Legislature(2015 - 2016)SENATE FINANCE 532

04/09/2016 10:00 AM FINANCE

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                 SENATE FINANCE COMMITTEE                                                                                       
                       April 9, 2016                                                                                            
                        10:07 a.m.                                                                                              
10:07:18 AM                                                                                                                   
CALL TO ORDER                                                                                                                 
Co-Chair  MacKinnon  called  the  Senate  Finance  Committee                                                                    
meeting to order at 10:07 a.m.                                                                                                  
MEMBERS PRESENT                                                                                                               
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Peter Micciche, Vice-Chair                                                                                              
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Lyman Hoffman                                                                                                           
MEMBERS ABSENT                                                                                                                
Senator Donny Olson                                                                                                             
ALSO PRESENT                                                                                                                  
Emmie Van  Wyhe, Staff, Senator Cathy  Giessel; Jane Conway,                                                                    
Staff,  Senator  Cathy  Giessel; Janey  Hovenden,  Director,                                                                    
Division   of   Corporations,  Business   and   Professional                                                                    
Licensing,  Department of  Commerce, Community  and Economic                                                                    
Development;   Senator   Mia   Costello,   Sponsor;   Sorcha                                                                    
Hazelton, Intern, Senator Mia  Costello; Alise Galvin, Self,                                                                    
Juneau; Eddie  Grasser, Self, Juneau; Senator  Bill Stoltze,                                                                    
Sponsor; Senator Johnny Ellis,  Sponsor; Sarah Evans, Staff,                                                                    
Senator Johnny Ellis.                                                                                                           
PRESENT VIA TELECONFERENCE                                                                                                    
John  Cotter,  Chair,  Board of  Pharmacy,  Fairbanks;  Dirk                                                                    
White,  Self,   Sitka;  Tara  Ruffner,   Alaska  Pharmacists                                                                    
Association,  Kenai;   David  Nees,  Self,   Anchorage;  Rob                                                                    
Carter,   Division  of   Agriculture;  Ronda   Marcy,  Chief                                                                    
Executive Officer,  Alaska Hemp Industries; Don  Hart, Self,                                                                    
Wasilla; Jack  Bennett, Self,  Homer; Lacey  Eshleman, Self,                                                                    
Wasilla; Casey Eshleman, Self,  Wasilla; Frank Turney, Self,                                                                    
Fairbanks;  Guy  Archibald,  Inside Passage  Water  Keepers,                                                                    
Juneau; Raymond  Sensmeier, Self, Yakutat;  Rosemarie Hotch,                                                                    
Self, Anchorage; Rick Solie, Self, Fairbanks.                                                                                   
SB 8      INDUSTRIAL HEMP PRODUCTION LICENSES                                                                                   
          SB 8 was HEARD and HELD in committee for further                                                                      
SB 163    NATL. RES. WATER NOMINATION/DESIGNATION                                                                               
          SB 163 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
SB 200    MANDATORY PHYSICAL ACTIVITY IN SCHOOLS                                                                                
          SB 200 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
SB 201    PHARMA BD & EMPLOYEES;DRUG DIST/MANUFAC                                                                               
          SB 201 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
SJR 12    CONST. AM: ELECTED ATTORNEY GENERAL                                                                                   
          SJR 12 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
Co-Chair MacKinnon discussed the schedule.                                                                                      
SENATE BILL NO. 201                                                                                                           
     "An Act relating to the  Board of Pharmacy; relating to                                                                    
     the  licensing  and  inspection of  certain  facilities                                                                    
     located  outside the  state;  relating  to drug  supply                                                                    
     chain security;  and creating  a position  of executive                                                                    
     administrator for the Board of Pharmacy."                                                                                  
10:08:34 AM                                                                                                                   
EMMIE    VAN   WYHE,    STAFF,   SENATOR    CATHY   GIESSEL,                                                                    
offered a sponsor statement (copy on file):                                                                                     
     Passage  of  SB 201  will  create  a more  secure  drug                                                                    
     supply chain  by allowing for licensing  and inspection                                                                    
     of wholesale  drug distributors  outside of  the state.                                                                    
     Currently, Alaska  is one of  the few  remaining states                                                                    
     that  does  not  license  out-of-state  wholesale  drug                                                                    
     distributors.  With laws  and regulations  varying from                                                                    
     state  to state,  licensing  an out-of-state  wholesale                                                                    
     distributor can  prove arduous. With  this legislation,                                                                    
     Alaska  can   take  action  to   eliminate  wholesalers                                                                    
     looking  for loopholes  in  the  regulatory system  and                                                                    
     ensure   that  all   out-of-state  applicants   seeking                                                                    
     licensure comply  with the  same regulations  as Alaska                                                                    
     This  legislation is  critical and  necessary to  bring                                                                    
     Alaska into  compliance with the Drug  Quality Security                                                                    
     Act (DQSA) and create a  new license category for "Out-                                                                    
     of-State Wholesale Drug  Distributors. Currently, there                                                                    
     is no  authority by the  Board of Pharmacy  to regulate                                                                    
     Out-of-State  Wholesale  Drug   Distributors  or  third                                                                    
     party logistic  providers (3PLs).  SB 201  would ensure                                                                    
     safe    delivery    of   controlled,    non-counterfeit                                                                    
     medications to Alaskans.                                                                                                   
     SB 201  would require  that any  out-of-state wholesale                                                                    
     drug   distributor  or   outsourcing  facility   follow                                                                    
     specific  guidelines  including  obtaining  a  license,                                                                    
     authorizing inspection  of the  facility by  a designee                                                                    
     of the board, and  appointing an agent before shipping,                                                                    
     mailing or delivering prescription  drugs to a licensee                                                                    
     in the state or advertising in the state.                                                                                  
     Additionally,  this  legislation  allows the  Board  of                                                                    
     Pharmacy  to create  a new  position titled  "Executive                                                                    
     Administrator"   to  serve   as   a   liaison  to   the                                                                    
     legislative   and    executive   branches    of   state                                                                    
