Legislature(2021 - 2022)BARNES 124
04/23/2021 10:30 AM House RESOURCES
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Audio | Topic |
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Start | |
HB98 | |
HB135 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+= | HB 98 | TELECONFERENCED | |
*+ | HB 135 | TELECONFERENCED | |
+ | TELECONFERENCED |
HB 98-FOREST LAND USE PLANS; TIMBER SALES 10:35:46 AM CHAIR PATKOTAK announced that the first order of business would be HOUSE BILL NO. 98, "An Act relating to forest land use plans; relating to forest land use plan appeals; relating to negotiated timber sales; and providing for an effective date." 10:36:35 AM REPRESENTATIVE HOPKINS, who had previously withdrawn Amendment 4 during the House Resources Standing Committee meeting on 4/19/21, said that he wasn't able to find a way to work the amendment through and restated that he withdrew Amendment 4. 10:37:01 AM REPRESENTATIVE FIELDS, who had moved to adopt Amendment 6 during the House Resources Standing Committee meeting on 4/19/21, when it was subsequently set aside, moved again to adopt Amendment 6, labeled 32-GH1607\A.17, Radford, 4/27/21, which read as follows: Page 7, lines 17 - 18: Delete "[TO A LOCAL MANUFACTURER OF WOOD PRODUCTS OR A USER OF WOOD FIBER]" Insert "to a local manufacturer of wood products or a user of wood fiber" 10:37:03 AM CHAIR PATKOTAK restated his objection from 4/19/21 for purposes of discussion. REPRESENTATIVE FIELDS explained that his amendments emerged from a desire to maximize local benefit; should natural resources related to fisheries or tourism, for example, be damaged through timber harvesting activities, support for local jobs and local manufacturers should be prioritized. He said Amendment 6 would limit the sale of timber to a local manufacturer, maximizing local economic benefits. 10:38:37 AM TIM DABNEY, Acting State Forester, Acting Director, Division of Forestry (DOF), Department of Natural Resources (DNR), directed attention to a letter from the Alaska Forest Association (AFA) [included in the committee packet], which read as follows [original punctuation provided]: In light of recent amendments that are under consideration to the Bill regarding limitations on exports and local hire requirements, AFA is concerned that the Bill will have negative unintended consequences on the timber industry and our member operators. MR. DABNEY said that HB 98 designed to allow local industry to sell the timber harvested and to find a market for types of wood that can't be manufactured locally. While AS 38.05.118 currently gives DOF the authority to negotiate a timber sale, it doesn't clearly state that the local business may export the timber after the work has been done to build roads and transport the logs. He explained that local mills aren't equipped to process young growth, there is a lack of local demand for wood products from small logs, and the only market for hemlock is in the Pacific Northwest. 10:41:59 AM CHRISTOPHER ORMAN, Assistant Attorney General, Natural Resources Section, Civil Division (Juneau), Department of Law (DOL), explained that Amendment 6 would be returning to that which is in current statute in AS 38.05.118. The problem, he explained, is that the timber sale provisions regarding 500,000 board feet specified in current AS 38.05.115 would be moved to AS 38.05.118 under HB 98. 10:44:53 AM CLAIR RADFORD, Legislative Counsel, Legislative Legal Services, Legislative Affairs Agency, said that Mr. Orman summarized the possible effects of Amendment 6 very well. 10:45:16 AM REPRESENTATIVE HANNAN asked Mr. Dabney whether the sales of less than 500,000 board feet are the same as those of hemlock and other timber that can't be processed locally. MR. DABNEY replied that both AS 38.05.115 and AS 38.05.118 can have an export component. REPRESENTATIVE HANNAN spoke of the protectionist views concerning the benefits of local manufacturing and noted that simply selling timber to local manufacturers may not be in the best interest of the state. Of there not being a domestic market for a certain type of timber, she asked, "Is that reason enough to negotiate a sale?" REPRESENTATIVE FIELDS responded that the lack of a domestic market is the reason for including an amendment to push local industry towards stability and job creation. 10:49:05 AM REPRESENTATIVE MCKAY expressed that while he sees the benefits of driving local industries, he would prefer to "let the free market prevail" because the state needs the revenue. He then asked Mr. Dabney whether selling timber overseas would generate more revenue than using it for firewood. MR. DABNEY said that in a competitive bid sale, the contract goes to the highest bidder; for material desirable as an export product, the out-of-state companies can outbid the local companies. This is one of the reasons, he said, that a negotiated timber sale with domestic business would be preferable. REPRESENTATIVE MCKAY said that trees are a renewable resource, and more value could be obtained by selling to out-of-state buyers. MR. DABNEY replied that balance is important, which is why it's important to have multiple mechanisms for entering into a sale. As far as trees growing back, he said, harvested areas previously populated with old-growth trees now contain young growth, which is a desirable commodity overseas. He said that taking advantage of overseas markets and allowing export for negotiated sales is the point of HB 98. 