Legislature(1995 - 1996)
02/21/1996 03:45 PM Senate RES
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SENATE RESOURCES COMMITTEE
February 21, 1996
3:45 P.M.
MEMBERS PRESENT
Senator Loren Leman, Chairman
Senator Drue Pearce, Vice Chairman
Senator Steve Frank
Senator Rick Halford
Senator Robin Taylor
Senator Georgianna Lincoln
Senator Lyman Hoffman
MEMBERS ABSENT
All Members Present
COMMITTEE CALENDAR
SENATE BILL NO. 198
"An Act establishing the Homer Airport Critical Habitat Area."
SENATE BILL NO. 180
"An Act authorizing the commissioner of the Department of Natural
Resources to negotiate and enter into timber sale contracts that
provide for local manufacture of high value-added wood products;
and establishing an Alaska Forest Products Research and Marketing
Program within the Department of Commerce and Economic
Development."
SENATE CONCURRENT RESOLUTION NO. 24
Relating to a division of game in the Alaska Department of Fish and
Game and to management of game.
PREVIOUS SENATE COMMITTEE ACTION
SB 198 - No previous action to record.
SB 180 - No previous action to record.
SCR 24 - See Resources minutes 2/14/96.
WITNESS REGISTER
Senator John Torgerson
State Capitol Bldg.
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of SB 198.
Brian Sweiven
Homer City Councilman
Homer, AK 99603
POSITION STATEMENT: Supported SB 198.
Eric Peterson
Homer City Councilman
Homer, AK 99603
POSITION STATEMENT: Supported SB 198.
Sam Kito, III, Legislative Liaison
Department of Transportation and Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Supported SB 198.
Derek Stonorov
Beluga Wetlands
51795 East End Rd.
Homer, AK 99603
POSITION STATEMENT: Supported SB 198.
Lynn Whitmore, Chairman
Homer Fish and Game Advisory Committee
P.O. Box 355
Homer, AK 99603
POSITION STATEMENT: Supported SB 198.
Nancy Lord
P.O. Box 558
Homer, AK 99603
POSITION STATEMENT: Supported SB 198.
Gino Del Frate, Biologist
Department of Fish and Game
3298 Douglas St.
Homer, AK 99603
POSITION STATEMENT: Supported SB 198.
Tom Boutin, State Forester
Department of Natural Resources
400 Willoughby Ave., 3rd Floor
Juneau, AK 99801-1724
POSITION STATEMENT: Commented on SB 180.
Karl Ohls, Chief Resources Specialist
Department of Commerce and Economic Development
P.O. Box 110804
Juneau, AK 99811-0804
POSITION STATEMENT: Commented on SB 180.
Kathleen Morse, Forestry Economist
Department of Commerce and Economic Development
P.O. Box 110804
Juneau, AK 99811-0804
POSITION STATEMENT: Commented on SB 180.
Jack Phelps
Alaska Forest Association
111 Stedman St., Ste 200
Ketchikan, AK 99901
POSITION STATEMENT: Supported CSSB 180.
Buck Lindekugel, Conservation Director
Southeast Alaska Conservation Council (SEACC)
419 6th
Juneau, AK 99801
POSITION STATEMENT: Commented on SB 180.
Sarah Hannan, Executive Director
Alaska Environmental Lobby, Inc.
P.O. Box 22151
Juneau, AK 99801
POSITION STATEMENT: Supported SB 180.
Mark Wheeler
Alaska Environmental Lobby, Inc.
P.O. Box 22151
Juneau, AK 99801
POSITION STATEMENT: Supported SB 180.
Pam La Bolle, President
Alaska State Chamber of Commerce
217 Second Street #201
Juneau, AK 99801
POSITION STATEMENT: Commented on SB 180.
ACTION NARRATIVE
TAPE 96-17, SIDE A
Number 001
SB 198 HOMER AIRPORT CRITICAL HAB. AREA
CHAIRMAN LEMAN called the Senate Resources Committee meeting to
order at 3:45 p.m. and announced SB 198 to be up for consideration.
SENATOR TORGERSON, sponsor of SB 198, said the Department of
Transportation currently has under its jurisdiction and control
about 1,000 acres surrounding and including the Homer Airport.
This bill asks that 300 acres of that be set aside for the primary
purpose of protecting wintering moose calves and some waterfowl and
shorebirds. He noted that the waterfowl and shorebirds are
absolutely restricted from any of the airport enhancement programs
coming up.
Opposition to the bill has basically been centered around whether
or not there will be enough room for future expansion of the
airport. The Homer City Council addressed this issue three times,
but the mayor vetoed the resolution authorizing support for the
bill each time.
SENATOR TORGERSON said this issue had taken an extreme amount of
negotiations between the DOT, Homer residents, the City Council,
and the Mayor's office.
