Legislature(2013 - 2014)BARNES 124
03/14/2014 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HB202 | |
| HB207 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 138 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 207 | TELECONFERENCED | |
| += | HB 202 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
March 14, 2014
1:05 p.m.
MEMBERS PRESENT
Representative Eric Feige, Co-Chair
Representative Dan Saddler, Co-Chair
Representative Peggy Wilson, Vice Chair
Representative Mike Hawker
Representative Craig Johnson
Representative Kurt Olson
Representative Paul Seaton
Representative Scott Kawasaki
Representative Geran Tarr
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 202
"An Act raising the application fee for a drawing permit for the
hunting of bison to $20; requiring the game management plan for
bison in the Delta Junction Bison Range Area to include
mitigation of bison damage to farm crops and farm and personal
property; and authorizing the commissioner of natural resources
to make grants to mitigate or prevent damage caused by bison."
- MOVED CSHB 202(RES) OUT OF COMMITTEE
HOUSE BILL NO. 207
"An Act establishing the Board of Agriculture, Conservation, and
Development; transferring the powers and duties of the Natural
Resource Conservation and Development Board to the Board of
Agriculture, Conservation, and Development; transferring to the
Department of Commerce, Community, and Economic Development the
authority to approve loans from the agricultural revolving loan
fund; terminating the Natural Resource Conservation and
Development Board; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 202
SHORT TITLE: BISON DRAWING PERMIT FEES
SPONSOR(s): REPRESENTATIVE(s) FEIGE
04/10/13 (H) READ THE FIRST TIME - REFERRALS
04/10/13 (H) RES, FIN
02/21/14 (H) RES AT 1:00 PM BARNES 124
02/21/14 (H) Heard & Held
02/21/14 (H) MINUTE(RES)
02/28/14 (H) RES AT 1:00 PM BARNES 124
02/28/14 (H) Heard & Held
02/28/14 (H) MINUTE(RES)
03/12/14 (H) RES AT 1:00 PM BARNES 124
03/12/14 (H) -- MEETING CANCELED --
03/14/14 (H) RES AT 1:00 PM BARNES 124
BILL: HB 207
SHORT TITLE: AGRICULTURE; AGRICULTURAL LOANS
SPONSOR(s): REPRESENTATIVE(s) FEIGE
04/12/13 (H) READ THE FIRST TIME - REFERRALS
04/12/13 (H) RES, FIN
02/05/14 (H) RES AT 1:00 PM BARNES 124
02/05/14 (H) Heard & Held
02/05/14 (H) MINUTE(RES)
02/28/14 (H) RES AT 1:00 PM BARNES 124
02/28/14 (H) Scheduled But Not Heard
03/14/14 (H) RES AT 1:00 PM BARNES 124
WITNESS REGISTER
DOUG VINCENT-LANG, Director
Division of Wildlife Conservation
Alaska Department of Fish & Game (ADF&G)
Anchorage, Alaska
POSITION STATEMENT: Testified on HB 202.
MICHAEL PASCHALL, Staff
Representative Eric Feige
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions related to HB 202 on
behalf of the sponsor, Representative Feige.
MICHAEL PASCHALL, Staff
Representative Eric Feige
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Outlined the changes in HB 207, Version R,
on behalf of the sponsor, Representative Feige.
FRANCI HAVEMEISTER, Director
Division of Agriculture
Department of Natural Resources (DNR)
Palmer, Alaska
POSITION STATEMENT: Answered questions regarding HB 207.
KRISTIN CURTIS, Auditor
Division of Legislative Audit
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding HB 207.
TODD PETTIT, Farmer; Chair
Palmer Soil and Water Conservation District
Palmer, Alaska
POSITION STATEMENT: Testified in opposition to Version R, the
proposed committee substitute to HB 207.
ARTHUR KEYES, Farmer
Palmer, Alaska
POSITION STATEMENT: Testified in opposition to HB 207.
ROBERT RIDDLE, Farmer
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 207.
DON BERBERICH, Farmer; President
Alaska Farm Bureau
Palmer, Alaska
POSITION STATEMENT: Testified in opposition to HB 207.
JOHN SCHIRACK, Producer
Palmer, Alaska
POSITION STATEMENT: Testified in opposition to HB 207.
CAROL KENLEY, Farmer
Palmer, Alaska
POSITION STATEMENT: Testified in opposition to HB 207.
ACTION NARRATIVE
1:05:54 PM
CO-CHAIR DAN SADDLER called the House Resources Standing
Committee meeting to order at 1:05 p.m. Representatives Seaton,
Olson, P. Wilson, Tarr, Kawasaki, Hawker, Feige, and Saddler
were present at the call to order. Representative Johnson
arrived as the meeting was in progress.
HB 202-BISON DRAWING PERMIT FEES
1:06:12 PM
CO-CHAIR SADDLER announced that the first order of business
would be HOUSE BILL NO. 202, "An Act raising the application fee
for a drawing permit for the hunting of bison to $20; requiring
the game management plan for bison in the Delta Junction Bison
Range Area to include mitigation of bison damage to farm crops
and farm and personal property; and authorizing the commissioner
of natural resources to make grants to mitigate or prevent
damage caused by bison." [Before the committee was Version P.]
1:06:49 PM
CO-CHAIR FEIGE stated HB 202 intends to solve a problem that has
existed in the Delta community since the 1950s. The bison herd
was introduced in the 1920s and has grown significantly since
the Delta barley project was started in the early 1980s, in
part, due to Alaska Department of Fish & Game's excellent game
management. He reported one unintended consequence is that
bison work their way into the barley fields just prior to the
crop being harvested.
CO-CHAIR FEIGE said the only economic way to prevent bison from
going onto the crop fields is to construct sturdy high fences,
which are expensive and costly. Hunters enjoy the benefits of
hunting the bison and significant interest exists in harvesting
bison in the limited permits issued each year.
