Legislature(2015 - 2016)BARNES 124

03/04/2015 01:00 PM RESOURCES


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Audio Topic
01:05:12 PM Start
01:06:28 PM Overview(s): Biomass Overview
01:55:37 PM HB87
02:43:46 PM Confirmation Hearing(s): Alaska Oil and Gas Conservation Commission
02:52:02 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Biomass Overview by Tok, Alaska Chamber of TELECONFERENCED
Commerce
+= HB 87 TIMBER SALES TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Confirmation Hearing: TELECONFERENCED
Alaska Oil & Gas Conservation Commission
<Above Item Rescheduled from 3/2/15>
+ Bills Previously Heard/Scheduled TELECONFERENCED
                      HB  87-TIMBER SALES                                                                                   
                                                                                                                                
1:55:37 PM                                                                                                                    
                                                                                                                                
CO-CHAIR TALERICO  announced that the  next order of  business is                                                               
HOUSE BILL  NO. 87,  "An Act  relating to the  sale of  timber on                                                               
state land; and providing for an effective date."                                                                               
                                                                                                                                
1:55:44 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  NAGEAK moved  to  adopt  proposed committee  substitute                                                               
(CS) for  HB 87,  labeled 29-GH1022\W,  Bullard, 2/26/15,  as the                                                               
working document.                                                                                                               
                                                                                                                                
REPRESENTATIVE SEATON objected for discussion purposes.                                                                         
                                                                                                                                
1:56:24 PM                                                                                                                    
                                                                                                                                
CHRIS  MAISCH,  Director  of   Forestry,  Division  of  Forestry,                                                               
Department  of  Natural  Resources,  said  there  was  discussion                                                               
regarding [Version A, Sec. 1,  AS 38.05.110(c)], page 1, lines 4-                                                               
6, regarding "best interest," which read:                                                                                       
                                                                                                                                
          (c) If a sale of timber may be offered under                                                                          
     multiple  provisions  of  AS  38.05.110-38.05.123,  the                                                                    
     commissioner  shall   determine  under  which   of  the                                                                    
     applicable  provisions to  offer the  timber consistent                                                                    
     with the best interest of the state.                                                                                       
                                                                                                                                
MR. MAISCH referred to a  2/17/15, memo directed to Senator Cathy                                                               
Giessel from  Thomas Lenhart, Senior Assistant  Attorney General,                                                               
of which  Mr. Maisch  would paraphrase.   He advised  that [small                                                               
"b"]  "best  interest"  is  interpreted   by  law  as  a  general                                                               
statement such  as it would  be in  his best interest  to prepare                                                               
when speaking to the committee, as  opposed to a capital "B" Best                                                               
interest which is a best interest  finding by law.  Subsequent to                                                               
speaking  with  knowledgeable  people,  Version  W  was  prepared                                                               
wherein  the last  part  of the  sentence on  line  6 is  deleted                                                               
["consistent with  the best  interest of the  state."].   He then                                                               
referred to  [Version A, Sec.  2, AS 38.05.118(a), page  1] lines                                                               
[8-9], which read:                                                                                                              
                                                                                                                                
        (a) Notwithstanding AS 38.05.115 and 38.05.120,                                                                     
        and upon a finding that the sale is in the best                                                                     
     interest of the state ...                                                                                              
                                                                                                                                
MR. MAISCH noted  that the above reference is  where there should                                                               
be a  finding required  under the  state's best  interest finding                                                               
process.   He  noted that  it is  the capital  "B" Best  interest                                                               
which is  well defined in  statute and  law and has  an important                                                               
part of all  of the decision making the state  does regarding its                                                               
natural  resources.    He  opined that  the  CS  fixes  potential                                                               
confusion identified earlier.                                                                                                   
                                                                                                                                
1:58:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON withdrew  his objection.   There  being no                                                               
further objection, Version W was before the committee.                                                                          
                                                                                                                                
1:59:04 PM                                                                                                                    
                                                                                                                                
MR. MAISCH pointed  out that the two previous  witnesses from the                                                               
City  of Tok  have  used  the AS  38.05.118  sale authority,  and                                                               
stressed that by  dropping the section he is  proposing will make                                                               
this  authority  applicable statewide.    Currently,  due to  the                                                               
three criteria, only  certain parts of the  state can participate                                                               
in a  timber sale offered  under this  authority.  He  noted that                                                               
the  authority  will  still  be available  for  the  Division  of                                                               
Forestry to use  and it will not minimize its  ability to perform                                                               
an  AS 38.05.118  timber  sale statewide  if HB  87  passes.   He                                                               
reminded  the committee  members  that the  problem in  Southeast                                                               
Alaska  is   that  the  section  currently   requires  an  excess                                                               
allowable cut, and  in Southeast Alaska after the  next two years                                                               
there will no longer be the  excess allowable cut.  He noted that                                                               
is the  way the Division  of Forestry is  able to direct  some of                                                               
the  logs off  state sales  to local  manufacturing and  mills in                                                               
Southeast  Alaska,  as  opposed   to  being  purchased  under  AS                                                               
38.05.120 authority as a log  that would go export which receives                                                               
no additional manufacturing  in the state.  He opined  that it is                                                               
one of the goals of this  particular change to allow the Division                                                               
of  Forestry to  continue to  choose the  negotiated sale  option                                                               
when  it is  in the  best interest  of the  state, which  will be                                                               
addressed in the best interest finding.                                                                                         
                                                                                                                                
