Legislature(2023 - 2024)BARNES 124
03/13/2023 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| HJR10 | |
| HB49 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HJR 10 | TELECONFERENCED | |
| += | HB 49 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 49-CARBON OFFSET PROGRAM ON STATE LAND
CHAIR MCKAY announced that the second order of business would be
HOUSE BILL NO. 49, "An Act authorizing the Department of Natural
Resources to lease land for carbon management purposes;
establishing a carbon offset program for state land; authorizing
the sale of carbon offset credits; and providing for an
effective date." [Before the committee, adopted as the work
draft on 3/8/23, was the proposed committee substitute (CS) for
HB 49, Version 33-GH1372\S, Dunmire, 3/3/23, "Version S."]
1:19:12 PM
HELGE ENG, Director/State Forrester, Division of Forestry and
Fire Protection, Department of Natural Resources (DNR), gave a
PowerPoint presentation, entitled "Forest Management Current
and Future," dated 3/8/23 [hard copy included in the committee
packet]. He began on slide 2, "Forestland Ownership," which
pictured a pie chart measuring forest land ownership in Alaska.
He noted that the federal government owned nearly half of the
forest land in the state. He continued to slide 3, "Timber
Ownership and Production," which featured a bar chart
distinguishing Alaska's timber harvest by ownership class.
1:22:11 PM
REPRESENTATIVE SADDLER asked Mr. Eng to expound on the
definition of sawtimber.
MR. ENG defined "sawtimber" as trees that are of a species,
size, and quality that are commercially viable or merchantable.
These trees can be sent to a sawmill and made into value added
wood products and sold on the market as lumber.
REPRESENTATIVE ARMSTRONG asked how the percentages on slide 3
translated to the number of acres logged on state land and
questioned how that had changed over time.
MR. ENG offered to follow up with the requested information.
1:24:09 PM
REPRESENTATIVE MCCABE questioned whether the 77 percent [of
sawtimber] was managed by the federal government.
MR. ENG said the management intensity of national forests was
low compared to private [forest management]. He added that the
National Forest System (NFS) had an initiative to transition
from old growth to young growth and harvested timber on a
smaller scale.
1:25:45 PM
MR. ENG continued on slide 4, "Forest Management," which read as
follows [original punctuation provided]:
Alaska Constitution, Article VIII sections 1 and 4
require that timber resources are to be made available
for maximum use consistent with the public interest
and to be utilized, developed, and maintained on the
sustained yield principle.
1:27:11 PM
REPRESENTATIVE ARMSTRONG asked whether Alaska was unique in
having the sustained yield principle, or whether that principle
was common in other states.
MR. ENG said the [sustained yield principle] was common among
state forests throughout the nation. He addressed slide 5,
"Sustained Yield," which read as follows [original punctuation
provided]:
Harvesting at most the amount of timber growth that
accumulates on the forest tract in any given year.
This is often referred to as the annual allowable cut
(AAC).
AS 41.17.950(26): The achievement and maintenance in
perpetuity of a high level annual or regular periodic
output of the various renewable resources of forest
land and water without significant impairment of the
productivity of the land and water; does not require
that timber be harvested in a non-declining yield
basis over a rotation period
AS 38.04.910(12): The achievement and maintenance in
perpetuity of a high level annual or regular periodic
output of the various renewable resources of the state
land consistent with multiple use.
1:30:36 PM
REPRESENTATIVE MCCABE asked whether the forest harvests were at
parity.
MR. ENG replied that both state and federal forests were not
reaching parity. The multiple use mandate charged the state
with accommodating recreation and other uses, as well as
supplying raw material on a regular basis to the timber
industry. He indicated that sometimes, less timber was
harvested to keep that bank account and the "spigot" of raw
material flowing.
1:33:13 PM
REPRESENTATIVE MCCABE clarified that he was more concerned about
forest management and forest fires. He asked Mr. Eng to expound
on the concept of multiple use.
MR. ENG replied that trees were a finite resource and an
underutilized resource in Alaska. He welcomed the governor's
charge to revitalize the state's timber industry. He shared his
belief that more than forest management, keeping up with the
increasing fire intensity was an important challenge.
REPRESENTATIVE MCCABE shared his understanding that Scandinavian
countries had very few forest fires. He opined that if Alaska
could manage its forests, money and industry could be made from
timber sales, and money could be saved on fighting forest fires.
He asked what was in the way of reaching parity [in regard to
timber sales.]
MR. ENG discussed the challenge of distance in Alaska,
explaining that hauling logs out of the woods encumbered a cost
per mile, which ate into profit margins. In addition, the lack
of roads created a costly challenge. He noted the tension
between wilderness, which was desirable in Alaska, and timber
production. He said there were solutions to keeping wilderness
while logging. He added that there were opportunities to expand
the timber industry in the state, such as the local lumber
grading bill, which was an effort to make it easier for small
sawmills owners to get started.
