Legislature(2003 - 2004)

04/09/2003 01:24 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         April 9, 2003                                                                                          
                           1:24 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Hugh Fate, Chair                                                                                                 
Representative Beverly Masek, Vice Chair                                                                                        
Representative Carl Gatto                                                                                                       
Representative Cheryll Heinze                                                                                                   
Representative Bob Lynn                                                                                                         
Representative Carl Morgan                                                                                                      
Representative Kelly Wolf                                                                                                       
Representative David Guttenberg                                                                                                 
Representative Beth Kerttula                                                                                                    
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 98                                                                                                               
"An Act relating  to sport fishing seasons and  areas for persons                                                               
under 16 years of age."                                                                                                         
     - MOVED HB 98 OUT OF COMMITTEE                                                                                             
HOUSE BILL NO. 204                                                                                                              
"An  Act relating  to  the regulation  of  natural gas  pipelines                                                               
under the Pipeline Act."                                                                                                        
     - MOVED CSHB 204(O&G) OUT OF COMMITTEE                                                                                     
HOUSE BILL NO. 226                                                                                                              
"An Act  relating to  the sale,  offer for  sale, representation,                                                               
and labeling of  food or other agricultural  products as organic,                                                               
and  to the  state organic  certification program;  and providing                                                               
for an effective date."                                                                                                         
     - MOVED HB 226 OUT OF COMMITTEE                                                                                            
HOUSE BILL NO. 163                                                                                                              
"An Act relating to an  annual wildlife conservation pass and the                                                               
fee for that pass; relating  to nonresident and nonresident alien                                                               
big game tag fees; and providing for an effective date."                                                                        
     - HEARD AND HELD                                                                                                           
PREVIOUS ACTION                                                                                                               
BILL: HB 98                                                                                                                   
SHORT TITLE:SPORT FISHING SEASONS FOR YOUTH                                                                                     
SPONSOR(S): REPRESENTATIVE(S)SAMUELS                                                                                            
Jrn-Date   Jrn-Page                     Action                                                                                  
02/14/03     0214       (H)        READ THE FIRST TIME -                                                                        
02/14/03     0214       (H)        FSH, RES                                                                                     
03/28/03                (H)        FSH AT 8:30 AM CAPITOL 124                                                                   
03/28/03                (H)        Moved Out of Committee                                                                       
03/28/03                (H)        MINUTE(FSH)                                                                                  
03/28/03     0669       (H)        FSH RPT 6DP                                                                                  
03/28/03     0669       (H)        DP: OGG, HEINZE, WILSON,                                                                     
03/28/03     0669       (H)        GUTTENBERG, SEATON                                                                           
03/28/03     0670       (H)        FN1: ZERO(DFG)                                                                               
03/28/03     0670       (H)        FN2: ZERO(DPS)                                                                               
04/09/03     0901       (H)        COSPONSOR(S): WOLF                                                                           
04/09/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
BILL: HB 204                                                                                                                  
SHORT TITLE:REGULATION OF NATURAL GAS PIPELINES                                                                                 
SPONSOR(S): REPRESENTATIVE(S)CHENAULT                                                                                           
Jrn-Date   Jrn-Page                     Action                                                                                  
03/19/03     0586       (H)        READ THE FIRST TIME -                                                                        
03/19/03     0586       (H)        O&G, RES                                                                                     
03/27/03                (H)        O&G AT 3:15 PM CAPITOL 124                                                                   
03/27/03                (H)        Moved CSHB 204(O&G) Out of                                                                   
03/31/03     0711       (H)        O&G RPT CS(O&G) NT 2DP 4NR                                                                   
03/31/03     0711       (H)        DP: ROKEBERG, KOHRING; NR:                                                                   
                                   HOLM, FATE,                                                                                  
03/31/03     0711       (H)        MCGUIRE, CRAWFORD                                                                            
03/31/03     0712       (H)        FN1: INDETERMINATE(DNR)                                                                      
04/09/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
BILL: HB 226                                                                                                                  
SHORT TITLE:ORGANIC FOOD                                                                                                        
SPONSOR(S): REPRESENTATIVE(S)STOLTZE                                                                                            
Jrn-Date   Jrn-Page                     Action                                                                                  
03/28/03     0677       (H)        READ THE FIRST TIME -                                                                        
03/28/03     0677       (H)        RES, FIN                                                                                     
04/09/03     0901       (H)        COSPONSOR(S): CHENAULT                                                                       
04/09/03     0901       (H)        COSPONSOR REMOVED: WILSON                                                                    
04/09/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
BILL: HB 163                                                                                                                  
SHORT TITLE:NONRES.GAME TAG FEES/WILDLIFE TOUR PASS                                                                             
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR                                                                                      
Jrn-Date   Jrn-Page                     Action                                                                                  
03/05/03     0433       (H)        READ THE FIRST TIME -                                                                        
03/05/03     0433       (H)        RES, FIN                                                                                     
03/05/03     0433       (H)        FN1: (DFG)                                                                                   
03/05/03     0433       (H)        FN2: (DFG)                                                                                   
03/05/03     0434       (H)        GOVERNOR'S TRANSMITTAL LETTER                                                                
03/05/03     0434       (H)        REFERRED TO RESOURCES                                                                        
03/14/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
03/14/03                (H)        Heard & Held                                                                                 
03/14/03                (H)        MINUTE(RES)                                                                                  
03/17/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
03/17/03                (H)        Heard & Held                                                                                 
04/04/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
04/04/03                (H)        Heard & Held                                                                                 
04/09/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
WITNESS REGISTER                                                                                                              
REPRESENTATIVE RALPH SAMUELS                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 98 as sponsor.                                                                                
GORDY WILLIAMS, Legislative Liaison                                                                                             
Office of the Commissioner                                                                                                      
Alaska Department of Fish and Game (ADF&G)                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 98.                                                                             
A. BEN SCHOFFMANN, Project Manager                                                                                              
Alaska Business Unit                                                                                                            
Domestic Production                                                                                                             
Marathon Oil Company;                                                                                                           
Vice-President, Kenai Kachemak Pipeline, LLC                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Offered presentation in support  of HB 204;                                                               
answered questions.                                                                                                             
MARK MYERS, Director                                                                                                            
Division of Oil & Gas                                                                                                           
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified on HB 204.                                                                                       
JIM STRANDBERG, Commissioner                                                                                                    
Regulatory Commission of Alaska                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:     During  hearing  on   HB  204,  answered                                                               
questions with regard  to RCA's role in  consumer protection, the                                                               
existing Pipeline Act, and other issues.                                                                                        
REPRESENTATIVE BILL STOLTZE                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified as sponsor of HB 226.                                                                            
BARBARA BITNEY, Staff                                                                                                           
to Representative Bill Stoltze                                                                                                  
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    Presented information  in  the  committee                                                               
packet for HB 226; answered questions.                                                                                          
LARRY DeVILBISS, Proprietor/Manager                                                                                             
Wolverine Farm                                                                                                                  
Palmer, Alaska                                                                                                                  
POSITION  STATEMENT:     During  hearing  on   HB  226,  provided                                                               
background  and explained  reasons  such  legislation is  needed;                                                               
asked that beef not be excluded from the bill if possible.                                                                      
RIVER BEAN, President                                                                                                           
Alaska Organic Association                                                                                                      
Palmer, Alaska                                                                                                                  
POSITION  STATEMENT:     Urged   passage  of  HB   226;  answered                                                               
DEAN BROWN, Acting Director                                                                                                     
Division of Agriculture                                                                                                         
Department of Natural Resources                                                                                                 
Palmer, Alaska                                                                                                                  
POSITION  STATEMENT:    Answered  a question  during  hearing  on                                                               
HB 226.                                                                                                                         
JIM POUND, Staff                                                                                                                
to Representative Hugh Fate                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   As the  committee aide,  answered questions                                                               
on  proposed Amendment 1  to  HB 163,  Version  D, and  suggested                                                               
alternative language.                                                                                                           
ACTION NARRATIVE                                                                                                              
TAPE 03-27, SIDE A                                                                                                            
Number 0001                                                                                                                     
CHAIR  HUGH FATE  called the  House Resources  Standing Committee                                                             
meeting  to order  at  1:24 p.m.    Representatives Fate,  Gatto,                                                               
Morgan,   and  Wolf   were  present   at  the   call  to   order.                                                               
Representatives  Masek, Lynn,  Guttenberg,  Kerttula, and  Heinze                                                               
arrived as the meeting was in progress.                                                                                         
HB 98-SPORT FISHING SEASONS FOR YOUTH                                                                                         
CHAIR FATE  announced that the  first order of business  would be                                                               