     government,  the   media,  and  other   state  pharmacy                                                                    
     boards,  as  well  as   implement  board  statutes  and                                                                    
    regulations, and aid in managing current licensees.                                                                         
10:11:14 AM                                                                                                                   
Co-Chair MacKinnon requested a sectional analysis.                                                                              
JANE CONWAY, STAFF, SENATOR CATHY GIESSEL, addressed the                                                                        
sectional analysis (copy on file):                                                                                              
     Section 1:                                                                                                               
          AS 08.80.130(13): Allows  licensing and inspecting                                                                  
          for    out-of-state    drug    distributors    and                                                                    
          outsourcing facilities.                                                                                               
          AS  08.80.130(14): Establishes  qualifications and                                                                  
          duties   of  executive   administrator.  Executive                                                                    
          administrator is  delegated authority in  order to                                                                    
          conduct board business.                                                                                               
     Section 2:                                                                                                               
          AS  08.80.03(c):  Specifications  for  facilities,                                                                  
          equipment, personnel,  and procedures  for control                                                                    
          of drugs                                                                                                              
     Section 3:                                                                                                               
          AS   08.80.157(k):  Applies   to  wholesale   drug                                                                  
          distributors  and  outsourcing facilities  outside                                                                    
          the state under                                                                                                       
          AS 08.80.159, regarding licensing.                                                                                    
    Section 4: Amends AS 08.80 by adding a new section:                                                                       
          Sec.  08.80.159: Requires  that  a wholesale  drug                                                                  
          distributor   or  outsourcing   facility  have   a                                                                    
          license  in Alaska  before  shipping, mailing,  or                                                                    
          delivering  prescription drugs  to  a licensee  in                                                                    
          the state  or before advertising in  the state, an                                                                    
          agent  must  be  appointed  in the  state,  and  a                                                                    
          designee  of the  board must  authorize inspection                                                                    
          of the facility.                                                                                                      
          An outsourcing facility,  in addition, must comply                                                                    
          with the  Drug Quality  and Security Act  of 2013.                                                                    
          The board may require  an inspection of facilities                                                                    
          located outside  of the state, approve  a designee                                                                    
          to inspect.  The board shall adopt  regulations to                                                                    
          implement this section.                                                                                               
     Section 5: Amends AS 08.80 by adding new section to                                                                      
     Article 2:                                                                                                                 
          Sec.  08.80.270: Allows  the  Board  to create  an                                                                  
          executive  administrator   position.  Defines  the                                                                    
          role of the executive administrator.                                                                                  
     Section 6:                                                                                                               
          AS 08.80.480(37): Defines "outsourcing facility"                                                                    
10:13:50 AM                                                                                                                   
Co-Chair MacKinnon solicited questions  on the intent of the                                                                    
10:14:01 AM                                                                                                                   
Senator Bishop  understood that  the legislation  was driven                                                                    
by the Drug Supply Chain Act of 2013.                                                                                           
Ms.  Conway  replied  in the  affirmative.  She  added  that                                                                    
Alaska  would  be  the  final   state  to  comply  with  the                                                                    
Senator  Bishop  referred to  section  2  of the  bill,  and                                                                    
wondered how much complying with  the legislation would cost                                                                    
pharmacies in the state.                                                                                                        
Ms.  Conway replied  that the  legislation  should not  cost                                                                    
pharmacies in  the state any  funds. She explained  that the                                                                    
bill  solely pertained  to  the  regulation of  out-of-state                                                                    
wholesalers in  order to protect  pharmacies in  Alaska from                                                                    
receiving counterfeit, or contaminated, drugs.                                                                                  
10:16:04 AM                                                                                                                   
Co-Chair MacKinnon OPENED public testimony.                                                                                     
10:16:44 AM                                                                                                                   
JOHN  COTTER,  CHAIR,  BOARD  OF  PHARMACY,  FAIRBANKS  (via                                                                    
teleconference), testified in support  of the bill. He noted                                                                    
that the  major component of  the bill was the  licensure of                                                                    
wholesalers, which  would insure the integrity  of the drugs                                                                    
being sold within the state.  He added that the Drug Quality                                                                    
Security Act (2013)  had secured the pedigree  of drugs, and                                                                    
the  bill would  ensure that  out-of-state wholesalers  were                                                                    
compliant to  that end. He said  that the hope was  that any                                                                    
revenue from  the bill  would offset the  cost of  adding an                                                                    
executive administrator to manage  the Board of Pharmacy and                                                                    
the growing complexity of board business.                                                                                       
10:19:09 AM                                                                                                                   
DIRK WHITE,  SELF, SITKA (via teleconference),  testified in                                                                    
support of the  legislation. He echoed the  testimony of the                                                                    
previous  speaker.   He believed  the bill  would bring  the                                                                    
state in to  compliance with the Drug  Quality Security Act.                                                                    
He  restated  that  the  bill  was  financially  neutral  to                                                                    
pharmacies in the  state. He reiterated that  the bill would                                                                    
protect the integrity of the  pedigree of the drugs that are                                                                    
sold to the state.                                                                                                              
10:21:25 AM                                                                                                                   
TARA  RUFFNER, ALASKA  PHARMACISTS  ASSOCIATION, KENAI  (via                                                                    