CO-CHAIR FEIGE said he would like to raise revenue for the state
that does not conflict with the federal funds that the state
receives from for fish and game purposes. Under the bill, the
additional revenue raised would allow the DNR to make grants not
exceeding the revenues from hunting fees and could augment the
existing soil and water conservation district's program that has
gradually been fencing off barley fields for farmers in the
Delta area. He offered his belief that HB 202 represents a
suitable compromise between the user groups - the [Delta Bison
Working Group] and the group [hunting or viewing the bison].
1:10:32 PM
REPRESENTATIVE P. WILSON asked how often these bison stampede
and whether a fence will stop a stampede.
DOUG VINCENT-LANG, Director, Division of Wildlife Conservation,
Alaska Department of Fish & Game (ADF&G), answered that it is
probably more an exception than the norm for the bison as they
tend to ramble; however, he acknowledged it does occur.
MICHAEL PASCHALL, Staff, Representative Eric Feige, Alaska State
Legislature, replied that he has not heard of a significant
stampede in the nine years that he has lived in Delta Junction.
He explained the bison have a "laid back" demeanor so it takes a
lot of effort to get them moving. He agreed that a fence would
not stop stampeding bison nor would most structures. In
response to a question, he anticipated that the grant program
would be ongoing until the grants were no longer needed. He
didn't think hunting fees will be reduced since the funds can be
put to good use through the ADF&G funds and the federal match.
1:13:59 PM
REPRESENTATIVE SEATON, referring to Version P, asked whether the
$20 increase in fees is under AS 16 and goes to the fish and
game fund. He noted the requirement under page 2 of Version P
[in Section 3] would amend AS 38.05, which means the
commissioner of DNR is not obligated to carry out these
provisions unless an inter-agency transfer from ADF&G occurs.
MR. PASCHALL answered yes; but specified the fee transfer is not
being required to be done through a reciprocal services
agreement. He clarified that the commissioner of DNR would make
the arrangement to obtain the funds through appropriation.
MR. PASCHALL clarified the [Delta Bison Working Group] process
has been ongoing for several years. He pointed out that the
bill represents the recommendations the working group made.
These recommendations were in the management plan that recently
went to the Board of Game for approval, but it does require
legislative action.
1:15:46 PM
CO-CHAIR SADDLER inquired as to the [Delta Bison] working group
membership.
MR. PASCHALL responded that he didn't specifically recall who
the members were but most are people from the community,
including representatives from agriculture, tourism, hunting,
and a local business owner. He characterized the working group
as a fairly-well represented group, although the farmers are
also hunters so everyone had a hunting interest.
1:16:27 PM
REPRESENTATIVE KAWASAKI referred to page 1, Version P, to
language deleted, "[BUT IS NOT LIMITED TO]" and asked for
further clarification.
MR. PASCHALL answered that is a drafting procedure that he has
observed in other bills so "must include" has been used.
REPRESENTATIVE HAWKER recalled that when the revisor's bill was
previously brought before the floor that as previously described
"[BUT IS NOT LIMITED TO]" had been the standard in the drafting
manual.
REPRESENTATIVE KAWASAKI referred to page 2, line 4, Version P,
to paragraph (4), which read, "preventing bison damage to farm
crops and farm and personal property." He asked for further
clarification on what could be included besides fencing and if
moving animals or culling animal populations would also be
included.
MR. PASCHALL believed any of the aforementioned items could be
included. He said the management of the bison range is limited
to the bison range, which he recalled was about 40,000 acres.
Although it isn't all state-owned land, the major purpose of
creating the bison range was to prevent damage by holding bison
south of the highway prior to the harvest season.
1:19:02 PM
REPRESENTATIVE KAWASAKI asked whether the free-ranging bison are
controlled since these bison can go through fences.
MR. PASCHALL answered that the working group recommended fencing
as the only option, noting that 200 animals would not be stopped
by anything short of thick concrete or steel walls. The
original intent was to maintain a free-ranging bison herd and
the recommendation in the fish and game management plan was to
fence in the farms to keep bison out. He acknowledged bison
have the ability to run through fences, but he characterized it
as an exception, a very rare exception.
REPRESENTATIVE KAWASAKI asked whether this management is the
standard provision for animal herds outside the Delta Bison
Range. Since there are lots of free-ranging animal herds in
Alaska, he asked whether it is the policy to compensate other
private landowners. He pointed out moose live in Creamer's
Field [Migratory Waterfowl Refuge] but they sneak out and eat
pumpkins from landowners. He wondered if this policy is limited
to the bison herds or if it applies to other species.
MR. PASCHALL deferred to ADF&G, but said it is a policy question
as to whether landowners should be compensated. He said that
these bison were introduced for recreational hunting so people
are receiving compensation for economic harm caused by them. He
highlighted another example would be expenditures the state
makes to eradicate northern pike which were been brought into
Alaska, but found to harm other fish.
1:22:20 PM
CO-CHAIR FEIGE indicated the sponsor's intent is that this is a
specific mitigation measure in a specific area for commercial
agriculture.
[The following exchange is verbatim.]
REPRESENTATIVE TARR: One email we had received from the Salcha-
Delta Soil and Water Conservation District talking about their
bison fencing program and that they oppose the bill, which is
kind of a surprise to me. But I'm just wondering do you see
this as a compliment to what they might be doing and give it a
little umph because they'll be additional dollars available.
CO-CHAIR SADDLER: Representative Tarr, could you clarify which
letter that is?
REPRESENTATIVE TARR: It's the one from Donald Quarberg. ... I
received it and every member of this committee is copied on this
email and it just has a picture attached of their bison fencing
program. But I'm not sure it made it into the packet, it is in
our email. ... wanted to just have your thoughts on that; it
seems like this could be a great compliment to it because there
would be additional resources available, and so I was surprised
by that.
MR. PASCHALL: Representative Tarr, through the chair, if I
could ask one question back to clarify for the answer and that
is: you're assuming that Don Quarberg represents the soil and
water district?
