Legislature(1995 - 1996)
03/21/1995 08:08 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HSTA - 03/21/95 HB 212 - TIMBER MANAGEMENT Number 046 JOE RYAN, Legislative Assistant to Representative Al Vezey, submitted the sponsor statement for HB 212, which he read into the record. "HB 212 was introduced by Representative James, at the request of constituents from the timber industry in Fairbanks. These people are operators of small lumber businesses in the local community. Their livelihoods have been impacted by the overly complicated procedures they must endure to secure timber from the state. It was not the lack of the resource that has impacted them, it is the inability of the Department of Natural Resources to allow the harvesting of this resource. Current statutes are such that the five-year planning and three-year planning updates, as required by Title 38, are totally impractical for the continuation of an ongoing industry. "For a number of years now, the Fairbanks Industrial Development Corporation has worked with and recruited timber companies to come to the Fairbanks area and set up shop. So far, they have not been successful, because of the overly restrictive policies mandated by Title 38. Without the ability to be guaranteed a supply of timber over the long term, no one will make the capital investment necessary to develop the industry. "This long-standing irritation has deprived the Fairbanks community and other communities across the state from developing the basic timber industries necessary for jobs and a healthy economic environment. "I feel that this bill addresses the minimum changes necessary to ensure the survival of the timber industry in Alaska." Number 094 CHAIR JAMES asked if Robert Valdatta was on line. ROBERT VALDATTA, on teleconference from Seward, asked questions about HB 212 and made comments to support timber mills in Alaska. He did not say if he was for or against HB 212. Mr. Valdatta asked how long it would be before they could start logging if this bill passed, if it would be within 72 hours or 5 years. He also queried the section about 50,000 cubic yards, which he remarked refers to gravel. He wondered if a person was going in to log, move gravel or build roads. Number 120 RICK SMERIGLIO, on teleconference from Seward, spoke against HB 212. Section 4, he said, exempts sales under 500,000 board feet on the listing in the 5 year sale. In his view, that was bad public policy. The five year sale has been the only way the public had to find out where logging would occur. Personal experience taught him that it takes considerable time for the public to pin down where logging will occur. The proposed 30-day period for the public notification of a sale is too short, because weeks are often required to pass things back and forth in the mail. He would ask for at least 120 days. Another point on Section 4 was about dead and downed timber, which he believes gets confused with old stand. Old stand means the trees have some rot in them. Some people think dead and downed timber means a few trees have beetles in the entire stand, so the entire stand will get logged. Also, in Section 7, there is contradictory language. Mr. Smeriglio stated that it will emphasize logging, and that is not the purpose of multiple use. Currently, in Alaska Statute 41, it just says the beneficial uses of the forests. What this bill does is emphasize logging in the underlying text, and that is not multiple use. Lastly, in Section 9, it says commercial logging may not be found incompatible, yet logging is clearly known to be highly detrimental if not incompatible with fishery production and back country recreation. CHAIR JAMES advised Mr. Smeriglio that his two minutes were up and to summarize his testimony. He summarized by saying this bill is bad public policy. It says in the sponsor statement the bill was requested by the logging industry and that industry has a special financial interest. It is contrary to the broader public interest. ED DAVIS, on teleconference in Anchorage, suggested the committee rethink the bill. He pointed out assumptions on which HB 212 were based: The Forest Practices Act is creating discord for the timber industry, and the authorizing legislation from Title 41 is also causing irritation to the timber industry concerning the state forests. The reality, in his opinion, was that these Acts are consensus documents. In 1990, a group gathered to represent tourism, timber, fishing, hunting, and also, state bureaucrats, and they hammered out a consensus. Each side made substantive sacrifices to do this, and they had a vision for the timber industry in which it would be welcome in the communities where it was operating. The proposed bill is the unilateral rewriting of that consensus so the timber industry will have its way. This will create problems, and he is against it. Mr. Davis suggested a consensus group be convened to take a look at it. JILLIANNE DE LA HUNT, Staff Attorney with Trustees For Alaska in Anchorage, called to opposed HB 212. She also submitted specific comments in written testimony and would keep her oral comments short. It was her opinion this bill politically compromised public process, and she asserted that to call this, as the sponsor statement says, a bill that will aid small timber operators, is facetious in their opinion. The bill is actually designed to allow large timber sales with very little public comment. Favoring logging over all other uses compromises multiple use and sustained yield principles. These things are presently constitutionally protected, so this bill could very likely result in future litigation. CLIFF EAMES, with the Alaska Center for the Environment, with offices in Anchorage and Wasilla, testified that they are opposed to HB 212. Mr. Eames expressed concern about what appears to be a pattern of anti-forest bills that would raid Alaskas forests. They are aware of four such bills being introduced this year and he wondered where the support was coming from. They believed it must come, almost exclusively, from a relatively small portion of the logging industry; also from people who would export logs in the round, also chips and jobs, out of Alaska. This has been the pattern of logging on state lands in recent years. On the national average, Alaska has twice the amount of