Legislature(2015 - 2016)BARNES 124

04/04/2016 01:00 PM RESOURCES

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved HCS CSSB 32(RES) Out of Committee
-- Public Testimony --
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 266(RES) Out of Committee
                       SB 32-TIMBER SALES                                                                                   
1:27:43 PM                                                                                                                    
CO-CHAIR TALERICO  announced that the  next order of  business is                                                               
CS FOR SENATE  BILL NO. 32(RES), "An Act relating  to the sale of                                                               
timber on state land; and providing for an effective date."                                                                     
CO-CHAIR  NAGEAK  moved to  adopt  the  proposed House  committee                                                               
substitute  (HCS)  for  CSSB 32,  Version  29-GS1022\N,  Bullard,                                                               
3/29/16, as the working document.                                                                                               
REPRESENTATIVE TARR objected for discussion purposes.                                                                           
JULIE MORRIS, Staff, Representative  David Talerico, Alaska State                                                               
Legislature, presented  the proposed  House CS to  the committee.                                                               
She  explained that  the only  change made  by Version  N is  the                                                               
addition of  the following  language to Section  1:   "Subject to                                                               
appropriation, the  commissioner shall provide 25  percent of the                                                               
revenue  from a  sale of  timber under  this section  to forestry                                                               
programs  operated   by  the  department  in   the  municipality,                                                               
reserve, or  community in which  the timber was harvested  or, if                                                               
the  timber was  not  harvested in  a  municipality, reserve,  or                                                               
community,  the municipality,  reserve, or  community closest  to                                                               
the area where the timber was harvested."                                                                                       
1:29:28 PM                                                                                                                    
REPRESENTATIVE TARR asked whether this  is supposed to be a style                                                               
of payment  in lieu of  taxes (PILT)  for state forestry  that is                                                               
modeled after the federal program.                                                                                              
CO-CHAIR TALERICO replied that his  idea behind this change is to                                                               
ensure  that  in  those  areas where  there  is  active  forestry                                                               
programs there is a reinvestment  in the community.  He requested                                                               
Mr. Chris Maisch to elaborate further.                                                                                          
1:30:19 PM                                                                                                                    
JOHN  "CHRIS"  MAISCH, Director  &  State  Forester, Division  of                                                               
Forestry (DOF),  Department of Natural Resources  (DNR), provided                                                               
a  refresher  on the  bill  given  it was  a  year  ago that  the                                                               
committee last  heard the bill.   He explained that  the Division                                                               
of Forestry currently has five  different authorities under which                                                               
it  can  sell  timber.    The  primary  and  preferred  authority                                                               
statewide  of selling  timber is  through  a competitive  process                                                               
under  AS 38.05.120  (".120").   Another  authority  is under  AS                                                               
38.05.117  (".117") where  the division  can offer  salvage sales                                                               
after  fires,  windstorms, disease,  or  other  kinds of  natural                                                               
disasters where the  timber will lose value quickly.   This is an                                                               
abbreviated process  to allow the  division to bring  those sales                                                               
to market  quickly.  This authority  is not used very  often, but                                                               
an  example is  the windstorm  in  the Tok  area where  a lot  of                                                               
timber was  lost.   There are two  negotiated sale  authorities -                                                               
small  negotiated sales  under AS  38.05.115 (".115")  for timber                                                               
under 500,000  board feet,  and large  negotiated sales  under AS                                                               
38.05.118  (".118"), to  which this  bill makes  changes.   These                                                               
authorities still  require best interest findings,  the exception                                                               
being  the .115  authority  which represents  about  40 acres  in                                                               
Interior Alaska.   The division  must still go through  the other                                                               
standard parts  of the planning  process, but for .115  sales the                                                               
division does  not have  to do  a best  interest finding.   Those                                                               
sales are currently only good for one year in length.                                                                           
MR.  MAISCH  said  the  original bill  also  clarifies  that  the                                                               
commissioner determine through the  best interest finding process                                                               
the  best  and   most  appropriate  authority  to   use  and  the                                                               
department must outline the conditions  of why it chose a certain                                                               
way to  sell the timber.   The bill  also ensures the  ability to                                                               
use 25 years of sale length  for the .118 authority, which is the                                                               
current sale  length.  Because  of the three conditions  that the                                                               
department is proposing  to modify, the .118  authority cannot be                                                               
used  statewide.   Those  three  conditions are:    1) must  have                                                               
under-utilized allowed cut  in the area in which  the timber will                                                               
be sold;  2) a  manufacturing facility must  exist or  will exist                                                               
within two  years that  can use  the timber that  is going  to be                                                               
sold; and 3)  a high level of unemployment, which  is a condition                                                               
the  division has  difficulty with.    The statute  reads a  high                                                               
level of unemployment and the regulation  reads that it has to be                                                               
135  percent  of the  statewide  average.   The  division  cannot                                                               
currently use  the .118 authority  in the Ketchikan  Borough, the                                                               
Matanuska-Susitna Borough, and the  Fairbanks North Star Borough,                                                               
so it  prevents the division  from doing these longer  term sales                                                               
under  that  authority.   So,  this  would essentially  even  the                                                               
playing field for all the operators  in the state to remove those                                                               
three  criteria.   More  importantly  it  is very  important  for                                                               
Southeast Alaska  where the timber  industry is in  dire straits.                                                               
Right  now the  division has  three sales  pending that  it would                                                               
negotiate in  Southeast Alaska to  Viking Sawmill in  Klawock and                                                               
represents  150 jobs  on Prince  of  Wales Island.   The  federal                                                               
government will not offer enough timber  in the next two years to                                                               