REPRESENTATIVE TARR: Through the chair, thank you. ... I had
received two emails from him. In the first email he did show
some connection to that organization and maybe that was not
accurate, so I would appreciate any clarification on that too.
MR. PASCHALL: Representative Tarr, through the chair. Don
Quarberg used to be the extension agent and used to be the soil
conservation agent for the [U.S. Department of Agriculture] USDA
and left those positions numerous years ago. And since that
time has been a very vocal opponent to agriculture in the area
and he's also a very ... active hunter and chairs the ... local
Fish & Game advisory committee. And he has been very vocal in
his opposition to any assistance to the farmers in any way,
under any circumstances, including objecting during discussions
about the USDA Farm bill and the programs that are available for
agriculture nationally. And the conservation and reserve
program, which interestingly promotes wildlife habitat, but he
refers to it as a handout to farmers, and goes on and on.
REPRESENTATIVE TARR: Thank you.
1:25:17 PM
REPRESENTATIVE HAWKER commented that he personally does not see
a compelling reason for this legislation. He doesn't oppose
moving HB 202 out of committee, but he does so with reservation.
REPRESENTATIVE JOHNSON remarked that the bison were introduced
in 1928 but the farms were established in 1978. He inquired
whether this issue is similar to someone buying a home next to
the airport and then complaining about the noise.
CO-CHAIR FEIGE responded the farmers had to sign documents that
they would not hold the government responsible for the bison at
that time the Delta barley projects were started in the late
1970s. However, the size of the herd has nearly doubled. In
1978, the herd consisted of 250 animals and today it is 450
animals, in part, due to state management for maximum
sustainable yield. He acknowledged that the farmers do not have
direct recourse to the state, but it is also a matter of
fairness. There are two competing user groups consisting of
farmers trying to make a living and hunters enjoying the sport
and subsistence aspect of hunting. He offered his belief that
this bill seems like a fair compromise to address an ongoing
problem. He pointed out that the ADF&G study group recommended
this remedy to resolve the problem.
REPRESENTATIVE KAWASAKI was unsure that this is the state's
responsibility. He pointed out he does not get money from the
state when moose eat his pumpkins from his garden. He was
unsure that it was the hunter's responsibility, yet this bill
would double the permit fees although he noted these fees are
modest. He maintained he was not convinced this bill is
necessary.
REPRESENTATIVE P. WILSON remarked that the current $10 fee is
very small so an increase to $20 would constitute a very small
increase to provide assistance to the farmers.
REPRESENTATIVE SEATON remarked that the fee increase is
necessary and since it provides matching funds he favors the fee
increases. He did not think DNR would have superfluous amounts
of money for grants, plus he thought the applicability of the
other sections will not come to fruition. Thus, he supports
moving the bill for that reason.
1:31:57 PM
CO-CHAIR FEIGE moved to report the proposed committee substitute
(CS) for HB 202, Version P, labeled 28-LS0412/P, Bullard,
2/24/14, out of committee with individual recommendations and
the accompanying fiscal notes. There being no objection, the
CSHB 202(RES) was reported from the House Resources Standing
Committee.
The committee took an at-ease from 1:32 p.m. to 1:36 p.m.
HB 207-AGRICULTURE; AGRICULTURAL LOANS
1:36:21 PM
CO-CHAIR SADDLER announced that the next order of business would
be HOUSE BILL NO. 207, "An Act establishing the Board of
Agriculture, Conservation, and Development; transferring the
powers and duties of the Natural Resource Conservation and
Development Board to the Board of Agriculture, Conservation, and
Development; transferring to the Department of Commerce,
Community, and Economic Development the authority to approve
loans from the agricultural revolving loan fund; terminating the
Natural Resource Conservation and Development Board; and
providing for an effective date." [Before the committee was
Version C].
1:36:30 PM
CO-CHAIR FEIGE moved to adopt the proposed committee substitute
(CS) for HB 207, Version R, labeled 28-LS0675\R, Martin, 3/7/14,
as the working document. There being no objection, Version R
was before the committee.
1:36:58 PM
MICHAEL PASCHALL, Staff, Representative Eric Feige, Alaska State
Legislature, outlined the provisions of Version R. He said that
Version R removes the provisions that pertain to the Natural
Resources Conservation and Development Board (NRCDB) from the
bill. He referred to the sectional analysis provided by [Hilary
Martin, Legislative Counsel, Division of Legal and Research
Services, Legislative Affairs Agency, dated March 13, 2014] and
stated that paragraph two summarizes this change. He explained
that Version R represents a rewrite of HB 207. He offered to
review the bill by section. He said that Section 1 repeals and
reenacts AS 03.09.010 (a), which would establish the Board of
Agriculture and Conservation (BAC) in the DNR. This section
also specifies the membership of the board which consists of 10
members, including three ex officio nonvoting members. Four
voting members must be engaged in commercial agriculture and at
least one member is from each of the four judicial districts.
1:39:28 PM
MR. PASCHALL stated that Section 1 identifies one member must be
a land user in the soil and water district. One member must
have a business and financial interest, but that person cannot
be engaged in commercial production agriculture. He highlighted
that these positions are current positions on the board. This
section also would add a new board member, who must have
experience in the preparation, storage, processing, handling,
sale, or marketing of food products in a wholesale or retail
environment, but cannot be engaged in commercial production
agriculture. He characterized this position as being the one
that represents the downstream process of farming.
Additionally, three ex officio members were added, including the
commissioner of DNR, the commissioner of Department of
Environmental Conservation (DEC), and the chancellor of the
University of Alaska Fairbanks or the chancellor's designee from
the Cooperatives Extension Service or the School of Natural
Resources and Extension. Section 2 would repeal and reenact AS
13.09.010 (d). This provision would prohibit an individual from
serving on the board if he/she had applied for or restructured a
loan application. He reminded members one purpose is to move
approval to the Department of Commerce, Community & Economic
Development (DCCED) and this provision limits people who wish to
obtain a loan from serving on the board. This would allow a
person with a lease, permit, installment contract, or loan under
AS 03.10 or AS 38.05 to be appointed to the board, but the
person may not take any official action that would affect their
own lease, permit, installment contract, or loan.