HOUSE BILL NO. 98, "An Act  relating to sport fishing seasons and                                                               
areas for persons under 16 years of age."                                                                                       
Number 0017                                                                                                                     
REPRESENTATIVE RALPH SAMUELS,  Alaska State Legislature, sponsor,                                                               
characterized HB  98 as a bill  that would give authority  to the                                                               
Board of Fisheries  (BOF) to open a fishery for  people less than                                                               
16  years of  age only.   This  is also  currently available  for                                                               
people 60 years of age and  older.  The bill doesn't mandate that                                                               
this must be done, but provides  an option that he surmised would                                                               
be used mostly in urban areas.                                                                                                  
REPRESENTATIVE  SAMUELS said  Campbell  Creek  flows through  his                                                               
neighborhood  and there  are a  number  of king  [salmon] in  the                                                               
creek,  about 500-600  over the  escapement [goal].   However,  a                                                               
fishery hasn't been opened there because  it would be open to too                                                               
many people.   This [bill]  would allow limitation of  the number                                                               
of fishermen  in a particular fishery  and would allow for  a lot                                                               
of family activities,  such as a father-and-son  fishing day, for                                                               
people  in urban  areas  who probably  don't get  as  much of  an                                                               
opportunity to go  fishing as people that live in  other areas of                                                               
the state.   Representative  Samuels said  another example  is in                                                               
Homer:   when fish  are in  the lagoon and  snagging is  legal, a                                                               
fishery could  be opened up for  [a variety] of hours  for people                                                               
to  take  their children  fishing.    He  added that  the  Alaska                                                               
Department of Fish and Game (ADF&G) and the BOF support HB 98.                                                                  
Number 0277                                                                                                                     
REPRESENTATIVE GATTO  asked if there  was any  separation between                                                               
residents and nonresidents.                                                                                                     
REPRESENTATIVE SAMUELS replied no.   He said the reason 16 became                                                               
the cutoff  age is because persons  under 16 are not  required to                                                               
have a  fishing license.   He offered his understanding  that the                                                               
same  [principle applies]  to persons  over  60 [in  the form  of                                                               
receiving] a card from the state, a lifetime license to fish.                                                                   
Number 0407                                                                                                                     
REPRESENTATIVE WOLF asked whether  the bill was discriminatory in                                                               
any way.  He said he thought the  bill was a good idea but didn't                                                               
want  to  see a  bill  pass  through  [committee] that  might  be                                                               
REPRESENTATIVE  SAMUELS reiterated  that [the  practice] is  done                                                               
for people  over the  age of 60.   He said  the [purpose]  of the                                                               
bill is  to get kids  to go fishing rather  than go to  the mall,                                                               
for  example.   He  offered  his  belief  that  the bill  is  not                                                               
discriminatory,  and   said  he'd  looked   long  and   hard  for                                                               
opposition to it.                                                                                                               
Number 0544                                                                                                                     
REPRESENTATIVE WOLF asked  if the bill would  designate a fishery                                                               
in areas that would be specifically for children.                                                                               
REPRESENTATIVE  SAMUELS replied  yes.   He  offered  Homer as  an                                                               
example of  an area,  citing limitations  that allow  snagging of                                                               
fish  during those  times  of the  year.   He  said a  three-hour                                                               
opening could be held for kids  under 16 years of age that allows                                                               
them to  fish without [competing]  with adults around  the stream                                                               
bank for a given time period.                                                                                                   
REPRESENTATIVE      SAMUELS,   in    response   to   remarks   by                                                               
Representative  Wolf,  said  the   board  may  adopt  regulations                                                               
establishing restrictive seasons and  areas necessary for persons                                                               
60 years  of age  or older for  participating in  sport, personal                                                               
use, or subsistence  fishing.  He said subparagraph  (B) would be                                                               
added to include persons under the age of 16.                                                                                   
Number 0713                                                                                                                     
REPRESENTATIVE MASEK asked how HB  98 would impact the Matanuska-                                                               
Susitna  area, specifically,  the  Big and  Little Susitna  River                                                               
REPRESENTATIVE SAMUELS  replied that  HB 98 doesn't  mandate that                                                               
any particular fishery  be opened or closed.  It  would allow the                                                               
BOF to follow  its normally procedures through  ADF&G through the                                                               
advisory boards to open a  particular fishery and provide the BOF                                                               
with the  option to do  that.  Representative  Samuels speculated                                                               
that HB  98 would  be used  more frequently  in urban  areas, but                                                               
said it doesn't  stop persons from other  communities that wanted                                                               
to have this for a given  reason; one could go through the normal                                                               
process  that the  BOF goes  through.   He noted  that he'd  been                                                               
looking  at permits  from the  last  hunting season  and had  run                                                               
across a couple of hunts for kids only; this would be similar.                                                                  
REPRESENTATIVE MASEK  observed that  the fiscal note  reflected a                                                               
zero  impact and  asked  if  [HB 98]  would  result  in a  larger                                                               
workload for BOF and ADF&G to implement.                                                                                        
REPRESENTATIVE SAMUELS said both BOF  and ADF&G support HB 98 and                                                               
had provided the  fiscal notes.  He said he  assumed it would not                                                               
[result in a larger workload].                                                                                                  
Number 0846                                                                                                                     
REPRESENTATIVE  GATTO  asked  if  the  bill  would  simply  allow                                                               
persons 16 years of age and  under to fish, and whether [the law]                                                               
currently allowed fishing during special seasons.                                                                               
REPRESENTATIVE SAMUELS  explained that persons under  16 years of                                                               
age  don't need  a  license  to fish;  that  subparagraph (A)  is                                                               
currently law;  and that subparagraph  (B) is being added  and is                                                               
the  only  change  being  made.   Currently,  the  BOF  can  have                                                               
[fisheries specifically]  for persons  60 years  of age  or over,                                                               
and   this  would   provide  the   option   to  have   [fisheries                                                               
specifically for] persons 16 years of age and under.                                                                            
Number 0922                                                                                                                     
CHAIR FATE  asked where  this law  would apply.   He  offered his                                                               
understanding  that most  areas don't  require a  fishing license                                                               
and season  [for persons  16 years  of age  and under],  with the                                                               
probable exception of some urban areas.                                                                                         
REPRESENTATIVE  SAMUELS answered  that the  bill would  allow the                                                               
[BOF] to [designate fisheries] anywhere  [in the state].  He said                                                               
he  didn't  imagine the  number  of  fishermen would  be  limited                                                               
unless there were a specific reason to do that.                                                                                 
Number 0994                                                                                                                     
GORDY WILLIAMS, Legislative Liaison,  Office of the Commissioner,                                                               
Alaska Department  of Fish and  Game, testified that the  bill is                                                               
permissive.   It just  adds powers  that the BOF  could use  in a                                                               
public process to  consider proposals brought before  them if the                                                               
department  or public  requested a  certain method  and means  to                                                               
enhance  the quality  of a  sport  fishery for  kids wherein  the                                                               
pressure wouldn't be  such that they were  [subjected to] "combat                                                               
fishing," or  to bring kids  into an area  for fishing in  a more                                                               
controlled atmosphere and  have special kids' fishing  days.  The                                                               
bill  doesn't do  anything  other  than give  that  power to  the                                                               
board, he explained.                                                                                                            
Number 1092                                                                                                                     
MR. WILLIAMS, in  response to a comment  by Representative Gatto,                                                               
said the BOF is pretty sensitive  to how it manages fisheries and                                                               
accommodates  different  interests.   This  would  be a  proposal                                                               
brought before and  established by the board, and  there would be                                                               
plenty of public testimony on all sides prior to its happening.                                                                 
Number 1141                                                                                                                     
REPRESENTATIVE  GUTTENBERG asked  if there  had been  any similar                                                               
proposals or processes for people over  the age of 60 and, if so,                                                               
whether any had been denied.                                                                                                    
MR. WILLIAMS indicated  he was unsure whether  that had occurred.                                                               
He said  the board has  been approached  to do the  youth seasons                                                               
and has  routinely had  to tell people  that it  cannot entertain                                                               
those proposals because it doesn't  have the authority.  He noted                                                               
that the BOF  had submitted a letter of support  for the bill and                                                               
said  he thought  it  is a  tool  the board  would  like to  have                                                               
available  to  it  and  the   public.    He  told  Representative                                                               
Guttenberg  he could  get back  to  him with  the information  on                                                               
senior citizens.                                                                                                                
Number 1207                                                                                                                     
REPRESENTATIVE WOLF  asked why  page 2,  line 10,  paragraph (7),                                                               
was  included if  the  intention  is to  allow  ADF&G  to set  up                                                               
fisheries for kids.                                                                                                             
MR. WILLIAMS  said the statute relates  to the powers of  the BOF                                                               
and what it  may consider, and is current law;  the only addition                                                               
is the underlying language on page 1, subparagraph (B).                                                                         
CHAIR FATE asked whether anyone else  wished to testify.  He then                                                               
closed public testimony.                                                                                                        
Number 1298                                                                                                                     
REPRESENTATIVE MASEK moved to report  HB 98 out of committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes;                                                               
she  asked for  unanimous  consent.   There  being no  objection,                                                               
HB 98 was reported from the House Resources Standing Committee.                                                                 