1:40:39 PM
REPRESENTATIVE MCCABE asked whether logging companies were given
a credit or discount if the land was unreachable by existing
roads.
MR. ENG said indirectly, yes, because road construction was
included in the timber sale. He explained that loggers were
responsible for pushing in the road as part of the purchase. He
agreed that more could be done in terms of subsidizing outlying
areas.
REPRESENTATIVE RAUSCHER asked whether second or third generation
growth was being harvested anywhere in Alaska.
MR. ENG reported that second growth harvest was well underway in
many areas of the state with most of the old growth concentrated
on federal lands in the Tongass National Forest. He reported
that Southeast Alaska was the most productive timber growing
region in the world with more stored biomass per acre than the
Amazon rainforest. He distinguished between forest management
practices in Southeast and Interior Alaska.
REPRESENTATIVE RAUSCHER asked whether logging was more difficult
to manage after the original harvest.
Mr. Eng said it depends on the wildfire cycle and explained how
wildfires create habitat to regenerate forests.
1:46:57 PM
CHAIR MCKAY refocused the discussion on HB 49.
MR. ENG continued on slide 6, "Multiple Use," which read as
follows [original punctuation provided]:
AS 38.04.910(5): The management of state land and its
various resource values so that it is used in the
combination that will best meet the present and future
needs of the people of Alaska, making the most
judicious use of the land for some or all of these
resources or related services over areas large enough
to provide sufficient latitude for periodic
adjustments in use to conform to changing needs and
conditions; it includes
(A) the use of some land for less than all of the
resources; and
(B) a combination of balanced and diverse resource
uses that takes into account the short-term and long-
term needs of present and future generations for
renewable and nonrenewable resources, including, but
not limited to, recreation, range, timber, minerals,
watershed, wildlife and fish, and natural scenic,
scientific, and historic values.
Mr. Eng narrated slide 7, "Sustained Yield, Example," which
pictured a forest divided into harvest units labeled 1-100.
1:51:34 PM
REPRESENTATIVE MCCABE asked whether area control was the best
practice or whether a percentage cut would be better.
MR. ENG said he did not mean to imply that area control was
better than volume control. He added that the planning of the
harvest was less important than the amount harvested to stay
within the sustainable harvest level.
REPRESENTATIVE SADDLER, in reference to the 100-year example on
slide 7, asked which forestry construct would allow for such
long-term management.
1:54:35 PM
MR. ENG said slide 7 depicted a hypothetical textbook example,
explaining that in Oregon, for example, the oldest harvest unit
would be 45 or 50.
REPRESENTATIVE WRIGHT referenced the inclusion of seaweed
farming on page 6, line 24 of the bill and questioned the
intention for "blue carbon."
1:56:08 PM
RENA MILLER, Special Assistant, Office of the Commissioner,
Department of Natural Resources (DNR), acknowledged that seaweed
farming was included as an example of a resource that could be
used with mitigation measures to increase the carbon stock on
the land. She noted that while ideas for seaweed farming were
out there, registries with specific protocols were lacking.
Should the bill pass, registries could be approached to build a
scientific and technological case for how a kelp project could
realize the benefits required for a carbon offset project.
REPRESENTATIVE WRIGHT sought to confirm that the state was still
actively exploring this option.
MS. MILLER affirmed that people were exploring it and DNR wanted
to be a part of it.
1:57:41 PM
MR. ENG narrated slide 9, which showed state forest and forest
classified state land. He continued on slide 10, "State
Forests," which read as follows [original punctuation provided]:
State Forests, managed by the Division of Forestry &
Fire Protection, are generally more evenly managed and
less event-driven than private lands or other State
lands with a profit maximization objective:
• Multiple use mandates, including recreation
• Sustained yield mandate
• Provide the timber industry with a perpetual,
stable, non-declining supply of raw material year
after year
• Consider and incorporate public input
For these and other reasons, State Forests in most
years harvest less than the sustained yield. They are
therefore generally sought after for forest carbon
offset projects.
MR. ENG concluded on slide 11, "Timber management and carbon
offset projects are complementary," which illustrated the
concept of additionality with a graph.
2:02:02 PM
REPRESENTATIVE MEARS returned to slide 10 and asked whether
state forests were generally sought after for forest carbon
offset projects because the newer growth sequestered more
carbon.
MR. ENG said that was part of it. He explained that carbon was
accumulated over time when harvest was less than new growth,
adding that additionality was a balancing act. He stated, "When
you harvest less, you accumulate more."
2:05:27 PM
REPRESENTATIVE MCCABE sought to clarify the term "area control"
and shared his understanding that carbon offset programs would
require a percentage cut for the whole area.