recreation, and Alaskans take pride in showing our state to visiting family and friends. The Alaska economy depends on the tourism industry, yet nobody will want to recreate in clear-cuts, and nobody will be able to fish in heavily sedimented rivers. Visitors do not come to Alaska to see clear-cuts, and he argued further that the primary use of state forests should not be commercial logging. He wondered how many Alaskans would think that commercial logging should be a higher use than fish and wildlife in our forests. He urged the committee to vote no on HB 212. Number 277 BOB ZACHEL, owner of Alaska Birch Works in Fairbanks, testified in favor of HB 212. He claimed he had to turn down orders this last year because he could not get logs. Everything is being exported and the local demand is not being met. Mr. Zachel said he thinks HB 212 will take care of some of the problems so small businesses will have access to the state forests. Without a supply of logs, businesses like his cannot compete. He supported HB 212, because without it he could not see much hope for small, local industry. Number 315 DAN RITZMAN, Northern Alaska Environmental Center, testified from Fairbanks to oppose HB 212. He thought too much emphasis was put on logging in some sections of the bill, which would make logging the primary interest of multiple use and he was opposed to that. Another concern was that the fish and wildlife have equal consideration as far as planning, but logging interests would have primary rights under management if HB 212 passes. TERRY HERMACH testified from Valdez against HB 212. In his opinion it would be a shortsighted bill. It would be harmful to tourism and commercial fishing, which are our most renewable resources. A forest will take 200 years to regenerate, and tourism and fishing are renewable every year. Mr. Hermach asserted that the best way to manage our timber resource is value added only. We should ban any export of raw logs and materials from our forests. He urged the committee to vote against this bill. Number 355 KEVIN HUFFORD, owner of PWF Express in Valdez, called to say that they make their living from unspoiled forests and the wildlife it produces. HB 212 was a shocking bill that gives priority to the logging industry. Future businesses, such as his, are immediately and directly threatened by it. It is a wholesale give-away of our state forests, so he strenuously objected to the bill. Number 370 WILLIAM DUNNE testified by teleconference from Homer, disclosing that he read the bill and thought it was very limiting. He recommended the committee take time to review the written testimony they receive. Part of his concern was in reference to small scale operators. When speaking to someone about it, when he had referred to small scale timber operators, the explanation he received was that small meant an operation with fewer than 500 employees. To him that would be a very large operation. For instance, in Homer they have a number of timber operations with one, two and three employees. Mr. Dunne said he would encourage that type of free enterprise, but giving away our state forests to large scale operators under the guise of them being small timber companies is outrageous. Also, he saw nothing in the HB 212 to reduce the export of round logs in ships. In Homer, they have a daily problem of exporting jobs, and resources, besides their heritage and habitat, overseas. Some sections of the bill were acceptable, which he could support, but he would ask for a consensus from commercial fishermen, sportsmen, conservation groups, and all user groups of the state forest, before they start tearing down the forests. Number 409 STEVE GIBSON, small scale miller and logger in Homer, testified against HB 212. His complaint was that this bill may do more to put him out of a source of timber than to help. Exporting timber posed a problem. He said the market conditions are such that every stick is rushing out of the area on a boat. He worried that the states available resources will be turned into stump farms just so the exports can go at a faster pace. It wont enhance his business at all in the long run; contrarily, it threatens his business. Whether or not insects threaten, he will not have anything left to turn into boards for local uses. Mr. Gibson reminded everyone that the nature of the wood here in Alaska is very different than wood from the Georgia Pine forests and the forests of Oregon. Second growth does not come back in 20, 30, or 40 years. The rotation time in his area is 100 to 170 years. So, he would urge the committee to kill the bill. Number 443 JACK POLSTER testified from Homer in opposition of HB 212. He believed in the concept of value added and felt that the value should be added by particular individuals as much as possible. In his view there was no concept that allows that principle better than personal use. HB 212 posed a threat to personal use, in his opinion. On the Kenai Peninsula they have high unemployment, and high beetle kill. They also have old stands, which creates a situation where personal use should come to the attention of the legislators and state forestry. It apparently has not. The possibility of personal use would benefit their community and it would help get people doing something productive. He wanted to urge the state to make personal use more available. They have not done that; instead, the state tells people that access is a problem. Although he understood the phenomenon of short funds, also the cost of building access, he said the state can allow access to future personal use areas while setting up commercial sales. Mr. Polster finalized his testimony by asking Chair James to please consider passing the Fully Informed Jury Legislation, that should be in her hands. Number 465 JESSE PAYNE testified from Delta Junction, saying that the general policies now put a serious handicap on Interior Alaskas timber industry. Mr. Payne said he resents groups who call themselves environmentalists, as if nobody else is interested in the state but them. His insinuation was that they would have us believe they advocate what is best for everyone in Alaska, and what is best for Alaskas resources. Still, they are against the bill that advocates what the state needs. Mr. Payne recommended HB 212 as being the best way to re-establish