keep that  mill running and  without the proposed change  in this                                                               
statute the  division will  be unable  to negotiate  those sales;                                                               
they  would have  to go  competitive  and in  Southeast Alaska  a                                                               
competitive sale is  pretty much guaranteed to  go export because                                                               
the export  market can afford to  pay more.  So  the division has                                                               
long had a policy in Southeast  Alaska where it tries to meet the                                                               
needs of both segments of the  industry and it has been the state                                                               
policy  to  emphasize  jobs  and  manufacturing  and  in  today's                                                               
environment manufacturing jobs  in this state is a  good thing to                                                               
encourage and that is exactly what  this will do.  The only other                                                               
change the bill would do is  clarify that these sales can be done                                                               
for wood fiber and biomass use  and that is just updating some of                                                               
the older  language in the  statute to  use more modern  terms in                                                               
terms of the forestry application for those types of sales.                                                                     
1:34:45 PM                                                                                                                    
MR. MAISCH addressed Version P,  saying it would put into statute                                                               
what  the division  has long  done by  both policy  and practice,                                                               
because  a large  part of  the division's  timber sale  staff are                                                               
funded under  timber sale  receipts.  A  percentage of  all state                                                               
timber  sales go  into a  timber sale  receipts account  and then                                                               
that account pays  for the actual foresters that do  this work in                                                               
the various parts  of Alaska.  For example,  the Ketchikan office                                                               
is the  division's number one  revenue producing  office, getting                                                               
about  39  percent of  its  revenue  back  in the  salaries  that                                                               
actually  support  positions  that  are doing  that  work.    The                                                               
Fairbanks  office is  about 100  percent, so  100 percent  of the                                                               
staff are supported  by that.  Tok gets 529  percent back because                                                               
the value  of those timber  sales are not  that high as  they are                                                               
mostly fiber sales which are of fairly low value.                                                                               
1:35:52 PM                                                                                                                    
REPRESENTATIVE SEATON  inquired whether  the revenue  from timber                                                               
sales in the various areas of  the state offsets the cost so that                                                               
there is not  a loss to the state, particularly  if 25 percent of                                                               
the gross revenue is given to the local municipality.                                                                           
MR. MAISCH  responded that the  funding would not actually  go to                                                               
the municipality, it is programs  operated by the division.  That                                                               
means wages in most part, but  it could be road or infrastructure                                                               
improvements in  that community.   For example, there may  not be                                                               
as much money in road maintenance  accounts as is wanted, so that                                                               
25 percent  receipt might  be used  to do  extra grading  in that                                                               
community, especially during hunting  season.  The division would                                                               
still have discretion on how it uses those funds.                                                                               
1:36:52 PM                                                                                                                    
REPRESENTATIVE  TARR, recalling  that  her  earlier question  was                                                               
related  to the  PILT,  asked  how the  division  arrived at  the                                                               
figure of 25  percent and surmised it is based  off an average of                                                               
what the division has been doing in practice.                                                                                   
MR. MAISCH answered yes, the  division has done this in practice,                                                               
but it  is not necessarily modeled  after the PILT.   This is Co-                                                               
Chair Talerico's  suggested language and essentially  what he has                                                               
described  does put  in statute  what  the division  has done  in                                                               
practice.   As the division has  taken budget cuts over  the last                                                               
four years,  more and more  of the division's general  fund money                                                               
for wages and  salaries of its forest management  staff have been                                                               
shifted over to  the timber sale receipts account.   The division                                                               
has lost  about 42 percent  of its  general fund money  for wages                                                               
for  the  forest  management  part of  the  division,  which  has                                                               
resulted in  quite a few  layoffs.  The  only way to  continue to                                                               
operate a forest  management program is by using  the timber sale                                                               
receipts  program to  actually support  those positions.   Should                                                               
revenues go down he will be  confronted with how to pay for those                                                               
positions or lay off additional  people.  On average the division                                                               
collects  roughly $600,000  annually  over a  10-year period  and                                                               
wages are  about $675,000 annually;  but, he has  some discretion                                                               
based on other funding sources on how he manages that.                                                                          
1:38:34 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON  inquired   whether  the  proposed  new                                                               
language is designed to act as  sort of a designated general fund                                                               
component to help  the division when the  legislature has reduced                                                               
the division's undesignated general fund (UGF).                                                                                 
MR. MAISCH  replied he does  not think necessarily that  that was                                                               
its primary intent  because the division was  already in practice                                                               
doing that with  the timber sale receipt account.   That has been                                                               
in place  for many years, the  division has used it,  but has not                                                               
depended on  it as much as  the division is now  depending on it.                                                               
The  legislature has  aggressively  shifted the  division out  of                                                               
general funds over to the timber  sale receipt account to pay for                                                               
the  division's staff.   This  [proposed  language] just  ensures                                                               
that the  places that  are generating  the timber  sales actually                                                               
will see  some benefit from  those timber  sales so that  he does                                                               
not take all the  money and put it in a place  that is not really                                                               
having a timber sale  program.  It is not that  he would do that,                                                               
but this  would just ensure that  everybody gets a fair  share of                                                               