HB 204-REGULATION OF NATURAL GAS PIPELINES                                                                                    
Number 1350                                                                                                                     
CHAIR FATE  announced that  the next order  of business  would be                                                               
HOUSE  BILL  NO. 204,  "An  Act  relating  to the  regulation  of                                                               
natural gas  pipelines under  the Pipeline Act."   [The  bill was                                                               
sponsored by Representative Chenault.]                                                                                          
REPRESENTATIVE MASEK moved  to adopt CSHB 204(O&G).   There being                                                               
no objection, it was so ordered.                                                                                                
The committee took an at-ease from 1:40 p.m. to 1:41 p.m.                                                                       
Number 1442                                                                                                                     
A.  BEN  SCHOFFMANN,  Project   Manager,  Alaska  Business  Unit,                                                               
Domestic Production, Marathon  Oil Company; Vice-President, Kenai                                                               
Kachemak Pipeline,  LLC (KKPL), gave a  presentation and provided                                                               
a 12-page handout.   Referring to page 2 of  the handout, he said                                                               
HB 204  would permit all  natural gas pipelines within  the state                                                               
to file a  tariff with the Regulatory Commission  of Alaska (RCA)                                                               
that  offers  both  firm  and  interruptible  service  under  the                                                               
Pipeline Act.   He related his view that this  is very similar to                                                               
what was done  through the legislature in 2000,  allowing a North                                                               
Slope  pipeline to  do that,  and is  also consistent  with sound                                                               
policy  in the  Lower  48, where  the  Federal Energy  Regulatory                                                               
Commission  (FERC) regulates  pipelines  under  the same  premise                                                               
with both firm and interruptible transportation.                                                                                
MR. SCHOFFMANN  explained that firm  service in  a transportation                                                               
pipeline  occurs  when a  shipper  commits  to paying  a  monthly                                                               
reservation  charge  and therefore  is  assured  a set  level  of                                                               
capacity;  that payment  is due  whether  or not  the service  is                                                               
actually  used.   The  pipeline,  in  turn, guarantees  that  the                                                               
capacity  is  available  as  and   when  needed.    By  contrast,                                                               
interruptible  service  is  a  pay-as-you-go  concept  that  only                                                               
requires payment from shippers if  they actually use the service.                                                               
The pipeline makes  its best efforts to provide  capacity, but in                                                               
the  event that  there is  a  restriction for  any reason,  those                                                               
shipments are  subject to curtailment  or interruption.   This is                                                               
important  for  pipeline investors  to  be  able to  ensure  that                                                               
they're going to  have a level of business prior  to making their                                                               
Number 1654                                                                                                                     
MR. SCHOFFMANN  said that without  the ability to offer  firm and                                                               
interruptible  service, a  pipeline  would have  to estimate  how                                                               
many customers it might have and  wouldn't be assured of a stable                                                               
revenue stream.  He suggested  pipeline investors like it because                                                               
they  can ensure  that  they  will get  business  in advance  and                                                               
ensure that  the pipeline they're  building is at least  going to                                                               
be of  the [appropriate] size for  the set level of  business; it                                                               
gives  some stability  and reduces  risk.   Shippers also  should                                                               
like  firm and  interruptible service,  he suggested,  because it                                                               
allows them  to align their  shipping services with  their boats,                                                               
gas supplies, and gas-sales contracts.                                                                                          
MR. SCHOFFMANN  explained that gas-sales contracts  are typically                                                               
made  between producers  and end  users  or customers;  pipelines                                                               
then come  into the middle  of that  relationship.  He  said it's                                                               
important to gas  suppliers who sign contracts  with customers on                                                               
pretty much the same basis -  firm sales or interruptible sales -                                                               
to be  able to  have flexibility  to make  sure the  pipeline can                                                               
transport the volumes  that they've sold either  under firm terms                                                               
or interruptible terms.                                                                                                         
Number 1714                                                                                                                     
MR. SCHOFFMANN suggested a producer  who has pretty firm supplies                                                               
may also  wish to  have firm  transportation.   Contrarily, there                                                               
are producers  who have signed contracts  that are interruptible.                                                               
It  would  make little  sense  for  producers with  interruptible                                                               
sales  contracts  to  sign up  for  firm  transportation;  they'd                                                               
rather pay as they  go.  Similarly, he said, if  they have yet to                                                               
fully  explore or  delineate their  gas reserves,  it would  be a                                                               
little difficult to  imagine why producers might want  to sign up                                                               
too much  firm capacity when they  still have a lot  of unknowns.                                                               
So  this helps  the  producers to  align transportation  services                                                               
with both their set gas-sales contracts and their gas supplies.                                                                 
MR.  SCHOFFMANN  said the  fiscal  note  from the  Department  of                                                               
Natural Resources (DNR), Division of  Oil & Gas, indicates a zero                                                               
impact.  However, a statement  on [RCA's] fiscal note expresses a                                                               
concern about  affiliate ownership as  it may relate to  the open                                                               
access provisions.   He  offered his  belief that  those comments                                                               
pretty  much had  to do  with a  general statement  that contract                                                               
carriage or firm and interruptible  transportation is generally a                                                               
good thing, but  said [RCA] might envision  some circumstances in                                                               
which  producer-affiliate  ownership could  be  a  problem.   Mr.                                                               
Schoffmann  relayed  his belief  that  this  concern was  largely                                                               
mitigated by the  comments in the RCA fiscal note.   In addition,                                                               
a producer-affiliate  ownership is the primary  model for Alaska,                                                               
he suggested,  primarily because the producer  affiliates are the                                                               
ones with  the greatest  incentive to make  the investments.   He                                                               
said currently those  concerns that may have  been raised haven't                                                               
Number 1855                                                                                                                     
MR.  SCHOFFMANN mentioned  conversations  he'd  had with  several                                                               
smaller   producers  such   as   Aurora  Gas   LLC,  Forest   Oil                                                               
Corporation,  and  Evergreen  [Resources].   He  talked  about  a                                                               
letter of support  from Aurora Gas LLC stating that  it very much                                                               
favored  the  expansion of  infrastructure  to  help them,  as  a                                                               
smaller producer, get  access to the markets with their  gas.  He                                                               
said he  was given  permission by Forest  Oil Corporation  to say                                                               
that  it had  looked at  the bill  and had  no problems  with it.                                                               
Mr. Schoffmann  reporting  that  his initial  conversations  with                                                               
Evergreen Resources seemed  favorable but that he had  yet to see                                                               
anything final from them.                                                                                                       
MR. SCHOFFMANN  offered his  belief that  this producer-affiliate                                                               
issue is  really not  one that  comes into  play with  this bill.                                                               
Furthermore,  he   said,  FERC  has  not   discriminated  against                                                               
producer-affiliate  ownership  elsewhere;  for that  matter,  the                                                               
revisions made to  the legislation in 2000 didn't  place any such                                                               
restrictions on North Slope gas pipeline.                                                                                       
Number 1921                                                                                                                     
CHAIR  FATE asked  how firm  transportation  service meshed  with                                                               
open seasons  and capacity, and how  interruptible transportation                                                               
service fits into this picture.                                                                                                 
MR. SCHOFFMANN relayed  his belief that RCA has  the authority to                                                               
ensure  that  there is  no  discrimination  with respect  to  the                                                               
pipeline capacity  and how  that is  allocated.   It is  a fairly                                                               
common  practice, he  suggested, to  hold  an open  season for  a                                                               
contract for  interruptible service.   He said KKPL did  that and                                                               
attempted to  at least apprise RCA  and let them have  some input                                                               
into that process.                                                                                                              
MR. SCHOFFMANN relayed his belief  that RCA could mandate that as                                                               
a part  of ensuring that all  interested parties had a  chance to                                                               
commit  to these  pipelines, and  that they  could do  that under                                                               
their  existing   authority  before  they  offered   to  grant  a                                                               
certificate  of convenience  and necessity  under AS  42.06.   He                                                               
said it  is always  in RCA's  purview to  review how  capacity is                                                               
being   allocated,   however,  to   make   sure   there  is   not                                                               
discrimination;  furthermore,  RCA  has   the  ability  to  force                                                               
expansion if  it finds that  capacity isn't being  fairly offered                                                               
to those who have need or who feel there is some discrimination.                                                                
Number 2152                                                                                                                     
MARK  MYERS,  Director, Division  of  Oil  & Gas,  Department  of                                                               
Natural  Resources, testified.   He  said  in the  case of  RCA's                                                               
authority, it allows them to  force mandatory expansion; however,                                                               
FERC does  not have that same  authority to force it,  so the RCA                                                               
has greater authority in this manner than does FERC.                                                                            
CHAIR  FATE, noting  that this  deals with  all pipelines,  asked                                                               
what would be  the case if this dealt with  a major pipeline that                                                               
would have authority.                                                                                                           
MR. MYERS said  in the case of the interstate  pipeline, there is                                                               
no  requirement for  mandatory expansion  of  the pipeline  under                                                               
current law.                                                                                                                    
Number 2193                                                                                                                     
REPRESENTATIVE KERTTULA  offered her understanding  that capacity                                                               
would have to be granted.                                                                                                       
MR.  MYERS said  it's more  of an  historical situation  in which                                                               
there's  a lot  of expansion  capacity available;  with a  lot of                                                               
competing  pipelines  in the  Lower  48,  there aren't  too  many                                                               
conditions  of having  only  a single  pipeline  or very  limited                                                               
infrastructure.    He  said  he thinks  the  FERC  standards  are                                                               