the original intent of the law and regulations that govern our forests. He said if we do not use the forests, nature will destroy them by insects or fire, or other natural causes. His opinion was that the state must address the needs of the Alaskan people, and use this industry responsibly. TYLER CONKEL testified from Delta Junction to offer his full support of HB 212. He urged everyone to vote for the bill. Mr. Conkel represented three separate concerns: He was testifying as a private citizen of Delta, as a member of the timber industry, and as a speaker for the Interior Alaska Forest Association. As a citizen of Delta Junction, he appreciated the Governors comments during his visit of March 16, 1995. To be specific, he appreciated the statement Governor Knowles made about the possibility of raising the allowable cut for Delta Junction. He said that without the primary use statement contained in HB 212, however, that idea would be unobtainable. HB 212 is consistent with the rest of the statutes concerning land classification and land use, he said. Currently, the state forest is the only land use without a primary use statement in the statutes. Wildlife habitats, parks, and all the others are protected, for instance, by primary use statements, but not to the exclusion of the multiple use. They stay consistent with the primary use statements of those classifications. So, state forests need that protection, and HB 212 provides it. Number 503 NICHOLAS OLSON, owner of a small, one man operation, testified via teleconference from North Pole. He is the owner of a small salvage scale, and he discovered a bad bug problem in his timber, which he said was getting worse. This bill, he said, will help him to harvest this timber before it rots and falls down. They need to make more timber available to small operations. Many operations do not have any wood. He had not gone over HB 212 thoroughly, but from what he understood and what he had seen of it, he felt it was a good step in the direction he wants to go. Something new must be done to help small, one, two, or three man operations. JEFF BENTZ testified from Anchorage in support of HB 212. He urged everybody to support the bill. In his view this legislation would remedy the bug kill problem they have, and also much of the timber in Interior Alaska that has bug kill. If the timber is not harvested, it will either rot and fall to the ground, or burn. This bill provides the means to put people back to work. It is not a clear cut large scale bill; it puts back 14 uses that were once there, in 1983. Also, it reverses what happened in 1990, and it will benefit people in the state of Alaska. Number 533 SARAH HANNAN, Executive Director, Alaska Environmental Lobby, a coalition of 20 groups across the state of Alaska, wanted to inform the committee that these groups are not raging national environmental groups aimed at shutting down resource development in Alaska. They are Alaskans who work in a diversity of industries, most of them in resource based industries, because that is what Alaska has. They oppose this legislation for a variety of reasons. She spoke of the five-year plan saying that for timber to be sold in Alaska it must be listed in two consecutive years, on a five- year planning process. In the course of 366 days the state can sell a tree. The state must list it one year, then the following year, and after that they may sell it. The process purposes to give the people who use the resource an opportunity for feedback on whether that sale, in detail, affects commercial hunting, trap- lines, plus a variety of other uses. She informed the committee that there are two state forests in the state of Alaska and that we are making policy about state forests, but we have much forested land. The two considerations must be separated, she said. Two state forests were created because there were state forests that had a diversity of users. Tanana Valley State Forest, for instance, encompasses the community of Fairbanks and all the other communities along the Tanana Valley Basin. Those communities have said this is not just state land to give away to export companies. She quoted the people in these communities as saying, This is our back yard, where we fish, hunt and trap, and moose hunt, and we have a lot of concerns about how these trees are cut and distributed. Ms. Hannan claimed that the Alaska Environmental Lobby supports Alaskan operations and value added timber processing, but currently the Supreme Court forbids the state of Alaska from banning export. They believe the thing to do is to look at timber policy to encourage local users. She pointed out that some who testified gave support to the bill; some did not. The reason is the bill states that anything under 500,000 board feet of timber does not have to be listed for sale. The reason is that this represents a lot of trees in some areas but not in others. In Southeast it is not a lot of trees. In the Mat-Su Valley it represents about 160 acres of trees, and she said, That is a lot of back yard. Ms. Hannan addressed Section 4, suggesting they amend the bill by reducing the number to 100,000 foot sales. She would also urge the state to be looking at small scale sales in a diversity of locations, working with local mill operators who can specify which areas are accessible. She said we need less industry development and, instead, support Alaskan for resource users and small scale operators who are not exporting in the round. Number 583 KATHY LENNINGER, Wilderness Lodge Owner, testified from Nenana. She had some concerns about HB 212, and about wildlife and bird habitats. Ms. Lenninger said she has seen clear-cuts down to the rivers edge; also, supposed reforested areas with dead seedlings after two years. In her area it takes 180 years for a spruce tree to grow to maturity. Ms. Lenninger also expressed concern about the watershed. She lives on the river, as most of the villagers do, and with big clear-cuts the watershed will be destroyed. Ms. Lenninger said she did not oppose reasonable small scale logging. Small scale operators should have opportunities to get wood. She did not believe this bill is the right one to accomplish that. Number 599 GORDON NORTON, small mill owner, testified from Fairbanks in favor of HB 212. It may not be perfect, he said, but