Legislature(2017 - 2018)HOUSE FINANCE 519
04/18/2017 09:45 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB25 | |
| SB88 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 25 | TELECONFERENCED | |
| += | SB 88 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 18, 2017
9:52 a.m.
9:52:38 AM
[Note: Meeting recessed and continued April 18, 2017 at
9:45 a.m. See separate minutes dated April 17, 2017 for
detail.]
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 9:52 a.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Paul Seaton, Co-Chair
Representative Les Gara, Vice-Chair
Representative Jason Grenn
Representative David Guttenberg
Representative Scott Kawasaki
Representative Dan Ortiz
Representative Lance Pruitt
Representative Steve Thompson
Representative Cathy Tilton
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Robin Stevens, Self, Juneau; Lisa Eigan Lagerquist, Self,
Douglas; Margaret Brodie, Director, Division of Health Care
Services, Department of Health and Social Services;
Representative Matt Claman, Sponsor; Lizzie Kubitz, Staff,
Representative Matt Claman; Senator Bert Stedman, Sponsor;
Wyn Menefee, Chief of Operations, Division of Mining, Land
and Water, Department of Natural Resources; Senator Mia
Costello.
PRESENT VIA TELECONFERENCE
Barry Christensen, Alaska Pharmacists Association,
Ketchikan; Robin Smith, Self, Anchorage; Sara Clark, Self,
Anchorage; Larry Edwards, self, Sitka; Rebecca Knight,
Self, Petersburg; Charles Wood, Mitkof Highway Homeowners
Association, Petersburg; Dennis Watson, Mayor, City of
Craig, Craig; Owen Graham, Alaska Forest Association,
Ketchikan; David Landis, Mayor, Ketchikan Gateway Borough,
Ketchikan; Mary Nanuwak, Self, Bethel.
SUMMARY
HB 25 INSURANCE COVERAGE FOR CONTRACEPTIVES
HB 25 was HEARD and HELD in committee for further
consideration.
SB 88 AK MENTAL HEALTH TRUST LAND EXCHANGE
CSHB 88(FIN) was REPORTED out of committee with a
"do pass" recommendation and with one previously
published zero fiscal note: FN1 (DNR)
Co-Chair Foster reviewed the agenda for the morning.
HOUSE BILL NO. 25
"An Act relating to insurance coverage for
contraceptives and related services; relating to
medical assistance coverage for contraceptives and
related services; and providing for an effective
date."
9:53:39 AM
Co-Chair Foster OPENED Public Testimony.
9:54:17 AM
ROBIN STEVENS, SELF, JUNEAU, supported HB 25. She shared
that she took birth control pills for 22 years due to her
inability to find a doctor who would perform a tubal
ligation. She explained that her insurance only allowed her
3 days to refill her birth control prescription before
beginning the next month's dosage. She believed that the
women most in need of birth control had the most barriers
to access due to lack of transportation, or inability to
take leave from work. She felt that avoiding pregnancy
should not be difficult. She urged members to remove the
barriers to birth control. She stated that a year's worth
of birth control was much less expensive and safer than the
cost of childbirth. She did not "subscribe to the theory
that it took two to tango and would never put her
reproductive future in the hands of her sexual partner."
Representative Guttenberg asked whether she could not get
her prescription refilled until she was out of birth
control. Ms. Stevens replied in the affirmative. Ms.
Stevens reported that birth control prescriptions were on a
28-day cycle. Her insurance through the Affordable
Healthcare Act (ACA or Obama Care) specified that she could
only obtain a refill every 25 days.
Vice-Chair Gara asked how long her prescription lasted or
whether she periodically had to coordinate through her
doctor and the pharmacy. Ms. Stevens stated that typically
a prescription was written for a period of 15 months.
9:58:42 AM
Representative Wilson asked about her insurance policy and
whether it was private or a federal program. She wondered
whether she was subject to a private insurers rule or
federal law. Ms. Stevens had been able to access private
insurance due to the ACA. Representative Wilson asked
whether the 25-day rule was the insurers or a federal
guideline. Ms. Stevens indicated that her health care
provider had mentioned that the insurer established the
rule. Representative Wilson asked why the tubal ligation
procedure was not authorized. Ms. Stevens answered that she
was not able to find a doctor to perform the surgery
because she might change her mind.
10:00:12 AM
LISA EIGAN LAGERQUIST, SELF, DOUGLAS, spoke in support of
HB 25. She provided information about her personal use of
birth control. She thought it was very important that other
contraceptive options were covered besides "The Pill." She
spoke about the inconvenience of having to get a monthly
prescription refilled. She thought that anything that could
be done to help people choose "intended pregnancies" was
imperative. She emphasized that anyone that wanted birth
control should have access to it. She urged support for the
bill.