1:40:15 PM
MR. PASCHALL said Section 3 requires the board to meet at least
four times a year and defines "commercial production
agriculture" as someone engaged with the intent to sell
agriculture products greater than a value of $5,000.
MR. PASCHALL related that Section 4 addresses the powers of the
board, including advising the commissioner of ADF&G and DEC on
issues, permitting, regulations, and the protection of
agriculture and food industry to broaden the economic base of
the state and to protect consumers.
CO-CHAIR FEIGE emphasized that the current statutory authority
for the board would limit the board to approving ARFL loans.
This bill would request that the BAC have a much greater say on
agricultural policy for the state. He clarified that the board
does not currently have this statutory authority.
1:41:36 PM
MR. PASCHALL explained that the policies are listed in this
section. Since the loan approval functions are transferred to
the DCCED under the bill, it was important to retain the board's
ability and expertise to review any loans that were denied or
appealed since extenuating circumstances might exist unique to
agriculture.
MR. PASCHALL referred to page 4, line 7-20, which is existing
language with the exception of line 14, paragraph (4), which
read, "ensure the wise use of the state's natural resources
through conservation of its soil and water;". This language
came from the soil and water districts in the state and was
added since part of agriculture and farming consists of
conserving resources.
1:42:53 PM
MR. PASCHALL referred to page 4, lines 21-24, which adds new
language in paragraph (7), which read, "recommend to the
University of Alaska Cooperative Extension Service or School of
Natural Resources and Extension programs and activities that
will further the promotion, regulation, and protection of the
agriculture and food industry, broaden the economic base of the
state, and protect consumers; and." He indicated the goal is to
make this a policy board to make recommendations to the agencies
involved in farming.
MR. PASCHALL referred to page 4, line 25 to paragraph (8),
"adopt regulations." He pointed out that line 28 establishes
guidelines for approval of emergency loans since the board
currently approves the loans and will need to write the
guidelines.
MR. PASCHALL stated that Section 5 is existing language, making
conforming clarifications.
MR. PASCHALL related that Section 6 specifies five voting
members of the board are necessary for a quorum and voting
purposes to ensure statewide input on agricultural policy
decisions.
1:44:23 PM
MR. PASCHALL said Section 7 would allow the board to adopt
regulations to carry out its duties, including establishing fees
for services provided.
MR. PASCHALL stated that Section 8 is existing language and
makes conforming language and Section 9 is existing language
that defines "agriculture" and "board."
MR. PASCHALL related that Section 10 would add a new section
regarding loans from the agriculture revolving loan fund. It
would require the DCCED to approve loans from the fund and sets
out the types of loans that may be approved.
1:45:10 PM
MR. PASCHALL highlighted that paragraphs 1-8 are an existing
loan activities of the board. He indicated that paragraph (9)
was added relating to commercial production or processing of
lime products limiting extraction to at least 50 percent for
agricultural purposes.
MR. PASCHALL pointed out paragraph (10) would allow a shop with
50 percent of its activities related to agriculture to be
eligible for a loan. For example, one mechanic in Delta
Junction performs nearly all his work on agricultural equipment
and would be eligible for a loan under the new program.
MR. PASCHALL stated that Section 11 provides conforming language
but does not change the terms of the process. He related that
Section 12 is existing language, but provides the minimum rate
for a loan may not be less than three percent. He stated that
Section 13 is also existing language and specifies that the DNR
receives the payments on behalf of the state.
MR. PASCHALL noted Section 14 is existing language but would
remove a reference to a fixed rate of interest for farm
processing loans, which is located in other portions of the
bill. He said Sections 15 is existing language but is
conforming language. Section 16 would limit the interest rate
to not less than three percent.
1:47:53 PM
MR. PASCHALL stated that Section 17 would require funds from
assignments of proceeds under this section to be deposited in
the agricultural revolving loan fund. He said Section 18 is
existing language, requiring excess proceeds collection from an
assignment to be refunded to the applicant.
MR. PASCHALL stated that Section 19 is conforming language that
would change a reference from the board to the DCCED and Section
20 provides a clarification and would amend the definition of
"nonfarm use." Section 21 would allow the legislature to
appropriate money from the fund for the costs of administering
the loan program under AS 03.10.
MR. PASCHALL said that Section 22 maintains that the board is
responsible for administering the agricultural revolving loan
fund. Some confusion has occurred in that some think the loan
fund has been moved to the DCCED; however, the loan fund remains
with the Board of Agriculture and Conservation.
CO-CHAIR FEIGE added that Legislative Budget and Audit (LB&A)
recommended moving the Agriculture Revolving Loan Fund (ARLF) to
DCCED. He offered his belief that a significant benefit can
occur by retaining the current structure but allowing the fund
to be administered by the board and operated under the Division
of Agriculture. The loan approval authority would be moved to
remove the conflict away from the board and expand the pool of
those who can serve on the board. This would allow the board to
be a greater vehicle for policy advice to the state.
1:51:26 PM
MR. PASCHALL explained that Section 23 reinserts language to
allow interest rates to be fixed to encourage agricultural
development but not subsidize non-viable agricultural
enterprises. The rates cannot discriminate against viable
existing agricultural enterprises but are comparable to rates
charged by other agricultural lending institutions. One
provision would allow the board to set the interest rate lower
than a comparable rate if the existing loan or application has
been denied by other lenders, falls within a particular
geographical area, or a particular activity that the board
considers to be a priority in the development of the
agricultural industry.
MR. PASCHALL stated that Section 24 is existing language with
the except for the definition of "department" as being the DCCED
instead of DNR. Section 25 would repeal statutes not needed.