different,  and  noted  that  from  an  Alaskan  standpoint,  the                                                               
ability to  expand is liked.   The Natural Gas Act  doesn't allow                                                               
FERC to  order expansion, so it  is mandated in federal  law.  He                                                               
said he  was unsure of  the historical  reasons for it,  and that                                                               
the  concept  of  the  RCA's  having  the  authority  to  mandate                                                               
expansion  was  liked.    That's appropriate  when  there  are  a                                                               
limited  amount  of pipelines  and  a  limited capacity  on  this                                                               
pipeline, he suggested.                                                                                                         
Number 2249                                                                                                                     
REPRESENTATIVE  KERTTULA  said  she  thought that  was  what  was                                                               
confusing  her, because  she  kept [relating  it  to] the  Trans-                                                               
Alaska Pipeline  System (TAPS),  a common  carrier.   She offered                                                               
her  understanding  that  [under  this bill]  the  gas  pipelines                                                               
aren't common carriers,  but would enter into  contracts under an                                                               
open season for either firm  or interruptible service.  She asked                                                               
if the  way around that, if  [a company] were to  get locked out,                                                               
would be to go to RCA and [request] expansion.                                                                                  
MR. MYERS  said that  is exactly right:   under  common carriage,                                                               
the transported  oil or  gas is  prorated for  the amount  of gas                                                               
available, whereas  with contract carriage there  is a commitment                                                               
to take or pay  on that capacity.  So it's  a very different type                                                               
of system.                                                                                                                      
REPRESENTATIVE  KERTTULA said  she is  most concerned  about what                                                               
would  be  done  for  access for  the  smaller,  independent  gas                                                               
companies,  and  that she  wants  to  feel assured  access  isn't                                                               
somehow  being closed  off to  them.   She  mentioned the  debate                                                               
about what  was done  with TAPS and  the state's  not maintaining                                                               
any ownership.  She asked for clarification.                                                                                    
Number 2329                                                                                                                     
MR. MYERS  said the particular  case is the KKPL  pipeline, which                                                               
so far has received nomination for  only 63 percent of the line's                                                               
capacity.  Up front, it's not  a very difficult issue if there is                                                               
extra  capacity in  the line  and it's  built to  a larger  size;                                                               
Mr. Myers said it wasn't his intention  to [imply] there is a big                                                               
deal here with this particular pipeline.                                                                                        
MR.  MYERS  told members  the  fiscal  note reflects  that  [DNR]                                                               
doesn't foresee a problem and that  it is looking into the future                                                               
at  cases wherein  a  pipeline may  be built  to  a much  smaller                                                               
capacity  than  is available  in  the  gas  market.   Under  that                                                               
scenario,  whoever  nominated  gas  first in  that  initial  open                                                               
season  would have  that committed  capacity; someone  else would                                                               
have to  either get the pipeline  to expand, which could  be done                                                               
voluntarily, or go to RCA on  an interstate line and request that                                                               
RCA require expansion, and go through the hearing process.                                                                      
MR. MYERS  continued, saying the  other way  to obtain gas  is to                                                               
get interruptible gas;  if someone nominates and  takes that firm                                                               
capacity and  doesn't use it,  someone [else] still  can, through                                                               
the RCA,  get use of  that capacity until  that other user  has a                                                               
need  for  it;  so  there   is  interruptible  capacity  that  is                                                               
MR. MYERS said  RCA definitely has greater  authority on contract                                                               
carriage gas, and it's not nearly  as problematic in the state as                                                               
the case where there is  no mandatory expansion requirements.  It                                                               
does put  the burden  on additional  users, if  they get  in that                                                               
situation, to  go to RCA  and go  through the hearing  process to                                                               
get that  expanded capacity, which  could potentially  delay some                                                               
projects.   He  offered  his  belief that,  overall,  there is  a                                                               
mechanism for people  to get their gas in the  line over the long                                                               
term, through  the RCA, if  they trust in the  agency's authority                                                               
and discretion to use that authority.                                                                                           
Number 2463                                                                                                                     
JIM  STRANDBERG, Commissioner,  Regulatory Commission  of Alaska,                                                               
concurred with  Mr. Myers.   He stressed  that the  added ability                                                               
for contract carriage  is going to be a benefit.   He offered his                                                               
belief that  it is  going to help  in attracting  investment, and                                                               
that  if contract  carriage was  in fact  allowed in  a pipeline,                                                               
were  some person  or company  to come  along later  and want  to                                                               
convey  gas over  that pipeline,  [RCA]  would still  be able  to                                                               
evoke  common-carrier  statutory   jurisdiction,  and  to  really                                                               
facilitate that producer  in getting access to the  pipeline.  He                                                               
said the  two ways available  to do it  are either to  require an                                                               
increase in  the pipeline capacity or  to take a look  at the way                                                               
the firm capacity is being used.   He said if someone isn't using                                                               
that capacity,  it is believed  that room  could be made  for the                                                               
new producer.  Mr. Strandberg said both of these types of                                                                       
carriage very well could occur.                                                                                                 
Number 2554                                                                                                                     
REPRESENTATIVE KERTTULA pointed out that she hadn't received a                                                                  
the RCA's fiscal note.  She asked if it had been submitted.                                                                     
MR. STRANDBERG said yes, it was a zero fiscal note.  In further                                                                 
response, he read the fiscal note analysis, which stated                                                                        
[original punctuation provided]:                                                                                                
     While not  explicitly stated,  the services  allowed by                                                                    
     this bill are typically  regarded as contract carriage.                                                                    
     The 2000  Legislature allowed it for  transportation of                                                                    
     natural gas  from the North  Slope, partially  to bring                                                                    
     State  statutes   into  accord  with  FERC   rules  for                                                                    
     interstate gas transport.                                                                                                  
     This  language  expands  the statutory  recognition  of                                                                    
     contract carriage to  all parts of the  State.  Because                                                                    
     common carrier  language is retained  in AS  42.06, RCA                                                                    
     retains  the ability  to provide  any and  all shippers                                                                    
     access  to transport  service  on intrastate  pipelines                                                                    
     through its regulatory processes.                                                                                          
     There  are no  fiscal impacts  on RCA  from this  bill,                                                                    
     however it  is expected  that where producers  elect to                                                                    
     own  and operate  a pipeline,  which  is allowed  under                                                                    
     state  statute, contract  carriage  with service  under                                                                    
     these  statutory  terms  will  be proposed  to  RCA  in                                                                    
     pipeline tariff filings.                                                                                                   
     RCA  will  consider  this under  the  statutory  public                                                                    
     interest standard.  RCA's budget  is funded through the                                                                    
     Regulatory  Cost  Charge  (RCC)  mechanism  and  direct                                                                    
     charge mechanisms.  No general  funds are allocated for                                                                    
     support of the agency.                                                                                                     
     The  RCC  is  recalculated  each year  and  allows  the                                                                    
     agency  to  recover  its  operating  costs  through  an                                                                    
     assessment  on  the  revenues   of  the  utilities  and                                                                    
     pipeline carriers it  regulates.  The RCC  is capped at                                                                    
     0.8 % of regulated utilities annual gross revenues.                                                                        
Number 2554                                                                                                                     
CHAIR FATE asked  Mr. Strandberg to fax RCA's fiscal  note to the                                                               
committee for review.                                                                                                           
The committee took an at-ease from 2:05 p.m. to 2:06 p.m.                                                                       
CHAIR FATE offered his belief that  the committee had done a good                                                               
job  in trying  to  determine  the coordination  of  RCA and  the                                                               
Division of Oil & Gas.  He  said there seemed to be no objections                                                               
from the departments  and that he hoped  everybody understood the                                                               
testimony relating  to open seasons  and capacity.  He  noted his                                                               
intention to move the bill forward.                                                                                             
CHAIR FATE asked whether anyone else  wished to testify.  He then                                                               
closed public testimony.                                                                                                        
Number 2757                                                                                                                     
REPRESENTATIVE  KERTTULA  offered  her understanding  that  there                                                               
will  still be  common-carrier  rules; that  [the  bill] is  just                                                               
allowing these contracts; and that,  ultimately, RCA will have to                                                               
make a  ruling if  there are  objections or  concerns.   She said                                                               
with that, she does not object.                                                                                                 
CHAIR FATE remarked  that he hadn't realized [RCA]  has the power                                                               
to force expansion and that it would certainly help exploration.                                                                
Number 2788                                                                                                                     
REPRESENTATIVE  MASEK  moved  to  report  CSHB  204(O&G)  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes;  she asked for  unanimous consent.  There  being no                                                               
objection, CSHB  204(O&G) was reported  from the  House Resources                                                               
Standing Committee.                                                                                                             
HB 226-ORGANIC FOOD                                                                                                           
CHAIR FATE  announced that  the next order  of business  would be                                                               
HOUSE  BILL NO.  226, "An  Act relating  to the  sale, offer  for                                                               
sale, representation, and labeling  of food or other agricultural                                                               
products  as  organic, and  to  the  state organic  certification                                                               
program; and providing for an effective date."                                                                                  
Number 2872                                                                                                                     
REPRESENTATIVE BILL  STOLTZE, Alaska State  Legislature, sponsor,                                                               
