Legislature(2013 - 2014)BARNES 124

03/14/2014 01:00 PM RESOURCES


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 138 GAS PIPELINE; AGDC; OIL & GAS PROD. TAX TELECONFERENCED
<Pending Referral>
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 207 AGRICULTURE; AGRICULTURAL LOANS TELECONFERENCED
Heard & Held
+= HB 202 BISON DRAWING PERMIT FEES TELECONFERENCED
Moved CSHB 202(RES) Out of Committee
                    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