teleconference),  testified  in  support of  the  bill.  She                                                                    
believed    that   the    legislation   would    make   sure                                                                    
pharmaceuticals were tracked through  the supply change in a                                                                    
transparent way.                                                                                                                
10:22:49 AM                                                                                                                   
Co-Chair  MacKinnon asked  whether the  outsourcing facility                                                                    
had to be in the United  States, or would the tracking reach                                                                    
international borders.                                                                                                          
Ms. Ruffner  replied that  she was not  sure of  the answer.                                                                    
She  offered  to   get  back  to  the   committee  with  the                                                                    
10:23:18 AM                                                                                                                   
Vice-Chair Micciche  asked whether an Alaska  resident could                                                                    
order  pharmaceuticals from  outside the  state, and  if so,                                                                    
would the bill cover internet suppliers.                                                                                        
Ms. Ruffner stated that anyone  could go on the internet and                                                                    
order drugs, and doubted that they were regulated.                                                                              
Vice-Chair  Micciche hoped  the  sponsor  would address  the                                                                    
10:24:02 AM                                                                                                                   
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
Co-Chair MacKinnon  asked Ms. Conway  to respond to  the two                                                                    
previous  questions  regarding  international  and  internet                                                                    
Ms.  Conway stated  that  she would  provide  a response  to                                                                    
those issues to the committee at a later date.                                                                                  
10:25:09 AM                                                                                                                   
Vice-Chair Micciche  discussed the fiscal notes  attached to                                                                    
the legislation (copy on file).                                                                                                 
10:26:04 AM                                                                                                                   
Co-Chair   MacKinnon   queried   the  perspective   of   the                                                                    
Department of  Commerce, Community and  Economic Development                                                                    
on  the estimation  of  receipts coming  in  to monitor  the                                                                    
10:26:27 AM                                                                                                                   
JANEY   HOVENDEN,   DIRECTOR,  DIVISION   OF   CORPORATIONS,                                                                    
BUSINESS   AND   PROFESSIONAL   LICENSING,   DEPARTMENT   OF                                                                    
COMMERCE,  COMMUNITY AND  ECONOMIC DEVELOPMENT,  stated that                                                                    
the cost  of the fiscal note  was expected to be  covered by                                                                    
new licensees.                                                                                                                  
SB  201  was  HEARD  and   HELD  in  committee  for  further                                                                    
10:27:06 AM                                                                                                                   
Co-Chair MacKinnon welcomed Co-Chair Kelly to the table.                                                                        
SENATE BILL NO. 200                                                                                                           
     "An Act relating to  physical activity requirements for                                                                    
     students in kindergarten through grade eight."                                                                             
10:27:22 AM                                                                                                                   
SENATOR MIA  COSTELLO, SPONSOR, offered a  sponsor statement                                                                    
on the legislation:                                                                                                             
     Senate  Bill 200  amends state  law  to ensure  Alaskan                                                                    
     students  receive  a   minimum  recommended  amount  of                                                                    
     physical  activity at  school. Under  the bill,  school                                                                    
     districts   would  provide   at   least   90%  of   the                                                                    
     recommended exercise  time for adolescents by  the U.S.                                                                    
     Center for Disease Control &                                                                                               
     Prevention  (CDC).  School  districts  would  have  the                                                                    
     flexibility to  meet this  requirement, equating  to 54                                                                    
     minutes,  through physical  education classes,  recess,                                                                    
     or a combination of activity types.                                                                                        
     The amount of  time students spend in  school has grown                                                                    
     over  the   years.  Changes  to  the   school  day  and                                                                    
     curriculum  have  led  to less  time  for  students  to                                                                    
     participate in unstructured  physical activity. Lack of                                                                    
     exercise can  have a detrimental  effect on  youth, and                                                                    
     can cause obesity and other  health concerns. This bill                                                                    
     aims  to   ensure  Alaskan  students   in  kindergarten                                                                    
     through eighth grade are  involved in physical activity                                                                    
     and have breaks from the  classroom that allow youth to                                                                    
     destress and  improve their focus.  Currently, slightly                                                                    
     more than  half of  school districts  in Alaska  have a                                                                    
     written  policy   for  elementary  and   middle  school                                                                    
     recess.  This  bill  will set  a  minimum  standard  to                                                                    
     ensure  students  receive  adequate  opportunities  for                                                                    
     physical activity.                                                                                                         
     Breaks  in  the school  day  have  been proven  to  aid                                                                    
     information retention and  focus. Unstructured physical                                                                    
     activity, like recess,  lets students process classroom                                                                    
     lessons  and  allows  for   an  education  outside  the                                                                    
     classroom from  their peers. A  CDC report  reviewed 50                                                                    
     peer-reviewed  studies  and  documented  links  between                                                                    
     physical activity  and academic  performance, including                                                                    
     achievement, behavior, cognitive  skills, and attitude.                                                                    
     The American  Association of Pediatrics has  also found                                                                    
     that  recess, either  indoor or  outdoor,  led to  more                                                                    
     attentive  and  productive  students,  in  addition  to                                                                    
     learning on playgrounds from peers.                                                                                        
     Ensuring   adequate   physical  activity   will   allow                                                                    
     Alaska's students  the opportunity  to learn  from each                                                                    
     other, to improve their  academic performance, to fight                                                                    