10:02:58 AM
BARRY CHRISTENSEN, ALASKA PHARMACISTS ASSOCIATION,
KETCHIKAN (via teleconference), spoke in favor of the
legislation on behalf of the organization. The association
believed that the bill was good public policy. He explained
that insurance plans typically restrict all prescriptions
to 30 or 90 days. He indicated that vacation overrides were
only available on some plans and were "fairly problematic."
The insurers required very specific information about dates
of travel and limited the supply to the length of travel.
Additionally, ferry workers whose job time on the boat was
extended were denied overrides if the pharmacist mentioned
the refill was necessary for work and not a vacation. He
referenced previous testimony regarding "refill parameters"
and delineated that typically 75 percent of a prescription
had to be used before refills were allowed but some plans'
parameters were more restrictive.
10:05:26 AM
Representative Guttenberg mentioned that prior discussions
focused on who mandated quantities of prescriptions; the
federal government or private insurers. He asked Mr.
Christiansen to speak to prescription drug managers and
their role. Mr. Christiansen explained that pharmacies
contracted with prescription benefit managers (PBM) and the
PBM's contracted with the group or individual insurer.
Every prescription at the "point of sale" was based upon
the insurance plans' parameters. He indicated that all the
pharmacists' conversations regarding prescriptions were
with the PBMs. Representative Guttenberg asked how much
control the PBMs had over the actions of the pharmacists.
He remarked that the PBMs were determining what the
pharmacists could do. MR. Christiansen agreed with the
statement. He related that except for self-paid
prescriptions, which were rare, every decision regarding
prescriptions was "dictated" by the PBM's. Everyday his
staff spent "numerous, numerous hours" on the phone and the
computer with PBM's trying to get people their medications.
He characterized the situation as "challenging."
10:09:05 AM
Representative Ortiz thanked Mr. Christiansen for all his
contributions to the field. He asked whether birth control
refill prescriptions typically required doctor's visits.
Mr. Christiansen responded that typically providers
authorized refills for 11 months after the initial one-
month prescription and shorter prescriptions were most
often easily refilled. He deduced that if HB 25 passed, the
pharmacists would likely have to inform the providers that
12-month prescriptions were allowable. Representative Ortiz
asked whether in Mr. Christiansen's experience, issues
around access to birth control were more problematic in
rural areas rather than urban areas, and if HB 25 was more
beneficial for rural residents. Mr. Christiansen answered
in the affirmative. He relayed that his pharmacy served
outlying rural areas and he could see how the legislation
would help residents in rural areas.
Co-Chair Foster asked Mr. Christiansen to expand on his
answer regarding the difficulties with prescription access
in rural villages. He spoke to the challenges in small
villages regarding healthcare delivery and access to
prescriptions. He wondered whether there was a higher
number of pregnancies in rural villages due to a lack of
services and if he knew of any attempts to address the
challenges. Mr. Christiansen responded that he did not have
information or insight specific to the representative's
district but offered to ask pharmacists from his area to
address the questions. He related that in the rural areas
he served around Ketchikan the difficulty was in rural
residents receiving medications in general and that birth
control was typically prescribed for longer periods of
time. He understood that other parts of Alaska might face
some unique challenges that he was unable to address.
10:14:37 AM
ROBIN SMITH, SELF, ANCHORAGE (via teleconference), spoke in
favor of HB 25. She spoke of the higher out-of-pocket
medical costs that women encountered versus men due to
contraceptive coverage. She relayed that birth control
coverage was expanded and co-payments were eliminated
through the ACA. She was concerned about potential changes
in the Affordable Care Act which currently covered
contraception due to the current administration and
Congress in Washington. She advocated providing a variety
of birth control including vasectomy. She thought that the
ability to choose pregnancy empowered women and their
families and provided the best outcomes for the child. She
voiced that increased access to contraceptives was the
"key" to reducing the number of unwanted pregnancies in
Alaska. She spoke to the high number of spousal and child
abuse in the state. She argued that one avoided pregnancy
would help to pay for a significant amount of birth control
for many others. She relayed her personal experience
regarding the inconvenience of attaining her birth control
prescriptions. She responded to Representative Wilson's
questions regarding the impact of HB 25. She agreed that
one "key limitation" of state plans was their inability to
affect nationwide or self-insured scope of coverage. She
suggested that if enough states adopted changes the action
would potentially set off a ripple effect across the entire
insurance industry. She urged members to support HB 25.
10:20:27 AM
SARA CLARK, SELF, ANCHORAGE (via teleconference), spoke in
support of HB 25. She thought it was important to support
women having control of their reproductive health. She
asked members to vote in favor of HB 25.
10:21:42 AM
Co-Chair Foster CLOSED Public Testimony.
Representative Wilson asked whether the Department of
Health and Social Services (DHSS) had found anything in
statute that prevented Medicaid from filling 12-month birth
control prescriptions.
10:22:05 AM
MARGARET BRODIE, DIRECTOR, DIVISION OF HEALTH CARE
SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES,
responded in the affirmative and noted that AS 47.47.065
outlined the regulation. She read the following language
from the statute:
? by regulations adopted by the commissioner in
conformity with applicable federal regulations.
