Legislature(2015 - 2016)BARNES 124
02/13/2015 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HB87 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 87 | TELECONFERENCED | |
HB 87-TIMBER SALES
1:05:46 PM
CO-CHAIR TALERICO announced that the only order of business is
HOUSE BILL NO. 87, "An Act relating to the sale of timber on
state land; and providing for an effective date."
1:06:15 PM
JOHN "CHRIS" MAISCH, Director & State Forester, Division of
Forestry, Department of Natural Resources (DNR), began his
introduction of HB 87 by reviewing the different authorities
under which the Division of Forestry has for selling timber
(page 2 of the 2/3/15 Briefing Paper for HB 87 in the committee
packet). He said this review will put into context the changes
being proposed for the authority under AS 38.05.118. He drew
attention to the division's authority for competitive sales
under AS 38.05.120 ("120"), explaining that these sales are done
either through sealed bid or an oral outcry auction. Oral
outcry auctions are used when there are a number of different
businesses interested in the wood. The sealed bid method is
used in the smaller communities where there are not as many
potential purchasers. Competitive sales are used to obtain the
best price.
MR. MAISCH said the next three sales methods he will discuss are
different variations of negotiated timber sales. Even though
the term "negotiated" is in the title, there is still a
competitive process in two of these three methods. He explained
that AS 38.05.115 ("115") provides the authority for small
negotiated sales of less than 500 thousand board feet of timber.
Drawing attention to the map of the Alaska Forest Resources and
Practices Regions on the last page of the briefing paper, he
explained that 500 thousand board feet would be roughly
equivalent to 20 acres in Southeast Alaska (Region I), 125 acres
in Southcentral (Region II), and 80 acres in the Interior
(Region III). Those basically represent the types of forest
that grow in each region and their productivity. Only one sale
a year can be negotiated under the 115 authority and currently
the sale is only good for one year. The division is in the
process of changing the regulation that affects the duration so
a purchaser would be allowed to have that sale type for up to
two years. The purchasers of these sales are very small
businesses, often described as "mom and pop" operations or a
sole proprietorship.
MR. MAISCH said AS 38.05.123 ("123") provides the authority for
negotiated sales for value-added products. These sales can be
up to 10 years or less than 10 years in length, can go up to 10
million board feet per year with a cap of 100 million board feet
over that 10-year period of time, and the operator purchasing
this type of sale must be manufacturing a high value wood
product. A high value wood product is defined in statute and in
regulation. The types of products that fall under high value-
added were recently updated via a regulation change. The other
type of product in this authority is just value-added products.
A value-added product would be a mill that cuts a board for
dimension use but doesn't dry, plane, or grade the board. A
high value added board is one that is kiln dried, planed, and
graded. Wood pellets were recently added to the high value-
added list because there is a wood pellet mill in Interior
Alaska near Fairbanks; the division is in the process of doing
an AS 38.05.123 sale for that facility.
1:11:12 PM
MR. MAISCH stated the subject of HB 87 is timber sales under the
authority of AS 38.05.118 ("118"). These sales can be up to 25
years in length and have three criteria that must be met in the
region in which a 118 sale authority is contemplated. House
Bill 87 would drop these three criteria from the 118 authority
to make it easier to use this authority statewide. The first
criteria is a high level of unemployment, meaning unemployment
must be over 135 percent of the statewide average as calculated
by the Department of Labor & Workforce Development and applied
to the state's different geographic regions. The Matanuska-
Susitna Borough, the Kenai Borough, and the Fairbanks North Star
Borough do not exceed that level of unemployment, so the 118
authority currently cannot be used in these geographic regions.