the timber revenue.                                                                                                             
REPRESENTATIVE JOSEPHSON  said he  has reviewed the  minutes from                                                               
the other body  and surmises that the key  component/heart of the                                                               
bill is the reforming of .118  sales so that the threshold of the                                                               
135 percent of unemployment does not need to be met.                                                                            
MR. MAISCH agreed  that is the heart of the  bill, along with the                                                               
other two pieces  which are not as difficult to  meet.  There are                                                               
three parts to  that regulation:  1) the excess  allowable cut so                                                               
he cannot over-commit and fail  to use sustained yield management                                                               
to  do a  large  negotiated sale,  so  he has  to  be within  the                                                               
allowable  cut; 2)  there has  to be  a facility  there that  has                                                               
excess capacity and can process that  cut; and 3) the 135 percent                                                               
[unemployment].   All three of those  would go away and  it would                                                               
make it a cleaner statute and much easier to administer.                                                                        
1:40:34 PM                                                                                                                    
REPRESENTATIVE  SEATON asked  whether, with  the sustainable  cut                                                               
language  going  away,  the division  has  other  regulations  or                                                               
statute that require sustainable harvest.                                                                                       
MR.  MAISCH responded  that the  state constitution  requires the                                                               
division to do [sustained yield  cutting], as do other provisions                                                               
of statute and  the division's forest management plan.   The bill                                                               
would not do  away with the need to manage  sustainably, it would                                                               
just delete the  wording that there must be  excess allowable cut                                                               
for [the  .118] sale  methodology].  It  would not  somehow "back                                                               
door" that he can exceed sustained yield principles.                                                                            
1:41:12 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON inquired whether  the reason for why the                                                               
.123 authority for negotiated sales  is unsatisfactory is because                                                               
of the required value-added feature.                                                                                            
MR.  MAISCH  answered  that  that is  not  necessarily  the  main                                                               
reason.   The main reason is  that those sales are  limited to 10                                                               
years in  length, and sometimes for  these industries, especially                                                               
the  biomass  side,  it  will   take  longer  than  10  years  to                                                               
capitalize the investment that was made in the plant and                                                                        
facility.  The division is also limited to two value-added sales                                                                
per forest practices region in any given time.                                                                                  
1:42:00 PM                                                                                                                    
CO-CHAIR TALERICO opened public testimony on the bill.                                                                          
REBECCA KNIGHT testified in opposition to the bill.  She spoke                                                                  
as follows:                                                                                                                     
     I previously  provided testimony  in opposition  to the                                                                    
     proposed SB 32 and its  companion HB 87 and continue to                                                                    
     oppose  the legislation  based on  those concerns  with                                                                    
     expanded testimony today.                                                                                                  
     One can only  conclude that based on  review of impacts                                                                    
     resulting  from  drastic  budget  cuts,  the  state  is                                                                    
     unable  to   adequately  fund  administration   of  its                                                                    
     current  timber sale  program.   Consequently,  whether                                                                    
     adequate  funding for  administration of  new long-term                                                                    
     timber contracts can be  secured is highly questionable                                                                    
     given  that the  state's  budgetary  crisis remains  in                                                                    
     near freefall, this  despite optimistic assurances from                                                                    
     DOF personnel  and the  bill's zero  fiscal note.   For                                                                    
     instance, as noted during the  recent Board of Forestry                                                                    
     meeting, "In  2015 due to budget  reductions and travel                                                                    
     restrictions, DEC  participated in  only one  trip with                                                                    
     three compliance inspections."   According to the state                                                                    
     forester, most  of the  2015 decline  in the  number of                                                                    
     inspections  is  due  to reduced  staffing  and  is  an                                                                    
     impact  of the  budget cuts.    I would  note that  one                                                                    
     annual   statewide  inspection   does  not   equate  to                                                                    
     satisfactory oversight.                                                                                                    
     It  is also  questionable  whether SB  32 can  actually                                                                    
     generate  significant positive  revenue  to the  state.                                                                    
     According to  DOF's 2013  annual report,  the statewide                                                                    
     timber  program costs  $5.9  million,  but generated  a                                                                    
     mere  $293,000 in  receipts for  the 2013  fiscal year.                                                                    
     The report  anticipated $851,000 in 2014  receipts from                                                                    
     a  projected 2014  budget of  $6.9  million.   Overall,                                                                    
     statewide  average revenues  for  the five-year  period                                                                    
     from  2009-2013 were  only $600,000  per year  with the                                                                    
     majority  of the  volume  offered  coming from  outside                                                                    
     Southeast Alaska.   The report does  not provide enough                                                                    
     information  to  assess   the  contributions  of  state                                                                    
     forests in  Southeast Alaska, but  it appears  that the                                                                    
     amount   of   revenue   generated   relative   to   the                                                                    
     administrative  cost is  very small  per million  board                                                                    
     feet,  meaning that  the program  likely operates  at a                                                                    
     net  public loss.   In  fact, according  to the  latest                                                                    
     [Board of  Forestry (DOF)] meeting  minutes, shortfalls                                                                    
     to DOF's  budgets are so  severe that tourism  head tax                                                                    
     was  suggested as  well as  a raid  on the  proceeds of                                                                    
     fishing  industry  licensing   fees  to  "help  protect                                                                    