2:00:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  surmised that  with the  passage of  HB 87                                                               
the "get over the hump" of  only allowing that if there is excess                                                               
cut available,  then the  Division of Forestry  would be  able to                                                               
offer a  negotiated sale with  additional value  added throughout                                                               
the state.                                                                                                                      
                                                                                                                                
MR. MAISCH  replied that Representative  Seaton is correct  as it                                                               
would make it  a statewide tool.  He reiterated  that the earlier                                                               
part  of  the  bill  clarifies  the  authority  the  commissioner                                                               
already has  to choose the  appropriate timber sale  authority to                                                               
be used when the state offers timber  in the State of Alaska.  He                                                               
noted  that  the majority  of  the  sales offered  statewide  are                                                               
performed  as  AS 38.05.120  sales  which  are competitive  sales                                                               
either through sealed  bid, or outcry.  He offered  that where it                                                               
is  in  the  state's  best  interest to  use  one  of  the  other                                                               
authorities, it will do that.                                                                                                   
                                                                                                                                
2:01:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON noted  that he  read most  of the  U.S.                                                               
Supreme  Court  Decision   South-Central  Timber  Development  v.                                                             
Wunnicke, 104  S.Ct. 2237 (1984),  and asked how the  Division of                                                               
Forestry dealt with  the holding which said  that essentially the                                                               
Congress  had not  expressly said  that this  kind of  sale could                                                               
occur without  a competitive process  as it violated  negative or                                                               
dormant commerce.                                                                                                               
                                                                                                                                
MR.  MAISCH  responded   that  there  is  some   clarity  in  the                                                               
regulations on that which does  allow the Division of Forestry to                                                               
consider  additional  things before  it  offers  this timber  for                                                               
sale, 11  AAC 71.055(b) lists  criteria the Division  of Forestry                                                               
can consider as part of the process, which read:                                                                                
                                                                                                                                
          (b) In determining whether a negotiated sale under                                                                    
     this section is in the best interests of the state, the                                                                    
     commissioner will consider                                                                                                 
                                                                                                                                
               (1) the local manufacturer's                                                                                     
                                                                                                                                
                    (A) financial backing and capability;                                                                       
                                                                                                                                
            (B)    experience   in    the   proposed                                                                            
     undertaking; and                                                                                                           
                                                                                                                                
            (C)   ability   to   meet   bonding   or                                                                            
     insurance requirements; and                                                                                                
                                                                                                                                
             (2) any other factors the commissioner                                                                             
     determines to be in the best interests of the state.                                                                       
                                                                                                                                
                                                                                                                                
MR.  MAISCH stated  that if  there  is interest  the Division  of                                                               
Forestry will put together a  Request for Proposals (RFP) to give                                                               
potential negotiators  the opportunity  to present the  best case                                                               
for  how they  would use  the  raw material.   He  said they  may                                                               
review  the   number  of  job  created,   type  of  manufacturing                                                               
accomplished with  the use of  the state wood, and  the financial                                                               
ability  of  the proposer  to  actually  complete what  they  are                                                               
proposing to do.  Essentially,  he noted the Division of Forestry                                                               
performs due  diligence as  part of  the RFP  process and  it can                                                               
make the  process fairly  simple, or  complex.   Historically, he                                                               
advised the process has been kept  fairly simple because a lot of                                                               
process is  not necessary in  most cases.   He opined that  it is                                                               
addressed in the  best interest finding which  gives the Division                                                               
of  Forestry  the  ability  to   choose  the  best  applicant  to                                                               
negotiate with for the rest of the terms of the contract.                                                                       
                                                                                                                                
2:03:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON surmised  it was  sort of  a negotiated                                                               
sale light, or  a modified negotiated sale to keep  a (small "c")                                                               
competitive element to it.                                                                                                      
                                                                                                                                
MR. MAISCH  answered that  basically the  RFP is  the competitive                                                               
piece  Representative Josephson  referenced in  the earlier  U.S.                                                               
Supreme Court case to not run  afoul of the ruling that they made                                                               
...  that would  be interpreted  as the  competitive part  of the                                                               
process.                                                                                                                        
                                                                                                                                
2:04:38 PM                                                                                                                    
                                                                                                                                
CO-CHAIR TALERICO opened public testimony.                                                                                      
                                                                                                                                