Section 26 would provide transition language to dissolve the
existing board and reappoint a new board with staggered terms.
1:53:17 PM
REPRESENTATIVE HAWKER, referred to AS 03.10.025 in Section 10 of
the bill, which provides the department with the authority to
make the loans. He related his understanding that subsection
(b) would provide the constraints. He asked whether this would
essentially leave the "fox in charge of the hen house."
MR. PASCHALL answered that the goal was to continue oversight of
the program by allowing those most familiar with agriculture to
set policies while still ensuring that the loans meet the
criteria under the DCCED's review.
1:54:59 PM
REPRESENTATIVE HAWKER maintained his concern that the policy
making authority remains under the board. Although he
understood the intent, he suggested that the regulated are
making the regulations. He characterized the prior operation as
being incredibly "self-serving."
REPRESENTATIVE SEATON referred to page 6, line 7, which would
give the department the ability to approve loans limited to
individuals or corporations, but leaves out cooperatives. He
asked the sponsor whether language could be added to add
cooperatives, on page 6, line 7, after partnership.
MR. PASCHALL said there would be no objection. He suggested
that normally the cooperative would be a corporation, but he
offered to check into it.
1:57:57 PM
REPRESENTATIVE JOHNSON inquired whether there is a definition of
"teleconference." For example, and whether that would include
Skype or video-conferences.
CO-CHAIR FEIGE related his understanding that in addition to
telephone it would allow video-conferences or Skype.
REPRESENTATIVE JOHNSON suggested that video-teleconference
similar to the legislative conferencing.
CO-CHAIR FEIGE answered it would be some type of real-time
teleconference method.
REPRESENTATIVE JOHNSON agreed; but cautioned against allowing
texting or e-mail as a means to participate.
CO-CHAIR SADDLER suggested that the sponsor could find out if a
general definition exists.
REPRESENTATIVE JOHNSON suggested it may be in statute.
2:00:04 PM
REPRESENTATIVE P. WILSON asked whether DNR will add extra staff
to process the additional loan applications. In response to a
question for clarification, she asked whether DNR would be
involved with regulations adopted by the board.
CO-CHAIR FEIGE related his understanding that this would
essentially give the board statutory authority to adopt
regulations that govern the Agricultural Revolving Loan Fund
(ARLF); however, the actual approval authority for the loans
rests with board. The application would be reviewed by DCCED
for approval, and if an applicant appealed the decision, it
would come before the board to obtain a recommendation for the
commissioner of DNR as to whether the loan should be approved.
2:02:47 PM
REPRESENTATIVE TARR recalled some opposition to taking away the
authority for loan approval. She said one of the
recommendations for this stemmed from the recent audit. She
understood the audit was to review the past five years but it
actually went back to the inception of the fund. Thus, some of
the information didn't clearly reflect that significant changes
had been made in the management to ensure success.
Additionally, some of the loss was due to some funds being swept
to pay for the Division of Agriculture's operating expenses but
weren't related to failed agricultural projects. She requested
further clarification.
FRANCI HAVEMEISTER, Director, Directors Office, Division of
Agriculture, Department of Natural Resources (DNR), responded
that is correct. The audit called for a review of the past five
years dating back to 2009. She related her understanding that
of the 66 percent loss of funds reported in the audit, $41
million was moved out of the Division of Agriculture, some of
which was appropriated to operate the division, with a portion
returned to the general fund for forest fire activities in the
Division of Forestry.
KRISTIN CURTIS, Legislative Auditor, Division of Legislative
Audit, Alaska State Legislature, explained a section of the
audit describes the historical perspective of the fund from its
inception. This provides some understanding on the balance of
the fund and how the equity has declined. The recommendations
in the audit are based on auditor's reviews of loans from the
past five years. She characterized these as being current audit
recommendations.
2:06:07 PM
REPRESENTATIVE JOHNSON shared Representative Hawker's concern
about the "fox guarding the hen house." He inquired whether a
separate approval process could be developed for regulations.
CO-CHAIR FEIGE asked for further clarification on whether he was
referring to regulations adopted by the board, such that the
regulations would be approved by the commissioner of DNR rather
than the board.
REPRESENTATIVE JOHNSON wondered if someone else could do it.
CO-CHAIR FEIGE agreed they could.
REPRESENTATIVE HAWKER said this is exactly what he wanted to put
on the table as a means to seek common ground solutions. He
suggested that the department do the administrative work by
approving the loan, but based on having the regulations proposed
by the board be subject to approval by the DCCED's commissioner
prior to adoption. He suggested that this would provide dual
control over the administrative process.
MS. CURTIS replied that her division takes no position.
However, she noted that the audit makes a recommendation about
improving regulations to whomever administers the fund. The
Board of Agriculture and Conservation (BAC) board could
implement the recommendations in terms of improving the
regulations. The DCCED's commissioner could approve the
regulations. The auditors believe improvements need to be made
but leaves it up to policymakers to decide who best decide
serves that role.
CO-CHAIR SADDLER indicated the process could be revised that
would result in improved regulations.
MR. PASCHALL, addressing the previous question, agreed this is
something that could be reviewed. He pointed out that the
legislature has a review committee for regulations which could
serve that purpose in the final process.
2:10:50 PM
REPRESENTATIVE HAWKER said that two members of that review
committee serve on this committee. He pointed out that this
function is not a role of the Administration Regulation Review
Committee since it has a broad oversight role but does not have
a policy-making role. In this instance, the legislature wants
to make sure that the control is established at a policy-making
level.
REPRESENTATIVE JOHNSON noted the distinction between approval
and review. In this instance he thought the committee is
interested in approval.
MR. PASCHALL pointed out that putting in some type of approval
process would be seen as a positive move.
CO-CHAIR SADDLER related the bill will be before the committee
again.
2:11:46 PM
REPRESENTATIVE KAWASAKI asked how the administration of other
revolving loan funds works and whether this proposal is similar
to those, such as for the Commercial Fishing Revolving Loan Fund
(CFRLF).