     fisheries habitat."   This  obtuse logic  is especially                                                                    
     troubling    when     these    industries    contribute                                                                    
     significantly  without  harm   to  regional  economies,                                                                    
     especially in Southeast Alaska.                                                                                            
     Overall,  SB  32 and  HB  87  represent a  considerable                                                                    
     expansion of  the timber  sale program  in a  period of                                                                    
     declining  budgets and  an irresponsible  abdication of                                                                    
     oversight  to the  industry.   Quite simply,  there are                                                                    
     inadequate  funds  to  do otherwise.    I  respectfully                                                                    
     request  that you  disallow  this  bill from  advancing                                                                    
1:46:03 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON requested  Ms.  Knight  to clarify  her                                                               
statement  in  regard to  using  tourism  or fisheries  money  to                                                               
regulate the forestry industry.                                                                                                 
MS. KNIGHT answered that was in  the March 2016 Board of Forestry                                                               
draft meeting minutes; she believed it  was on page 12.  She said                                                               
she  will provide  written testimony  to the  committee that  has                                                               
footnotes that cite those sources.                                                                                              
REPRESENTATIVE TARR  requested Ms. Knight to  submit her comments                                                               
in writing and  noted that she is particularly  interested in Ms.                                                               
Knight's testimony  about overall cost versus  the amount brought                                                               
in in receipts and what is being included in the overall cost.                                                                  
MS.  KNIGHT  replied  she  is uncertain  exactly  what  all  that                                                               
includes,  but  it is  from  the  [Division] of  Forestry's  2013                                                               
annual report.                                                                                                                  
1:47:32 PM                                                                                                                    
DAVID BEEBE,  City of Kupreanof,  testified in opposition  to the                                                               
bill.  He spoke as follows:                                                                                                     
     [CSSB  32(RES) authorizes]  the commissioner  to bestow                                                                    
     ownership  of  a  25-year supply  of  state  forest  to                                                                    
     create  regional  state-sanctioned  timber  plantations                                                                    
     for  the  purposes  of timber  export  and  large-scale                                                                    
     conversion  of  forests  to  biomass  energy.    Gordon                                                                    
     Harrison   reminds   us   in   his   book,   [Alaska's]                                                                  
     Constitution:   A  Citizen's Guide,  that delegate  Bob                                                                  
     Bartlett  and  others   urged  constitutional  defenses                                                                    
     against freewheeling disposals  of public resources and                                                                    
     colonial-style   exploitation  that   would  contribute                                                                    
     nothing  to  the  growth   and  betterment  of  Alaska.                                                                    
     Timber  monopolies  have a  bad  track  record here  in                                                                    
     Southeast.  The United  States Supreme Court found that                                                                    
     50-year,  long-term  pulp   contract  holders  colluded                                                                    
     through  price  fixing  and   other  illegal  means  to                                                                    
     destroy  the  existing   small  loggers  in  Southeast.                                                                    
     These repercussions of  long-term contracts continue to                                                                    
     span   the   social,    economic,   and   environmental                                                                    
     landscapes across  most of  Southeast and  the wildlife                                                                    
     on some islands may never fully recover from that.                                                                         
     The    management    of    old-growth-dependent    deer                                                                    
     populations also  has a bad track  record in Southeast.                                                                    
     The Alaska Board of Fisheries  and Board of Game are on                                                                    
     record  on  several  occasions  requesting  the  Forest                                                                    
     Resources and  Practices Act be amended  to include for                                                                    
     the  protection and  management  of  wildlife on  state                                                                    
     forests  to   provide  for   constitutionally  mandated                                                                    
     sustainable  yield  principles.    This  has  not  been                                                                    
     accomplished, nor  has the Alaska Department  of Fish &                                                                    
     Game  as co-managers  of fish  and wildlife  on federal                                                                    
     forest  lands  been  successful  at  preventing  severe                                                                    
     crashes in  deer populations in Game  Management Unit 3                                                                    
     and wolf populations in Unit 2.                                                                                            
     Both the  briefing paper and  the fiscal  note analysis                                                                    
     of SB  32 prepared by  the director of the  Division of                                                                    
     Forestry [have]  overlooked the full  environmental and                                                                    
     fiscal  consequences  of  the  bill in  the  realms  of                                                                    
     environmental  impacts on  rural communities  and human                                                                    
     health consequences.   The briefing paper  states, "All                                                                    
     timber sales,  including negotiated sales,  must comply                                                                    
     with  the constitutional  requirement to  manage timber                                                                    
     for sustained yield."   But, characteristically, avoids                                                                    
     mentioning  that   Article  VIII,  Section   4,  titled                                                                    
     Sustained Yield, includes  fish, forests, and wildlife.                                                                    
     The  health consequences  of large-scale  conversion to                                                                    
     biomass combustion is a  serious concern for healthcare                                                                    
     professionals of  the American Lung  Association, which                                                                    
     emphasizes   pollution   from   the   consequences   of                                                                    
     combustion of wood and other biomass sources.                                                                              
     Language providing  25 percent of the  revenue from the                                                                    
     timber    sale    to     the    nearest    municipality                                                                    
     notwithstanding an absent  and adequate fiscal, social,                                                                    
     and  environmental  analysis  of  SB 32,  the  City  of                                                                    
     Kupreanof  requests  state  legislators to  table  this                                                                    
     legislation in committee.                                                                                                  