Representative Wilson asked if there were any state
regulations that prevented a 12-month prescription from
being written through Medicaid. Ms. Brodie responded in the
negative. Representative Wilson referred to Page 5, lines
28 through 29:
(13) a group health insurance policy covering
employees of a participating governmental unit is
subject to the requirements of AS 21.42.427.
Representative Wilson inquired whether the University's and
the largest state union's plans were covered under the
provision. Ms. Brodie was unable to answer the question.
Representative Wilson reiterated the question and wondered
whether the following bill language from page 6, lines 6
through 8 also applied:
A self-insured group medical plan covering active
state employees provided under this section is subject
to the requirements of AS 21.42.427.
REPRESENTATIVE MATT CLAMAN, SPONSOR, responded that he was
unfamiliar with the various health plans for the University
and was unable to provide the answer. He offered that if
the plan was a union trust type of health insurance plan,
the federal Employee Retirement Income Security Act (ERISA)
exempted union trusts from state regulations and therefore
state law could not impact a union health trust
administered plan.
10:26:07 AM
Representative Wilson deduced that the general union plan
[General Government Unit (GGU)] was most likely exempt from
the legislation. She remarked that the state paid for the
plan, but did not manage it. She believed that the fiscal
note should be updated because according to Ms. Brodie's
testimony the state could administer 12 month contraceptive
prescriptions for Medicaid. She asked Ms. Brodie for the
reasons why the state had not done so, especially since the
fiscal note identified savings in the Medicaid program
under the bill. Representative Claman offered to provide
the additional information.
Co-Chair Seaton suggested that the legislature could only
act through statute. However, the legislature could advise
the administration through a resolution. He remarked that
the only way the legislature could override a regulation
was through statute.
Representative Wilson pointed out that there was no
statute. She confirmed with Ms. Brodie that DHSS had not
written a regulation either. She declared that under
current regulation or statute there was nothing that
prevented 12 month prescriptions under Medicaid and the
Alaska Care plans with or without the bill.
Representative Guttenberg asked that in the absence of
state statute, regulations, or a plan directive,
prescription parameters were left up to the PBM's to
contain insurer's costs. Ms. Brodie confirmed that the
reason the limit was in place for most plans and Medicaid
was cost containment. She commented that Medicaid
recipients revolved in and out of the program and the state
did not want to pay for ineligible prescriptions.
10:30:37 AM
Vice-Chair Gara wanted to ensure that the bill remained in
statute for as long as possible. He mentioned a prior
discussion that the bill would only remain effective if the
ACA remained intact. He asked whether the provisions would
remain in statute regardless of changes to the ACA.
Representative Claman cited page 3, lines 5 and 6,
Subsection (1) and noted that the bill referenced the ACA
as amended. He thought if the ACA was completely repealed,
Alaska statute could possibly be affected. He did not see
any likelihood of repeal of the ACA. He thought that the
language in the bill "was more than adequate" to ensure
that HB 25 would continue in the state. Vice-Chair Gara did
not want to "play Vegas odds with the bill." He wondered
whether the contraceptive provisions in the bill would
remain if Congress removed the ACA provisions regarding
contraceptive care. Representative Claman did not believe
that the bill was "dependent upon" the ACA and informed the
committee that the ACA references in the bill were specific
to religious exemptions. He believed that the bill would
continue to be applied even if the ACA was repealed. He
discerned that the ACA religious exemptions were so broad
that creating religious exemptions in state statute may
cause problems, especially if the exemption was narrower
than the ACA's. He felt that the endeavor to craft statutes
based on what possibly could happen with the ACA created
confusion.
10:34:57 AM
Vice-Chair Gara asked whether the 12-month requirement
would remain regardless of the ACA. Representative Claman
answered in the affirmative. He clarified that the 12 month
requirement only applied if the provider wrote a 12 month
prescription. Vice-Chair Gara understood the "hazards" if
the state developed its own religious exemption. He
reported that relying on the current religious exemption
under ACA would disappear in state stature if the ACA was
repealed. He wondered why the bill did not specify that the
provisions were relying on the current ACA religious
exemption in 2017. He suggested inserting language such as:
"under the ACA religious exemption as written as of January
1, 2017." Representative Claman would not object to the
amendment. Vice-Chair Gara asked whether the language would
be added on page 3, line 6 of the bill. Representative
Claman recommended that the language broadly applied to
Subsection (g) on page 2, lines 31 through page 3, line 10.
10:37:22 AM
Representative Wilson interpreted the bill language on page
2, line 3 that the bill did not prohibit a 15 month
prescription from being filled.
LIZZIE KUBITZ, STAFF, REPRESENTATIVE MATT CLAMAN, responded
that there was a federal law limiting the period of a
prescription to 12 months. Representative Wilson was not
concerned about the federal law and was only concerned
about the interpretation of the bill's provision. Ms.