The second criteria that must be met is that the geographic area
must have an underutilized annual allowable cut. In the Tanana
State Forest of Interior Alaska, the division only offers about
10 - 15 percent of its annual allowable cut, so in that part of
the state this authority would be usable if there were not the
limitations of borough unemployment. The division uses this
authority a lot in Southern Southeast Alaska to negotiate sales
to sawmills and manufacturers located in southeast communities,
as opposed to the logs being sold competitively which would
allow most of that material to go into the export market. The
export market in the Pacific Rim and the Lower 48 can afford to
pay a higher price for the log, so if the division were to use
its 120 authority in Southeast Alaska the logs would all move
offshore as opposed to being used for supporting jobs and
manufacturing in Alaska communities. Mr. Maisch explained that
AS 38.05.118 came about because of a situation in the Haines
State Forest in the late 1970s/early 1980s when the state tried
to regulate the round log trade. A purchaser challenged one of
the division's sales and that case went all the way to the
"supreme court." The state lost that case because states are
not allowed to regulate interstate commerce. The 118 authority
was subsequently created by the legislature and the governor at
the time to allow the state to have other criteria that it could
use besides just price or an outright restriction on log export
to direct logs to support local mills. It was referred to as
the "Schnabel Act" after the Schnabel Mill that was located in
Haines in those days. He said the third criteria is that there
must also be an underutilized manufacturing capability at the
facility, essentially meaning that a mill could add a second
shift or operate year round. House Bill 87 proposes to strike
the three criteria from being considerations, making it easier
for the Division of Forestry to use the 118 authority statewide.
1:14:40 PM
MR. MAISCH said another example of where the division tried to
utilize the 118 authority was in Tok when Alaska Power and
Telephone Company was contemplating investment in a large
facility that would produce electricity with the use of wood
chips. The company approached the division about a 118 sale
with a 20-year commitment to lock in a reasonable fuel price to
ensure the recouping of its investment in an energy facility.
As the division went through the best interest finding (BIF)
process, it became apparent that there was competitive interest
when a second company expressed interest in the same wood. So,
the division stopped the BIF, backed up, and offered the sale as
a competitive 120 sale. Unfortunately, both companies decided
not to bid and that sale is now on the shelf and available, and
the division is still hopeful one of those companies will come
forward and purchase that timber at some point in the future.
MR. MAISCH maintained that the provisions of HB 87 would not in
any way change the division's public process. Best interest
findings are required for these larger negotiated sales. Small
negotiated sales that fall under 115 do not require a best
interest finding. He stated there would still be "two bites at
the apple" for the public and others interested in the sales.
One is the best interest finding process where the division puts
out a preliminary BIF, takes comment, and then modifies and
makes a final decision based on that comment. The division does
the on-site cruising of the timber, laying it out on the ground,
and then puts together a forest land use plan that has specific
information learned at the time of the sale layout, and again
the public and other interested parties get an opportunity to
comment on how the sale is designed and actually brought
forward. The division would do notice under the "945 notice
clause" for the larger timber sales, while the small 115 sales
are exempt from the 945 notice clause.
1:16:45 PM
MR. MAISCH addressed Section 1 of HB 87, explaining it proposes
to add a new subsection, (c), to make it clear that the
commissioner would have the authority to determine which of the
applicable sale provisions is the most appropriate to use in the
sale of timber "consistent with the best interest of the state."
He pointed out that this provision of best interest is what the
division would refer to as lower case best interest as opposed
to upper case Best Interest. This statement of lower case best
interest does not mean that best interest findings are required
for the authorities under AS 38.05.110 - 38.05.123.
MR. MAISCH explained that Section 2 would add new words [to AS
38.05.118(a)]: "the commissioner may negotiate a sale of timber
to a local manufacturer of wood products or a user of wood fiber
...." The new words "wood fiber" are to make it clear that wood
chips are included and can be used for biomass type facilities.
While the division is comfortable it already can do that, this
makes it specific that wood fiber is an intended use. He drew
attention to the two Alaska Energy Authority maps at the back of
the committee packet that display the number of wood biomass
projects that are currently being considered, or are already
built and operating, around the state. He said the red dots on
the first map indicate the communities that are doing pre-
feasibility studies to determine whether they have enough wood
and the economics make sense for heating projects, but the Tok
project is an electrical project. The second map shows where
there are operating facilities; the best known one being in Tok,
which produces both power and heat for the school and has a
greenhouse that produces food for use in the school lunch
programs for the whole district. This also occurs in Craig, but
the boiler there is a solid wood boiler that heats the school.