1:51:14 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON inquired  whether  he  is correct  that                                                               
there are no  state forests near Kupreanof or  Petersburg and the                                                               
closest one is northeast of Wrangell.                                                                                           
MR.  BEEBE  responded that  that  is  not  quite correct.    Game                                                               
Management Unit  3 involves  a number of  state parcels  that are                                                               
within 10 miles  of the City of Kupreanof.   The Wrangell Narrows                                                               
separates  Kupreanof  Island  from Mitkof  Island  and  Frederick                                                               
Point in particular  has an area that is one  of the last refuges                                                               
of a  very heavily hit  island of winter  deer range.   The south                                                               
end of  the island, only about  20 miles away from  Kupreanof, is                                                               
also a very important deer winter  refuge that is pretty much not                                                               
going  to be  regarded for  the qualities  that it  represents to                                                               
maintain winter populations of deer.                                                                                            
1:53:12 PM                                                                                                                    
OWEN  GRAHAM,  Executive  Director,  Alaska  Forest  Association,                                                               
stated he  supported this bill  last year and still  supports it.                                                               
The  bill gives  the Department  of Natural  Resources (DNR)  the                                                               
flexibility  it  needs  to  better manage  its  timber  lands  in                                                               
Southeast.   It would  get used  from time  to time  in Southeast                                                               
Alaska.   The  other regions  do not  have the  same issues  that                                                               
Southeast has, such  as remote sites and  high mobilization costs                                                               
for  small  parcels, the  competition  from  outside Alaska  from                                                               
speculators that  end up mostly  not performing  their contracts.                                                               
There  is  an  inadequate  supply  of  timber  for  the  existing                                                               
operators.  Those conditions are  pretty much unique to Southeast                                                               
Alaska.   This flexibility will not  get used a lot,  but when it                                                               
is used  it would be very  helpful.  A number  of times conflicts                                                               
have arisen because of two  different operators trying to use the                                                               
same  remote log  transfer facilities,  rafting grounds,  storage                                                               
areas, and  roads.  A number  of times speculators have  put in a                                                               
sky-high bid  on what  few timber  sales are  out there  and then                                                               
defaulted, and  the state  had to  go back.   The same  thing has                                                               
happened with the U.S. Forest  Service, which usually delays that                                                               
timber sale for an entire year  during a time of being critically                                                               
low on  timber.  He said  Alaska has a good  forest practices act                                                               
that is  designed specifically  to protect  water quality.   Fish                                                               
populations  in  areas on  Prince  of  Wales  Island that  he  is                                                               
familiar  with have  more  than  doubled in  the  last 60  years,                                                               
particularly  in  the most  heavily  logged  areas.   The  Alaska                                                               
Department of  Fish & Game  gave him  some records that  show the                                                               
fish  populations  have  more than  doubled  all  over  Southeast                                                               
Alaska in the last 60 years.   Logging at much higher levels than                                                               
what  DNR will  be  harvesting has  had no  impact  on the  fish.                                                               
Wildlife is also  doing very well; deer  populations are sky-high                                                               
on Prince of  Wales Island.  People say the  wolf populations are                                                               
down right  now, and they  might be down,  but it is  not because                                                               
they do  not have enough deer  to eat in Game  Management Unit 2.                                                               
The  Division of  Forestry  can manage  its  timber sale  program                                                               
without harming fish  and wildlife.  Providing  the division with                                                               
this  additional  flexibility  to  operate will  provide  a  much                                                               
needed  timber supply  and help  the economy  of scale  and maybe                                                               
keep one  or two  sawmills open that  would otherwise  be closed.                                                               
Frequently the Forest  Service or the state sells a  sale where a                                                               
portion of  it goes  export, but  the other  portion will  end up                                                               
going to the mills.  Sometimes,  because of extreme high costs in                                                               
these remote areas, that higher value  from a portion of the wood                                                               
going export  gets enough value  out of  the timber sale  so that                                                               
the mill can afford to saw the rest of the logs.                                                                                
1:56:57 PM                                                                                                                    
REPRESENTATIVE TARR recalled the  testimony that according to the                                                               
2013 annual  report it cost  $5.9 million to manage  the forestry                                                               
program and  only brought  in about  $300,000 in  receipts, which                                                               
means  the program  is about  2,000  times more  costly than  the                                                               
receipts that  are brought in.   She asked how Mr.  Graham thinks                                                               
members  should  evaluate that  in  the  context of  the  state's                                                               
overall budget problem.                                                                                                         
MR. GRAHAM  answered that whoever  made that remark  probably did                                                               
not understand the  budget.  The Division of Forestry  gave him a                                                               
chart that shows  the division makes a good profit  on the timber                                                               
sales.   There is  a lot  more in  the division's  budget besides                                                               
preparing timber sales and managing  the young growth stands that                                                               
come up behind the sales.   He offered to provide a graph showing                                                               
this if  requested.  Responding  further to  Representative Tarr,                                                               
he agreed to provide this information.                                                                                          
1:58:30 PM                                                                                                                    
CARL PORTMAN,  Deputy Director,  Resource Development  Council of                                                               
Alaska (RDC), spoke  in support of CSSB 32(RES).   He paraphrased                                                               
from  the  following   written  statement  [original  punctuation                                                               
     RDC  is a  statewide business  association representing                                                                    
     forestry,  oil and  gas, mining,  tourism, and  fishing                                                                    
     industries.  Our  mission  is to  grow  Alaska  through                                                                    
     responsible   resource    development.   RDC   supports                                                                    