Kubitz responded that she was correct. Representative
Wilson read page 1, lines 6 through 8 of the bill:
Sec. 21.42.427. Coverage for contraceptives. (a) A
health care insurer that offers, issues for delivery,
delivers, or renews in the state a health care
insurance plan in the group or individual market
shall?
Representative Wilson noted the use of the word "shall."
She asked whether the bill only applied as listed above to
entities that provided contraceptive coverage. Ms. Kubitz
responded affirmatively.
HB 25 was HEARD and HELD in committee for further
consideration.
CS FOR SENATE BILL NO. 88(RES)
"An Act authorizing a land exchange with the federal
government in which certain Alaska mental health trust
land is exchanged for certain national forest land and
relating to the costs of the exchange; and providing
for an effective date."
10:40:17 AM
AT EASE
10:40:56 AM
RECONVENED
SENATOR BERT STEDMAN, SPONSOR, He explained that the
concept had "been in the works for decades." He emphasized
that the bill was a land exchange for approximately 20
thousand acres of Forest Service land for roughly 18
thousand acres of Alaska Mental Health Trust Authority
(AMHTA) property. He reported that much of the AMHTA
parcels bordered many communities in Southeast Alaska. He
elucidated that many parcels were of high value for
standing timber, view sheds, and trails and recreation. The
conflict was how to mitigate the impact of the trust
harvesting large volumes of timber very near communities.
He noted that the land exchange process was underway and
the lands were selected. He spoke to the parcels of land in
northern Southeast Alaska. He described some of the parcels
and their locations. He mentioned a parcel of land in the
"backdrop" of Sitka near Mt. Verstovia that contained a
high volume of old growth timber but was in the direct view
shed of the community. The community's concern regarding
the view shed and recreational use lead to the parcel's
inclusion in the exchange. He highlighted that a parcel on
Mitkof Highway in Petersburg was targeted for the exchange.
The community expressed concern over impacts from
landslides.
REPRESENTATIVE DAN ORTIZ, COMPANION BILL SPONSOR, noted
that the bill had companion legislation in the House as
well as on the federal level. He understood that action had
to be taken at the state level before the federal bill
could be acted upon. He was proud to be moving the
legislation for the House and viewed the bill as a "triple"
win situation for the tourism industry, AMHTA, and the
timber industry. He mentioned a parcel near Ketchikan
located on "Deer Mountain" and explained that the land was
the primary view shed for the community and used for hiking
and other recreational opportunities. The parcel offered
benefits to the tourism industry. He indicated that the
timber industry supported the exchange due to gaining
access to federal land via the exchange. He strongly
supported the legislation.
10:50:20 AM
Senator Stedman relayed that the state had one sawmill
left, and had lost 2 pulp mills and other sawmills. The
remaining sawmill sitting on Prince of Wales Island
consumed 60 percent of the electricity on the electrical
grid. If the state lost the sawmill, the loss would have a
large negative rippling effect through the local economy.
He communicated that the large sawmill supplied the timber
or "saw logs" to the smaller sawmills. He noted the
difficulty in the "fiber supply" that created difficulty in
securing capital to modernize or upgrade sawmill facilities
if the future timber supply was unknown. He voiced that the
legislation was a "time sensitive issue." In addition, the
legislation ensured "viable timber access for the
industry." The state had been carrying the "brunt of the
burden" for lack of timber supply by the federal
government. The land exchange would afford a direction to
move very quickly on some timber sales and moved the timber
industry to more viable logging land on Prince of Wales
Island. He suggested that concentrating the timber industry
on the southern end of Southeast Alaska where the timber
quality was superior was beneficial because the
infrastructure already existed and was closer to the
sawmill. He conveyed that there was significant support for
the legislation from all of the involved entities due to
the long public process and engagement on the issue.
10:55:28 AM
Co-Chair Foster indicated that there would be a PowerPoint
presentation by the Alaska Mental Trust Authority.
Representative Pruitt appreciated the bill. He asked
whether passage of the bill helped the bill move through
Congress. Senator Stedman responded in the affirmative. He
pointed out that the bill mirrored the federal bill and
passage paved the way for the Alaskan delegation to garner
support for the bill.
Representative Pruitt asked if the land exchange areas were
located in areas away from the population and did not
interfere with the view shed or recreation and made it more
likely that the AMHTA could develop the land and further
help its beneficiaries. Senator Stedman answered in the
affirmative and noted that the exchanged land located in
the center of Prince of Wales was a highly active logging
area. He indicated that the AMHTA were acting as good
stewards of the land in participating in the exchange which
benefitted the communities but still offered the trust
marketable land to help its beneficiaries. Additionally the
exchange offered the Forest Service more recreational land.