2:05:17 PM                                                                                                                    
                                                                                                                                
KIRK DAHLSTROM,  Stockholder and  General Manager,  Viking Lumber                                                               
Company,  said  Viking  Lumber   bought  a  bankrupt  sawmill  in                                                               
Klawock, Alaska 21  years ago and it has  operated steadily since                                                               
that time.  The Forest  Service provided approximately 98 percent                                                               
of  Viking Lumber's  timber  supply  for the  first  10 years  of                                                               
operation.   Subsequently,  he noted,  the Forest  Service became                                                               
unpredictable  and the  Alaska  Department  of Natural  Resources                                                               
(DNR) has  come through  over and  over again  the past  10 years                                                               
supplying timber when Viking Lumber was  in dire need.  He opined                                                               
that Viking Lumber  has only negotiated one or two  sales as most                                                               
have  been through  the RFP  process.   On  two occasions  Viking                                                               
Lumber has had temporary restraining  orders imposed by a federal                                                               
judge on Forest  Service timber sales and the  state came through                                                               
with negotiated  sales and kept  Viking Lumber  operating through                                                               
that period.   He remarked  that Viking Lumber  has approximately                                                               
22  million  feet  of  logs   per  year,  with  annual  sales  of                                                               
approximately $17  million, and  the only  money that  leaves the                                                               
state is  the stumpage for the  Forest Service.  He  offered that                                                               
with  the contractors  that  build  the roads,  log  and cut  the                                                               
timber,   and  load   barge  and   ships,  the   company  employs                                                               
approximately 140 people year-round.   He described Viking Lumber                                                               
as the  largest supplier of  piano stock  out of Sitka  Spruce in                                                               
the  world which  means if  Viking  Lumber goes  out of  business                                                               
there  will  be no  grand  or  baby  grand  pianos.   He  further                                                               
described the  company as the  largest supplier of  dimension red                                                               
cedar  lumber  in  the  United States,  which  might  seem  funny                                                               
because only  approximately 8 million feet  a year is cut.   Most                                                               
red  cedar mills  do not  cut dimension,  as they  cut siding  or                                                               
boards.   He explained that  the company  also cuts a  high grade                                                               
hemlock product as  all of the hemlock goes  into the manufacture                                                               
of vertical  grain doors, and  window stock, as almost  no lumber                                                               
Viking  Lumber cuts  goes into  the construction  of homes  as it                                                               
goes  into finish,  decks, gazebos,  and  pianos.   He stated  he                                                               
supports HB  87, because it works  to keep the company  alive and                                                               
believes it will in the future.                                                                                                 
                                                                                                                                
2:08:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON referred  to Mr.  Dahlstrom's statement                                                               
regarding federal  stumpage, but  this is all  state land  and he                                                               
requested clarification.                                                                                                        
                                                                                                                                
MR.  DAHLSTROM answered  that  of  the $17  million  per year  in                                                               
revenue involving  a Forest Service  sale, the stumpage  they pay                                                               
on that  goes into  the general fund  of the  federal government,                                                               
and state timber goes to the state.                                                                                             
                                                                                                                                
2:09:24 PM                                                                                                                    
                                                                                                                                
DAVE STANCLIFF, Tok  Chamber of Commerce, City of  Tok, said many                                                               
years  ago an  issue of  state  authority came  before the  House                                                               
Resources Standing Committee.   In the 1980s,  there were massive                                                               
land trades going on and the  commissioner at the time asked that                                                               
sideboards  be put  on  the  land trades.    He  stated that  the                                                               
commissioner  believed the  state was  losing value  in the  land                                                               
trades but the  statutes were so wide open that  there was no way                                                               
to get a better  handle on it.  There is a  statute that for land                                                               
trades  exceeding   values  of  $500,000  or   more,  legislative                                                               
approval was required.  He  explained that the government is made                                                               
up  of checks  and balances,  and HB  87 transfers  a much  wider                                                               
authority to the Division of  Forestry and a commissioner who the                                                               
committee  may  trust  today,  but  this  bill  goes  beyond  all                                                               
administrations.   He offered that  there is no check  or balance                                                               
by the  legislative branch for  this trust factor that  is before                                                               
the committee.   He opined that government works  when one branch                                                               
or the other might get slightly  out of balance, there is another                                                               
branch that can bring it back  into balance.  He related that his                                                               
concern is the broad based  authority of a state resource without                                                               
checks and  balances in place.   He urged the committee  to reach                                                               
out and  get more of  the timber users  in the state  involved as                                                               
his understanding is that this  bill was introduced before any of                                                               
those  people were  involved  in the  deliberative  process.   He                                                               
highlighted that  this is  a monumental  change of  authority and                                                               
the committee should take it seriously.                                                                                         
                                                                                                                                
2:11:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON asked, in  terms of state residents that                                                               
could  be  dissenters,  doesn't  this enhance  the  value  of  an                                                               
industry  and create  a tendency  to keep  logs in  Alaska rather                                                               
than sending them to Asia.                                                                                                      
                                                                                                                                
MR.  STANCLIFF answered  that the  aforementioned advantages  are                                                               
there,  but he  argued that  there are  always things  beyond the                                                               
immediate  and  not  necessarily  on the  surface.    Perhaps  in                                                               
Southeast Alaska, he pointed out,  this would be a good solution,                                                               
but in  the Tok  area if  a warehouser were  to negotiate  a sale                                                               
under conditions  that may or may  not seem fair it  could wipe a                                                               
business  like Mr.  Young  off  the map.    He  related that  the                                                               
provision put into  statute years ago was so  exceptions could be                                                               
made for small and medium  size business and the sideboards would                                                               
still be there  for larger users.  He urged  the committee not to                                                               
rush and take some time.   Although, he said, in the end everyone                                                               
may comfortable and move ahead, but  it is a big decision and the                                                               
users affected should have more involvement.                                                                                    
                                                                                                                                