Craig also has a greenhouse for school lunch programs. The 118
authority is definitely of interest to the larger biomass
projects, he said.
1:19:50 PM
REPRESENTATIVE SEATON recalled a bill was passed several years
ago to make peat available as a biomass resource. He inquired
about a peat biomass resource as compared to wood biomass.
MR. MAISCH responded that according to the Division of Mining,
Land and Water, peat falls under the negotiated materials sales
of Title 38, which is AS 38.05.550 - 565. Peat sales fall under
AS 38.05.555(f), which allows the negotiation of peat and sets
different pricing structure points at different levels of sale
quantities. Peat is treated as a material sale product, not a
timber product.
1:21:15 PM
REPRESENTATIVE TARR understood each state forest would have to
have a forest management plan and that these plans describe the
allowable harvest. She further understood that [under HB 87]
all timber sales would still be subject to the constitutional
requirement for sustained yield management. She said it sounds
like the frequency at which the forest could be cut would be
increased. She asked whether this proposed change would allow
more board feet to be cut than would have otherwise been cut.
MR. MAISCH replied he thinks the discussion being referenced is
the discussion about using the 118 sale authority in Southern
Southeast Alaska where traditionally there has been a lot more
wood volume available off the Tongass National Forest, a federal
forest. But that is not the case any longer, it is now referred
to as a timber famine because not enough wood is available. The
division uses this 118 authority to try to direct the limited
supply of state wood to the local manufacturers. Right now the
division is in the process of doing a "bridge timber program"
where the division is offering its surplus allowable cut. The
allowable cut is managed on a 10-year average, so in any one
year sales might sell up to the allowable cut, which is 13
million feet in the southern Southeast State Forest on Prince of
Wales Island. In a year where that full allowable cut is not
sold, that unsold volume is essentially put in the bank and can
be offered at some point in the future which would result in the
allowable cut being exceeded in that given year. For that 10-
year period of allowable cut, it must average out to be either
right on the money or lower. The proposed changes do not allow
the division to sell any more timber than what is allowed under
sustained yield and annual allowable cut calculations. What the
proposal would do is that in the next two years the division
will have offered all of its surplus allowable cut and would
then no longer be able to use the 118 provision based on the
current requirement that there has to be a surplus of allowable
timber to harvest.
1:24:01 PM
REPRESENTATIVE SEATON requested an explanation for why it is
being proposed to repeal the criteria that an area must have
underutilized manufacturing capacity.
MR. MAISCH answered that that requirement was in place to ensure
that the wood purchased under this kind of a negotiated sale
would actually result in creating additional jobs in that
facility. So, if a facility theoretically was at full capacity
operating three shifts, more volume necessarily wouldn't result
in the desired effect of more jobs. So, that is where that term
"underutilized capacity" comes from. It also has been
interpreted that if a new mill was being built, and it existed
within two years of the negotiated sale, that would also be
considered as unutilized capacity, but there is a provision in
the contracts that allows the division to cancel the contract if
the mill is indeed not up and running and cutting wood within
that two-year timeframe. The idea is to encourage job creation.
REPRESENTATIVE SEATON understood that the aforementioned
criteria is one of three criteria that HB 87 would remove.
MR. MAISCH replied correct.
REPRESENTATIVE SEATON concluded the proposal removes the local
jobs portion of this. He further understood that the area must
have underutilized manufacturing capacity, not the particular
bidder. For example, he asked, if there is not underutilized
capacity in Southeast Alaska, "does that mean under current
status [the division] couldn't have these sales, and ... removal
of that would allow basically export ... of those logs because
there wasn't underutilized capacity in the area."
MR. MAISCH responded no. By removing these three criteria it
still is going to be 118 authority, which allows the division to
do that negotiation. Section 2, subsection (a), of the bill
still states "to a local manufacturer", so those words are not
being changed. The bill maintains the intent that this is for
manufacture, that it is for use in local facilities, and
striking the three subsections would make it easier for the
division to use this authority statewide and to use it
consistently, should the division choose to use it through a
best interest finding process. This will still be a relatively
rare authority that the division would use, except in Southern
Southeast Alaska, as per the earlier discussion on the allowable
cut piece of it.