10:54:26 AM REPRESENTATIVE HANNAN asked Mr. Dabney to clarify whether, if Amendment 6 were to be adopted, the statute would then say that the sale cannot be negotiated. She then asked whether that means a competitive bid process involving either foreign or domestic companies would be possible. MR. DABNEY reiterated that if a negotiated timber sale is disallowed, a competitive bid process could take place, and foreign companies have a competitive advantage in being able to outbid domestic companies. He noted that a foreign or out-of- state purchaser would use local equipment and labor rather than sending their own employees and equipment to Alaska. 10:56:55 AM CHAIR PATKOTAK withdrew his objection to Amendment 6. 10:57:01 AM REPRESENTATIVE CRONK objected. 10:57:03 AM A roll call vote was taken. Representatives Hannan, Hopkins, and Fields voted in favor of Amendment 6. Representatives Schrage, Gillham, Rauscher, Cronk, McKay, and Patkotak voted against it. Therefore, Amendment 6 failed to be adopted by a vote of 3-6. 10:58:03 AM REPRESENTATIVE FIELDS said that Amendment 7 would not be offered. CHAIR PATKOTAK clarified that Representative Fields would not be [re]offering Amendment 7, which was labeled 32-GH1607\A.16, Radford, 4/17/21. [Amendment 7 - moved for adoption by Representative Fields on 4/19/21, with an objection for discussion purposes stated by Chair Patkotak, and subsequently tabled - remained tabled.] 10:58:33 AM The committee took a brief at-ease. 10:59:22 AM REPRESENTATIVE FIELDS moved to adopt Amendment 8, labeled 32- GH1607\A.15, Radford, 4/17/21, which read as follows: Page 7, following line 13: Insert a new bill section to read: "* Sec. 6. AS 38.05.115 is amended by adding a new subsection to read: (d) The commissioner may negotiate a sale of timber under AS 38.05.110 - 38.05.123 only to a prospective purchaser whose main office or headquarters is located in the state." Renumber the following bill sections accordingly. CHAIR PATKOTAK objected for purposes of discussion. REPRESENTATIVE FIELDS said that, like Amendment 6, the intention of Amendment 8 is to support local businesses. He asked Ms. Radford to explain the differences between the two. 11:00:25 AM MS. RADFORD explained that Amendment 8 would allow the DNR commissioner to negotiate a timber sale only to a purchaser with a head office or headquarters within the state. 11:00:58 AM The committee took a brief at-ease. 11:01:41 AM REPRESENTATIVE FIELDS said that milling jobs have declined over the past 30 years due to management of federal lands and international dynamics in the marketplace, but that there is expansive authority to create local jobs on state lands. He said that Alaska has historically had policies regarding in- state hiring. 11:03:05 AM CHAIR PATKOTAK asked to have someone address the potential constitutional concerns with Amendment 8. 11:04:05 AM MS. RADFORD said that Amendment 8 raises some constitutional issues under the Privileges and Immunities Clause, Commerce Clause, and Equal Protection Clause; she said that she has not done an in-depth analysis, but the Privileges and Immunities Clause restrains efforts to discriminate against out-of-state citizens. REPRESENTATIVE FIELDS said that the issue of restricting hiring to Alaska residents in terms of state lands and resources, versus private or federal lands, goes back decades to when the State originally tried to mandate in-state hiring for development on the North Slope; the legislature gradually passed a series of laws, he said, "eventually arriving at an Alaska hire requirement statute called the Zone of Underemployment statute." He characterized the policy as permissible when certain economic decisions related to high unemployment. He said that the current administration was the first one in 30 years to stop pursuing in-state hiring, "departing from longstanding bipartisan support for Alaska hire." 11:07:24 AM MR. ORMAN expressed his agreement with Ms. Radford's assessment of which constitutional clauses could affect Amendment 8 and listed several specific statutes that would apply to cases involving the Equal Protection Clause and the Privileges and Immunities Clause. He said that they key issue when looking at Amendment 8 is identifying the rational basis for restricting timber sales to only include businesses with a main office located inside the state; when considering Amendment 8 in terms of the Equal Protection Clause, he explained that there has historically been legislative intent language explaining the rational basis. When considering the Privileges and Immunities Clause, he said, the question is, "Does the law place a burden on the privileges or immunities protected by the U.S. Constitution, and if a burden does exist, can the state provide a substantial reason for the discrimination?" He then explained that the Dormant Commerce Clause should also be considered, citing South-Central Timber Development v. Wunnicke, 467 U.S. 82, 104 S. Ct. 2237 (1984). In response to a follow-up question by Chair Patkotak, Mr. Orman clarified that Amendment 8 would cause redundancy in AS 38.05. 