2:13:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TARR surmised  that Mr. Stancliff does  not have a                                                               
suggestion for remedying the situation,  other than the committee                                                               
engaging affected parties more before  moving forward.  She asked                                                               
whether  he could  suggest examples  of the  checks and  balances                                                               
necessary.                                                                                                                      
                                                                                                                                
MR. STANCLIFF  advised that there  are many examples  of branches                                                               
of government,  especially the  legislative branch,  having those                                                               
types of ability.  He  suggested that rather than the legislature                                                               
approving  every   sale,  which   could  become   cumbersome  and                                                               
political, give  the legislature the  ability to veto or  by two-                                                               
thirds majority vote veto.   He offered that it can  be set up in                                                               
any manner  including public interest wherein  everyone is happy.                                                               
Although,  in the  cases he  cited years  ago where  there was  a                                                               
concern by the  commissioner over what was  happening ... concern                                                               
enough to  ask the  legislature for  help.   He opined  that "we"                                                               
need to be careful.                                                                                                             
                                                                                                                                
2:15:19 PM                                                                                                                    
                                                                                                                                
JOE YOUNG, Young's Timber, Inc.,  offered concern that he learned                                                               
of this  bill approximately two  weeks ago and he  wondered about                                                               
the  "new" transparency  of this  administration.   He  expressed                                                               
concern regarding repeal of AS  38.05.118(c) clause as without it                                                               
his  business would  not  be in  existence.   He  stated that  to                                                               
repeal the  clause after it  has been  a good tool  especially in                                                               
rural Alaska ... he cannot agree.   Another concern is that HB 87                                                               
adds  more confusion  to the  patch work  of forestry  laws.   He                                                               
offered concern  for someone working  in the  industry attempting                                                               
to figure out all  the laws.  A person can go  to the Division of                                                               
Forestry  who advises  that their  interpretation is  "this," but                                                               
the  person  reads  something  as  "that,"  is  a  concern.    He                                                               
questioned the  rush to get the  bill pass so fast,  not advising                                                               
anyone  regarding   the  repeal  of  AS   38.05.118(c),  and  the                                                               
confusion of all of the laws together is discouraging to him.                                                                   
                                                                                                                                
2:17:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  offered  his  understanding  that  the                                                               
language  here, with  the tweak  just  made, was  taken from  the                                                               
Susitna Forest bill of which was  vetted over the last two years.                                                               
He asked Mr. Young whether he was aware of that bill.                                                                           
                                                                                                                                
MR. YOUNG replied that he knew  "they" were trying to establish a                                                               
state forest in the Susitna Valley,  but that's all he thought it                                                               
was for.                                                                                                                        
                                                                                                                                
REPRESENTATIVE JOSEPHSON referred to  AS 38.05.118(c) and posited                                                               
that the removal of  (c) would be good for Mr.  Young as he would                                                               
no longer have  to prove up that  Tok has a bad  economy, or that                                                               
Mr.  Young had  underutilized timber,  or underutilize  allowable                                                               
cut.   Now, he  remarked, the  commissioner through  the director                                                               
can more easily make a negotiated sale.                                                                                         
                                                                                                                                
MR.  YOUNG  opined  that  AS  38.95.118(c) is  in  place  and  he                                                               
believes  the bill  gives the  commissioner or  the director  too                                                               
much power.   He questioned a  situation where he wanted  to do a                                                               
negotiated timber sale and the  commissioner decides it is not in                                                               
the best interest of the state.   He asked what recourse he would                                                               
have after that  determination.  He described  AS 38.05.118(c) as                                                               
checks and  balances because if a  person makes a request  to the                                                               
Division  of Forestry,  of which  he has  made many  requests and                                                               
sometimes  not received  a response,  that law  is there  for Mr.                                                               
Young's protection and he does not want to see it go away.                                                                      
                                                                                                                                
REPRESENTATIVE JOSEPHSON referred to  Mr. Young's comment that he                                                               
has  not  always received  responses  to  his requests  from  the                                                               
Division of  Forestry, as opposed  to Mr. Stancliff  praising the                                                               
forester as being a great employee bringing pieces together.                                                                    
                                                                                                                                
MR. YOUNG  clarified that upper  management, within  the Division                                                               
of Forestry, did not reply to his requests.                                                                                     
                                                                                                                                
2:20:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON  requested that Mr. Maisch  respond to the                                                               
prior statements.                                                                                                               
                                                                                                                                