it would help smaller businesses, which are the backbone of our economy in his area. Mr. Norton added that by small business he meant a business with fewer than ten employees. He has forest lands of his own and has seen where bark beetles are destroying it, especially in old stands. If these old stands are not harvested, there can be more destruction and a greater fire hazard. He explained there can be a greater loss of timber by not harvesting it. He expressed that he wanted to see it easier for people with small businesses to obtain tracts they can handle. Number 626 MR. RYAN returned to the table to offer other supportive comments on this legislation. He reported that, in the process of land use planning, particularly under our constitutionally mandated multiple use, nothing says you cannot take certain areas and delay the highest and best use of that area. This makes the other uses auxiliary to the highest and best use, which is appropriate. Last year, Commissioner Glenn Olds, who served under the Hickel Administration, had a rewrite of Title 38, which he said would have done specifically that: Designate certain lands and give them highest and best use. Once they obtained highest and best use, the land would be available for all of the other uses. Nothing would be restricted. Mr. Ryan recounted some testimony heard from people of the environmental community and addressed a comment made by a person on teleconference. The persons comment was that tourism is a major support in the state of Alaska. Mr. Ryan said he would differ, for oil is and has been the major support. He saw an urgency to develop a secondary industry, because when the oil goes, he said, we will be in a serious economic situation. Mr. Ryan repeated what the Governor had said: Alaska is open for business. He said this bill will implement the Governors plan. Also, Mr. Ryan added that early photographs of Fairbanks and Dawson City show the surrounding hills completely denuded. There were no trees growing at all; they were cut down for fire wood and to make cabins. Today, those same places are surrounded by large, mature forests. So, the country does regenerate, he said. In addition, Mr. Ryan noted that the Tanana and Yukon Rivers are glacial fed and full of microscopic particles of silt. It is difficult to contaminate glacial fed rivers and the turbidity levels more than they already are. MR. RYAN quoted from the Bible: By their works you shall know them. With that, he referred to comments made by environmental leaders and those who developed the philosophy of environmentalism. Directing the committee to backup information in the committee packets, he read an excerpt from Dixie Lee Rays book, Environmental Overkill, Whatever happened to Common Sense? One comment was by David Brower, founder of the Friends of the Earth, and former executive director of the Sierra Club. Mr. Brower said, While the death of young men in war is unfortunate, it is no more serious than the touching of mountains and wilderness areas by mankind. Mr. Brower was also quoted as saying to a travel group in Whistler, British Columbia, September 23, 1992: Loggers losing their jobs because of spotted owl legislation is, in my eyes, no different than people being out of work after the furnaces of Dachau shut down. Also, Mr. Ryan quoted Christopher Manes from a book entitled Green Rage. Christopher Manes had outlined a program for ecological reform, and its main features included: De- industrialization of the West; Reduction of human population; elimination of all use of fossil fuel, including automobiles, coal- fired plants, and manufacturing processes using petrochemicals; ending of all monocultural and cattle production; end of all commercial logging; restoration of wilderness on developed land; and reintroduction of large predators, such as grizzly bears and wolves. Mr. Ryan concluded that by their own words it was clear what their agenda is. He could see them objecting to any kind of legislation that would provide an opportunity for people to make a living. With that, he urged everyone to seriously consider passing HB 212. CHAIR JAMES asked if there were any questions. When there were none, she informed the committee that Mr. Tom Boutin was there to answer questions. Mr. Boutin was there representing the Division of Forestry, which is under the Department of Natural Resources. REPRESENTATIVE CAREN ROBINSON said she wanted to hear the Departments opinion of this bill. She noticed a whole series of amendments, and assumed they were recommending some changes. CHAIR JAMES wished to reiterate that the committee received these amendments late the previous evening, around 7:00 p.m., and since nobody had a chance to review them she did not think they would be able to deal with them at this meeting. Number 675 REPRESENTATIVE ROBINSON asked if Representative James planned to hold the bill over until they could go through the amendments. CHAIR JAMES said it was up to the committee to decide, but they could hold it or pass the bill out to the next referral, which was Resources. They could hold it over in order to go through the amendments. Meanwhile, Mr. Boutin was there to answer some questions and Chair James asked if he was familiar with all the amendments. Number 685 TOM BOUTIN, Alaska State Forester, Division of Forestry, Department of Natural Resources, approached the table saying he was familiar with the amendments. He thought it would be a better bill with the amendments; however, he said the Administration did not support the bill with or without the amendments. Number 690 CHAIR JAMES said she had a copy of AS 41.17.230, which is the Forest Practices Act of 1983. It shows that, in 1990, the primary use of the forest was deleted. She asked if Mr. Boutin was around in 1990. MR. BOUTIN said he was around, but he was not involved in the process that lead to the 1990 updated Forest Practices Act. CHAIR JAMES said what bothered her most was that the largest amount of testimony at that meeting was from the environmentalist community. It told her they have a Forest forced Practices Act based on consensus. If this was based on consensus in 1983, that commercial timber harvest and related activities should be number one on the list, then came back in 1990 and turned around by consensus, it was heavily weighted