11:00:05 AM
Vice-Chair Gara worried that with land exchanges statutory
easements to and along rivers were lost. He wanted to
ensure that any land transferred to the federal government
would be accessible through an easement. He wanted to
maintain the public's access to its own lands. Senator
Stedman expounded that Southeast Alaskans were sensitive
about access to fish streams for sport and commercial uses
and they were protected. Vice-Chair Gara wondered where he
could identify the easement protections in the bill.
Senator Stedman deferred the answer to the Department of
Natural Resources (DNR) presenter. He emphasized that the
state did not restrict waterway access. Vice-Chair Gara
wanted to confirm that his concerns were addressed.
11:03:23 AM
WYN MENEFEE, CHIEF OF OPERATIONS, DIVISION OF MINING, LAND
AND WATER, DEPARTMENT OF NATURAL RESOURCES, introduced the
PowerPoint Presentation: "SB 88 - Alaska Mental Health
Trust Land Exchange with the USFS." He turned to slide 2:
"The Alaska Mental Health Trust":
• A perpetual trust using its resources to ensure a
comprehensive integrated mental health program in
Alaska.
• Funding programs that serve Alaska's most vulnerable
populations for the past two decades.
• Providing programs for mental illnesses, developmental
disabilities, Alzheimer's disease and related
dementias, traumatic brain injuries & substance abuse
disorders.
Mr. Menefee elaborated that the trust spent approximately
$20 million annually on programs, projects, activities,
initiatives, and advocacy and helped fund state agencies,
and non-profits through grants. The funds were not state
general funds (GF) in part from its land revenue.
11:05:21 AM
Mr. Menefee scrolled to slide 3: "The Trust Land Office":
Manages the Trust owned land and resources to generate
revenue, used by the Trust to improve the lives of the
beneficiaries.
Our Mission: to protect & enhance the value of Alaska
Mental Health Trust lands.
Mr. Menefee expanded that the trust land contained multiple
asset classes that included mining and subdivisions. He
advanced to slide 4: "Trust Management Principles":
1. Maximize long-term revenue & productivity from trust
land
2. Protect corpus
3. Encourage diverse revenue-producing uses of
trust land
4. Manage trust land prudently, efficiently & with
accountability to the trust and its beneficiaries
Mr. Menefee relayed that the trust expected to gain $40 to
$60 million in revenue over the next 20 years as a result
of the exchange. He furthered that the exchange would
improve the lives of its beneficiaries. He continued to the
map on slide 5: "Land Distribution." He reviewed that the
Alaska Territorial government had to select its survey
lands from areas located next to communities. He delineated
that currently, with the populous growing there were
concerns with how the state managed the land; preserving
scenic view sheds, water sheds, safety, etc. The trust made
decisions in the best interest of its beneficiaries but
paid attention to communities' concerns. The trust viewed
the exchange as a way to solve 2 things: addressing
community concerns and increasing trust revenue.
11:08:51 AM
Mr. Menefee provided details on slide 6: "Land Exchange
Details":
18,258 acres of Trust lands adjacent to the
communities of Ketchikan, Wrangell, Petersburg, Sitka
& Juneau would be transferred to the USFS
20,580 acres of remote land on Prince of Wales Island
& Shelter Cove would be transferred to the Trust for
development and timber harvest
Equal value exchange
Phase I complete in 1 year and Phase II in 2 years
Mr. Menefee reported that the acreages were not finalized.
The land exchanged was of equal value and surveys and
appraisals were required. Ultimately, the acreages will
adjust according to the equal value of appraisals. He
notified the committee that not all of the AMHTA land next
to communities was included in the exchange and was
retained for future development of subdivisions and other
types of use. He spoke of the different phases of the
exchange. The first phase included exchanges in Naukati and
Ketchikan with the remainder in phase two. The first phase
accelerated timber production and sales. He discussed the
maps on slide 7 titled: "Trust Land to be Exchanged in
Southeast Alaska" and "National Forest Service Land to be
Exchanged." He pointed to the areas on the map on the left
that depicted trust lands in red traded for forest service
land on the map on the right portrayed in green. He noted
that a packet of maps (copy on file) were included in the
member's bill packets.
11:11:34 AM
Mr. Menefee continued to slide 8: "Land Exchange Benefits":
Consolidates Trust land ownership
Replaces lands adjacent to communities with lands that
are more conducive to revenue production such as from
timber harvest
Protects timber and tourism industries
Protects jobs and economies in SE Alaska
Protects viewsheds, watersheds, and certain old growth
timber stands
Mr. Menefee conveyed that the trust was statutorily
obligated to profit off of the land. In the face of
community opposition to developing some of the adjacent
lands the equal value exchange offered the trust similarly
valuable land while protecting the communities' interests.
He emphasized that the timber industry was a "multi-layer
industry" and a vibrant timber industry had a positive
multiplier effect throughout the region that also benefited
the trust.