MR. MAISCH  responded that the  three clauses there right  now do                                                               
not  compel  the  Division  of  Forestry  to  actually  use  this                                                               
authority.  Currently, the commissioner  and Division of Forestry                                                               
determines what  timber sale  authority it  will use  through the                                                               
best interest  finding process.   He expressed that  the Division                                                               
of Forestry does not want to  be "the referee between two parties                                                               
and who really gets to negotiate  a timber sale," which is why it                                                               
generally  uses its  AS  38.05.120 authority.    For example,  he                                                               
offered, when the  AP&T project (building a  power facility using                                                               
wood)  was first  enumerated for  Tok, the  Division of  Forestry                                                               
started  an  AS  38.05.118  negotiated   sale  process.    As  it                                                               
published the  preliminary best interest  finding, which  is open                                                               
to  public  and agency  comment,  it  became apparent  there  was                                                               
competitive interest  by another party  that was equally  as well                                                               
qualified to  potentially negotiate a  sale with the  Division of                                                               
Forestry.   He explained that  rather than continue with  a final                                                               
best  interest finding,  the Division  backed up  and decided  it                                                               
would offer this sale as an  AS 38.05.120 competitive bid sale so                                                               
the  most appropriate  parties could  bid on  this resource.   He                                                               
described  that as  a situation  where the  Division of  Forestry                                                               
started down  one path and found  that it would not  work as well                                                               
as anticipated,  so went back and  did it differently.   He noted                                                               
that a best  interest finding has a  formal administrative appeal                                                               
process as  well as a  civil appeal  process so there  are checks                                                               
and balances in  place to protect parties that  have commented on                                                               
the preliminary  bid, including  parties that  may not  have been                                                               
chosen to  negotiate with.   Another example,  he offered,  is in                                                               
Fairbanks where the  Division is performing an  AS 38.05.123 sale                                                               
for the  pellet mill, which  is another form of  negotiated sales                                                               
under  the Division's  timber sale  authority -  that's the  high                                                               
value added negotiated sale authority.   He explained that within                                                               
the briefing  paper is  a summary  of five  different authorities                                                               
the Division  of Forestry has to  negotiate wood.  He  noted that                                                               
it  was  the same  issue  there  in that  a  local  saw mill  was                                                               
concerned about not  being able to receive the supply  of wood it                                                               
needed  if  the  Division  of   Forestry  performed  a  long-term                                                               
contract with the  pellet mill.  Again, he  offered, the Division                                                               
of  Forestry  modified,  after   the  preliminary  best  interest                                                               
finding  (BIF) process,  the  final BIF  process  and took  those                                                               
comments into consideration.   He explained that  the Division of                                                               
Forestry  then  structured  the   proposed  sale  differently  by                                                               
withholding any  high quality White  Spruce saw logs from  the AS                                                               
38.05.123 contract and offered those competitively.                                                                             
                                                                                                                                
2:24:02 PM                                                                                                                    
                                                                                                                                
SHELLY  WRIGHT, Executive  Director,  Southeast Conference,  said                                                               
the   Southeast   Conference    is   the   economic   development                                                               
organization for  Southeast Alaska, and  it supports HB 87.   She                                                               
noted that  Southeast Alaska does  not quite the  success stories                                                               
that Tok has,  as it is not doing well  in the timber department.                                                               
The  State  of  Alaska  Timber   Sale  Program  is  important  to                                                               
Southeast Alaska, and as previously  stated, without state timber                                                               
140 people on Prince of Wales Island  would be out of a job.  She                                                               
offered  that  Viking  Lumber  is hanging  on  only  through  the                                                               
assistance of private land owners  and the State of Alaska Timber                                                               
Sales.   The federal government has  not been able or  willing to                                                               
provide timber  to Southeast Alaska  for quite some time  and the                                                               
federal government owns or manages  most of the land in Southeast                                                               
Alaska.  She  remarked that this legislation will  give the state                                                               
Timber Program more  flexibility to determine how  timber is sold                                                               
and what it is used for.   Relaxing the requirements for offering                                                               
25-year sales  statewide provides a guarantee  for investments in                                                               
the industry and stability for the  work force.  Allowing the DNR                                                               
commissioner and  the [Division  of Forestry] the  flexibility to                                                               
determine which applicable  sale method is best is  not only good                                                               
for  the  buyer,  it  also  gives  the  state  the  advantage  of                                                               
receiving the best  return on the timber.  Under  the Forest Land                                                               
Use Plan it  is imperative the best use of  timber is used across                                                               
the state.   She explained  that biomass energy  processors, wood                                                               
product   manufacturers,  and   international   trades  are   all                                                               
important  economic drivers  for the  industry and  state.   This                                                               
legislation will increase  the option for the  industry and allow                                                               
the  state  an  even  better   partner  with  interested  private                                                               
investors.    As  is  known, growth  in  private  investment  and                                                               
resilient  communities are  the only  things that  will save  the                                                               
state in  this time  of a shrinking  budget and  uncertainty, she                                                               
stated.   She  offered that  the Southeast  Conference previously                                                               
sent a letter of support for this legislation.                                                                                  
                                                                                                                                