     policies aimed  at ensuring  a reliable  and economical                                                                    
     long-term State and federal timber supply.                                                                                 
     In   the  decades   since  the   State's  timber   sale                                                                    
     authorizing statutes were last  amended, the demand for                                                                    
     wood  fiber from  State lands  for energy  purposes has                                                                    
     increased significantly in  response to escalating fuel                                                                    
     oil  costs and  State  capital  investment through  the                                                                    
     renewable  energy capital  grant program.  As a  result                                                                    
     wood  fiber  for  biomass  energy  has  grown  into  an                                                                    
     important  component  of  forest  products  from  State                                                                    
     timber sales.                                                                                                              
     What  has also  changed over  the past  decades is  the                                                                    
     dependence of  our remaining Southeast Alaska  mills on                                                                    
     timber sales  from State  lands. In  some circumstances                                                                    
     negotiated State timber sales  are essential in keeping                                                                    
     what is  left of  our remaining  manufacturing capacity                                                                    
     RDC agrees  with the administration, as  articulated in                                                                    
     Governor Walker's transmittal  letter, that competitive                                                                    
     timber sales are the preferred  means of selling timber                                                                    
     under  most  conditions.   However  some  circumstances                                                                    
     warrant  the flexibility  of offering  negotiated sales                                                                    
     at appraised  fair market  value in  order to  ensure a                                                                    
     reliable  supply   of  raw   material  to   mills.  The                                                                    
     Department of Natural Resources  (DNR) has a good track                                                                    
     record  of  limiting  its  negotiated  sales  to  those                                                                    
     circumstances where  it is clearly in  the State's best                                                                    
     interest,  and the  added flexibility  afforded to  the                                                                    
     DNR  Commissioner by  this surgical  statutory revision                                                                    
     will  provide needed  flexibility  required by  today's                                                                    
     realities of timber supply and markets.                                                                                    
     By  giving the  DNR Commissioner  added flexibility  in                                                                    
     offering negotiated sales and  clarifying that users of                                                                    
     wood fiber are also  eligible for negotiated sales, the                                                                    
     State will  have tools  appropriate to  conditions that                                                                    
     frankly were  not part of  the timber  supply landscape                                                                    
     when State's timber sale statutes were last revised.                                                                       
     These  amendments support  recommendations of  the 2012                                                                    
     Alaska  Timber   Jobs  Task   Force.  The   task  force                                                                    
     recommendations were developed  with input from leaders                                                                    
     in the  timber industry and  have been endorsed  by the                                                                    
     Alaska Board of Forestry.                                                                                                  
MR. PORTMAN  concluded by stating  that the basic premise  of the                                                               
bill is to remove the  constraints on negotiated timber sales and                                                               
to allow longer term timber  sales where appropriate.  Passage of                                                               
this bill  will help  keep RDC's members  in the  forest products                                                               
industry  in business.   The  current restrictions  limit DNR  to                                                               
negotiating only with  certain sawmills.  He  urged the committee                                                               
to pass the proposed House CS for CSSB 32(RES).                                                                                 
2:01:41 PM                                                                                                                    
CO-CHAIR  TALERICO  closed  public testimony  after  ascertaining                                                               
that no one else wished to testify.                                                                                             
REPRESENTATIVE TARR requested that Mr.  Maisch be able to respond                                                               
to the testimony about the overall cost relative to receipts.                                                                   
MR.  MAISCH  confirmed  that Ms.  Knight's  figures  are  correct                                                               
regarding the  overall budget,  but said  Mr. Graham  was correct                                                               
that that budget does many more  things than just fund the timber                                                               
sale  program.   He said  a significant  amount of  federal money                                                               
comes into the  division that runs a suite  co-op programs around                                                               
the  state, such  as forest  health programs,  community forestry                                                               
programs, and forest stewardship  programs that provide technical                                                               
assistance  to private  land owners  to help  them better  manage                                                               
their forests.   The [2013 Alaska Forest  Resources and Practices                                                               
Act] was mentioned  and many more inspections than  one have been                                                               
accomplished.  Three  agencies are involved in  that effort, with                                                               
the Division of  Forestry being the lead agency.   The key things                                                               
are to  protect water quality and  fish habitat, so ADF&G  is one                                                               
of the  division's partners and  the Department  of Environmental                                                               
Conservation  (DEC) is  the other  partner.   It is  correct that                                                               
DEC's budget has  put DEC in the situation where  it is unable to                                                               
participate in  field inspections  as much as  it was  once able.                                                               
Because DEC  only participated  in one  inspection does  not mean                                                               
that only  one inspection was done.   He offered his  belief that                                                               
over 40  or 50 inspections  were done last  year and ADF&G  was a                                                               
partner on those inspection.                                                                                                    
MR. MAISCH  continued, reporting that about  $2.1 million remains                                                               
in  the division's  budget for  general funds  for forestry  as a                                                               
whole.   The division  collects about  $600,000-$700,000 annually                                                               
in  timber sale  receipts that  are directly  invested back  into                                                               
that  budget.   Statewide that  money provides  300-350 full-time                                                               
jobs in  the forest products  sector and  creates infrastructure.                                                               
Roads  and bridges  that are  built  for these  timber sales  are                                                               
written  against  the  timber  sales   in  most  cases,  so  that                                                               