11:17:22 AM REPRESENTATIVE FIELDS noted the need for rational basis and discussed the tendencies of local companies to hire local, support local charities, pay into the local tax base, and are attuned to the products that local people need. 11:18:18 AM REPRESENTATIVE MCKAY said that sometimes business can't find qualified employees and that others can't pass a drug test. He characterized Amendment 8 as trying to solve a problem that doesn't exist and said that DOF is tasked with getting the most revenue for the timber. 11:20:14 AM MR. DABNEY noted that negotiated sales under AS 38.05.123 are already allowed only for local manufacturers. He also said that the six factors of determination under AS 38.05.110(c) contain provisions for local benefits. Regarding Representative McKay's assertions, he explained that timber harvests tend to have predominately local hires in all aspects, and he said that maximizing revenue isn't the goal of DOF. While price is important, he said, he could foresee a situation in which a proposal with the highest price would fail to a proposal with a lower price but more local benefits. 11:25:29 AM REPRESENTATIVE RAUSCHER opined that needed labor can't always be supplied locally, but that a company with a bottom line won't want to pay for plane tickets. He expressed that he does want HB 98 to pass and that he does not support Amendment 8. 11:27:36 AM REPRESENTATIVE HANNAN noted that Amendment 8 does not specify hiring Alaska residents, it says that the business needs to be headquartered in Alaska in order to take part in negotiated sales; there is nothing in Amendment 8 restricting a company from bringing staff from elsewhere. She said that most of the old-growth has been harvested in the last 40 years, and that in southeast Alaska the few remaining areas of old-growth adjoin university or tribal land. She said that one of her prime concerns with HB 98 overall is the difference between negotiated sales and competitive bid sales. It's clear, she said, that the goal of bid sales is to give the contract to the highest bidder; however, negotiated sales are intended to address local need and, she said, "Asking for the business to be located here seems like a fairly low bar." She said that it would be ideal for the business to either be, or intent to remain, a longstanding member of the community, but that it's not difficult to start a business in Alaska. 11:30:09 AM CHAIR PATKOTAK removed his objection to Amendment 8. 11:30:10 AM REPRESENTATIVE CRONK objected. 11:30:16 AM A roll call vote was taken. Representatives Fields, Hopkins, and Hannan voted in favor of Amendment 8. Representatives McKay, Cronk, Rauscher, Gillham, Schrage, and Patkotak voted against it. Therefore, Amendment 8 failed by a vote of 3-6. 11:30:55 AM REPRESENTATIVE FIELDS moved to adopt Amendment 9, labeled 32- GH1607\A.14, Radford, 4/17/21, which read as follows: Page 7, following line 13: Insert a new bill section to read: "* Sec. 6. AS 38.05.115 is amended by adding a new subsection to read: (d) A timber sale contract entered into under AS 38.05.117, 38.05.118, or 38.05.123 must require the purchaser to hire only resident workers." Renumber the following bill sections accordingly. 11:30:58 AM CHAIR PATKOTAK objected for purposes of discussion. REPRESENTATIVE FIELDS pointed out that workers have often been brought in from out of state, and that as timber sales become increasingly international, there becomes less incentive for multinational corporations to hire local workers. As the timber will be harvested on state lands, he said, the legislature has the authority to mandate local hiring. He recounted a story of a federal logging job in which the purchaser brought in undocumented immigrants from Mexico and classified them as independent contractors in order to defraud them of workers' compensation, minimum wage, and insurance benefits. He said that the situation was noticed only because one of the workers was killed by a bear, largely due to insufficient equipment and safety measures which would have otherwise been obligatory. 11:33:54 AM MR. DABNEY said that the industry will not survive much longer if it is not provided with adequate timber and with the flexibility to export and that the collapse of the industry would affect local workers. He opined that the problem is the lack of available timber, not competition from outside the state. He said that HB 98 is intended to create more flexibility for the next few years, since the supply of timber from the U.S. Forest Service lands is severely limited, young- growth timber has not yet reached an amount sufficient to feed the industry, and DOF is already providing the maximum amount of timber available on state lands. He said that if a company is required to hire only local workers, the contract may be at risk. He stated that DOF opposes Amendment 9. 