2:27:06 PM                                                                                                                    
                                                                                                                                
CHELSEA  GOUCHER, Executive  Director, Greater  Ketchikan Chamber                                                               
of  Commerce,  said the  Greater  Ketchikan  Chamber of  Commerce                                                               
supports HB  87 in that  it has  worked hard to  promote economic                                                               
diversities,  regional growth,  a  climate good  for business,  a                                                               
life  style that  attracts  year round  residents,  and a  stable                                                               
productive  work  force.   The  existence  of a  timber  industry                                                               
supports each aspect  of this mission unequivocally  and for this                                                               
reason the  Greater Ketchikan Chamber of  Commerce encourages the                                                               
passage  of HB  87.   She  stated that  now, more  than ever,  is                                                               
interest  in Biomass  energy and  a demand  for wood  fibers that                                                               
indicates the State  of Alaska should take a  proactive stance in                                                               
providing  timber and  access  to forest  products  for this  and                                                               
other  burgeoning  value  added industries.    Additionally,  she                                                               
pointed out, what  remains of the traditional  timber industry in                                                               
regions  like Southern  Southeast Alaska  is more  dependent than                                                               
ever  on  the  State  of  Alaska and  continues  to  face  nearly                                                               
insurmountable  obstacles  from  the  federal  government.    The                                                               
timber offered  in negotiated  state sales  help sustain  jobs in                                                               
industry  across the  state, particularly  both in  Ketchikan and                                                               
Prince of  Wales Island.   Currently, she stated,  no opportunity                                                               
to better  the lives  of individuals living  in Alaska  should be                                                               
overlooked.    It  is  inarguable  that  this  bill  offers  real                                                               
opportunities  for  Alaskans  everywhere.     She  requested  the                                                               
committee note  the support of  the Greater Ketchikan  Chamber of                                                               
Commerce and  of Ketchikan's  business community  for HB  87, and                                                               
the potential  it possesses  to positively  impact the  lives and                                                               
livelihoods of Alaskans.                                                                                                        
                                                                                                                                
2:29:11 PM                                                                                                                    
                                                                                                                                
REBECCA KNIGHT  expressed that  she just received  a copy  of the                                                               
proposed committee  substitute and has had  little opportunity to                                                               
review it  so will offer her  prepared testimony.  House  Bill 87                                                               
should be rejected  in its entirety as it would  suspend the same                                                               
yield requirement for  large timber sales on state  forests.  She                                                               
said  she  questions  whether  private  sector  landholders  like                                                               
Weyerhaeuser   and  Georgia   Pacific,  and   their  professional                                                               
foresters would  undertake an unsustainable business  practice as                                                               
proposed by  this bill.   She offered that  it is a  poster child                                                               
for  squandering  public resources  to  the  detriment of  future                                                               
generations.   This bill will  allow long-term  25-year contracts                                                               
for timber to be negotiated  without advertisement or competitive                                                               
bid  which is  a questionable  business practice.   She  remarked                                                               
that given  proposed huge state  government budget  cuts recently                                                               
approved by the  House Finance Committee it would  not be prudent                                                               
to support  such contracts  when there is  no assurance  that the                                                               
funds to administer  those contracts would be  available down the                                                               
road.   She said  it could  leave the state  at risk  of contract                                                               
cancelation and associated compensation costs.                                                                                  
                                                                                                                                
MS.  KNIGHT stated  that the  bill  give primacy  of the  state's                                                               
public lands  to logging above  all other resources,  above fish,                                                               
wildlife,  subsistence  needs,  recreation, and  scenic  quality.                                                               
She  related  that  her  commercial  fishing  family  depends  on                                                               
quality  fish  habitat,  however,  this  habitat  will  not  even                                                               
receive  the  minimal protections  out  on  federal lands.    She                                                               
described 100  foot no cut  buffers as  the norm on  most federal                                                               
streams, yet  streams on  state lands will  only receive  66 foot                                                               
buffers.   She stated  that these  buffers are  routinely granted                                                               
exemptions  particularly  when  there  is  large  timber  in  the                                                               
stream-side  area.   She expressed  this is  exactly the  habitat                                                               
that provides shade and stream  stability to the state's valuable                                                               
fishery sources.   She highlighted  that she is  unconvinced that                                                               
essential  fish  habitat  is  adequately  protected  under  these                                                               
circumstances and  that she is  also miffed  at the rush  to push                                                               
this bill  through committee with little  consideration for other                                                               
uses.  She  opined that state timber in Southeast  Alaska will be                                                               
exported in  the round  providing few jobs  to the  very industry                                                               
that this bill is supposedly intended  to prop up.  She described                                                               
it  as another  subsidy with  no real  payback.   The bill  would                                                               
require a  finding that the sale  is in the best  interest of the                                                               
state,  however,  these  findings  are made  by  DNR  which,  she                                                               
described,  as the  timber extraction  arm  of state  government.                                                               
She posited that  the Alaska Forest Practices Act is  weak and in                                                               
serious need  of overhaul,  and that  these findings  are heavily                                                               
biased toward  logging.   She expressed that  the kind  of forest                                                               
resources important  to most people  are fish, wildlife,  and the                                                               
opportunity   for  subsistence   which   only  receives   cursory                                                               
considerations from  DNR.  She  asked that the  committee consult                                                               
with expert Alaska  Department of Fish & Game,  Fish and Wildlife                                                               
biologists  that are  free  of restrictions  of  DNR's one  voice                                                               
timber promotion policy.                                                                                                        
                                                                                                                                