MR. ENG contrasted the advantages and disadvantages of
percentage cuts. He reiterated his belief that distinguishing
between harvest methods was less important than the amount of
biomass of trees remaining per acre to store carbon.
2:08:22 PM
REPRESENTATIVE SADDLER asked whether old or young trees did a
better job at capturing and storing carbon.
MR. ENG said, in general, neither one was a "winner." He
explained that younger trees consume carbon at a more rapid pace
than old-growth, but old-growth trees store more carbon in their
trunks, leaves, and branches.
2:11:34 PM
REPRESENTATIVE ARMSTRONG asked, given the difficulty of the
process, how to calculate carbon offset and determine carbon
credits.
MR. ENG suggested jumping in and trying the carbon credit
process. He discussed attempts in Michigan and California,
adding that Alaska could learn from their poor experiences. He
pointed out that with the state's enormous forest land base,
Alaska had the luxury of making mistakes and recovering.
REPRESENTATIVE ARMSTRONG requested a case study example that
would paint a before and after and highlight the potential
impacts.
REPRESENTATIVE MCCABE questioned the value per board-foot and
whether that figure was fixed or variable.
MR. ENG said the value was highly variable. He explained that
"stumpage," defined as the right to harvest timber, was sold by
the state to loggers. He offered to follow up with a range of
values and realized revenues.
2:17:29 PM
CHAIR MCKAY invited Mr. Steininger to answer finance-related
questions from the committee.
2:18:34 PM
REPRESENTATIVE MEARS sought more clarity on the carbon offset
revenue fund; how the funds would be used; and how the general
fund (GF) would receive revenue from it.
2:19:07 PM
NEIL STEININGER. Director, Office of Management and Budget
(OMB), explained that per Section 2 of the bill, money coming in
through the carbon offset program was defined as a designated
general fund (DGF) source of revenue. The carbon offset revenue
fund was a separate fund that would be populated by
appropriations from the legislature from either GF dollars or
revenue from the program itself. The department could then
spend the money without further appropriation to manage the
program. He noted that the legislature, through the annual
appropriation process, would have the option to divert a portion
of the revenue to other uses or straight to the GF. He noted
that the provision in question had been slightly reworded in
Version S, making it so program revenue would go directly into
the fund without an appropriation by the legislature.
Consequently, to take a profit out of the program, the state
would need to appropriate a balance from the fund back into the
GF or to another purpose.
2:21:50 PM
REPRESENTATIVE SADDLER expressed concern that there were not
many dedicated funds. Although the legislature might intend to
designate the funds to support the program, he said, the state
may not be able to encumber that money.
MR. STEININGER acknowledged that the prohibition on designated
revenue made it so a single source of revenue could not be
dedicated specifically to a purpose without legislative
appropriation. He likened the carbon offset revenue fund to the
spill prevention and response (SPAR) account.
REPRESENTATIVE SADDLER asked whether the fund would be
sweepable.
MR. STEININGER answered no and expounded.
MS. MILLER clarified that DNR would like the latitude to spend
because the department would have commitments under project
contracts entered into with the registry.
CHAIR MCKAY asked whether the federal government would have
separate carbon offset programs on their land.
MS. MILLER clarified that the bill specifically addresses state
proponent projects on state land.
CHAIR MCKAY asked whether the federal government could do a "cap
and trade" on their forested land in Alaska.
MS. MILLER said theoretically, the federal government could do
as they need to with their land; however, to date, there was no
registry with protocols for federal lands owners.
2:27:53 PM
REPRESENTATIVE ARMSTRONG questioned the total number of acres of
state forest.
MS. MILLER reported that Tanana Valley State Forest was roughly
2 million acres, the Haines State Forest Resources Management
Area was roughly 75,000 acres, and the Southeast State Forest
had somewhere between 30,000 and 40,000. He noted that in
addition to the state forests, there were other acres of
forested state land.
REPRESENTATIVE MCCABE requested another explanation of the
carbon offset revenue fund.
MR. STEININGER summarized the movement of money from the carbon
offset revenue fund to the GF. He reiterated that the revenue
would stay segregated in the fund for access by DNR until the
legislature should choose to withdraw moneys to "cash out" into
the GF or appropriate for another purpose.
2:32:01 PM
REPRESENTATIVE SADDLER sought to confirm that the bill would
change state leasing to allow the sale of carbon offsets while
also allowing the state to package and sell its own carbon
credits.
MS. MILLER answered yes, it would allow DNR to lease state land
for others to undertake carbon management, in which the lease
revenue would not go into the carbon offset revenue fund. In
addition, it would create a carbon offset program within DNR for
the state to undertake projects on state land for which the
revenue fund was created.
REPRESENTATIVE SADDLER asked whether Ms. Miller had said that
the state would only be a player on state forest land.