explained that  HB 226  will help many  farmers in  his district,                                                               
particularly  those in  the "niche"  portion of  the agricultural                                                               
industry, by helping them participate  in compliance with federal                                                               
requirements under a  state organic program.  He  noted that this                                                               
bill  has features  of  legislation  sponsored by  Representative                                                               
Harris the previous year; Representative  Harris had asked him to                                                               
help take  the lead  on this along  with Representative  Gatto, a                                                               
cosponsor, who  is from Palmer.   He  deferred to Ms.  Bitney for                                                               
further explanation.                                                                                                            
Number 2958                                                                                                                     
BARBARA  BITNEY, Staff  to  Representative  Bill Stoltze,  Alaska                                                               
State Legislature, addressed information  in the committee packet                                                               
and offered  details.  Referring  to a sectional  analysis [dated                                                               
April  7, 2003,  from Legislative  Legal and  Research Services],                                                               
she said  the bill is to  bring Alaska in line  with the National                                                               
Organic Program (NOP) that was  passed in [2001] and that allowed                                                               
14 months  for states to  come in line; last  year Representative                                                               
Harris introduced HB 432  to do that, but it didn't  pass.  Right                                                               
now, Alaskan producers  of organic products must go  out of state                                                               
for certification;  the packet contains letters  relating to this                                                               
and the associated cost burden.                                                                                                 
TAPE 03-27, SIDE B                                                                                                            
Number 2958                                                                                                                     
MS.  BITNEY,   to  show  how   many  communities   are  affected,                                                               
highlighted three farmers'  markets in Anchorage and  one each in                                                               
Eagle  River,   Fairbanks,  Homer,  Soldotna,  and   Wasilla;  in                                                               
addition, Delta and  Talkeetna plan to start one.   Those are the                                                               
smaller producers,  and there  are larger  agricultural producers                                                               
as well such  as Wolverine [Farm], which produces  carrots.  They                                                               
face  a big  issue regarding  costs associated  with keeping  the                                                               
"organic"  label,  she  told  members.    Offering  a  label  for                                                               
committee members to  view, she indicated these  labels cannot be                                                               
used without certification.                                                                                                     
Number 2944                                                                                                                     
REPRESENTATIVE  GATTO asked  why meat,  fish, and  poultry aren't                                                               
included in the bill.                                                                                                           
MS. BITNEY replied:                                                                                                             
     Actually,  I have  a clarification  in  there, and  ...                                                                    
     they are actually applied in  two different sections of                                                                    
     the  statute.     And  so   we're  dealing   with  them                                                                    
     separately, and part of the  reason for that is because                                                                    
     ... we have  a distinct need right now to  make sure we                                                                    
     get the agriculture through.   And they've been waiting                                                                    
     for over a year and a half to do that.                                                                                     
Number 2905                                                                                                                     
REPRESENTATIVE GUTTENBERG  referred to  page 1 [Section  2, lines                                                               
12-13],  which says  in  part, "The  department  may establish  a                                                               
state  organic  certification  program".   He  asked  whether  it                                                               
should be "shall" rather than "may".                                                                                            
MS. BITNEY  answered, "We definitely want  them to do that,  so I                                                               
would have to check with the Department of Law to clarify that."                                                                
Number 2875                                                                                                                     
REPRESENTATIVE GUTTENBERG  referred to  Section 1 and  noted that                                                               
it says  [on line 5, "AS  03.58.010 is repealed and  reenacted to                                                               
read:"].  He asked what the change was.                                                                                         
MS.  BITNEY answered  that the  [statutory] organic  standards in                                                               
place aren't in line with the current federal organic program.                                                                  
REPRESENTATIVE  GUTTENBERG  surmised,  then, that  basically  the                                                               
state standards  had been  thrown out  and the  federal standards                                                               
MS. BITNEY concurred.                                                                                                           
Number 2850                                                                                                                     
REPRESENTATIVE HEINZE observed that  [the sponsor statement] says                                                               
qualified  inspectors  would  complete the  inspection  and  [the                                                               
final certification  process would  be performed by  a designated                                                               
state official].   She asked whether the  inspectors are Alaskans                                                               
or would be brought in from the federal government.                                                                             
MS. BITNEY  answered that a  lot of the inspectors  are federally                                                               
qualified because there  is a significant cost  for the training.                                                               
She added, "People  haven't applied for the  training yet because                                                               
we don't even have the  certification program here in Alaska yet.                                                               
So  I  believe  that  if  we  did do  this,  we  would  have  the                                                               
certification here and then the inspectors would follow."                                                                       
REPRESENTATIVE   HEINZE  asked   whether   funds  are   available                                                               
somewhere to start the certification process.                                                                                   
MS. BITNEY replied:                                                                                                             
     We  have  a  fiscal  note  that  covers  basically  the                                                                    
     certification process.   And the inspection  process is                                                                    
     actually what  requires the most  time.  And  right now                                                                    
     the inspectors come up, do  a very thorough inspection.                                                                    
     And  we  would  be   able  to  have  the  certification                                                                    
     process, sign off  on it - they would  look through all                                                                    
     the  required documentation,  make sure  everything was                                                                    
     correct, and  could do  an onsite  inspection follow-up                                                                    
     if they wanted.                                                                                                            
Number 2770                                                                                                                     
REPRESENTATIVE  STOLTZE remarked  that  he is  very sensitive  to                                                               
fiscal  matters  and is  working  with  Representative Harris,  a                                                               
cosponsor,  so that  the House  Finance Committee  can scrutinize                                                               
this to make sure it  just meets necessary costs.  Representative                                                               
Stoltze said he'd keep a watchful eye as well.                                                                                  
REPRESENTATIVE HEINZE  clarified that  she wanted to  ensure that                                                               
the money is there to implement this.                                                                                           
REPRESENTATIVE  STOLTZE replied  that  if these  [costs] are  all                                                               
justified,  he  will fight  tooth  and  nail for  this  important                                                               
industry in his  district and others.  It isn't  a large industry                                                               
at  this  point, he  noted,  but  certainly  has potential.    He                                                               
expressed the desire to nurture it.                                                                                             
Number 2726                                                                                                                     
REPRESENTATIVE  GUTTENBERG   referred  to  Section  4,   page  2,                                                               
line 10, which relates to establishing  a fine.  He asked whether                                                               
this is new or is common practice.                                                                                              
MS. BITNEY answered  that the U.S. Code sets a  $10,000 limit for                                                               
a fine.   The Department of Natural Resources (DNR)  - under [the                                                               
Division  of Agriculture]  - would  have to  determined with  the                                                               
Department of Law  what they would set for a  fine.  She surmised                                                               
that it  would be in line  with other states, and  noted that the                                                               
[federal]  organic program  has  draft language  that all  states                                                               
have looked  at for adoption.   "I believe ours was  in line with                                                               
that," she added.                                                                                                               
REPRESENTATIVE GUTTENBERG asked whether this  is a new policy for                                                               
Alaska with regard to fines.                                                                                                    
REPRESENTATIVE STOLTZE offered to find out.                                                                                     
Number 2633                                                                                                                     
LARRY DeVILBISS, Proprietor/Manager, Wolverine Farm, began by                                                                   
explaining that Wolverine Farm has existed in the Matanuska                                                                     
Valley since 1956.  He told members:                                                                                            
     When we came up to begin  managing the farm in 1980, we                                                                    
     made a  number of  decisions that  sort of  changed the                                                                    
     direction of where we went.   We had traditionally been                                                                    
     a  potato and  dairy farm,  and we  decided to  go into                                                                    
     organic production  as much as  possible, and  to focus                                                                    
     on carrots and beef.  And  over that 22 or 23 years, we                                                                    
     have   phased   completely   out  of   the   nonorganic                                                                    
     production  ...  of  carrots  and  are  just  producing                                                                    
     organic carrots now  - just to tell you  that that's an                                                                    
     indicator of where the market  has gone up here; it has                                                                    
     definitely grown  enough to  accommodate at  least this                                                                    
     farm ... in one product.                                                                                                   
     And  about five  or six  years  ago, I  was a  founding                                                                    
     member of  the Alaska  Organic Association,  because up                                                                    
     to  that  point  there  had  been  no  way  to  certify                                                                    
     organically up  here in the  state.  And after  quite a                                                                    
     bit of research we came  up with a model that basically                                                                    
     was  modeled  after  the  California  organic  growers'                                                                    
     association and Oregon Tilth.                                                                                              
     And through  these years, with  a board  ... [composed]                                                                    
     of  both   growers  and  retailers  and   a  couple  of                                                                    
     housewives, we flew in inspectors  that were members of                                                                    
     the  international organic  inspectors association  and                                                                    
     adopted standards and have had  a program that we think                                                                    
     had a lot of credibility and ... worked pretty well.                                                                       
     But  when the  national standard  kicked in  last year,                                                                    