by the environmentalist community. TAPE 95-32, SIDE B Number 000 MR. BOUTIN claimed that he has heard comments from many people in the two years since he has had this job, and many Interior saw- millers complained that they were not represented at all. Mr. Boutin did not know the history of why they were not represented. CHAIR JAMES spoke on the market as the driving force behind sales. It has been her opinion that when you have something to sell, it is only available to sell when you have a specific market, so the market drives the sales. Formerly, if someone had a product that people use, they could fix it and make it available for people to buy. It seems we have moved into an era where if someone is not buying specifically what we have, we eliminate the industry. Consequently, the buy and sell arrangement is eliminated. She asked if Mr. Boutin could relate what he thought about that, and if he thought it applied to the timber industry. MR. BOUTIN wasnt sure if he understood the question, but he said that virtually all the states timber is sold by competitive auction, either by oral bid or sealed bid. CHAIR JAMES said he answered from the states position of selling timber as being the market. Her understanding was that the timber has no market unless there is someplace else for it to go. An industry comes in and only buys because they can process and sell to a market; then the market would determine what the timber requirement would be. Number 045 MR. BOUTIN said that was true, and if the market goes away nobody will bid. Each year the state has some timber sales for which nobody is willing to pay the minimum bid. Their appraisals are based on past sales, so if they get a steep downturn in the market their appraisals become too high. Also, some of the sales are not economic. So, they do have sales that do not sell. He said most of the sales have great competition interest, however, and are sometimes bid to a multiple of the minimum price. REPRESENTATIVE ROBINSON requested from Mr. Boutin an overview of why the department has problems with this bill. Number 068 MR. BOUTIN explained that it is a long and complex bill. To capsulate it, he said it destroys public process. The Division of Forestry thinks it understands the public process; it also thinks it knows how to use the process. The process is not cheap, but it is the sale of public resources, so it has to be done through a process. The department thinks it is becoming more cost effective at doing the process and is becoming better at the process. They had 12 court cases, which they won, he said, and each judge told them to proceed with the sale. They were also informed that they have done a good job crossing Ts and dotting Is. He felt this was proof that the public process works. REPRESENTATIVE BRIAN PORTER expressed that he had no doubt the department has a good grasp of the process, but he questioned if they have a good grasp of the other side of the equation. That is what Chair Jamess question related to. He asked if it would not be appropriate to consider that the length of time the process takes now has an adverse effect on the ability to meet a market at a time that it exists. Number 100 MR. BOUTIN explained that the process takes all of two years. In theory, perhaps, under AS 38.05.113, they could be there at a year and a day, but, realistically, it takes two years. He listed the steps taken: Each sale goes through the public comment period for the five year harvest schedule at least twice; then each sale has to have a forest land use plan; and afterward, a 30-day agency and municipal comment period and a 30-day public comment period. Each sale has a minimum of three public comment periods, plus a public meeting. The public relies on this extended examination and people do not want to see that extended process reduced. As for not meeting the market, timber sales are driven by the resources they have in their budget, and currently, the rate of timber sales is twice what the five year average was leading up to 1993. He said it is bound to be reduced in the future, because the Division of Forestry is required by law to fight fires and to enforce the Forest Practices Act. That is a private land enforcement action. As those things in Forest Practices enforcement expand, the timber sales program is cut back. This fiscal year there is no forestry in Tok, so in FY 96, there will feasibly be a cutback of a timber sale in another part of the state because that is all they have to give. Number 194 REPRESENTATIVE JOE GREEN wondered, since the market is so fluctuant, if they could review the state resources for a sale on a much broader scale. That way they could have everything prearranged and in place to meet the market demands when they come. He said he was unsure about how long the review lasted, or if it expired in so many years. MR. BOUTIN remarked that he never saw the two year process as being responsible for not meeting the market demands. There is competitive interest throughout the state for anything a landowner can put up for sale. The public process does not prevent the Division of Forestry from having more timber to put up for sale. If AS 38.05.113 were no longer in effect, the Division of Forestry would not be able to put up more timber for sale more quickly. Mr. Boutin did not consider the public process an impediment to putting timber up for sale, and he would not recommend eliminating the public process. He defended it, saying if they did not have the public process they would be losing in court, and they would also be putting up less timber for sale. Number 194 REPRESENTATIVE GREEN said that was not quite his question. He wanted to know, if they continued with the two year process, if they could expand the review areas, or have groups of areas prepared for the market demands. He pointed out that although Mr. Boutin did not think the two year process was a problem, the testimony indicated that it was a problem. Representative Green wanted to find a way they could have the process working in advance so they could have timber available when the market demanded it. Number 205 MR. BOUTIN said that AS 38.05.113 requires the Division of Forestry to do a five-year harvest schedule. Nothing is keeping the state from doing just one five-year harvest schedule for the entire state, yet