11:14:19 AM
Mr. Menefee advanced to slide 9: "Why Now":
Result of 10 years of planning and public input
Extensive negotiations with USFS
Addressing concerns from conservation groups and other
interests
Timber industry, a key revenue generator for the
Trust, is at risk because of low timber supply
USFS timber supplies have dwindled
Mr. Menefee reported that the discussions began 10 years
ago with "Tongass Round Table" meetings with 35 entities
participating comprised of communities, conservation
groups, United States Forest Service (USFS), etc. The round
table group defined the parameters of the exchange and the
exchange participants remained "true" to the constraints
when developing the exchange. The trust engaged in
extensive conversations with the USFS during the process.
He indicated that one of the latest replacements took place
near Sitka with the recent exchange of Katlian Bay for No
Name Bay. He remarked that the precise package in SB 88 was
contained in the federal bill. He discussed that the timber
industry was the key revenue generator for the trust. The
USFS evolved its policies on allowable harvest levels and
mandated a transition to sustainable young growth harvest;
both policies had an adverse effect on getting timber to
market. He detailed that the USFS did not anticipate
getting timber to market for five years and were the
largest timber supplier in Southeast Alaska. Other entities
were currently counted on for the timber supply; i.e., the
state's Division of Forestry, AMHTA, and the University of
Alaska. He offered that a reliable timber supply depended
upon the trust's land exchange. A disruption in the timber
supply would severely impact the industry's ability to
restart production when supply increased.
11:16:57 AM
Mr. Menefee pointed to the example on slide 10: "USFS
Forest Plan." He highlighted that the slide contained the
"Tongass National Forest Land Use Map" and the small areas
shaded in green was the only portion available for timber
supply. The remaining brown and tan areas were not
designated for development. The USFS "definitely reduced"
the available land for timber and increased recreational
uses. He mentioned the importance of the trust land acting
as a "bridge" for timber supply during the transition time
to sustainable young growth production. He restated the
devastating effects of a timber industry shutdown due to
lack of supply. He communicated the urgent need for the
legislation to get passed in the current year. He reviewed
slide 11: "Federal Legislation":
• S. 131 introduced by Senator Murkowski and Sullivan in
January 2017
• HR. 513 introduced by Representative Young in January
2017
• Language compatible with SB 88
• Directs the USFS to complete the exchange
11:19:25 AM
Mr. Menefee noted that the Alaskan delegation believed the
federal bill would pass in the early summer of 2017. He
moved to the list of the many supporters of the exchange on
slides 12 and slide 13 titled: "Thank You to Our
Supporters." He emphasized that the exchange generated
positive revenue for the trust at no cost to the state. He
reiterated all of the benefits of the exchange for all
parties. He referenced Vice-Chair Gara's question
concerning easement protection and provided clarification.
He elaborated that a "disposal" of trust land did not
include a "to and along easement." The trust had to protect
the financial interest of its lands. He cited a court
ruling, "Lassen versus Arizona" [United States Supreme
Court, January 1967] that required states to pay for
statutory easements on trust lands. Therefore, the state
abided by the ruling and easements were not included by the
trust unless the easement was already in existence. He
communicated that the trust land that the state owned
allowed for public use. In addition, stipulations
maintained public road use on the lands. Certain areas were
excluded due to conservation concerns and conservation
easements were included in places like the limestone and
karst areas on Prince of Wales Island to protect the
underground fish streams. The trust was "cognizant of
protecting habitat."
Vice-Chair Gara related that the state was statutorily
mandated to maintain to and along easements when it
disposed of land. He asked where the trust exemption was
included in statute. Mr. Menefee stated that the exemption
was not included in statue. He elucidated that due to the
legalities of including easements without financial
compensation the Department of Law (DOL) advised the trust
that the to and along easements were not applicable unless
the state were to pay for the easements. Vice-Chair Gara
did not understand the compensation aspect since the trust
land was awarded by the state.
11:23:37 AM
Mr. Menefee recounted that the original trust lands were
awarded to the trust by the federal government.
Mismanagement of the lands occurred, which resulted in a
lawsuit that was settled in 1994. He reported that the
settlement specified that the land was to be used for the
beneficiaries' financial benefit. Another condition of the
settlement required that the state replaced the original
land awarded the trust. He pointed to "the enabling act,
the settlement, and HB 201 in 1994" [HB 201 Mental Health
Trust Amendments - Chapter 5 FSSLA 94 - 06/23/1994] that
directed the matter of easements. Vice-Chair Gara was
"disappointed" and stated that the statute mandated the
state maintain to and along easements when it was in the
public's interest. He felt that it was inconceivable that
periodic access to fishing streams was not in the public's
interest. He asked whether the trust maintained the to and
along easements in the land transferred to the USFS. Mr.
Menefee answered in the negative. He elaborated that only
"existing encumbrances at the date of the enactment of the
bill" were included.