     ... it  knocked out  the possibility of  growers' being                                                                    
     involved at  all in the  actual certification.   And so                                                                    
     we've kind of been floundering  since then.  Since that                                                                    
     time, I've actually  stepped out of the  carrot side of                                                                    
     the production here at Wolverine  Farm, and ... there's                                                                    
     three other  relatives that are  picking that up.   And                                                                    
     this year they've  had to go out  to Washington [State]                                                                    
     to certify because  nothing was put in  place last year                                                                    
     ... to enable us to certify.                                                                                               
Number 2455                                                                                                                     
MR. DeVILBISS continued:                                                                                                        
     The  way  we  [envision]  this working  is  that  we'll                                                                    
     continue  flying in  independent inspectors  to do  ...                                                                    
     the inspecting, at our expense,  until such time as ...                                                                    
     there are  qualified inspectors up  here that  could do                                                                    
     it.  ... But  even then,  the growers  would expect  to                                                                    
     bear  that expense.   The  only thing  we haven't  been                                                                    
     able to do ... and need  from the state is some kind of                                                                    
     a certification of that process  so that we can use the                                                                    
     federal seal.   And in order for the state  to do that,                                                                    
     it was  necessary for  this law  that is  coming before                                                                    
     you  to repeal  the old  state standard  and adopt  the                                                                    
     national organic standard, and  make room for the state                                                                    
     to accommodate this process.                                                                                               
     I ... was  unaware up to this point [that]  there was a                                                                    
     fiscal  note attached  to it  at  all.   But we're  not                                                                    
     looking for  a handout.   We're just looking for  a way                                                                    
     to do business here ...  that doesn't require us to put                                                                    
     another  state  sticker  on  our  bags.    That  really                                                                    
     doesn't seem  appropriate.  It's not  something we want                                                                    
     to  do.   We've developed  quite a  bit of  loyalty for                                                                    
     Alaskan products here.                                                                                                     
MR.  DeVILBISS  mentioned  moving  the bill  ahead  and  said  he                                                               
believes [organic  food] is a  niche that is growing.   Referring                                                               
to a  recent audit on  the Division  of Agriculture, he  said one                                                               
recommendation was that  the state do what it can  to help niches                                                               
like  this in  the agricultural  industry to  get started.   This                                                               
bill certainly would help do that, he concluded.                                                                                
Number 2356                                                                                                                     
REPRESENTATIVE  GATTO asked  Mr. DeVilbiss  what gross  weight of                                                               
carrots Wolverine Farm can produce annually.                                                                                    
MR. DeVILBISS  answered that  they've been  producing 500  to 600                                                               
tons a year.   Annual gross revenues have been  about $350,000 to                                                               
$400,000.   On  the organic  side, he  noted, most  of that  goes                                                               
toward wages because it is very labor-intensive.                                                                                
REPRESENTATIVE  GATTO  asked  whether   other  kinds  of  organic                                                               
produce are grown in the Matanuska Valley.                                                                                      
MR.  DeVILBISS  affirmed  that.   He  said  the  association  has                                                               
producers  that grow  a  large variety  of  vegetables, more  for                                                               
farmers'  market, but  one commercial  potato  producer in  Delta                                                               
produces just potatoes, to his belief.                                                                                          
Number 2240                                                                                                                     
MR. DeVILBISS returned attention to the bill and said:                                                                          
     We  eventually plan  to bring  our  livestock into  the                                                                    
     program.  In fact, we started  to last year, but we ran                                                                    
     into  a problem:   we've  been unable  to come  up with                                                                    
     organic  sources  for  enough nitrogen  to  grow  grass                                                                    
     here.   But as soon as  possible we want to  be able to                                                                    
     sell organic beef as well.   And so ... I would like to                                                                    
     see that  exclusion taken out of  there, unless there's                                                                    
     some reason why it couldn't be.                                                                                            
CHAIR FATE said he'd have to take a look at that.  He added:                                                                    
     I  do  know  that  in  previous  efforts  in  red  meat                                                                    
     programs   there's   always   been  some   problem   in                                                                    
     certification.     And  we've  had  a   difficult  time                                                                    
     getting,  as you  are, ...  federal inspectors  to come                                                                    
     up.   And it has to  be federally inspected meat.   And                                                                    
     that's one of the  problems in several enterprises that                                                                    
     have really  tried ... and  had actually a  pretty good                                                                    
     local market.  But I  know the University of Alaska had                                                                    
     a red meat  program, and that was one  of the problems,                                                                    
     ... trying to get certification  of that meat after, of                                                                    
     course, the meat was processed.                                                                                            
MR.  DeVILBISS added  that the  national standard  addresses this                                                               
fully, so there's  no complication as far as the  standard on the                                                               
national level is concerned.                                                                                                    
Number 2150                                                                                                                     
REPRESENTATIVE HEINZE  lauded Mr.  DeVilbiss as a  "shining star"                                                               
in  the agricultural  field for  dedication and  the products  he                                                               
produces.  She  then asked how fertilizer is  applied for organic                                                               
MR. DeVILBISS replied:                                                                                                          
     Well,  if  you read  the  national  standard, which  is                                                                    
     probably  two  or  three inches  thick,  you'd  have  a                                                                    
     better idea.   But basically it has to  be done without                                                                    
     any  synthetic compounds,  which  means  you can't  use                                                                    
     fertilizer  that's been  chemically produced.   There's                                                                    
     natural rock  for phosphate; we use  fish byproduct for                                                                    
     the phosphorus; the nitrogen is  harder to come by, but                                                                    
     that's where we  use composting and cow  manure and ...                                                                    
     a whole  bunch of  other stuff.   And it's  all spelled                                                                    
     out and it's all got to  be verified ... as the process                                                                    
     goes along so it's not ... infringed on.                                                                                   
     And I might say that one  reason we, as a farm, decided                                                                    
     to  go  organic  is  'cause we're  convinced  that  our                                                                    
     father   died   prematurely   of  cancer   because   of                                                                    
     agricultural chemicals. ...  We don't criticize farmers                                                                    
     ...  that  don't  do  it  that way,  but  we  had  good                                                                    
     motivation as a family to do something different.                                                                          
CHAIR FATE informed members that Dean  Brown and Rob Wells of the                                                               
Division of Agriculture were available to answer questions.                                                                     
Number 2030                                                                                                                     
REPRESENTATIVE GUTTENBERG  remarked that  he likes the  option of                                                               
having  an  organic  foods  section  at  the  store.    He  asked                                                               
Mr. DeVilbiss, on  a larger  scale, whether  there is  a separate                                                               
market that is large enough for this.                                                                                           
MR. DeVILBISS answered:                                                                                                         
     We wouldn't be moving  that direction if there weren't.                                                                    
     ... The production figures  I gave Representative Gatto                                                                    
     were  for organic  production only.  ...  It's a  niche                                                                    
     that ... has  grown significantly in the  past 20 years                                                                    
     and ... I expect will continue to grow.                                                                                    
REPRESENTATIVE GUTTENBERG asked whether most  of the market is in                                                               
supermarkets or farmers' markets.                                                                                               
MR. DeVILBISS replied  that it's in both places.   He added, "Our                                                               
production has gone almost entirely  into the supermarket chains.                                                               
In fact,  through last  year, ...  we were even  in Juneau  for a                                                               
Number 1935                                                                                                                     
RIVER  BEAN,  President,  Alaska Organic  Association,  began  by                                                               
thanking Representative  Stoltz for bringing the  bill forward on                                                               
behalf  of his  association.    He urged  passage  so Alaska  has                                                               
something  in  place  to help  with  the  certification  process.                                                               
Noting that a number of farmers  must go to Washington State this                                                               
year in  order to  be certified at  great expense,  he contrasted                                                               
that with  the cost for  in-state certification, saying  it would                                                               
simply be  returning the cost  of the program  to the state.   He                                                               
told members:                                                                                                                   
     We're  not  looking for  a  handout;  we're looking  to                                                                    
     cover  costs.   But at  this point  the Alaska  Organic                                                                    
     Association  can  no longer  certify.    So we  need  a                                                                    
     certifying body in the State  of Alaska in order to put                                                                    
     "Alaskan certified  organic" on  our produce  or labels                                                                    
     or  bags, rather  than  "Washington  State for  Alaskan                                                                    
     grown produce."                                                                                                            
MR. BEAN said this also  would support sustainable agriculture in                                                               
the valley.   Offering his  belief that  a number of  farmers who                                                               
aren't certified  would become certified  if the State  of Alaska                                                               
were accredited  to do so,  he concluded, "I think  the publicity                                                               
is much greater through a state  program and ... would offer that                                                               
opportunity  to  a lot  more  growers,  maybe on  a  [sliding-fee                                                               
scale]  than   what  we   could  do   with  the   Alaska  Organic                                                               
Number 1802                                                                                                                     
REPRESENTATIVE HEINZE asked whether  the certification would come                                                               