there are reasons they do not do that. One problem is people or groups of people such as the Trustees for Alaska who file complaints in Superior Court. These groups have not stopped the sales, but they have filed for emergency stays on each auction. They failed to obtain the stay; but the five year harvest is the subject of this complaint against the Division of Forestry. If they are going to run into potential snags like that, they would prefer not to have all the state sales at that risk. MR. BOUTIN said there are ten forestry areas. These areas know best which sales to put up and what access is likely to run into problems in the public process. Those things would argue against putting all sales into one combined five-year harvest schedule, yet the law does not prevent them from doing that. He explained also that one thing that prevents them from doing many timber sales in preparation to have a full pipeline is laying out the timber ahead of time, in order to do the Forest Land Use Plan under AS 38.05.112. That is necessary so they have a bullet proof best interest finding when they go to court. He stated that laying out timber in advance takes lots of resources, and they have limited resources. They lack the people to lay out five years worth of timber, to get it in the pipeline and hold it there for the possibility of a market. Number 251 CHAIR JAMES said the Department of Forestry has a greater interest in the industry than anything else. It was also apparent that when he spoke of timber sales and the market, he was speaking about sales of timber to a market, which to her was the industry. He had not considered what the five year schedule ought to be, but then Chair James pointed out that they could not possibly consider what a five year schedule ought to be unless they knew what the market would be. In her view, their prime interest was obviously in the industry. She asked if he were an industry if he would be willing to come into this state and depend on the five year schedule to give him enough product to put his industry into operation. MR. BOUTIN answered, no. In the present environment, in public land management, he said, anyone making an investment would surely want more of an assurance of supply than our good intentions over a five year period. He said an investment would require an assured supply. Number 269 CHAIR JAMES confronted Mr. Boutin with our dilemma, which is a $500 million deficit this year in our budget. There is an urgency to reduce it, and it is urgent enough that the legislature must resort to reducing funds to education and other important programs. The problem is how they can get the budget down by $500 million, and finding ways to develop the economy. Chair James wondered if Mr. Boutin believed the only way to salvage the economy is by resource development, other than what we are presently doing. She asked if he would agree that timber would be a good way to do that. Number 275 MR. BOUTIN said the states timber sale program is cost effective. Despite new documentation and one public meeting, they estimate doing for each of the one million board feet of timber, they still expect a positive return to the general fund for every board foot sold. We should promote value added processing, he said, and also get a federal law passed to allow the state to limit log exports. It should have been done long ago, and he thought it would be a good time for value added processing to come from state lands. Moreover, resource jobs can be part of the solution to the Prudhoe curve problem, and timber should be making a contribution. Number 299 CHAIR JAMES brought up the condition of the timber, particularly in the Tanana Valley. People on the environmental side seem to believe the timber is healthy, but to her it looked unhealthy. Small spruce stands and birch stands look like hair on a dogs back. Her idea was if they had a management process aimed at growing healthier forests, it would surely increase the available amount of timber for processing. She wondered if Mr. Boutin agreed, and also if he thought it would shorten the recycling period if they could improve the management process. Number 310 MR. BOUTIN said they are bumping up against the allowable cut on Haines State Forest, which is 6.9 million board feet a year. In that area, thinning, which increases the record of growth does incrementally increase the allowable cut. In the Interior the allowable cut, as calculated using conventional science, would be approximately ten times what the state is harvesting there in the Interior. He would have a hard time arguing for general funds to be used for the thinning of timber to increase the growth, and to increase the cut, when the harvest is such a small percentage of what the allowable cut would calculate out to be. The public needs assurance, he said, that they know what they are doing before they can do anything more. Number 336 REPRESENTATIVE GREEN said at a Resource Committee meeting a month ago, in Southeast, they were subjected to some pretty horrible situations, such as mills closing. The gist was that those mills are currently in jeopardy because bureaucratic red tape does not permit them to have the fiber for a value added process. He wondered if bureaucrats could take a more appropriate, innovative stand in doing something in a more expeditious manner; also, in a more compatible manner with market demands. That would drive and proliferate a value added type of investment for some sort of a plant. Representative Green said Mr. Boutin made a good case against going statewide, yet he maintained there must be a way to take broader sections and multiplicities in a unit package, allow what is necessary to keep the public happy with the process, and still get advance approval for when the market demands come. This would allow the state to compete on the open market. The present method of waiting for five years is a laughingstock. Instead of hiding behind bureaucracy he suggested a more proactive approach. Number 380 MR. BOUTIN answered that some kind of instate processing has to be part of the equation. For instance, in Southeast, the only place where the state can help out with these downed mills is in the Haines Forest. That allowable cut of 6.97 million board feet a year is very small and is not a solution to a