REPRESENTATIVE SEATON understood, then, that the negotiated
terms are still going to be for local or regional manufacturing
of the product and that elimination of the section for
underutilized capacity will not allow these timber sales to be
used for export lumber.
MR. MAISCH confirmed that Representative Seaton has stated it
correctly and said that would also be his interpretation of this
proposed change.
1:28:17 PM
REPRESENTATIVE TARR addressed Mr. Maisch's previous statement
about violating the interstate commerce clause. She surmised
that, given the conversation taking place now and the response
from one particular mill, this public discussion is for this to
be a policy that would advantage a local company at the
disadvantage of this export company, and that the Department of
Law has said there is no interstate commerce issue there if it
is being done with that specific intent.
MR. MAISCH answered yes, this statute was created specifically
because of the "supreme court" case on interstate commerce that
specifically said states do not have the power to regulate. He
expressed his confidence that this is constitutionally allowable
under the state's constitution. Potentially, it is choosing
winners and losers, he allowed, a position that the division
does not like to be in, so that is why the division uses the 120
authority for the majority of its timber sales. It has been the
policy of many past administrations, including this current one,
to try to use the state's resources to create as many jobs,
especially manufacturing jobs, in the state as possible. The
lack of wood supply in the Tongass National Forest has reduced
the forest products sector in Southeast Alaska from 5,000
employees to 200 - 250. The industry that is left is on the
brink of failing because of a lack of wood supply. So, the
small amount of wood that the division can bring to the table is
very important to the continued existence of these businesses.
It is not that the division will not do 120 sales in Southeast
Alaska: the division still does that on occasion when the sale
is located too far away from the mills that could use it, or it
might be right next to a bigger sale of either federal or
private timber and so it makes sense to offer that sale at the
same time under a 120 authority. It is not a complete "un-use"
of that other authority, but it would give the division the
ability to direct as much wood as possible to manufacturing.
1:30:38 PM
REPRESENTATIVE TARR expressed her concern that it is old-growth
forest with salmon streams that will be cut. She said the
duration of time makes [this proposal] stand out: the
competitive sales have no duration limit, but these are up to 25
years. She surmised that because it would be a negotiated sale
there would still be public notice so people could comment.
Given the appraisal would be every five years, she asked whether
there would be an allowable cut over the length of that contract
that specifies in what years that will happen. She further
asked whether the potential exists for things to be done
haphazardly between time zero and five years when a re-appraisal
takes place.
MR. MAISCH replied the division has not done a 25-year sale
because a lot can happen in that long amount of time, especially
in Interior Alaska where wildland fire is a common occurrence.
Once terms of the sale are negotiated, the division uses a
standard timber sale contract that requires bonding, reappraisal
every five years under the 118 authority, and [reappraisal]
every three years under the 123 authority. In reappraisal the
division looks at the base rates and the fair market appraisal
of the material being sold and can adjust the rates
contractually. At that time the division would take into
account any major changes to its ownership of timber, such as a
large wildland fire. The longest term sales the division has
contemplated were the 20-year sales in Tok. Currently the
division is doing two five-year sales back-to-back under the 123
authority in Fairbanks. The length of time is critical for a
business entity that is going to seek financing in the private
sector to build a facility, in which case the business needs a
minimum 10-year commitment of raw material to amortize that
investment in the private equity sector. The division not
exceed its allowable cuts and the re-calculated allowable cuts
that are based on changing conditions; there is always a
constant adjustment as the division moves forward in time.
1:33:41 PM
REPRESENTATIVE JOSEPHSON addressed Mr. Maisch's statements about
present lack of available timber. He offered his understanding
that in a competitive sale, timber is cut as logs in the round
and shipped overseas, generally, or the timber is used
domestically in a local mill and then perhaps shipped elsewhere.
He asked what in that duality speaks to a lack of timber supply.
In other words, he continued, if someone failed to bid in a
competitive bid to cut and ship as logs in the round, wouldn't,
for example, Viking Lumber Company, as the only bidder perhaps
in one scenario, receive the timber sale.