infrastructure is  paid for as  part of  the value of  the timber                                                               
that comes  out of the woods  and then the division  picks up the                                                               
maintenance of  that infrastructure  over the  long run  and that                                                               
infrastructure provides  access for a  variety of uses.   Perhaps                                                               
the most important  thing it provides the division  is access for                                                               
wildland fire  protection around communities.   The management of                                                               
that forest  reduces fuel loads  around communities,  making them                                                               
safer to  live in  and enjoy,  and this is  a hard  one to  put a                                                               
price tag  on.   During the  Willow fire  last year  the division                                                               
protected  $360 million  in value  just  in the  areas that  were                                                               
evacuated.   The fire two  years ago  on the Kenai  Peninsula was                                                               
about $260 million in value.   A large-scale landscape fuel break                                                               
was done  and that  allowed the division  to save  that community                                                               
that was evacuated.   So, there is a big  other benefit from this                                                               
forest management that  the division does not  usually get credit                                                               
for and  it may be more  important than the revenue  generated by                                                               
the  division.   He  pointed  out  that  many of  the  division's                                                               
[staff] positions  have feet  in the  division's fire  program as                                                               
well as  the resources  program.   Thus, a  position lost  on the                                                               
resources side is also a position lost on the fire side.                                                                        
2:05:52 PM                                                                                                                    
REPRESENTATIVE TARR understood that in  a typical fiscal year the                                                               
division is  not staffed up for  the kind of fire  event like the                                                               
Willow fire.   She surmised  that most of those  additional funds                                                               
would come through the supplemental budget.                                                                                     
MR.  MAISCH replied  correct, a  base budget  funds the  division                                                               
just  like a  fire  department ready  to fight  fire  - the  fire                                                               
engine  is  ready,  staff  trained  and  ready,  helicopters  and                                                               
retardant aircraft -  and that is about $19 million.   Then there                                                               
is  the  suppression  account  which is  funded  at  the  10-year                                                               
average.   This 10-year average  has not been updated  for almost                                                               
20 years and  only comes in at $6 million  in the budget process;                                                               
the division  must supplement  this throughout  the process.   An                                                               
updated 10-year average would be  about $52 million.  Last year's                                                               
fire  season was  the division's  second largest  at 5.1  million                                                               
acres.   The division is  not staffed for  that and so  relies on                                                               
other  states and  on  Canadian  provinces through  international                                                               
agreements.   Last year help came  from 37 states and  2 Canadian                                                               
provinces with 3,700 firefighters at the height of the season.                                                                  
2:07:34 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON  understood  that the  Southeast  State                                                               
Forest includes about a dozen locations.                                                                                        
MR. MAISCH replied  correct.  It is a lot  of dispersed locations                                                               
and is  about 50,000  acres in total,  which is  relatively small                                                               
compared to the Interior state forests.                                                                                         
REPRESENTATIVE  JOSEPHSON  asked   whether  those  aforementioned                                                               
locations are  all south of  Petersburg so that they  are between                                                               
Petersburg and Ketchikan.                                                                                                       
MR.  MAISCH answered  he would  have  to look  at a  map, but  he                                                               
believes yes.   The Southeast  State Forest is  primarily located                                                               
in southern Southeast  Alaska, and the Haines State  Forest is in                                                               
northern [Southeast Alaska].                                                                                                    
REPRESENTATIVE  JOSEPHSON  posed  a   scenario  of  boating  past                                                               
Coffman  Cove or  Edna  Bay  and inquired  whether  he would  see                                                               
management such that he would see  second growth coming back or a                                                               
complete denuding of the landscape.                                                                                             
MR.  MAISCH replied  it depends  on the  site as  it is  all site                                                               
specific.   A  mosaic  of different  age  classes is  represented                                                               
across that  landscape.   A lot  of young growth  has come  in in                                                               
Coffman  Cove and  Edna Bay,  primarily on  federal sales  as the                                                               
state has  not been in the  timber sales business as  long as has                                                               
the federal government.   But, the state does  have a significant                                                               
amount  of young  growth that  is in  a variety  of age  classes.                                                               
When looking across  a landscape like that it  depends on whether                                                               
there are  a lot  of mountains or  relief, because  harvest units                                                               
will be  seen in  those areas  high above  the waterline.   There                                                               
will be  harvested and unharvested  units.  On federal  and state                                                               
ground there are  buffers along the shorelines  and fish streams,                                                               
so it  will be  a mosaic landscape,  not a  devastated landscape.                                                               
However, he allowed, it depends on the eye of the beholder.                                                                     
2:10:19 PM                                                                                                                    
CO-CHAIR  NAGEAK moved  to report  the  proposed House  committee                                                               
substitute (CS)  for CSSB 32(RES), Version  29-GS1022\N, Bullard,                                                               
3/29/16,  out of  committee with  individual recommendations  and                                                               
the accompanying fiscal notes.                                                                                                  
2:10:36 PM                                                                                                                    
REPRESENTATIVE TARR  objected in  order to  state that  she would                                                               
like for  more time to  be put into  looking at the  overall cost                                                               
and  value.    When  the  legislature  talks  about  the  overall                                                               
sustainability of  programs, she  said, a look  must be  taken at                                                               
the other  economic opportunities in communities  if these timber                                                               
programs cannot be afforded.  She then removed her objection.                                                                   
REPRESENTATIVE CHENAULT  objected in order  to state that  a look                                                               