Wrangell Sawmill that needs 60 to 80 million feet of saw logs. They have had sales, and the general fund does fine, but the timber has been exported. Number 409 CHAIR JAMES asked if we have enough pulp logs to reopen the pulp mill that is closed. MR. BOUTIN said that pulp is not just one commodity. The state has 60 million feet of allowable cut not being used, of low value hardwood in the Interior. It is the same mix that a new mill in Northern Alberta is using. There is not enough Sitka Spruce and hemlock to come close to providing enough wood for the closed mills. They are 600 tons per day mills and would use 450 thousand cords, which is 225 million feet a year. The state doesnt have that supply in Sitka Spruce and hemlock. There is white spruce being logged off the Kenai, which is a high value product for newsprint pulp mills. The chips from the Kenai are going to newsprint mills overseas. CHAIR JAMES brought up the economic picture, saying if the market does not drive the process, we as a state should be in tune to what the market is and respond accordingly. We have to turn the market, she said, and shorten the time frame. We have to create jobs also. We do that with everything else except timber. MR. BOUTIN said there is a development stage. It is different with oil and gas. The wood industry is accustomed to a longer time horizon than with fish. The public process is not an impediment; timber is a resource, but we cannot chase the market, he said. Number 501 REPRESENTATIVE SCOTT OGAN asked Mr. Boutin about the 500 thousand board feet sales, wondering how many acres that would be around the Tanana Forest. MR. BOUTIN said that 10,000 feet to the acre is a pretty good average for that area. That would amount to 50 acres. REPRESENTATIVE OGAN wanted to know how many acres are in the Tanana Forest. Fifty acres would be a very small sale. MR. BOUTIN said that the Tanana State Forest itself has 1.3 million acres. The Tanana Basin has much more state forest lands. REPRESENTATIVE OGAN asked if he would say that the people who go consistently to the public hearings are pretty much the same crowd. He wondered if they reflect the sentiments of the general public. MR. BOUTIN said he was surely speaking of environmentalists, and those who come to public meetings do want to see timber jobs. The extent to which they represent the public at large, he did not know. CHAIR JAMES said she read the input on the Yakutat plan, and from what she gathered it was that they liked value added, but what they wanted to see was one man and one tree, and to make the tree into something and sell it. Different people have different measures of concern, and the people who testified on the teleconference said they support the small logger. She said that HB 212 is a bill that supports the small logger, but those people are opposed to it. They have not proved to her by anything they have done that they support small operators. MR. BOUTIN said that certainly everyone agrees with jobs, but the best that the bureaucrats at the Division of Forestry can do is understand the public process, and to have a genuine and legitimate process where they bring the public in early to let them know they are considering their comments. They are also responding to their comments, so if they end up in court each judge will tell them to sell the timber. HSTA - 03/21/95 Number 596 REPRESENTATIVE ROBINSON expressed that she did not know Mr. Boutin was involved in HB 121, which related to the salvage sales, but she heard people say it was that part of the forest they wanted to get their hands on. She was curious about how the two bills meshed together, and if HB 121 would assist them. She wondered also if it would help smaller operations. MR. BOUTIN said how they mesh together is in exempting salvage sales from the five-year harvest schedule. HB 121 does that, and it requires a written finding, which makes it superior to HB 212, in his opinion. According to the testimony they heard, people on the Kenai have businesses with one and two employees and they have problems getting logs when there is more wood moving on the Kenai than ever before. The Division of Forestry and the University together sold 25 million board feet in 1995. That is enough wood for the Seward mill for a year. Dollars talk, he said, so if anybody has the money to pay, the wood is there. One thing the public process does, because of the forest land use plan, is that it forces larger sales than we might otherwise have. It makes smaller sales less cost effective. HSTA - 03/21/95 Number 638 CHAIR JAMES concluded that if we continue in the same process with the logging industry, without making big changes, the people who provide value added cannot stay in business. Changes are necessary to have the product available to do some value added. What makes business work is a market, a product, and then a profit. Present laws are not working. Somehow we have to have a stop-gap measure. Number 665 MR. BOUTIN said there are people working on a way to allow the state to require value added processing of timber from state lands. He is more optimistic than ever before that they will be able to get that done. He reiterated that he does not see the public process as an impediment to bringing timber up for sale. CHAIR JAMES said, It is the time it takes. Number 674 REPRESENTATIVE GREEN concluded that if the bureaucratic morass continues, we will never be where we need to be when the market comes. Time is of the essence. He thought Mr. Boutin failed to get the point which was if logs are not available in a timely manner that people will not come into Alaska and commit to putting up a value added type plant. MR. BOUTIN focused on their pipeline of timber that is in process, explaining that once the timber is sold it takes some type of development, like building roads and so forth. Most of their sales are in the winter, but they cannot get to them until the next fall. However, the pipeline of timber is more full than it has ever been before, so despite the public process they are doing more now than in the past. TAPE 95-33, SIDE A Number 000 CHAIR JAMES requested that they move the bill out and let it be heard in Resources, the next committee of referral. She felt they had a good discussion. Number 006 REPRESENTATIVE ED WILLIS noted that this bill