MS. CURTIS explained that the CFRLF's approval process is done
by a committee of loan officers. She noted the audit report
compares the administration of the loan fund to various
comparable loan funds and highlights the differences. The audit
concludes it is unusual to have a board such as the BAC board
involved in approving the loans. However, the department does
make the point that it is there for a unique reason. She
reiterated that they are very different funds, but the audit
highlights differences between comparable funds in the report.
2:13:03 PM
REPRESENTATIVE TARR agreed with Representative Hawker and
Representative Johnson that a great solution might be for the
DCCED's commissioner to approve new regulations but to currently
keep the responsibility under the BAC. The legislature could
help ensure that the fund stays solvent and that funds are
available for agricultural development. She noted many
legislators are committed to this goal.
CO-CHAIR FEIGE asked for further clarification on why approval
for regulations would be up to the DCCED's commissioner and not
DNR's commissioner.
2:14:06 PM
REPRESENTATIVE TARR answered that the DCCED oversees other loan
funds, the audit makes recommendations, and from discussions
with the auditors, it seems as though the DCCED would be more
familiar with the financial management the DNR. She
acknowledged she has thin knowledge in this regard, but people
were not comfortable with fully removing the responsibility from
the BAC.
REPRESENTATIVE HAWKER maintained it is a policy call. He agreed
with Representative Tarr. From a regulatory-making perspective,
it makes sense that the DCCED's regulations are the ones being
implemented since DCCED approves the loans. However, it crosses
the line by giving an entity within DNR the potential authority
to propose the regulations, but the DCCED would approve them.
He questioned asking DCCED to enforce something completely and
totally structured in DNR. He said if the matter dealt with
resource management, forestry, or land issues, the DNR
commissioner would be the proper place to vest the authority;
however, in this case an economic activity, the loan fund, is
clearly within the bailiwick of commerce.
2:17:08 PM
CO-CHAIR SADDLER opened public testimony on HB 207.
2:17:24 PM
TODD PETTIT, Farmer and Chair of the Palmer Soil and Water
Conservation District, thanked Representative Feige for pulling
the Natural Resource Conservation and Development Board merger
out of the bill. He testified in opposition to HB 207. First,
the changes to the BAC and ARLF statutes would be bad for the
agricultural producers in the state since the bill does not
streamline government nor does it support the intent of the ARLF
loan program. He read the policy of the ARLF, as follows, "It
is the policy of this chapter to promote the more rapid
development of agriculture as an industry throughout the state
by means of long-term low-interest loans." Allowing the program
to be placed into DCCED would negate this policy by layering it
with unneeded government bureaucracy. One of the many benefits
of the BAC, after loan approval, has been its expediency in
processing loans and issuing funds to farmers. Further, he
emphasized the importance a clear and transparent board, which
BAC has achieved by following the guidelines of who may serve on
the board. Version R would eliminate this transparency by
allowing a producer with a current ARLF loan to sit on the board
or to apply for a loan, which creates huge conflict of interest
and completely removes the original intent of this bill and the
specific policy.
MR. PETTIT testified that the majority of producers and farmers
are also against this bill and it is simply bad for agriculture
in the state. He observed that the industry is growing by leaps
and bounds, that it is an exciting time to be involved in
agriculture in Alaska, and he cautioned against adding
encumbering bureaucracy to an expanding and developing resource
in Alaska.
2:20:35 PM
CO-CHAIR SADDLER asked for further clarification on the comment
that a majority of farmers are opposed to this. He asked
whether he was speaking as the director of the Palmer District.
MR. PETTIT reported that the Palmer District board, the Matsu
Valley Farm Bureau, and the other conservation districts within
the state are all opposed to the bill. He acknowledged he is
speaking today as a producer, but he has been involved in the
hearings and proceedings on this bill and reported his sense of
widespread opposition to the bill.
2:21:59 PM
ARTHUR KEYES, Farmer, expressed his opposition to HB 207. He
said he finds the statement of "the fox guarding the hen house"
to be offensive and unfair to the current BAC board whose
members have invested their time in agriculture and care about
the farming industry. He agreed with Mr. Pettit and noted he
has also spoken to many producers and the majority of farmers
oppose the bill. He surmised that anyone supporting this is in
the minority so he encouraged the committee to kill this bill.
Further, if committee members are concerned about food security
in Alaska, this bill should be killed. He has shown visitors
the unlimited innovation and opportunities on his farm; however,
legislative support will go a long way in assisting innovation
to survive and thrive, to preserve food security, and to
strengthen and "grow" it.
2:24:37 PM
REPRESENTATIVE TARR clarified that the comment "the fox guarding
the hen house" referred to changes made in Version R that will
allow someone currently serving on the BAC to also apply for a
loan, which current statute prohibits. She asked Mr. Keyes' to
weigh in on the BAC retaining authority for loan approval,
allowing the BAC to draft regulations, but DCCED having final
approval on new regulations.
MR. KEYES agreed the proposed committee substitute [Version R]
might create that aforementioned situation; however, adding more
safeguards would also create more bureaucracy that isn't
necessary since existing law contains appropriate safeguards.
He questioned allowing someone to serve on the board and obtain
a loan, which he viewed as a conflict of interest.
2:27:29 PM
CO-CHAIR FEIGE queried how Mr. Keyes believes the bill would
create more bureaucracy since it doesn't add additional people.
MR. KEYES suggested that it would increase the size of the
board, would add ex officio members, and a financial person
would review the application, who would subsequently submit it
to the DCED for loan officer approval. He questioned how it
wouldn't create more bureaucracy.
2:28:56 PM
CO-CHAIR FEIGE, regarding the conflict of interest issue, said
the main point of HB 207 is to provide more statutory policy
advice to the Division of Agriculture and the department. The
existing conflict of interest - the approval authority resting
with the board - would be removed by having a separate entity,
DCCED, approve loans. He disagreed that HB 207 creates a
conflict since the approval authority would not reside with BAC.