MR. MAISCH responded there are more than just two companies that
are potentially in play in Southern Southeast Alaska and that is
primarily what is being talked about with this proposed change.
Two bigger companies are involved in round log export: Viking
Lumber Company [of Craig on Prince of Wales Island] is a mid-
size mill, and Icy Straits Lumber & Milling, Inc., of Hoonah [on
Chichagof Island], which is not near as large and cuts about 5
million board feet a year. Plus there are a number of smaller
mills around Southern Southeast Alaska/Prince of Wales. Most
state timber is not larger blocks of wood. Sometimes the
division sells only 2 or 3 million board feet and sometimes as
much as 10 or 15 million board feet in a sale. Depending on
where the mill is located, there can often be more than one
bidder. It is not just a simple matter of whether an exporter
doesn't bid on a sale that it would by default go to Viking.
There is actual competitive interest in the wood because there
is simply not enough wood available for the capacity that both
the round log exporters have and the milling sector has in
Southern Southeast Alaska. About 100 million board feet of wood
could probably be utilized in Southern Southeast Alaska in the
industries currently located there. In a good year the U.S.
Forest Service sells maybe 30-35 million board feet and the
division sells a little bit in addition, so the available volume
is very short for the current industry.
1:36:25 PM
REPRESENTATIVE JOSEPHSON asked what the state is giving up in
revenue when a decision is made to sell domestically rather than
for the overseas market, setting aside the economic impact
created by spinoff in places like Thorne Bay and Craig.
MR. MAISCH replied the state would receive a 30 - 50 percent
higher price for that log as a stumpage value, depending upon
the sale's location and size, quality of wood, and amount of the
wood. However, the key point here is that only about 13 million
[board] feet of wood are being talked about as being available
annually on a sustained yield basis [from state forests]. This
doesn't translate to a large number: a few hundred thousand
dollars difference in the very best case scenario and just tens
of thousands of dollars difference in a worst case scenario.
So, the state is forsaking a higher price for the concept of
creating jobs and supporting communities.
REPRESENTATIVE JOSEPHSON observed that the sectional analysis
for Section 3 states that the [repeal of AS 3.05.118(c)] would
enable DNR to negotiate timber sales in all areas [of the
state]. He offered his understanding that the current three-
pronged test of the 118 authority was designed such that if
there is economic hardship a negotiated sale can occur, but if
there is not economic hardship the assumption is that there
should be some competitiveness. He surmised that if the
Interior and Matanuska-Susitna areas are doing better
economically, the result would be a competitive bid.
MR. MAISCH answered yes, the 120 sale is the default method
under which the division sells the vast majority of its timber
sales. The division only uses these other authorities when it
finds that it is in the best interest of the state to use those
authorities. The division offers a fair number of 115 sales in
the Interior, but those are the small negotiated sales that go
to very small operators and do not cost the division as much to
lay out and administer. Instead of going through all the
process of what a larger sale would require, it actually saves
the state money to be able to offer those small sales to those
small operators; as well, it saves the small operators a lot of
the red tape of the larger sale authorities.
1:39:33 PM
REPRESENTATIVE TARR, regarding the talk about lack of wood from
federal forests, related that timber sales on federal forests
have been criticized as money losing operations because it is
the federal government that pays for replanting and the building
and ripping of roads. She asked who the responsible party is
under state timber sales for road building and ripping and
reclamation and replanting.