under  the   Division  of  Agriculture,  Department   of  Natural                                                               
Resources (DNR).                                                                                                                
MR. BEAN replied that he believed so.                                                                                           
REPRESENTATIVE  HEINZE asked  Dean Brown  whether this  indicates                                                               
the Division of Agriculture will stay put.                                                                                      
Number 1766                                                                                                                     
DEAN BROWN, Acting Director,  Division of Agriculture, Department                                                               
of Natural  Resources, answered that the  administration has been                                                               
looking  at the  recommendations  from the  audit,  and that  the                                                               
Board of  Agriculture and  Conservation had  made recommendations                                                               
for  candidates for  the director  [position].   She offered  her                                                               
understanding that  no final  decisions have  been made  yet, but                                                               
said she'd  been the acting  director since December 15.   Noting                                                               
that the growing season is  approaching and that the Agricultural                                                               
Revolving Loan  Fund is active  in supporting farmers,  Ms. Brown                                                               
added that agriculture is alive  and well and that producers have                                                               
viable products they're bringing to market this year.                                                                           
Number 1686                                                                                                                     
REPRESENTATIVE  GUTTENBERG  asked Mr.  Bean  who  the members  of                                                               
[Alaska Organic Association] are across the state.                                                                              
MR. BEAN  answered that  members range  from Fairbanks  to Homer,                                                               
although not  in the  outlying Bush areas.   "It's  possible they                                                               
don't  know about  it," he  added.   "We've done  all of  our own                                                               
advertising,  and it's  been limited  to ...  just basically  the                                                               
road system."   He acknowledged  that the [Anchorage  Daily News]                                                             
goes  out to  the  Bush,  but said  there  are  no members  there                                                               
MR. BEAN noted  that his personal business,  Arctic Organics, was                                                               
started 18 years ago and always  has been organic.  However, this                                                               
is  the first  year  that the  produce no  longer  can be  called                                                               
"organic," and there is a possible  federal fine of up to $10,000                                                               
if his  business calls it that.   He added, "We  cannot afford to                                                               
go to  Washington State and have  them do our inspection  for us.                                                               
So  we are  no longer  able to  call our  produce 'organic,'  and                                                               
that's a real shame."                                                                                                           
Number 1577                                                                                                                     
REPRESENTATIVE  GUTTENBERG  requested  the names  of  the  Alaska                                                               
Organic Association's members from Fairbanks, his own district.                                                                 
MR.  BEAN replied  that  he  didn't have  a  list  with him,  but                                                               
mentioned a  certified grower  in the Fairbanks  area and  that a                                                               
number  of people  have called  wanting Mr.  Bean to  do a  radio                                                               
program up there, although they hadn't followed through.                                                                        
Number 1544                                                                                                                     
REPRESENTATIVE MASEK  asked about  any cooperatives  currently in                                                               
place.   She  recalled  that when  she was  living  on the  Yukon                                                               
River, the  Tanana Chiefs  Conference had  a program  under which                                                               
potatoes,  turnips,  carrots, and  so  forth  were grown  in  the                                                               
village.   She mentioned  a soil  and water  conservation program                                                               
and  said  she  didn't  know   whether  it  was  affiliated  with                                                               
[Mr. Bean's organization] in any way.                                                                                           
MR. BEAN said no and explained:                                                                                                 
     We're  basically a  stand-alone program  and operation.                                                                    
     We  started  the  Alaska  Organic  Association  several                                                                    
     years ago, and  Larry DeVilbiss, as he  stated, was one                                                                    
     of the  founding members,  and there  were a  number of                                                                    
     other people.  And we spent  probably a year and a half                                                                    
     researching our standards,  and we did this  all on our                                                                    
     own;  ...  there  were  no  other  groups  or  entities                                                                    
     involved.   And so it  is just ... basically  the board                                                                    
     members of the Alaska  Organic Association that came up                                                                    
     with the standards that we  have yet today, but they're                                                                    
     no longer effective.                                                                                                       
Number 1442                                                                                                                     
REPRESENTATIVE  GATTO asked  whether  genetically modified  foods                                                               
that were grown organically would qualify.                                                                                      
MR.  BEAN  answered that  the  National  Organic Program  doesn't                                                               
allow that.   It  specifies what the  organic standards  are, and                                                               
genetically modified foods aren't part of that.                                                                                 
REPRESENTATIVE  GATTO  asked whether  there  is  a limit  on  the                                                               
annual dollar volume.   In other words, could a  person who sells                                                               
$500  in  products a  year  be  able  to sell  something  organic                                                               
without certification?                                                                                                          
MR. BEAN answered yes.  He elaborated:                                                                                          
     Currently, the  way that  the National  Organic Program                                                                    
     reads is that  anyone that grosses less  than $5,000 is                                                                    
     allowed to  sell their  produce as  organic as  long as                                                                    
     ... they're  following the standards that  the NOP, the                                                                    
     National Organic  Program, has set  forth.  But  ... if                                                                    
     they're not  making very  much money  ... they  are not                                                                    
     required to  pay the money  to become certified.   They                                                                    
     do have to  promise to grow to those  standards ... and                                                                    
     then they can  use the word "organic," but  they do not                                                                    
     need to be certified.                                                                                                      
Number 1332                                                                                                                     
CHAIR FATE  noted that  the bill strikes  the current  $1,000 cap                                                               
[for a  civil fine] and  also includes  attorney fees.   He asked                                                               
whether the intent is that there will still be a $1,000 limit.                                                                  
MS. BITNEY  replied that there is  a limit in the  federal law of                                                               
$10,000.   As the bill  reads, it is  left up to  the department.                                                               
She  suggested  that might  be  something  for the  committee  to                                                               
Number 1242                                                                                                                     
REPRESENTATIVE  KERTTULA referred  to  the  addition of  attorney                                                               
fees to the costs  that can be recovered [page 2,  line 17].  She                                                               
said she didn't think any  administrative code in Alaska had that                                                               
and asked whether it's something new.                                                                                           
MS.  BITNEY  said  she'd  have  to  get  back  to  Representative                                                               
Kerttula on that.                                                                                                               
REPRESENTATIVE STOLTZE  added that he didn't  feel strongly about                                                               
it   and  indicated   he  didn't   have   the  legal   background                                                               
Representative Kerttula has.                                                                                                    
REPRESENTATIVE  KERTTULA  clarified  that   she  wasn't  sure  it                                                               
wouldn't be a good idea, but just hadn't seen it before.                                                                        
Number 1180                                                                                                                     
REPRESENTATIVE  MASEK moved  to report  HB 226  out of  committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes;  she  asked  for  unanimous   consent.    There  being  no                                                               
objection, HB 226 was reported  from the House Resources Standing                                                               
REPRESENTATIVE STOLTZE  informed members that he  would follow up                                                               
on the very good questions they'd asked.                                                                                        
HB 163-NONRES. GAME TAG FEES/WILDLIFE TOUR PASS                                                                               
Number 1118                                                                                                                     
CHAIR FATE  announced that the  final order of business  would be                                                               
HOUSE  BILL NO.  163,  "An  Act relating  to  an annual  wildlife                                                               
conservation  pass  and  the  fee  for  that  pass;  relating  to                                                               
nonresident  and  nonresident  alien   big  game  tag  fees;  and                                                               
providing for  an effective  date."  [The  bill was  sponsored by                                                               
the House  Rules Standing Committee  by request of  the governor.                                                               
Before  the committee,  adopted as  a work  draft on  4/4/03, was                                                               
Version D, labeled 23-GH1098\D, Utermohle, 3/18/03.]                                                                            
CHAIR  FATE   indicated  the  public  hearing   had  been  closed                                                               
previously and reminded members  that several amendments had been                                                               
incorporated into Version D.   He asked whether the committee had                                                               
any questions before addressing further amendments.                                                                             
REPRESENTATIVE KERTTULA said she had concerns, not questions.                                                                   
The committee took an at-ease from 2:48 p.m. to 2:50 p.m.                                                                       
Number 0896                                                                                                                     
REPRESENTATIVE  MASEK  moved to  adopt  Amendment  1, which  read                                                               
[original punctuation provided]:                                                                                                
     Page 2, following line 14                                                                                                  
     (9)   a  wildlife  conservation pass  will provide  new                                                                    
     revenue that may  be used to support  fish and wildlife                                                                    
     management,  including protection,  and to  support and                                                                    
     promote  the   tourism  industry  for   which  wildlife                                                                    
     resources attract visitors to the state;                                                                                   
Number 0890                                                                                                                     
REPRESENTATIVE KERTTULA objected to ask for an explanation.                                                                     
CHAIR FATE explained  that it sets forth the  intent, since there                                                               
had been questions about what these funds would be used for.                                                                    
REPRESENTATIVE KERTTULA removed her objection.                                                                                  
Number 0832                                                                                                                     
REPRESENTATIVE GUTTENBERG  asked whether adding [Amendment  1] to                                                               
the findings  section directs those  funds or whether it  is just                                                               
part of the opening statement about the legislation.                                                                            
CHAIR  FATE said  that, to  him, this  is more  than just  intent                                                               
