateway  Borough, and the AMHTA  beneficiaries. He                                                                    
noted the protection of Deer Mountain.                                                                                          
                                                                                                                                
11:49:29 AM                                                                                                                   
                                                                                                                                
MARY NANUWAK,  SELF, BETHEL  (via teleconference),  spoke in                                                                    
opposition of  SB 88.  She thought that  the lands  had been                                                                    
ruined  but  the  parties  were  proceeding  with  the  land                                                                    
exchange  regardless.  She opined  that  the  trust and  DNR                                                                    
claimed that  they "protected everything"  when they  do not                                                                    
engage  in protections.  She believed  that  the state  only                                                                    
acted in  the interest  of the  beneficiaries when  they had                                                                    
"something to gain." She disagreed  with a notion that rural                                                                    
people  were not  informed and  warned that  rural residents                                                                    
were  aware  of many  things  happening  in the  state.  She                                                                    
requested that the state  refrain from "undoing everything,"                                                                    
which was a waste of money and time.                                                                                            
                                                                                                                                
11:52:42 AM                                                                                                                   
                                                                                                                                
Co-Chair Foster CLOSED Public Testimony.                                                                                        
                                                                                                                                
Representative Pruitt suggested moving  the bill. He thought                                                                    
any  amendments would  "totally and  dynamically change  the                                                                    
goal of  the bill."  He characterized a  vote on  moving the                                                                    
bill as  an "up or  down" vote.  He opined that  the federal                                                                    
purchase option  took a win  for the timber industry  out of                                                                    
the bill.                                                                                                                       
                                                                                                                                
Co-Chair  Foster  asked  whether members  had  any  proposed                                                                    
amendments.                                                                                                                     
                                                                                                                                
11:54:09 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
11:56:11 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Vice-Chair  Gara stated  his "surprise"  that the  trust did                                                                    
not  maintain  to  and  along  easements  on  its  land.  He                                                                    
questioned the legal authority and  asked for an "objective"                                                                    
follow-up  answer from  Mr. Menefee.  Mr. Menefee  confirmed                                                                    
that his office and DOL would provide a follow up answer.                                                                       
                                                                                                                                
Vice-Chair  Gara  reviewed the  zero  fiscal  note from  the                                                                    
Department of Natural Resources FN 1 (DNR).                                                                                     
                                                                                                                                
Representative Pruitt  MOVED to  REPORT CSHB 88(FIN)  out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
There being NO  OBJECTION, CSHB 88(FIN) was  REPORTED out of                                                                    
committee  with  a "do  pass"  recommendation  and with  one                                                                    
previously published zero fiscal note: FN1 (DNR)                                                                                
                                                                                                                                
Co-Chair  Foster  reviewed  the  agenda  for  the  afternoon                                                                    
meeting.                                                                                                                        
                                                                                                                                

Document Name Date/Time Subjects
SB 88 - Opposition Document 4.18.2017.pdf HFIN 4/18/2017 9:45:00 AM
SB 88