Representative Grenn thanked the bill sponsors and
characterized the legislation as "inspiring." He referred
to slide 6 and remembered that the amount of acreage listed
would change based on valuations. He asked what type of
land was sought after by the trust. Mr. Menefee responded
that the lands listed on the slides were the only lands
that were included in the exchange. He delineated that the
adjustments were required within the demarcated land to
ensure the exchange was of equal value. He exemplified that
if there was more value to USFS land than trust land the
exchange "shaved off" some federal land to make the
exchange equal and visa versa. An equalization process was
delineated in both state and federal bills.
Co-Chair Foster acknowledged the presence of Senator Mia
Costello.
Representative Pruitt asked what type of tree growth was
included in the trust's land from the USFS. Mr. Menefee
responded that the land included a 50 percent to 50 percent
mix of young and old growth trees and the young growth were
in different stages of age from 25 to 50 years. He added
that some of the young growth stands were already pre-
thinned and some logging roads remained intact. The initial
harvest would be comprised of old growth and over time the
timber would transition to sustainable new growth.
Representative Pruitt deduced that the exchange created
more of a sustainable harvest opportunity in the long-term.
Mr. Menefee agreed with the statement.
11:29:42 AM
Co-Chair Seaton mentioned that a few years prior there was
legislation that lengthened the time of valuation surveys.
He wondered whether the bill passed and inquired about the
time frame of the valuations. Mr. Menefee noted that Co-
Chair Seaton was thinking of the land exchange bill that
lengthened the time of the appraisals, which previously
expired in one year. He explained that "dynamic
administrative problems" had occurred with administrative
exchanges under AS 38.50 and the one year time period. He
clarified that SB 88 was not subject to AS 38.50,
therefore, time restraints did not apply to the land
exchange.
Co-Chair Foster OPENED Public Testimony.
11:31:53 AM
LARRY EDWARDS, SELF, SITKA (via teleconference), spoke in
favor of amending SB 88. He submitted a proposed amendment
to the committee and recommended its inclusion in the bill.
He explained that the amendment proposed a federal buyout
versus a land exchange and provided a different kind of
beneficial resolution for all parties. He claimed that the
Alaska Forest Resources and Practices Act allowed clear cut
logging of unlimited size. He referenced the organization
called "Greater Southeast Alaska Conservation Community
(GSACC)" which had provided testimony (copy on file) that
included photographs of recent clear-cut logging of 4000
acres of trust land in the center of Revllagigedo Island.
He reported that the land exchange included an additional
nine square mile parcel adjacent to the clear cut land. In
addition, the parcels on Prince of Wales Island designated
for the trust amounted to 19 square miles in three large
blocks. He voiced that none of the previous committees that
heard SB 88 considered the impacts of logging on such a
large scale in those locations. He believed that the
legislature was "obligated" to analyze the impacts of
logging the areas. He believed that a buyout was a "far
better solution." He contended that much of the community
testimony for HB 55 was not included in SB 88 and noted
that some of residents of Prince of Wales Island were
distressed over the proposed exchange. He thanked the
committee and urged members to reconsider the bill in its
present form.
11:35:34 AM
REBECCA KNIGHT, SELF, PETERSBURG (via teleconference),
spoke in opposition of SB 88. She shared that she was a
member of a long-time fishing family. She completely
understood the needs of AMHTA beneficiaries having a
relative who was a beneficiary. She believed that the bill
was "a timber industry bill using the beneficiaries as a
prop to get timber legislation passed." She opposed the
legislation for a variety of reasons and believed the
exchange was a "travesty." She asserted that a federal
buyout of AMHTA land was a "far better alternative." She
recommended that the committee change the bill to a federal
buyout with the lands deeded to the Tongass National Forest
and the proceeds going to the trust. She noted that the
Petersburg Assembly supported the buyout option and stated
that AMHTA supported a buyout option as well. She
maintained that much of the bill's support was based on a
threat by the AMHTA to immediately log its lands if the
federal legislation was not adopted by January 15, 2017.
She believed a buyout option would help beneficiaries,
avoid impacts to Ketchikan and Petersburg landowners, and
avoid landscape impacts. She voiced that the Alaska Forest
Resources and Practices Act was antiquated and would
continue to allow clear-cutting of up to several thousand
acres on multiple parcels of exchange land. She wondered
why experienced Department of Fish and Game (DFG)
biologists were not consulted on the exchange. She listed
the benefits of a buyout versus a land exchange. She opined
that "the lands could be purchased for a few tens of
millions of dollars at a fair market value?."
Co-Chair Seaton remarked that the opposition letter that
Mr. Edwards referred to as well as Ms. Knights were
included in the member's bill packets.
11:40:20 AM
CHARLES WOOD, MITKOF HIGHWAY HOMEOWNERS ASSOCIATION,
PETERSBURG (via teleconference), spoke in support of SB 88.
He related that the association was a group of 95
homeowners that resided below the slide prone slopes of
Mitkof Highway. He reported that there had been 9
landslides on the slopes and 5 had occurred since December
2005. He believed that logging the slopes of the slide area
would further accelerate the landslide potential. The group
of residents had been living with stress because of
potential landslides and their efforts in opposition to the
trust's logging plans cost the association over $135,000.