must be  taken at both  sides of the  coin.  He  concerns himself                                                               
with the  cost of managing the  state's forests, he said,  but he                                                               
also  concerns himself  with  the cost  to  communities when  the                                                               
forests are not  managed.  The fire on the  Kenai Peninsula could                                                               
easily have  devastated a number  of communities and some  of the                                                               
programs  spoken to  by Mr.  Maisch definitely  saved houses  and                                                               
probably some  lives.   Regarding wildlife, it  was found  on the                                                               
Kenai  Peninsula  that  after  a  fire  goes  through  the  moose                                                               
population  normally  rebounds  to be  considerably  better  than                                                               
before the  fire.   So, while  he is  concerned about  the price,                                                               
sometimes money is not everything in communities.                                                                               
2:14:09 PM                                                                                                                    
REPRESENTATIVE JOHNSON  thanked Carl Portman and  Owen Graham for                                                               
identifying who  they actually  work for  and what  their mission                                                               
was here.  Saying he "googled"  a couple of the other testifiers,                                                               
he maintained  that they represent  the greater  Southeast Alaska                                                               
conservation community,  which is people that  probably would not                                                               
want any timber cut.                                                                                                            
REPRESENTATIVE JOSEPHSON thanked and  applauded Mr. Beebe and Ms.                                                               
Knight for  their testimony and  said they are doing  great work.                                                               
In one of the great remaining  rainforests he can see the need to                                                               
remove some through the sales  that are identified as .115 sales,                                                               
which  are small  sales.   However, a  corner was  turned in  the                                                               
1990s  and, yes,  jobs were  lost,  but the  economic benefit  is                                                               
greater  to   tourism,  commercial  fishing,   ecotourism,  sport                                                               
fishing, and  related industries to  say that a few  hundred jobs                                                               
do  not need  to  be subsidized.    They are  great  jobs and  he                                                               
particularly likes the finished  work products that are reflected                                                               
in the .123 sales.  He applauds  folks who do not want to look at                                                               
denuded landscapes; they  want to see something  sustained in its                                                               
natural state and would never naysay them.                                                                                      
2:16:30 PM                                                                                                                    
CO-CHAIR NAGEAK said he spent  four years in Southeast Alaska and                                                               
has seen the benefits of the industry.   That was before oil.  He                                                               
recalled how  the students  who spent the  summer working  in the                                                               
timber, fishing, or mining industries  came back to school with a                                                               
bunch of  money.  While  his community had government  jobs, such                                                               
as federal  programs for kids  after school, those jobs  were not                                                               
as  lucrative.    The  discovery  of oil  made  a  whole  lot  of                                                               
difference.  He  knows how important those industries  are to the                                                               
people in  those communities.   Alaska is blessed with  all these                                                               
resources.   Trees  regrow and  there are  fisheries programs  to                                                               
ensure the resources are enjoyed by all.                                                                                        
REPRESENTATIVE OLSON  said it has been  a long time since  he has                                                               
heard  mutual aid  brought  up in  any  kind of  a  meeting.   He                                                               
related that  within two  days of  the start  of the  Funny River                                                               
fire  there were  about 600  firefighters  from approximately  10                                                               
states, smoke  jumpers from the  Interior, and  Canadian skimmers                                                               
and a pilot plane.  The cooperation was extremely impressive.                                                                   
REPRESENTATIVE TARR noted she is  a botanist and these are issues                                                               
that  she  has worked  on  for  about 20  years.    She said  her                                                               
comments were not  about fire suppression or the need  or lack of                                                               
need for  those services.   While those are  certainly important,                                                               
she was  referring to the  actual management for  timber harvest.                                                               
This  has been  a longstanding  problem in  national forests  and                                                               
that is  why she brought up  the PILT -  there has been a  lot of                                                               
tension  between local  communities  and  the federal  government                                                               
because those  areas that cannot  be developed cannot have  a tax                                                               
base and  she wanted to highlight  some of the issues  she thinks                                                               
are worth consideration.   In areas where there are  not a lot of                                                               
other  economic opportunities  it has  been shown  time and  time                                                               
again that ample lead time is  needed so people do not experience                                                               
severe economic hardship  as a result of some of  the projects or                                                               
jobs going away.                                                                                                                
2:21:29 PM                                                                                                                    
REPRESENTATIVE CHENAULT  removed his  objection.  There  being no                                                               
further objection, HCS  CSSB 32(RES) was reported  from the House                                                               
Resources Standing Committee.                                                                                                   

Document Name Date/Time Subjects
HCS CS SB 32 Ver N.pdf HRES 4/4/2016 1:00:00 PM
SB 32
CS SB 32 Support Letter.pdf HRES 4/4/2016 1:00:00 PM
SB 32
CS SB 32 Briefing Paper.pdf HRES 4/4/2016 1:00:00 PM
SB 32
CS SB 32 Letter of Support 1.pdf HRES 4/4/2016 1:00:00 PM
SB 32
CS SB 32 Letter of Support 2.pdf HRES 4/4/2016 1:00:00 PM
SB 32
CS SB 32 Letter of Support 3.pdf HRES 4/4/2016 1:00:00 PM
SB 32
CS SB 32 Letter of Support 4.pdf HRES 4/4/2016 1:00:00 PM
SB 32
CS SB 32 Letter of Support 5.pdf HRES 4/4/2016 1:00:00 PM
SB 32
CS SB 32 Letter of Support 6.pdf HRES 4/4/2016 1:00:00 PM
SB 32
CS SB 32 Letter of Support 7.pdf HRES 4/4/2016 1:00:00 PM
SB 32
CS SB 32 Resolution.pdf HRES 4/4/2016 1:00:00 PM
SB 32
CS SB 32 Sectional Analysis.pdf HRES 4/4/2016 1:00:00 PM
SB 32
SB0032B(1).PDF HRES 4/4/2016 1:00:00 PM
SB 32
SB32CS Fiscal Note.pdf HRES 4/4/2016 1:00:00 PM
SB 32
HB 112 ver P (RES draft CS).pdf HRES 4/4/2016 1:00:00 PM
HB 112
HB 112 Sponsor Statement Ver P.pdf HRES 4/4/2016 1:00:00 PM
HB 112
HB 112 Sectional P.pdf HRES 4/4/2016 1:00:00 PM
HB 112
HB 112 Explanation of Changes W to P.pdf HRES 4/4/2016 1:00:00 PM
HB 112
CSHB 266N 4-1-16.pdf HRES 4/4/2016 1:00:00 PM
HB 266
CSHB 266 explanation of changes.pdf HRES 4/4/2016 1:00:00 PM
HB 266
HB 266 Supporting Document - Letter of Support Resident Hunters of Alaska.pdf HRES 4/4/2016 1:00:00 PM
HB 266
CSHB112 ver P 4.3.16 CFEC opposing letter.pdf HRES 4/4/2016 1:00:00 PM
HB 112
SB 32 LOS Denali Log.pdf HRES 4/4/2016 1:00:00 PM
SB 32
HB 112 Oppose -UFA Hse Resources 040416.pdf HRES 4/4/2016 1:00:00 PM
HB 112
HB 112 Support LB&A CFEC Audit.pdf HRES 4/4/2016 1:00:00 PM
HB 112
CSSB 32-RDC Support.pdf HRES 4/4/2016 1:00:00 PM
SB 32
HB 266 Opposing Written Testimony.pdf HRES 4/4/2016 1:00:00 PM
HB 266