     childhood obesity  through exercise, and to  reduce the                                                                    
     stress  levels   that  have  adverse  effects   on  our                                                                    
     children.  This bill  helps them  grow into  successful                                                                    
Representative  Costello  shared   that  she  suffered  from                                                                    
scoliosis as  a child,  which had prompted  her to  become a                                                                    
life-long  swimmer.  She  stressed   that  the  benefits  of                                                                    
regular physical activity were numerous.                                                                                        
10:30:31 AM                                                                                                                   
SORCHA HAZELTON,  INTERN, SENATOR MIA COSTELLA,  stated that                                                                    
the  legislation  would  ensure   that  Alaska's  kids  were                                                                    
physically active  and mentally  healthy, setting  a balance                                                                    
of structured  and unstructured time during  the school day.                                                                    
She  said that  the bill  would  amend state  law to  ensure                                                                    
school  districts  provided  a  daily  minimum  of  physical                                                                    
activity for  kindergarten through  8th grade  students. She                                                                    
stated that  the state  did not have  a policy  requiring or                                                                    
recommending  recess  or  physical activity  breaks  at  any                                                                    
grade  level.  She  furthered that  only  half  of  Alaska's                                                                    
school  districts had  a written  policy for  elementary and                                                                    
middle school  recess, and one-third of  the school district                                                                    
policies for elementary schools did  not meet the CDCs daily                                                                    
recommended  amount of  physical activity  in a  full school                                                                    
week. She stressed that physical  activity had many benefits                                                                    
for   students,  such   as:  combating   childhood  obesity,                                                                    
improving  academic performance,  and fighting  the rise  of                                                                    
youth mental disorders.                                                                                                         
10:32:32 AM                                                                                                                   
Ms.   Hazelton  relayed   that  physical   activity  allowed                                                                    
students to learn  from their peers outside  of a classroom.                                                                    
She lamented the  growing issue of childhood  obesity in the                                                                    
state and the associated  medical healthcare costs. She said                                                                    
that  26  percent  of  Alaskan  high  school  students  were                                                                    
overweight or obese, while 36  percent of K-12 students were                                                                    
overweight  or  obese  in  the  2010-2011  school  year.  40                                                                    
percent  of Alaskan  3 year-olds  were either  overweight or                                                                    
obese  according to  the 2014  Alaska Obesity  Facts Report.                                                                    
She  shared that  the legislation  would  address the  issue                                                                    
through a simple, daily activity.  She noted that recess and                                                                    
P.E. had been  cut in schools across the nation  in order to                                                                    
implement  more   instructional  time.  She   stressed  that                                                                    
physical  activity  had been  proven  to  improve focus  and                                                                    
information retention.  She noted that the  American Academy                                                                    
of  Pediatrics had  found that  children's brains  processed                                                                    
information  best if  given a  period of  interruption after                                                                    
instruction;  best   served  through   unstructured  breaks,                                                                    
rather than  shifting subject matter.  She expounded  on the                                                                    
merits  of recess  and physical  activity  for children  and                                                                    
young adults.                                                                                                                   
10:36:09 AM                                                                                                                   
Co-Chair MacKinnon  referred to an inability  to hold recess                                                                    
due  to  inclement  weather. She  wondered  whether  schools                                                                    
would suffer repercussions for  not getting students outside                                                                    
due to bad weather.                                                                                                             
Ms.  Hazelton stated  that inclement  weather  was always  a                                                                    
challenge.   She  asserted   that  many   of  the   physical                                                                    
activities listed  in the  bill could  be done  indoors; the                                                                    
bill would not  rule out in-classroom exercises.   She added                                                                    
that  many students  did  not mind  playing  outside in  the                                                                    
10:38:03 AM                                                                                                                   
Senator Dunleavy  commented on  the issue of  students being                                                                    
inappropriately dressed for  outdoor recess. He acknowledged                                                                    
that appropriate  dress for  appropriate climate  would need                                                                    
to be stressed.                                                                                                                 
10:39:01 AM                                                                                                                   
Co-Chair MacKinnon discussed the safety  issue of ice on the                                                                    
playground. She thought that children  could move indoors to                                                                    
a  gym  or  auditorium  for exercise,  but  noted  that  all                                                                    
schools in the state were not equip with those facilities.                                                                      
10:39:35 AM                                                                                                                   
Co-Chair MacKinnon OPENED public testimony.                                                                                     
10:40:04 AM                                                                                                                   
ALISE GALVIN,  SELF, JUNEAU, testified in  strong support of                                                                    
the bill.  She expressed that  as a mother of  four children                                                                    
she  believed   that  all  children  needed   more  physical                                                                    
activity.   She  expressed   concern   with  limited   adult                                                                    
supervision during outdoor playtime,  and training for those                                                                    
overseeing physical activities indoors.                                                                                         
10:41:59 AM                                                                                                                   
EDDIE  GRASSER,   SELF,  JUNEAU,  discussed  the   bill.  He                                                                    
mentioned a program sponsored by  the Department of Fish and                                                                    
Game  called the  National Archery  in the  Schools program,                                                                    
which he believed  mirrored the goals discussed  by the bill                                                                    
sponsor.  He  asserted  that  getting  children  active  and                                                                    
outdoors was a positive thing.                                                                                                  
10:43:31 AM                                                                                                                   
DAVID  NEES, SELF,  ANCHORAGE (via  teleconference), offered                                                                    