language, although it  is clarification of what the  use will be.                                                               
Emphasizing  that it's  in  the body  of law  and  uses the  word                                                               
"will", he  then noted that  it says "will provide  new [revenue]                                                               
that may be used to support" and so forth.                                                                                      
REPRESENTATIVE GUTTENBERG  said his concern is  whether its being                                                               
under Section 1, "Findings", makes a difference.                                                                                
CHAIR  FATE clarified  that these  amendments had  come from  the                                                               
Number 0697                                                                                                                     
REPRESENTATIVE MASEK  said she believes  it's appropriate  and in                                                               
line with the other findings, paragraphs (1) through (8).                                                                       
CHAIR FATE concurred.                                                                                                           
REPRESENTATIVE KERTTULA  observed that Amendment 1  says the pass                                                               
[may be used  to] support and promote the tourism  industry.  She                                                               
didn't recall much testimony on how  it would do that.  She asked                                                               
what the plan  is to do with the funds  for the tourism industry,                                                               
and whether the funds will go into marketing, for instance.                                                                     
Number 0622                                                                                                                     
JIM  POUND,  Staff  to Representative  Hugh  Fate,  Alaska  State                                                               
Legislature, speaking as the committee aide, responded:                                                                         
     This  was  language  that we  had  discussed  with  the                                                                    
     administration regarding expanding  out the possibility                                                                    
     of --  and, again, it's  primarily a finding,  but it's                                                                    
     intent  language so  that when  ... future  legislators                                                                    
     ... are looking at how  funds are distributed, ... they                                                                    
     have  [an] option  of ...  moving that  money into  the                                                                    
     tourism industry  as far as marketing  or whatever area                                                                    
     they see fit.                                                                                                              
Number 0565                                                                                                                     
REPRESENTATIVE GUTTENBERG asked  whether someone from Legislative                                                               
Legal and  Research Services could give  him an answer as  to how                                                               
it is  different to  put this language  in the  findings section,                                                               
rather than relating it to a statute with a reference line.                                                                     
MR. POUND  offered his opinion  instead, saying a  paragraph that                                                               
he believed  was on page 6,  line 30, to  page 7, line 2,  in the                                                               
previous bill version  was in a completely different  part of the                                                               
legislation.   He said  [Amendment 1] was  put together  to bring                                                               
that  language  back into  the  bill,  "in part,  especially  the                                                               
wildlife management portions of it."   He also indicated that the                                                               
omission had  been discovered this  very day, and that  there may                                                               
be a  modification needed to  Amendment 1 because it  is somewhat                                                               
CHAIR FATE announced his preference  of making recommendations to                                                               
the House Finance Committee and moving the bill forward.                                                                        
Number 0310                                                                                                                     
REPRESENTATIVE MASEK reiterated that  she believes Amendment 1 is                                                               
in  the  appropriate  place  and  adds  language  brought  up  in                                                               
committee discussions  from the tourism industry.   "We're trying                                                               
to  facilitate all  users, every  one that  has a  stakeholder in                                                               
this  bill here,"  she added.   "And  I think  we're compromising                                                               
quite a  bit, and I think  this amendment ... should  pass."  She                                                               
asked  that Representative  Guttenberg remove  his objection  and                                                               
then  have the  House Finance  Committee  take a  closer look  at                                                               
Amendment 1.                                                                                                                    
REPRESENTATIVE GUTTENBERG said he would remove his objection.                                                                   
Number 0193                                                                                                                     
REPRESENTATIVE MASEK renewed her motion to adopt Amendment 1.                                                                   
REPRESENTATIVE GATTO objected.                                                                                                  
REPRESENTATIVE  HEINZE  referred  to  the  wording  "promote  the                                                               
tourism industry  for which  wildlife resources  attract visitors                                                               
to the  state".  She said  it seems to  be a very narrow  part of                                                               
tourism.   If  a  boat owner  doesn't run  a  wildlife tour,  for                                                               
example, the funds cannot come back to that person.                                                                             
CHAIR FATE replied:                                                                                                             
     Part of what  you say is true, but  there's very little                                                                    
     ... in the ... tourism  industry that doesn't deal with                                                                    
     the viewing  of wildlife, whether  it's on a  tour ship                                                                    
     or  whether it's  on  a rubber-tire  crate  to ...  the                                                                    
     Interior of Alaska  or whatever. ... So  it's not quite                                                                    
     as  narrow ...  as a  person might  be made  to believe                                                                    
     here in the wording ....                                                                                                   
Number 0082                                                                                                                     
REPRESENTATIVE GATTO told members  he isn't entirely pleased with                                                               
the bill,  but now that  it's before  the committee, he  has some                                                               
trouble with the  wording of Amendment 1.   He questioned whether                                                               
it will  always be  true that a  wildlife conservation  pass will                                                               
provide new  revenue.  He  suggested it  makes more sense  to say                                                               
"funds generated  from a wildlife  conservation pass may  be used                                                               
to support", for instance.                                                                                                      
TAPE 03-28, SIDE A                                                                                                            
Number 0001                                                                                                                     
CHAIR FATE  said this isn't  talking about  the bottom line  or a                                                               
balance sheet, but about revenue derived  from one pass.  If more                                                               
than one pass  is sold, there will  be a multiple of  the cost of                                                               
the pass as revenue.  He suggested it is a matter of semantics.                                                                 
REPRESENTATIVE GATTO  replied that it's  tough for him to  make a                                                               
declaration  that  something  will  happen unless  he  can  offer                                                               
supporting evidence.   He indicated he wouldn't  pursue it unless                                                               
some other  members agreed, but  said he'd feel  more comfortable                                                               
with "funds generated from", rather than the existing language.                                                                 
Number 0108                                                                                                                     
MR.  POUND  proposed a  possible  way  to address  Representative                                                               
Gatto's   concern  and   duplicative  wording.     Referring   to                                                               
[subsection (e)]  page 6, line 30  - which he said  is relatively                                                               
unimportant  - and  on  to  page 7,  line  7,  he suggested  that                                                               
[subsection (e) should  read in part, "The annual  balance in the                                                               
account may  be appropriated by  the legislature for  the purpose                                                               
of fish  and game management,  viewing, and  education programs,"                                                               
with  the  following  inserted:   "including  protection  and  to                                                               
support  and  promote the  tourism  industry  for which  wildlife                                                               
resources attract  visitors [to] the  state".   Deleted  would be                                                               
the wording "for other public purposes" [page 7, line 2].                                                                       
MR. POUND then suggested that on  page 7, line 7 [it should say]:                                                               
"The annual  balance in  the account may  be appropriated  by the                                                               
legislature  for  the  purpose   of  fish  and  game  management,                                                               
viewing,  and education  programs,  including  protection and  to                                                               
support  and  promote the  tourism  industry  for which  wildlife                                                               
resources attract  visitors [to]  the state."   Deleted  would be                                                               
"for other public purposes".                                                                                                    
MR.   POUND  suggested   the  foregoing   would   take  care   of                                                               
Representative  Gatto's concern  about wording  saying this  will                                                               
generate funds, because it refers it back to fees.                                                                              
CHAIR FATE  said it  sounds like  a pretty  good compromise.   He                                                               
suggested Amendment 1  should be withdrawn and a  new Amendment 1                                                               
should be moved.                                                                                                                
Number 0250                                                                                                                     
REPRESENTATIVE MASEK withdrew Amendment 1.                                                                                      
REPRESENTATIVE MASEK moved to adopt new [Conceptual] Amendment 1                                                                
[as set forth by Mr. Pound previously].                                                                                         
REPRESENTATIVE HEINZE expressed confusion, saying she hadn't                                                                    
been finished with her discussion.                                                                                              
Number 0317                                                                                                                     
REPRESENTATIVE KERTTULA objected for purposes of discussion.                                                                    
She told members:                                                                                                               
     Here's where  I think  we're going awry  with this.   I                                                                    
     think Representative Guttenberg's  point about findings                                                                    
     versus intent's  pretty well taken.   This really isn't                                                                    
     in "finding".   It may be  intent.  But now  what we're                                                                    
     doing is actually  getting ... into where  we think the                                                                    
     money  should  go,  and  that's  probably  the  statute                                                                    
     itself.    So  I  don't really  care,  because  I  have                                                                    
     problems with  the whole bill.   But I do  think you're                                                                    
     starting  to  really  get the  record  pretty  confused                                                                    
     about, "This  just isn't a  finding." ...  There hasn't                                                                    
     been evidence  on it.  It's  not in the right  place in                                                                    
     the bill.   So, I don't know what you  want to do about                                                                    
     it, but there's my objection.                                                                                              
Number 0410                                                                                                                     
REPRESENTATIVE MASEK withdrew new Conceptual Amendment 1.                                                                       
[HB 163 was held over.]                                                                                                         
Number 0528                                                                                                                     
There being no further business before the committee, the House                                                                 
Resources Standing Committee meeting was adjourned at 3:06 p.m.                                                                 

Document Name Date/Time Subjects