MR. KEYES acknowledged he might be misunderstanding the bill,
but he understood that Version R would allow someone with a loan
to serve on the BAC, which seemed like a conflict of interest.
2:30:35 PM
CO-CHAIR FEIGE related his understanding that the current
conflict of interest is that sitting board members will be
approving loans. Removing the loan approval authority would
eliminate the conflict of interest offered his belief that this
bill would increase the pool of applicants that could serve on
this board.
MR. KEYES responded that the current system, regardless of the
audit, has proven to be an effective one. He lauded the BAC as
one of the best boards, as did Mr. Fogels. He said this bill
attempts to fix something that is already exceptional and he
encouraged members to kill the bill.
2:31:56 PM
REPRESENTATIVE P. WILSON asked what Mr. Keyes thinks he will
lose if this bill is passed.
MR. KEYES answered that agriculture is a unique industry. He
related a scenario in which that illustrates decisions farmers
must make. For example, the risks hay farmers take risks might
include spreading $50,000 in fertilizer on their fields in hopes
of obtaining sufficient crop to repay their loans only to have
it blow off during a dry spell, represents risk that doesn't fit
the typical loan parameters. He questioned the ability of
bankers to make decisions appropriate to farmers' needs since
they haven't experienced the heartbreak of losing a crop or been
involved in the aforementioned fertilizer fiasco. He emphasized
this could adversely affect farmers from securing loans when the
loan program was designed to help farmers and to create an
expedient program. Further, with respect to language in the
bill, a disparity in authority exists, such that the frequency
in which the new board "may" give advice is peppered throughout
the bill but any reference to the DCCED indicates "shall."
2:36:06 PM
REPRESENTATIVE HAWKER disagreed, noting at least two members on
this committee hail from farm communities in Iowa and even
though he is a CPA and has been a banker, he has a farming
perspective, too. He appreciated the testimony, but
respectfully cautioned that the goal is to create an efficient
method to help farmers secure loans with the appropriate
financial and managerial control while vesting farm policy
within this board.
2:37:46 PM
ROBERT RIDDLE, Farmer, asked for clarification on the definition
of a farmer. He referred to one provision that identified a
farmer as someone who earns $5,000 or more per year. He
questioned what happens to farmers who lose their crops. He
suggested it be more like miners who have an assessment, and if
farmers met the assessment by improving the ground it could be a
consideration.
2:39:09 PM
CO-CHAIR FEIGE referred to page 3, line 11, Version R,
subsection (g), which read:
"commercial production agriculture" means agriculture
engaged in with the intent to sell agricultural
products with a value of $5,000 or greater a year.
CO-CHAIR FEIGE asked if the crop fails the farmer still had the
intent to sell the product whether the farmer would qualify
under this provision.
MR. RIDDLE asked for clarification on who would define intent.
CO-CHAIR SADDLER answered that a person who has entered the
business of farming would express the intent to farm.
2:40:35 PM
DON BERBERICH, Farmer and President of the Alaska Farm Bureau,
stated he also serves as the treasurer for the Palmer Soil and
Water Conservation District and has a small farm. He has also
worked as an agriculture teacher and FAA advisor at Palmer High
School for the past 24 years. He highlighted two complaints he
has with HB 207. First, at the annual state Farm Bureau meeting
the membership intended to vote for "no support" for HB 207. He
described the process the membership used and asked to clarify
the Alaska Farm Bureau voted not to support HB 207.
CO-CHAIR SADDLER asked what version of the bill was before the
bureau, noting the committee currently has Version R before it.
MR. BERBERICH stated that the Alaska Farm Bureau considered
Version U [the original version of the bill]. He offered his
belief that the current BAC board has been one of the best. He
suggested limiting the changes to address the concern that a
person with an ARLF loan can serve as a board member without
making sweeping changes to a system that works. He lamented
that he should be tackling his numerous farm chores instead of
testifying today and attending meetings next week to develop a
list of farming priorities in Alaska. He also doubted that HB
207 will be on the list of farming priorities.
MR. BERBERICH maintained that the audit findings misunderstood
the role of Mt. McKinley Meat and Sausage (MMM&S) [Alaska DNR,
Division of Agriculture] since "propping up" the MMM&S supports
a much bigger section of agriculture. He offered his belief
that killing the slaughterhouse could kill the meat industry,
which in turn will harm the animal feed industry, the hay
producers, the grain producers, those storing feed, and more.
He offered his belief that to develop lime production could also
wipe out the ARLF. The focus should be on important issues such
as developing the food security in Alaska so Alaskans can
survive for a month without relying on food from the Lower 48.
2:46:13 PM
CO-CHAIR FEIGE, in regard to Mr. Berberich's comment that people
would be "thrown off" the board because of the bill, wondered
who would not qualify to serve under the bill as stated.
MR. BERBERICH clarified that this bill isn't a good way to thank
a board that has been doing a good job.
CO-CHAIR FEIGE remarked that he admires the BAC's work and he is
in no way criticizing the board's actions. Under the bill, most
of the current board members could continue to serve since the
bill only changes the structure and places an emphasis on
commercial agriculture. He characterized the bill as intending
to provide a policy conduit for information to and from the
industry to the state.
2:47:46 PM
JOHN SCHIRACK, Producer, stated that he serves on the BAC as
well as serving as Chair of the Soil and Water District in
Wasilla. He reiterated Mr. Pettit's comments in thanking the
sponsor for removing the Soil and Water District from the bill.
He questioned who supports this bill since the aforementioned
Matsu Farm Bureau and the Farmers Union, the "main players,:
voted to oppose the bill. He commended the Chair of the BAC for
his work on the board. He related that an accountant and a
financial person serve as board members. In addition, the
current BAC has representation from Kodiak, Kenai, Mat-Su
Valley, and the Soil District, but the Delta Junction member is
currently vacant.