He asked for the committee's support of SB 88 to avert
trust logging on landslide prone slopes above residential
areas.
11:41:57 AM
DENNIS WATSON, MAYOR, CITY OF CRAIG, CRAIG (via
teleconference), spoke in favor of SB 88. He relayed that
he participated in commercial salmon fisheries for 43
years. He believed that the bill would help to pave the way
for a stable revenue stream for the beneficiaries of the
Alaska Mental Health Trust. He noted the benefits of a
stable timer supply for the timber industry, the region,
and for Craig. He thanked the committee.
11:44:21 AM
OWEN GRAHAM, ALASKA FOREST ASSOCIATION, KETCHIKAN (via
teleconference), spoke in favor of SB 88. He read from a
prepared statement:
The Alaska Forest Association supports the land
exchange between the Alaska Mental Health Trust and
the US Forest Service. It is vital to our timber
industry that the State enact SB 88 this legislative
session.
The Alaska Forest Association (AFA) is a non-profit
business association that was formed in 957 to
represent the interests of the timber industry in
Alaska. The AFA currently manages a pension program, a
group health insurance program, a scholarship program
for the timber industry and sponsors the Sustainable
Forestry Initiative program for Alaska.
The Forest Service manages more than 90% of the
commercial timberland in Southeast Alaska and that
federal agency has failed to provide sufficient timber
to keep our manufacturing facilities operating. We
have lost two pulp mills, several large sawmill over
the last 20+ years, and we have only a single mid-size
sawmill remaining. Now that last sawmill is at risk of
closure because the Forest Service has mismanaged its
timber sale program again and has provided a timber
sale schedule that indicates there will be very little
federal timber available to our last sawmill until at
least 2020. The State Division of Forestry has
continued to supply timber for our industry, but the
State manages only 2% of the commercial timberland in
the region. The State alone cannot supply our last
surviving sawmill.
If the Alaska Mental Health Trust exchange is
completed this legislative session, our last midsize
sawmill should be able to utilize timber from that
exchange to keep the mill operating until 2020 when
the Forest Service projects it will again be able to
supply timber.
This value-for-value exchange has a lot of support
within the region because in addition to helping
preserve our remaining timber manufacturing jobs, the
exchange will enable the Alaska Mental Health Trust to
avoid harvesting land adjacent to Ketchikan and
Petersburg that the local communities want preserved.
11:46:38 AM
DAVID LANDIS, MAYOR, KETCHIKAN GATEWAY BOROUGH, KETCHIKAN
(via teleconference), spoke in support of SB 88. He noted
his familiarity with the local issues. He relayed that the
people of the community of Ketchikan had repeatedly
supported a land exchange. He listed the many benefits of
the land exchange. He offered that the land exchange
benefited the timber industry, the residents of the
Ketchikan Gateway Borough, and the AMHTA beneficiaries. He
noted the protection of Deer Mountain.
11:49:29 AM
MARY NANUWAK, SELF, BETHEL (via teleconference), spoke in
opposition of SB 88. She thought that the lands had been
ruined but the parties were proceeding with the land
exchange regardless. She opined that the trust and DNR
claimed that they "protected everything" when they do not
engage in protections. She believed that the state only
acted in the interest of the beneficiaries when they had
"something to gain." She disagreed with a notion that rural
people were not informed and warned that rural residents
were aware of many things happening in the state. She
requested that the state refrain from "undoing everything,"
which was a waste of money and time.
11:52:42 AM
Co-Chair Foster CLOSED Public Testimony.
Representative Pruitt suggested moving the bill. He thought
any amendments would "totally and dynamically change the
goal of the bill." He characterized a vote on moving the
bill as an "up or down" vote. He opined that the federal
purchase option took a win for the timber industry out of
the bill.
Co-Chair Foster asked whether members had any proposed
amendments.
11:54:09 AM
AT EASE
11:56:11 AM
RECONVENED
Vice-Chair Gara stated his "surprise" that the trust did
not maintain to and along easements on its land. He
questioned the legal authority and asked for an "objective"
follow-up answer from Mr. Menefee. Mr. Menefee confirmed
that his office and DOL would provide a follow up answer.
Vice-Chair Gara reviewed the zero fiscal note from the
Department of Natural Resources FN 1 (DNR).
Representative Pruitt MOVED to REPORT CSHB 88(FIN) out of
committee with individual recommendations and the
accompanying fiscal note.
There being NO OBJECTION, CSHB 88(FIN) was REPORTED out of
committee with a "do pass" recommendation and with one
previously published zero fiscal note: FN1 (DNR)
Co-Chair Foster reviewed the agenda for the afternoon
meeting.
ADJOURNMENT
11:59:44 AM
The meeting was adjourned at 11:59 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 88 - Opposition Document 4.18.2017.pdf |
HFIN 4/18/2017 9:45:00 AM |
SB 88 |