11:36:11 AM MR. ORMAN said that the same legal issues as described earlier, concerning the Equal Protection Clause and the Privileges and Immunities Clause, are also issues with Amendment 9. 11:36:45 AM REPRESENTATIVE SCHRAGE asked what kind of training is required for the jobs in question. MR. DABNEY said there are multiple types of workers involved in the industry and listed chainsaw, heavy equipment, dump truck, and logging truck operators. He said that high-skill labor is required for the mechanized equipment, and noted the administrative staff required for the clerical work. He said that they're living-wage jobs that are important to the economy. REPRESENTATIVE SCHRAGE asked whether Amendment 9 would apply to all staff, or only those actively involved in the harvesting of the timber. 11:39:06 AM REPRESENTATIVE FIELDS responded that the intent is to specify local hires for the harvest of the lumber, not the entire company. REPRESENTATIVE SCHRAGE noted his discomfort with the prior amendments addressing related issues but said that he could support Amendment 9 after hearing descriptions of the hands-on jobs. He referenced Representative Cronk's notes about the many firefighters who possess the specialized skills that would be transferable to the timber industry. 11:39:55 AM REPRESENTATIVE CRONK recalled that Southeast Alaska used to have a thriving timber industry and opined that development of resources is being hampered by the federal government. He then characterized Alaska as having the best-managed resources and best environmental protections in the world. 11:43:06 AM REPRESENTATIVE GILLHAM said that he agrees with hiring local, but there are times when qualified local employees can't be found. 11:43:56 AM REPRESENTATIVE HOPKINS expressed that revenue being funneled into the general fund is not the only way to increase the wealth of the state. He characterized local hire amendments as having a "snowball effect" on local and regional well-being. 11:45:20 AM REPRESENTATIVE RAUSCHER opined that over 90 percent of the committee members agree with the benefits of hiring local residents, but that it should not be mandated. He said that he would not support Amendment 9. 11:46:33 AM REPRESENTATIVE HANNAN said that the goal should be to create the biggest economic impact possible when it comes to resource extraction. She discussed the possibility of having taxation on income earned in Alaska. Noting that Amendment 9 would likely not be adopted, she said that she would support it because hiring local workers keeps money in the local economy. 11:47:49 AM REPRESENTATIVE FIELDS reminded committee members of the constitutional mandate to provide Alaska residents the maximum benefit from resource development on state lands and said that one of the most basic benefits is job production. He opined that, without mandates, the state would not achieve the local hire rates it needs. 11:48:11 AM CHAIR PATKOTAK removed his objection to Amendment 9. 11:48:14 AM REPRESENTATIVE CRONK objected. 11:48:19 AM A roll call vote was taken. Representatives Schrage, Hannan, Hopkins, and Fields voted in favor of Amendment 9. Representatives Gillham, Rauscher, Cronk, McKay, and Patkotak voted against it. Therefore, Amendment 9 failed to be adopted by a vote of 4-5. 11:49:25 AM CHAIR PATKOTAK stated that a committee substitute would be drafted to incorporate the amendments adopted thus far. He announced that HB 98, as amended, was held over.
Document Name | Date/Time | Subjects |
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HB 98 DNR Response to Remaining Amendments 4.23.2021.pdf |
HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM |
HB 98 |
HB 98 HRES Action on Amendments 4.19.2021.pdf |
HRES 4/19/2021 1:00:00 PM HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM |
HB 98 |
HB 98 Amendment Cronk A.24 4.19.2021.pdf |
HRES 4/19/2021 1:00:00 PM HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM |
HB 98 |
HB 98 Memo Amendment A.15 4.19.2021.pdf |
HRES 4/19/2021 1:00:00 PM HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM |
HB 98 |
HB 98 HRES Amendment Packet 1 4.19.2021.pdf |
HRES 4/19/2021 1:00:00 PM HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM |
HB 98 |
HB 135 Sponsor Statement 4.23.2021.pdf |
HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM HRES 4/26/2021 1:00:00 PM HRES 1/21/2022 1:00:00 PM |
HB 135 |
HB 135 Sectional Analysis Version A 4.23.2021.pdf |
HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM HRES 4/26/2021 1:00:00 PM HRES 1/21/2022 1:00:00 PM |
HB 135 |
HB 135 DNR Presentation 4.23.2021.pdf |
HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM HRES 4/26/2021 1:00:00 PM |
HB 135 |
HB 98 Letter Alaska Forest Association 4.23.2021.pdf |
HRES 4/23/2021 10:30:00 AM |
HB 98 |