MR. MAISCH replied it is done differently on the state side,
with the vast majority of the roads built by the timber
purchaser. The division appraises the value of the improvement,
be it a bridge or a primary or secondary road, into the sale
price. The timber sale contract requires the purchaser to build
that piece of infrastructure. If the infrastructure is already
in existence, the division appraises in a maintenance cost for
the road while the purchaser is using it. Where there is not an
active timber sale on segments of roads, it defaults to the
state to continue to maintain those roads. The division must
maintain them to meet forest practices standards which are
focused on fish habitat and water quality issues. Occasionally
the division has received capital appropriations for a larger
piece of infrastructure, such as a bridge that would not be easy
to carry on a timber sale. So, there have been some cases where
capital money has been invested in infrastructure, just as is
done on all other types of infrastructure in the state. The
division is very proud that it has over 500 miles of roads in
Alaska, mostly in the Interior. Some of those are winter roads,
but those roads are very much multiple-use roads and are how
people get out to recreate, hunt, and do subsistence. They are
an important piece of life in many of the places where there are
state forests or state lands that are classified for forestry
use. In regard to reforestation, those costs are sometimes
appraised into the sales and other times the division simply
uses natural regeneration, which is usually very effective in
Southeast Alaska. However, natural regeneration is sometimes
not as effective in the Interior and Southcentral Alaska, so the
division will supplement that with planting if the regeneration
surveys show that that needs to be done. Sometimes the division
does receive capital monies, but more often the division has
some timber sale receipt authority, about $850,000 a year, that
can be used for infrastructure or reforestation work. The
division actually supports some of its timber sale foresters off
of the funds that are earned through the timber sale receipt
program. Most years, though, the division returns money to the
treasury once that cap is hit.
1:42:44 PM
REPRESENTATIVE SEATON observed that the 115 sales are
approximately 125 acres in size in Southcentral and about 80
acres in the Interior. He asked whether Interior sales are that
much more productive than Southcentral sales.
MR. MAISCH confirmed they are, primarily because [the Interior]
tends to have better soil types, temperatures, and a lot of
spruce stands. Based on the division's inventories, the average
volume per acre in the Interior is about 8,000 board feet,
whereas in Southcentral it is about 4,800 - 6,000 board feet.
Southcentral has much more mixed forest - spruce and usually
birch. Interior has some mixed stands, but often the stands are
pure spruce, pure birch, or pure aspen, which tend to grow much
denser than in Southcentral. Some of the Interior forests rival
about 35,000 board feet to the acre, which is equal to some of
the average stands in Southeast Alaska.
REPRESENTATIVE SEATON drew attention to page 1, line 6, of the
bill which states "offer the timber consistent with the best
interest of the state." He then drew attention to page 1, line
9, which would add "the sale is in the best interest of the
state". He queried whether these could be read such that the
state gets itself into a lawsuit that the commissioner is
required to have a best interest finding before there can be a
sale in Section 1 under AS 38.05.110 - 38.05.123, given some of
those don't require a best interest finding. He said if no one
is present from the Department of Law to answer his question
then he would like to get a written opinion verifying that that
does not require a best interest finding in Section 1.
MR. MAISCH reiterated that he has spoken with the Department of
Law, but will get a written finding for Representative Seaton.
He said, "The way I read that one in Section 6, as I mentioned
we would call that the lower case best interest finding, whereas
in Section 9 it's prefaced up there in (a) where it says 'upon a
finding that a best [interest of the state]', so that is kind of
the big b, for lack of a better word to describe it, and it is a
fine legal definition or understanding." He offered his
agreement with Representative Seaton that it would be good to be
as clear as possible and will get back with an opinion.
1:46:04 PM
REPRESENTATIVE JOSEPHSON inquired whether the "supreme court"
decision regarding the commerce clause was from 1983.
MR. MAISCH responded it was in the late 1970s or early 1980s and
that he will get back to the committee with the actual case. He
said the parties were the State of Alaska and an attorney who
had purchased timber.
1:46:51 PM
MR. MAISCH, responding to Co-Chair Talerico, explained that one
board foot is 12 inches by 12 inches by 1 inch, and a cubic foot
is 12 inches by 12 inches by 12 inches.
CO-CHAIR TALERICO asked whether timber sales can be transferred.
For example, he is aware of some lumber operations in his
district that have changed hands on a regular basis.
MR. MAISCH answered that through the contract process there is
the ability to reassign contracts. In some cases an operator
can actually re-sell a contract if the operator feels that is in
its economic best interest. However, generally, it is through
re-assignment and the division does due diligence because the
bonds must be reposted and the new party must have the financial
ability.