some  history of  recess and  physical  education in  public                                                                    
schools.  He relayed  that physical  activity was  important                                                                    
but  worried  about the  cost  of  paying trained,  licensed                                                                    
professionals to  instruct children.  He shared  that poorly                                                                    
taught physical education could  be detrimental to students.                                                                    
He stressed  the need  for clear language  in the  bill that                                                                    
recognized  the difference  between  physical education  and                                                                    
recess as ways for children to be physically active.                                                                            
10:46:59 AM                                                                                                                   
Co-Chair MacKinnon asked whether  he was advocating that the                                                                    
bill call for licensed  professionals to administer physical                                                                    
education to students.                                                                                                          
Mr.  Nees  thought  that programs  in  the  state's  schools                                                                    
should  be reviewed  by a  licensed  professional to  ensure                                                                    
that the curriculum was safe.                                                                                                   
10:47:44 AM                                                                                                                   
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
10:48:07 AM                                                                                                                   
Vice-Chair Micciche discussed the zero fiscal note.                                                                             
SB  200  was  HEARD  and   HELD  in  committee  for  further                                                                    
SENATE JOINT RESOLUTION NO. 12                                                                                                
     Proposing amendments to the Constitution of the State                                                                      
     of Alaska relating to the office of attorney general.                                                                      
10:49:01 AM                                                                                                                   
Co-Chair  MacKinnon directed  the  committee's attention  to                                                                    
SJR 12.                                                                                                                         
SENATOR  BILL STOLTZE,  SPONSOR, noted  that the  bill topic                                                                    
had come before  the legislature many times in  the past. He                                                                    
offered a sponsor statement:                                                                                                    
     The State of Alaska has grown from being a frontier                                                                        
     state in 1959 to being a major player in the world's                                                                       
     oil and  gas industry today. With  economic growth, has                                                                    
     come vast growth in population.                                                                                            
     As the  state looks to  the future, and  the challenges                                                                    
     of emerging as  a strong independent state,  it is time                                                                    
     to examine how the state selects its Attorney General.                                                                     
     Alaska is one  of seven states that  currently does not                                                                    
     elect its  Attorney General in  a general  election, by                                                                    
     the  people.   In  addition  to  Alaska,   Hawaii,  New                                                                    
     Hampshire, New                                                                                                             
     Jersey  and Wyoming  leave  selection  of the  Attorney                                                                    
     General  to   an  appointment  by  the   governor.  The                                                                    
     Attorney   General  in   Maine   is   elected  by   the                                                                    
     Legislature and the                                                                                                        
     Tennessee Supreme Court elects the Attorney general.                                                                       
     The people  of Alaska  would like  to have  an attorney                                                                    
     general that is accountable to the people.                                                                                 
     Voting for  SJR 12 and  passing it along to  the voters                                                                    
     will show Alaskans that we  are willing to move forward                                                                    
     and trust  the people of  Alaska to select  an Attorney                                                                    
     General who  will vigorously represent the  will of the                                                                    
     people of our great state.                                                                                                 
10:55:43 AM                                                                                                                   
Senator  Dunleavy  pointed  out  to  the  sponsor  that  the                                                                    
attorney general in Maine was  appointed by the Legislature.                                                                    
He was  curious whether  Senator Stoltze had  researched how                                                                    
that arrangement had worked for the state.                                                                                      
Senator Stoltze  replied that he  had not. He  assumed that,                                                                    
anecdotally,  the   process  was  sometimes   political  and                                                                    
sometimes  was  not. He  added  that  43 states  had  direct                                                                    
election of  the attorney general; 5  states had appointment                                                                    
by  governor,   Maine  had  election  by   Legislature,  and                                                                    
Tennessee had a selection by  the Supreme Court. He asserted                                                                    
that he did not believe  in modeling Alaska's method by "how                                                                    
they do it on the outside."                                                                                                     
10:56:49 AM                                                                                                                   
Co-Chair MacKinnon OPENED public testimony on SJR 12.                                                                           
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
10:57:21 AM                                                                                                                   
Vice-Chair Micciche discussed the zero fiscal notes.                                                                            
Co-Chair MacKinnon  informed the committee  that Legislative                                                                    
Affairs  Agency would  be informed  that  their zero  fiscal                                                                    
note lacked backup documentation.                                                                                               
SJR  12  was  HEARD  and   HELD  in  committee  for  further                                                                    
10:58:49 AM                                                                                                                   
AT EASE                                                                                                                         
10:59:34 AM                                                                                                                   
SENATE BILL NO. 8                                                                                                             
     "An Act relating to the regulation and production of                                                                       
     industrial hemp."                                                                                                          
11:00:10 AM                                                                                                                   
SENATOR  JOHNNY ELLIS,  SPONSOR,  voiced that  the bill  had                                                                    
growing support  and no known opposition.  He contended that                                                                    
the bill would give Alaskans  the freedom to farm industrial                                                                    
hemp. He asserted  that the state should not  be hindered by                                                                    
the federal government in  producing industrialized hemp, as                                                                    