2:33:08 PM                                                                                                                    
                                                                                                                                
ERIN  McLARNON, Executive  Director, Working  Forest Group,  said                                                               
she is  a Board of Forestry  member and an executive  director of                                                               
the  Working Forest  Group.   She  advised she  is testifying  in                                                               
support of  HB 87  that will  enable the  commissioner of  DNR to                                                               
better respond  to the economic  and geographic realities  of the                                                               
forest product industry.  She  stated that who would have guessed                                                               
that  a primary  demand for  state  timber would  be for  biomass                                                               
energy purposes.   The  bill will allow  DNR to  offer negotiated                                                               
timber sale  for up to  25-years, which  is crucial to  medium to                                                               
large biomass  energy projects to get  off the ground.   The bill                                                               
also  offers DNR  the flexibility  to determine  which applicable                                                               
sale  method is  in  the best  interests of  the  state for  each                                                               
timber sale.   She  described it  as a win-win  not only  for the                                                               
State of Alaska, but also its fiber users.                                                                                      
                                                                                                                                
2:34:15 PM                                                                                                                    
                                                                                                                                
MIKE SALLEE said  he is a commercial harvest diver  and has owned                                                               
and   operated  a   small   Volkswagen   engine  powered   mobile                                                               
dimensioned saw mill close to 35  years.  He noted that there are                                                               
a  couple  dozen  of  these  mills  in  Ketchikan,  over  300  in                                                               
Southeast, and  over 400 statewide.   He said he  primarily mills                                                               
salvage  timber that  has  been  carried to  salt  water by  wind                                                               
storms or landslides.  Secondarily,  he has milled neighbors logs                                                               
cleared  from their  shoreline home  sites,  milled 10,000  board                                                               
foot free  use timber, and  once purchased several  thousand feet                                                               
of  logs  at   the  local  U.S.  Forest   Service  yard  auction.                                                               
Occasionally people will  tow logs that he mills  in exchange for                                                               
some of the  lumber from those logs.   He stated he  does not cut                                                               
live  trees by  himself to  feed his  mill.   He offered  that he                                                               
mills  less than  100,000 board  feet annually  and has  produced                                                               
framing lumber, decking, cedar siding,  yellow cedar for bentwood                                                               
boxes, totems,  paddles, house timbers  and wooden  boat timbers.                                                               
His concern with  HB 87 is that it creates  25-year contracts and                                                               
that  sales tailored  to large  scale operations  will result  in                                                               
local merchantable wood going away.   He pointed out that he just                                                               
saw this bill yesterday for the  first time and hasn't had a good                                                               
chance to digest it, but a  lot of wood is going away, especially                                                               
the  yellow cedar  that  is declining  due  to allegedly  climate                                                               
change  that results  in the  loss  of snow  cover that  prevents                                                               
freezing of the yellow cedar shallow  roots.  He noted it appears                                                               
there is a partnership between  the timber industry and the state                                                               
forest manager  and that partnership  does not appear  to address                                                               
climate change and  the need to keep carbon stored  in forests in                                                               
Southeast Alaska.   In addition, he pointed out  that large scale                                                               
operations tend to target the  most valuable timber and little of                                                               
it remains  in a local borough  for processing.  He  offered that                                                               
he does  not know if HB  87 applies to Mental  Health Trust lands                                                               
and the  University of  Alaska timber lands  but has  been sorely                                                               
disappointed with the  amount of merchantable trees  cut down and                                                               
left in the woods on  Mental Health Trust lands helicopter sales.                                                               
He conveyed that they've also left  a lot of slash and tops which                                                               
it  is  a mess  in  a  lot of  areas  that  they've logged.    He                                                               
expressed that  much of the  Mental Health Trust land  timber was                                                               
exported.  He  offered his apprehensive of  more discretion being                                                               
given to a  politically appointed commissioner.  He  noted it has                                                               
been  interesting to  him  how the  state can  malign  the U.  S.                                                               
Forest  Service   while  saying  nothing  about   private  Native                                                               
Corporations shipping  vast value  out of  the state  with little                                                               
impetus to  help the rest of  the timber industry.   He mentioned                                                               
that the concept of a working  forest also means it has ecosystem                                                               
services that  the forest  performs other  than just  working for                                                               
people.    He  expressed  that   the  ecosystem  services  is  an                                                               
important part of the picture.                                                                                                  
                                                                                                                                
2:38:03 PM                                                                                                                    
                                                                                                                                
DAVID BEEBE, City of Kupreanof,  said he is representing the City                                                               
of  Kupreanof.   He  commented that  while  Governor Bill  Walker                                                               
cites his authority under the  Alaska State Constitution, Article                                                               
III, Section  18, the  Governor's bill  is fundamentally  at odds                                                               
with  the Alaska  State Constitution,  Article  VIII, Section  4,                                                               
which read:                                                                                                                     
                                                                                                                                
     Fish,  forests,  wildlife,  grasslands, and  all  other                                                                    
     replenishable  resources belonging  to the  State shall                                                                    
     be   utilized,  developed,   and   maintained  on   the                                                                    
     sustained  yield  principle,   subject  to  preferences                                                                    
     among beneficial users.                                                                                                    
                                                                                                                                