1:49:07 PM
CO-CHAIR TALERICO opened public testimony on HB 87.
1:49:48 PM
RICK ROGERS, Executive Director, Resource Development Council
for Alaska (RDC), stated that RDC is a statewide, membership
funded, trade association representing oil and gas, mining,
tourism, fisheries, and forestry. He said RDC is in favor of HB
87 and has submitted a letter for the record. The timber
industry is a shadow of its former self, with timber supply
being the biggest issue restricting the industry in Alaska. In
a small way, HB 87 helps the state adjust the tools that it has
to be as effective as possible in providing meaningful timber
supply, particularly for manufacturing facilities like Viking
Lumber and others in Southeast Alaska that are struggling
because of the lack of federal timber. He said RDC agrees with
the administration that the 120 sales, the competitive sales,
are the first choice and, all things being equal, the best way
to sell timber. However, there are unique circumstances with
the competition between exports and the need for the state to
help mills struggling with the lack of adequate supply. Given
this different climate of timber supply, this is an appropriate
adjustment to the statutes since they haven't been changed for
several decades. He clarified that wood chips are part of the
market basket that can be considered, which makes sense given
there is now a biomass energy industry, particularly in the
Interior. While the biomass industry is small, it is one
additional way to address the high cost of energy in rural
Alaska as well as some of the air quality issues that come from
burning wood with less advanced technology.
1:52:59 PM
JASON HOKE, Executive Director, Copper Valley Development
Association, stated the Copper Valley is an ocean of biomass
with over a million acres of beetle-killed timber, of which 67
percent is on state land. He explained that a board foot is
applicable towards timber, whereas tonnage is what is used when
discussing biomass. In his area there is a lot more biomass
than timber. This biomass needs "to be ground up and processed
as chips into what is defined as a higher value-added product."
He said the Copper Valley Development Association is in full
favor of HB 87 and hopes the committee will push the bill
forward. However, he continued, he has two caveats. One is
that under the 123 authority, sales to supply a chip operation
would not qualify for high value-added. He explained that he is
currently working on a deal with a processor and a value-added
bio-brick maker and the only way to get a lot of this timber out
is to chip it in the woods and haul it to the facility where it
will be pressed into bricks. While it is mostly black spruce,
which is very small diameter, it still has value if chipped.
So, his first caveat is to take a look at AS 38.05.123 in this
regard. Further, he noted, under an AS 38.05.123 sale the
processing facilities must be operational prior to harvesting
timber sold under this authority. But, he pointed out, the
aforementioned operation is going to go hand-in-hand because the
facility is also going to be the processor - to get the wood out
it has to be chipped before it can be made into bio-bricks.
1:55:42 PM
CO-CHAIR TALERICO held over HB 87 and kept open public
testimony.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 87 Ver A.pdf |
HRES 2/13/2015 1:00:00 PM |
HB 87 |
| HB 87 Negotiated Timber Sales Briefing Paper.pdf |
HRES 2/13/2015 1:00:00 PM |
HB 87 |
| HB 87 Fiscal Note.pdf |
HRES 2/13/2015 1:00:00 PM |
HB 87 |
| HB 87 RDC support letter.pdf |
HRES 2/13/2015 1:00:00 PM |
HB 87 |
| HB 87 Governor Transmittal Letter.pdf |
HRES 2/13/2015 1:00:00 PM |
HB 87 |
| HB 87 LOS Viking.pdf |
HRES 2/13/2015 1:00:00 PM |
HB 87 |
| HB 87 AEA Map.pdf |
HRES 2/13/2015 1:00:00 PM |
HB 87 |
| HB 87 Biomass Projects Map.pdf |
HRES 2/13/2015 1:00:00 PM |
HB 87 |
| HB 87 FRPA REGION MAP.jpg |
HRES 2/13/2015 1:00:00 PM |
HB 87 |
| HB 87 Sectional Analysis 3.pdf |
HRES 2/13/2015 1:00:00 PM |
HB 87 |
| 2.13.15 HRES HB 87 Southeast Conference LOS.pdf |
HRES 2/13/2015 1:00:00 PM |
HB 87 |