it  was not  related to  marijuana.  He felt  that the  bill                                                                    
would help out  Alaska farmers and take a  stand against the                                                                    
federal   government.  He   offered  a   brief  history   of                                                                    
industrialized  hemp in  the United  States.  He dubbed  the                                                                    
bill a "freedom  to farm" bill, which  would unite lawmakers                                                                    
in bipartisan support.  He revealed that it  was not certain                                                                    
where  in the  state the  product would  grow, but  insisted                                                                    
that Alaskan farmers  wanted to make the  attempt. He shared                                                                    
that  the uses  for  industrialized hemp  were numerous.  He                                                                    
referred  to  support letters  in  member  packets (copy  on                                                                    
11:04:32 AM                                                                                                                   
SARAH  EVANS, STAFF,  SENATOR  JOHNNY  ELLIS, discussed  the                                                                    
sectional analysis of the bill (copy on file):                                                                                  
     Section  1  establishes  a  license  procedure  in  the                                                                  
     Department  of Natural  Resources (DNR)  for production                                                                    
     of  industrial   hemp,  including   planting,  growing,                                                                    
     harvesting, processing, possessing,  selling, or buying                                                                    
     industrial  hemp.   This  section  also   requires  the                                                                    
     Commissioner of  DNR to  adopt regulations  relating to                                                                    
     industrial hemp.                                                                                                           
     Section  2   creates  an   affirmative  defense   to  a                                                                  
     prosecution  under AS  11.71.030  -  11.71.060 for  the                                                                    
     manufacture,  delivery,   possession,  possession  with                                                                    
     intent  to  manufacture or  deliver,  or  display of  a                                                                    
     schedule  VI controlled  substance  if  the person  was                                                                    
     licensed to  produce industrial hemp and  in compliance                                                                    
     with the term of license.                                                                                                  
     Section 3  authorizes the  Department of  Public Safety                                                                  
     to  conduct a  national criminal  history record  check                                                                    
     for  licensure as  an industrial  hemp  producer in  AS                                                                    
     Section 4  states that a  person who is  licensed under                                                                  
     sec.1 of  the bill  to produce  industrial hemp  is not                                                                    
     required to  be licensed  as a  marijuana establishment                                                                    
     under AS 17.38.100.                                                                                                        
11:06:45 AM                                                                                                                   
Co-Chair  MacKinnon  queried   the  difference  between  the                                                                    
intent of  the bill, and  that of the  citizens' initiative,                                                                    
which  would require  a  license  for industrial  operations                                                                    
related to cannabis.                                                                                                            
Senator  Ellis  responded  that   there  was  an  understood                                                                    
difference between  the two crops.  The cannabis crop  had a                                                                    
much greater THC level than that of industrial hemp.                                                                            
11:07:49 AM                                                                                                                   
Co-Chair MacKinnon OPENED public testimony.                                                                                     
11:08:18 AM                                                                                                                   
ROB  CARTER, DIVISION  OF AGRICULTURE  (via teleconference),                                                                    
testified in support  of the bill. He clarified  that the CS                                                                    
would not have fiscal impact for the division.                                                                                  
Co-Chair  MacKinnon rebutted  that the  fiscal not  had been                                                                    
for $160,000  the previous day.  She whether  the industrial                                                                    
hemp would need to be tested for THC levels.                                                                                    
Mr. Carter explained that as  the CS was written, there were                                                                    
no  requirements   for  the  division  to   provide  testing                                                                    
Co-Chair MacKinnon  wondered whether public safety  or state                                                                    
troopers would  be able to identify  visually the difference                                                                    
between industrial hemp and marijuana.                                                                                          
Mr. Carter responded  in the negative. He  believed that the                                                                    
difference between marijuana and hemp  would have to be left                                                                    
to the good faith of the producer.                                                                                              
11:10:18 AM                                                                                                                   
RONDA   MARCY,   CHIEF   EXECUTIVE  OFFICER,   ALASKA   HEMP                                                                    
INDUSTRIES  (via teleconference),  testified  in support  of                                                                    
the  bill.  She  clarified that  affirmative  defense  would                                                                    
shift the  burden of  testing onto  the field  producer. She                                                                    
relayed that  the hemp would  be tested numerous  times, and                                                                    
that certified  seeds, verified  to be  less than  3 percent                                                                    
THC,  would  be  used.     She  offered  an  anecdote  about                                                                    
industrialized hemp in Kentucky,  and the benefits the plant                                                                    
had offered the  state. She said that her  company was ready                                                                    
to  help  farmers  to  produce  products  that  ranged  from                                                                    
insulation  and  concrete,  to   fish  food.  She  expressed                                                                    
excitement about bringing the industry to Alaska.                                                                               
11:12:40 AM                                                                                                                   
Senator Bishop asked about the use of hemp in concrete.                                                                         
Ms.  Marcy  shared  that  there was  a  substance  known  as                                                                    
"hempcrete,"  which  had  been   used  to  build  the  Roman                                                                    
aqueducts. She discussed the high  value of hemp insulation.                                                                    
She explained  that the hempcrete had  a bit of a  "give" to                                                                    
it, making  it optimal for  use in buildings in  Alaska. She                                                                    
added that the high insulation  factor of hemp would help to                                                                    
lower energy costs in the state.                                                                                                
11:14:24 AM                                                                                                                   
Co-Chair  MacKinnon  asked  whether  the  recent  initiative                                                                    
would legalize the opening hemp retail establishments.                                                                          
Ms. Marcy replied that she  had submitted an application for                                                                    