MR. SCHIRACK agreed with the conflict of interest sections of
the bill. He acknowledged that a board member would need to be
recused from any actions the board would take the member's loan.
He acknowledged he does not know the whole regulation process,
but he does not believe the BAC can propose a regulation and
adopt it. In closing, he asked members not to support HB 207.
2:52:58 PM
CAROL KENLEY, Farmer, spoke in opposition to HB 207, stating
that she serves as the secretary of the Matsu Farm Bureau. She
understood the changes in Version R would move the loan approval
from the BAC to DCCED, would allow current board members to have
current ARLF loans or apply for AFLF loans, and would allow the
board to advise and consult. First, she opposed moving the loan
approval to DCCED. Currently, farmers, who have real interest
in ensuring a viable ARLF are the ones "guarding the hen house"
and they have an interest in ensuring that the ARLF remains
viable. Second, she questioned whether conflicts could arise if
DCCED approve loans. She offered her belief the board already
advises and consults with DNR. She offered her belief this bill
is trying to "fix something that isn't broken." Finally, the
Matsu Farmers Bureau is united in opposing the original version
of HB 207 and she surmised they would also be opposed to Version
R. She asked members to postpone action on HB 207 until the
committee has allowed the Matsu Farm Bureau an opportunity to
weigh in on Version R.
2:56:02 PM
CO-CHAIR SADDLER closed public testimony on HB 207.
CO-CHAIR FEIGE directed attention to a letter from Mr. Nate
Burris in the committee packet dated February 2, 2014.
The committee took an at-ease from 2:57 p.m. to 2:59 p.m.
2:59:14 PM
CO-CHAIR FEIGE again directed attention to letters from Mr. Nate
Burris and Mr. Jim Clark, noting both had been involved in the
meat processing industry and have raised some concerns about
MMM&S. The ARLF audit highlighted several assets, including
MMM&S, which was acquired when the owner of the facility
defaulted and the fund took back the property. It provides a
significant function for the agriculture industry in
Southcentral Alaska, including offering a "kill floor,"
refrigeration for initial meat aging, and the authority to stamp
USDA on carcasses to allow for public sales. The facility also
processes meat for the prison system, using prison labor for
processing and meat cutting. However, MMM&S has been losing
over $100,000 per year, which comes out of the agriculture
revolving loan fund.
3:01:25 PM
CO-CHAIR FEIGE pointed out a number of actions taken by the BAC
board, including that the BAC has tried to divest itself of the
MMM&S's plant. To date, due to a variety of reasons that
closure has not been accomplished, he said.
CO-CHAIR FEIGE remarked that he did not intend to formerly offer
two proposed amendments, one related to legislative intent and
the other to specifically remove the authority for the facility
meat processing. The MMM&S facility can process meat at such
low costs since it uses prison labor, which prevents other
businesses from competing in the industry. In fact, meat
processing is not a function of state government and should be
operated by the private sector. He cautioned against however,
immediately eliminating the "kill floor" asset and recommended a
suitable transition should be developed to either close MMM&S or
allow the private sector to take it over.
3:04:01 PM
CO-CHAIR FEIGE, in his research with the USDA, found it will
take somewhere between 60 to 90 days to obtain a USDA stamp.
This is not within the realm of possibilities. He explained two
proposed amendments, not yet offered. He related that Amendment
1, [28-LS0675\R.1, Martin, 3/13/14] proposes to close McKinley
Meat and Sausage (MMM&S) by 2015. Secondly, Amendment 2, [28-
LS0675\R.2, Martin, 3/14/14], would restrict MMM&S processing
meat. He asked members to consider these proposed amendments
for discussion at a later date.
3:04:58 PM
REPRESENTATIVE HAWKER remarked that the legislature had a large
debate a number of years ago on the prison industries and its
competition with the private sector. He said the state should
not be using convict labor to compete with the private sector.
CO-CHAIR SADDLER reported that members of the committee have
been provided letters of February 27, 2014 from Nate Burris and
Jim Clark. Additionally, members have been provided copies of
amendments.
REPRESENTATIVE SEATON asked that Version R and the proposed
amendments [not yet before the committee] be posted on-line.
3:06:22 PM
[HB 207 was held over.]
3:06:45 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 3:07 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 207 Version R.pdf |
HRES 3/14/2014 1:00:00 PM |
HB 207 |
| HB 207 Schirack Email.xps |
HRES 3/14/2014 1:00:00 PM |
HB 207 |
| HB 207 Marsh Email.xps |
HRES 3/14/2014 1:00:00 PM |
HB 207 |
| HB 202 Barrette Letter.pdf |
HRES 3/14/2014 1:00:00 PM |
HB 202 |
| HB 207 Sectional Version R.pdf |
HRES 3/14/2014 1:00:00 PM |
HB 207 |
| HB 207 VanderWeele Email.xps |
HRES 3/14/2014 1:00:00 PM |
HB 207 |
| HB 207 Nate Burris Letter.pdf |
HRES 3/14/2014 1:00:00 PM |
HB 207 |
| HB 207 Jim Clark Letter.pdf |
HRES 3/14/2014 1:00:00 PM |
HB 207 |
| HB 207 Amendment R.1.pdf |
HRES 3/14/2014 1:00:00 PM |
HB 207 |
| HB 207 Amendment R.3.pdf |
HRES 3/14/2014 1:00:00 PM |
HB 207 |
| HB 207 Amendment R.2.pdf |
HRES 3/14/2014 1:00:00 PM |
HB 207 |
| HB 207 Arians Email.xps |
HRES 3/14/2014 1:00:00 PM |
HB 207 |
| HB 207 Bill Satterberg Letter.pdf |
HRES 3/14/2014 1:00:00 PM |
HB 207 |
| HB 207 Delta Farm Bureau Letter.pdf |
HRES 3/14/2014 1:00:00 PM |
HB 207 |
| HB 207 Wrigley Email.xps |
HRES 3/14/2014 1:00:00 PM |
HB 207 |