MR.  BEEBE  commented that  sustained  yield  of these  fish  and                                                               
wildlife  resources  requires  that ecosystem  services  function                                                               
without significant  impairment.   The State  of Alaska  has long                                                               
known that  significant impairment of Southeast  forest habitats,                                                               
structure, function,  and composition, precludes  the sustainable                                                               
yield of Sitka Black Tailed Deer  and other wildlife.  He advised                                                               
that  emergency closures  and  significant  restrictions on  deer                                                               
hunting presently exist  in a 20-mile or  more radius surrounding                                                               
the City of  Kupreanof.  He stated that the  Department of Fish &                                                               
Game  (ADF&G) published  a statistical  summary  of the  season's                                                               
deer hunter harvest in all of  Southeast communities in 1961.  In                                                               
terms of hunter's  success, Petersburg ranked the  highest of all                                                               
communities  of  Southeast  with  a hunter  success  rate  of  97                                                               
percent, which  is an average  of 3.5 deer  per hunter.   Yet, in                                                               
2012, 147 hunters on Mitkof  Island required 565 deer hunter days                                                               
to harvest  22 deer.   He noted  that the restrictions  on Mitkof                                                               
Island have just been imposed  on Lindenberg Peninsula, where the                                                               
City of  Kupreanof is located.   He stated  that the area  is the                                                               
hunting  destination  of  last  resort  with  regard  to  weather                                                               
protected access to  deer.  He highlighted that  there is glaring                                                               
evidence  that the  state's  failure to  abide  by the  sustained                                                               
yield  principle invoked  in the  Alaska  State Constitution  [is                                                               
apparent].   He recommended  that everyone  consider the  oath of                                                               
office  taken to  defend the  Alaska State  Constitution and,  he                                                               
asked  the committee  members to  uphold  the oath  they took  by                                                               
voting no on moving HB 87 out of committee.                                                                                     
                                                                                                                                
2:41:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR TALERICO closed public testimony.                                                                                      
                                                                                                                                
2:41:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  referred to a prior  statement that the                                                               
AS 38.05.118 bill could be used  as a backdoor way to ship timber                                                               
in the round.                                                                                                                   
                                                                                                                                
MR. MAISCH advised that he did  hear that statement but it is not                                                               
a correct assertion.                                                                                                            
                                                                                                                                
REPRESENTATIVE JOSEPHSON asked why that statement was incorrect.                                                                
                                                                                                                                
MR. MAISCH responded  that the Division of  Forestry goes through                                                               
the best interest finding process  to negotiate the sale with the                                                               
purpose of  trying to  keep state timber  processed and  mills in                                                               
Alaska.   He referred  to the  previously mentioned  U.S. Supreme                                                               
Court case  where the  state tried to  restrict round  log export                                                               
and explained that this is  the authority crafted after that case                                                               
was lost  to enable Alaska  to have  an ability to  actually keep                                                               
logs on shore in Alaska to be processed.                                                                                        
                                                                                                                                
2:42:26 PM                                                                                                                    
                                                                                                                                
CO-CHAIR TALERICO held over HB 87.                                                                                              
                                                                                                                                

Document Name Date/Time Subjects
3.4.15 HSE RES Chamber of Commerce Tok Bio Mass.pptx HRES 3/4/2015 1:00:00 PM
3.4.15 HES RES Young's Timber Bio Mass.pptx HRES 3/4/2015 1:00:00 PM
3.4.15 HSE RES HB 87 Sectional Analysis 3.pdf HRES 3/4/2015 1:00:00 PM
HB 87
3.4.15 HSE RES HB 87 Biomass Projects Map.pdf HRES 3/4/2015 1:00:00 PM
HB 87
3.4.15 HSE RES HB 87 AEA Map.pdf HRES 3/4/2015 1:00:00 PM
HB 87
3.4.15 HSE RES HB 87 LOS Viking.pdf HRES 3/4/2015 1:00:00 PM
HB 87
3.4.15 HSE RES HB 87 Governor Transmittal Letter.pdf HRES 3/4/2015 1:00:00 PM
HB 87
3.4.15 HSE RES HB 87 RDC support letter.pdf HRES 3/4/2015 1:00:00 PM
HB 87
3.4.15 HSE RES HB 87 Fiscal Note.pdf HRES 3/4/2015 1:00:00 PM
HB 87
3.4.15 HSE RES HB 87 Negotiated Timber Sales Briefing Paper.pdf HRES 3/4/2015 1:00:00 PM
HB 87
3.4.15 HRES HB 87 Primary Manufacture Case SCTD vs DNR 1984.pdf HRES 3/4/2015 1:00:00 PM
HB 87
3.4.15 HRES Knight public testimony HB 87.pdf HRES 3/4/2015 1:00:00 PM
HB 87
3.4.15 HRES CSHB 87 W Rebecca Knight 3.8.15 Opposition Letter.pdf HRES 3/4/2015 1:00:00 PM
HB 87
3.4.15 HRES CSHB 87 version W.pdf HRES 3/4/2015 1:00:00 PM
HB 87
3.4.15 HSE RES HB 87 Ver A.pdf HRES 3/4/2015 1:00:00 PM
HB 87