a license,  but added  that hemp  sales and  marijuana sales                                                                    
were  separate issues.  She had  been  legally advised  that                                                                    
growing hemp  was legal, provided  the producer  could prove                                                                    
that the product contained less  than three percent THC. She                                                                    
asserted that she would strive  to be in compliance with all                                                                    
regulations.  She offered  that the  nutritional content  of                                                                    
hemp was higher than alfalfa.                                                                                                   
11:16:34 AM                                                                                                                   
DON HART,  SELF, WASILLA (via teleconference),  testified in                                                                    
support  of  the bill.  He  pointed  out that  the  previous                                                                    
testifier was a  bastion of information related  to hemp and                                                                    
marijuana. He discussed the  legalization of industrial hemp                                                                    
in Canada. He  explained that at the present  time, hemp was                                                                    
generating funds for Canada, which  he thought would be good                                                                    
for  Alaska. He  discussed  the hemp  seed,  which had  nine                                                                    
grams of  protein in three tablespoons;  higher than salmon.                                                                    
He  believed  that  industrialized hemp  could  bolster  the                                                                    
Alaskan economy.                                                                                                                
11:19:17 AM                                                                                                                   
JACK  BENNETT, SELF,  HOMER (via  teleconference), testified                                                                    
in support  of the bill. He  discussed sustainable building,                                                                    
and had worked on building  a tiny home model utilizing hemp                                                                    
products. He discussed heating in  rural areas of the state,                                                                    
and  highlighted the  importance  of  energy efficiency  and                                                                    
sustainability that  could be  provided with  green building                                                                    
materials  such  as  hemp  products.   He  lauded  the  high                                                                    
geothermal  mass  of  hempcrete.   He  discussed  the  waste                                                                    
produced with concrete production.  He relayed that Mercedes                                                                    
Benz  and BMW  used hemp  plastics  in their  car doors.  He                                                                    
expounded  on the  many useful  qualities of  industrialized                                                                    
11:23:02 AM                                                                                                                   
LACEY   ESHLEMAN,   SELF,  WASILLA   (via   teleconference),                                                                    
testified  in support  of  the bill.  She  had an  extensive                                                                    
farming  background,  and  acknowledged that  challenges  of                                                                    
farming in  Alaska. She thought  there would be  benefits to                                                                    
farming hemp. She discussed  her personal farming experience                                                                    
and history.  She expressed excitement about  the industrial                                                                    
applications  of   hemp.  She  possessed   currently  unused                                                                    
farmland  and was  interested in  growing hemp.  She thought                                                                    
industrialized hemp would help to stimulate the economy.                                                                        
11:25:26 AM                                                                                                                   
CASEY   ESHLEMAN,   SELF,  WASILLA   (via   teleconference),                                                                    
testified  in support  of  the bill.  He  was interested  in                                                                    
industrialized hemp  for the health and  industrial benefits                                                                    
the  plant  would  provide.   He  shared  that  agricultural                                                                    
benefits  of the  hemp plant  included  the rejuvenation  of                                                                    
depleted soils.  He relayed  that, as  a contractor,  he was                                                                    
excited  to  use industrial  hemp  in  his construction.  He                                                                    
encouraged the passage of the legislation.                                                                                      
11:27:21 AM                                                                                                                   
FRANK   TURNEY,   SELF,  FAIRBANKS   (via   teleconference),                                                                    
testified  in support  of the  bill. He  shared that  he had                                                                    
been  trying to  educate his  community on  the benefits  of                                                                    
industrial  hemp,   and  the   difference  between   it  and                                                                    
smokeable  cannabis,  for  two  decades.  He  mentioned  the                                                                    
Fairbanks Northstar  Borough's resolution in support  of the                                                                    
bill. He  stated that hemp  biomass was the  fastest growing                                                                    
biomass on the planet. He  discussed the products that could                                                                    
be  made  using hemp.  He  offered  a brief  explanation  of                                                                    
cannabis and hemp. He directed  the committee's attention to                                                                    
the website www.hemp.com as a source of information.                                                                            
11:30:46 AM                                                                                                                   
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
11:31:04 AM                                                                                                                   
Vice-Chair Micciche discussed the fiscal note.                                                                                  
Vice-Chair Micciche thought that  the zero fiscal note would                                                                    
be defensible if  the cost were shifted to  the producer. He                                                                    
wondered why the sponsor had not considered the shift.                                                                          
Senator Ellis  explained that any hemp  production in Alaska                                                                    
would require the importation of  hemp seeds from elsewhere.                                                                    
He believed  that the affirmative  defense written  into the                                                                    
bill that related to the  producer using less than 3 percent                                                                    
THC seeds would be enough  legal coverage for the farmer and                                                                    
the  state. He  said that  he would  accept any  suggestions                                                                    
that the committee had to offer.                                                                                                
Vice-Chair  Micciche thought  that  the bill  could be  more                                                                    
SB  8   was  HEARD  and   HELD  in  committee   for  further                                                                    
SENATE BILL NO. 163                                                                                                           
     "An Act relating to the nomination and designation of                                                                      
     state water as outstanding national resource water;                                                                        
     and providing for an effective date."                                                                                      
11:34:18 AM                                                                                                                   
Co-Chair MacKinnon OPENED public testimony.                                                                                     
11:35:04 AM                                                                                                                   
GUY  ARCHIBALD, INSIDE  PASSAGE WATER  KEEPERS, JUNEAU  (via                                                                    
teleconference),  testified in  opposition  to  the bill  as                                                                    