covers a lot of variation that he is not an expert in. His concern was how the fish habitat is protected when they prepare the packages for sale. Fisheries, is one of the main resources of the state, and a renewable resource. He questioned what they do to protect that habitat. Number 029 MR. BOUTIN said they do a number of things. The Forest Practices Act for state land requires a riparian buffer, which they use as a no-cut buffer. The law would allow variations, but they do not use variations on state land. They have a 100 foot no-cut buffer, and then from 100 to 300 feet they have a special wildlife management zone where they defer to the Alaska Department of Fish and Game as to whether they can enter into it or not. Number 077 REPRESENTATIVE ROBINSON said she wanted to go through the recommendations from the department on the amendments before passing the bill out. She wanted to understand everything and said she wanted Mr. Boutin to go through the bill, point by point, to show where he recognized problems. Another issue bothering her was the two year process. She failed to understand why anyone had a problem with it when it was so important to this state. Two years in her view was not a long time. Another issue was the need for federal changes before they can begin the promotion of the value added. MR. BOUTIN said he had heard in the Department of Law that it is not possible to have enforceable state law requiring value added without a change in federal law. REPRESENTATIVE ROBINSON said we should look at some kind of resolution to our congressional delegation about whatever it is that we need to do. She wanted to get on the record also that HB 16 was introduced by Representative Tom Brice that was nearly identical to this bill. It was upsetting to her, she said, that they introduced a bill through State Affairs and they did not hear Representative Brices bill. Number 140 CHAIR JAMES had an explanation for Representative Robinson, saying that she received the same documentation that Representative Brice received from timber operators in the Fairbanks area, but he filed a bill that excluded important sections of the documentation. The timber operators wanted it like it was and HB 212 is what the timber operators wanted. HB 212 includes their original requests. REPRESENTATIVE PORTER said it would be appropriate that Resources deal with these amendments, where there are the people who have that specific interest and expertise. He felt State Affairs dealt appropriately with the policy issues that the committee was required to look at. He also recognized and believed there are people who rely on and benefit from the current procedural requirements of statute and regulation. Representative Porter said he would only add that there are others who are adversely affected and who object to the time required in the process. He stated that the courts have upheld the divisions application of the law, and they have crossed all the Ts and dotted all the Is. In his view, the policies should be made in the legislature, not in the courts. He felt that meeting markets is a function of competition and it is only fair to put the state on the same playing field as others who are competing. He supported moving the bill out. Number 193 REPRESENTATIVE IVAN said he followed the purpose and intent of the bill and he approved of it. As he explained, he came from an economically depressed area, where there is minimal resource development. Timber supplies are small, and there is small timber in the middle Kuskokwim he would like to see developed wherever possible, and to make it available within their local area. He thought this bill would provide opportunities for economic development for small operations there. When they have timber projects now they have to order it from Seattle, and it arrives the following year. The people he represents are some of the best conservationists as far as fishery resources are concerned. If the bill passed, they would make sure the fisheries are protected. Also, this would provide jobs and make the product available to the people there, where they hardly have anything as far as timber is concerned. CHAIR JAMES called for a motion to move the bill out. REPRESENTATIVE OGAN moved that the committee pass HB 212 out of State Affairs with fiscal notes attached and individual recommendations. REPRESENTATIVE ROBINSON objected, and wanted to reiterate why she objected. She agrees with Representative Ivan, and she would like to see smaller operators have a better access to our forests. She also would like to see the smaller operators do better value added products with the lumber. The reason she objected was that they did not go through the bill, and she had not heard the true objections from the department one by one, or go through the recommended amendments brought to the committee. Her desire was to move the bill out in the best shape possible, and she did not think they accomplished that. CHAIR JAMES responded to Representative Robinson saying that this bill should have and could have gone directly to Resources. It was heard in State Affairs at her request, so this committee would understand the gist of what they were doing with this bill. She regretted that they did not have the amendments soon enough so they could look at them for a few days and come prepared to deal with them. Nevertheless, she felt they had a good State Affairs Committee meeting on the bill. They gave it a lot of attention and did not slight anyone. They allowed testimony and got good response from Mr. Boutin on all the questions and comments. They met the State Affairs requirements, so she was comfortable about moving it on to Resources where the amendments will be addressed in a timely fashion. REPRESENTATIVE ROBINSON said she just did not understand why the rush. She said she would obviously lose on this, but she had at least put her comments on the record. REPRESENTATIVE WILLIS said he would be voting not to pass the bill out for similar reasons as expressed by Representative Robinson. CHAIR JAMES asked for a roll call vote because there were objections. Representatives Porter, Ogan, Green, Ivan and James voted in favor of moving the bill out. Representatives Willis and Robinson voted against passing the bill. HB 212 was passed out of the State Affairs Committee.