MS. Miller clarified that the state could be a player anywhere
on state land, and the only player that could do a project on a
state forest was the state.
REPRESENTATIVE MEARS speculated that carbon management would
require a lot of resources and asked how much the state could
potentially profit from carbon offset programs.
2:37:49 PM
MS. MILLER noted that revised fiscal notes were forthcoming.
She added that absent an existing project, a report on the pilot
projects [included in the committee packet] was a useful tool
for getting a sense of associated costs. The report presented
gross revenues and project expenses, including cost of
inventory; monitoring, reporting, validation; annual account
fees; and credit registration and transfer fees.
CHAIR MCKAY asked what aspect of a project would be done by
state employees versus private contractors.
MS. MILLER said employees, whether state or private, would vary
by project and negotiated contractual arrangement.
CHAIR MCKAY asked whether forestry personnel would be pulled
away from timber sales to manage the carbon offset projects.
MS. MILLER stated that the project activities may or may not be
carried out by Division of Forestry and Fire Protection
employees. If so, they would be compensated through project
revenues.
CHAIR MCKAY referenced a prior conversation with vendors who
made a statement about eating costs until getting paid at the
end. He sought clarity on that comment.
MS. MILLER asserted that many project developers take a turnkey
approach by covering the cost of project development until it
generates credits.
2:42:02 PM
CHAIR MCKAY requested a flow chart detailing the expected cash
flow timeline for a carbon offset project.
MS. MILLER directed the committee to Appendix B, which outlined
a project schedule. She approximated that credits would be
generated in 18 months; however, field work in Alaska was
unpredictable depending on the project and its intensity.
REPRESENTATIVE SADDLER asked how the management of state land
would change if it was leased for carbon offset.
MS. MILLER explained that when leasing state lands to a private
party, any requests to constrain the land use would need to be
presented with the application. DNR would consider the request
in a best interest finding, which involved a period for public
comment. She concluded that she did not anticipate a large
impact from state land lease to third parties on curtailing
other activities.
REPRESENTATIVE SADDLER asked for an example of potential
limitations.
MS. MILLER said it was hard to give examples. She speculated
that field work inventory may require site control to avoid
potential loss of carbon stock.
2:47:05 PM
CHAIR MCKAY compared slide 7 to slide 11 and asked whether slide
11 showed a percentage cut or an area cut.
MR. ENG clarified that the slides were independent of each
other. He added that the graph on slide 11 could be any forest
management method, indicating that the harvest volume removed
was the point of significance.
MS. MILLER, in response to a follow up question from Chair
McKay, clarified that slide 11 was purely hypothetical.
CHAIR MCKAY inquired about permafrost and asked which tree
species was the best at capturing carbon.
MR. ENG opined that the species of tree does not matter, adding
that the best way to consume carbon was to have many large,
native trees that were genetically adapted to the site.
2:52:13 PM
REPRESENTATIVE MEARS said she hoped to hear more about the
characteristics of each state forest. In addition, she asked
whether the forest management plans would need to be amended to
include carbon management.
MS. MILLER answered yes. The bill would enable management plans
to be updated to identify land within a forest that was
generally appropriate for a carbon project.
REPRESENTATIVE SADDLER asked whether the area planning process
would require the evaluation of general state land for carbon
offset use.
2:54:21 PM
MS. MILLER responded that in general, project developers would
need to approach DNR with a concept for a project.
REPRESENTATIVE SADDLER sought to confirm that it would not be a
new category that would need to be evaluated for mineral
development, recreation, or timber harvest.
MS. MILLER answered yes.
REPRESENTATIVE MEARS asked whether a 55-year lease length was
efficient for any of the programs.
MS. MILLER said leases of state land to third parties were
capped at 55 years. The bill also capped the length of state
project commitments at 55 years.
2:58:00 PM
CHAIR MCKAY announced that HB 49, Version S, was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 49 DOF Forest Management Presentation.pdf |
HRES 3/8/2023 1:00:00 PM HRES 3/13/2023 1:00:00 PM |
HB 49 |
| HJR 10 Sponsor Statement.pdf |
HRES 3/13/2023 1:00:00 PM |
HJR 10 |
| HJR 10 NPS Proposed Rule.pdf |
HRES 3/13/2023 1:00:00 PM |
HJR 10 |
| HJR 10 Alaska Congressional Delegation Memo.pdf |
HRES 3/13/2023 1:00:00 PM |
HJR 10 |
| HJR 10 Alaska Delegation Letter.pdf |
HRES 3/13/2023 1:00:00 PM |
HJR 10 |
| HJR 10 HRES Public Testimony through 3.13.23_Redacted.pdf |
HRES 3/13/2023 1:00:00 PM |
HJR 10 |