written. He thought it should  not be harder to the citizens                                                                    
of Alaska  to protect clean  water than it was  for industry                                                                    
to  pollute  it.  He  pointed out  that  the  Department  of                                                                    
Environmental   Conservation  did   not  currently   require                                                                    
baseline  data  on  the  receiving water,  as  part  of  the                                                                    
application   for   discharge.   He   furthered   that   the                                                                    
significant  economic  benefit  analysis  conducted  by  the                                                                    
department  had  no  minimum   economic  benefit  level.  He                                                                    
thought there  had to be  waters in  the state that  were so                                                                    
critical to  the communities that  they could  be designated                                                                    
without burdensome bureaucracy. He  asserted that this issue                                                                    
was not  one of land  use, but  of water quality.  He argued                                                                    
that land  owners did  not retain the  right to  pollute the                                                                    
water.  He  added that  it  was  the responsibility  of  the                                                                    
legislature  and administrative  agencies  to protect  clean                                                                    
11:37:21 AM                                                                                                                   
RAYMOND  SENSMEIER,  SELF,   YAKUTAT  (via  teleconference),                                                                    
testified  in opposition  to the  bill as  written. He  read                                                                    
from a prepared letter (copy on file):                                                                                          
     On  August  26  the   Yakutat  Tlingit  Tribal  Council                                                                    
     unanimously  voted  to  seek Tier  3  Natural  Resource                                                                    
     Water Designation,  The Yakutat Tlingit  Tribal Council                                                                    
     represents  Yakutat  Tlingit   Tribe  (Petitioners)  in                                                                    
     nominating the  Yakutat Forelands  for ONRW  status and                                                                    
     protection under  18 AAC 70.015(a)(3). To  qualify as a                                                                    
     Tier  3, or  ONRW water,  one of  two criteria  must be                                                                    
     met. The  water must either  be in a national  or state                                                                    
     park or wildlife refuge or  be a water with exceptional                                                                  
     recreational   or  ecological   significance  (Emphasis                                                                    
     added).  Under  these  criteria the  Yakutat  Forelands                                                                    
     qualify as  both an  exceptional recreational  area and                                                                    
     as    having     special    ecological    significance.                                                                    
     Additionally,  these   lands  contain   many  historic,                                                                    
     traditional,  sacred and  cultural sites  vital to  the                                                                    
     Yakutat  Tlingit Tribe.  The  area  is currently  under                                                                    
     congressionally  designated  protection and  within  an                                                                    
     inventoried Roadless Area.                                                                                                 
     Even  though  the State  of  Alaska  has no  nomination                                                                    
     producers  yet in  place,  the federal  antidegradation                                                                    
     policy   provides   guidance  for   Petitioners.   ONRW                                                                    
     designation  offers special  protection  for waters  of                                                                    
     "exceptional ecological significance."  These are water                                                                    
     bodies  that   are  important,  unique,   or  sensitive                                                                    
     ecologically, but  whose water quality, as  measures by                                                                    
     the traditional parameters such  as dissolved oxygen or                                                                    
     pH.   may   not   be   particularly   high   or   whose                                                                    
     characteristics  cannot  be   adequately  described  by                                                                    
     these parameters (such as wetlands).                                                                                       
     Guidance  for  developing  implementation  methods  for                                                                    
     antidegradation  policies  is  provided  through  EPA's                                                                    
     Regional Offices.                                                                                                          
[This 9 page document, in its entirety, can be found on                                                                         
BASIS under the bill]                                                                                                           
11:43:36 AM                                                                                                                   
ROSEMARIE  HOTCH,  SELF,   ANCHORAGE  (via  teleconference),                                                                    
testified against  the bill  as written.  She felt  that the                                                                    
legislation was example of Alaska  Natives being maligned in                                                                    
waste   water  issue   discussions.   He   hoped  that   the                                                                    
legislature  could   move  forward  with   legislation  that                                                                    
supported protecting Alaska's waters.                                                                                           
11:45:52 AM                                                                                                                   
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
Co-Chair MacKinnon discussed housekeeping.                                                                                      
11:47:30 AM                                                                                                                   
RICK  SOLIE,  Alaska   Miners  Association,  FAIRBANKS  (via                                                                    
teleconference), testified  against the bill as  written. He                                                                    
expressed   that  that   the  association   had  significant                                                                    
concerns with regard to AS  46.03.185, and believed that Sub                                                                    
section (a) should  be removed from the bill.  He hoped that                                                                    
the association  could work  with the  committee to  craft a                                                                    
bill  that  would  address  the   situation  and  allow  the                                                                    
administration to comply with EPA requirements.                                                                                 
11:49:32 AM                                                                                                                   
Co-Chair  Kelly refuted  previous  testimony  that the  bill                                                                    
would make  it harder  for Alaskans  to protect  clean water                                                                    
than for  corporations to pollute waters.  He contended that                                                                    
corporations kept water  clean and offered the  Red Dog Mine                                                                    
as an example.  He furthered that fishing  improved in areas                                                                    
of  mining  because industry  was  required  to put  cleaner                                                                    
water  back   into  watersheds   than  had   been  naturally                                                                    
SB  163  was  HEARD  and   HELD  in  committee  for  further                                                                    
11:50:51 AM                                                                                                                   
Co-Chair MacKinnon discussed housekeeping.                                                                                      
11:51:35 AM                                                                                                                   
The meeting was adjourned at 11:51 a.m.                                                                                         

Document Name Date/Time Subjects
SB 8 Public Testimony Packet 1.pdf SFIN 4/9/2016 10:00:00 AM
SB 8