SENATOR LEMAN asked what this would actually do to the management
of the property, other than just protection against future
development. MR. TORGERSON said he didn't anticipate any changes.
Some willows might be planted for moose to eat, because it's the
only moose calving place left in its natural state.
Number 135
BRIAN SWEIVEN, Homer City Councilman, said on February 3, and in
April of 1995 the Council passed resolutions supporting critical
habitat. In October, Senator Torgerson held a public meeting in
Homer on this legislation. The Mayor was the only person who
objected. In December 1995 the Council unanimously supported the
legislation. On January 22, 1996 the City Council approved another
resolution supporting SB 198 and the Mayor vetoed it. On February
12, 1996, the City Council overturned the Mayor's veto by a vote of
6 - 0.
ERIC PETERSON, Homer City Councilman, supported SB 198, although he
is a realtor and a development oriented person. This is not an
anti-development bill, he said. It is simply a bill to use State
land that is not being used to let moose eat. Other things can be
done like nature trails and viewing areas for tourists. He said
they would not do something like this in Homer unless it had broad
community support, which it has.
Number 197
SAM KITO III, DOT, said they support SB 198. He said presently it
is being managed as clear area for the Homer airport which in
essence means that nothing is being done on the property. The area
in question is a wetlands area and there are no trees to cut.
Number 215
DEREK STONOROV, Beluga Wetlands, supported the testimony and SB
198. He said they have the support of the people in the area as
well as letters of support from 15 different groups and a petition
with 200 names on it.
SENATOR LEMAN noted that there are two small parcels south of the
airstrip and he asked why they are part of the proposed critical
habitat area. MR. STONOROV said they were included because there
is an Aleutian tern colony that uses the wetlands there. It's the
only Aleutian tern colony that has road access in the State. He
added that there are 850 feet from the center of the runway and
part of the colony would be inside that right-of-way.
LYNN WHITMORE, co-chairman of a local task force and chairman of
the Homer Fish and Game Advisory Committee, said they have
supported this concept for a long time. Recently, they had to
institute a cow moose hunt because of the population of moose they
had compared to the winter browse. Something definitely needs to
be done.
Number 272
NANCY LORD, Homer resident, said that part of the intent is to add
the advantage of having the area identified for this purpose.
There is a land trust and there are some land owners who would
possibly donate their lands to public use in conjunction with the
reserved area. There would be more opportunity for recognizing the
area for its wildlife viewing and recreational values to aid the
tourism industry.
GINO DELFRATE, Biologist, ADF&G, said he supported SB 198.
SENATOR LEMAN asked if he anticipated that the Department would be
rather passive and let community groups and individuals work on the
property or would they actually be actively involved in improving
the moose browse. MR. DELFRATE said at present there are no plans
for habitat enhancement.
SENATOR LEMAN said he would set the bill aside and announced that
he would be in Homer with Senator Torgerson on March 1 and they
planned to view the site and there would be a chance for public
input from 11:00 a.m. - 12:30 p.m.
SRES 2/21/96
SB 180 VALUE-ADDED TIMBER SALES; MARKETING
SENATOR LEMAN announced SB 180 to be up for consideration.
SENATOR PEARCE moved to adopt the work draft "c" CS to SB 180.
There were no objections and it was so ordered.
TOM BOUTIN, State Forester, said this was a bill requested by the
Governor after meeting with the timber industry which told him that
a reliable timber supply was needed before any kind of capital
investment could be made. This bill would allow negotiated sales
and the CS would allow the sales to have up to 10 million board
feet per year. The Commissioner of DNR would determine to what
extent the timber in the particular sale would be used to make
"high-value added products." There would be a requirement in the
timber sale contract that that percentage of timber be used for
high-value added products.
MR. BOUTIN said that the 10 million board feet is a problem with
the administration which prefers 5 - 7 million board feet. Most
timber sale contracts would be far less than that and a higher
amount would alarm the public without gaining any utility.
CSSB 180 takes all the Board of Forestry comments and turns them
into the bill with the exception of the timber volume limit.
The CS puts a limit on the number of contracts per region per year
in the first three years and then specifies that for the rest of
the years the limit would be set by regulation.
The Board of Forestry recommended that some products be added to
the list of high value added products and then came up with a
separate category called "value added products" that the
Commissioner would take into account. The new category includes
pulp, chips, wafer board, and green lumber products.
The Board of Forestry did not recommend eliminating section 3 of SB
180.
SB 180 does not add timber sales. Timber sales on State land are
unlikely to approach the ceiling of sustained yield with multiple
use because of budget realities. SB 180 is simply a method of sale
option that doesn't change the public process. It doesn't transfer
any forest management responsibilities to the timber purchaser and
it doesn't close the door on round log exports, MR. BOUTIN said.
Number 366
KARL OHLS, Resources Development Specialist, said the original
version of SB 180 established an Alaska Forest Products Research
and Marketing Program, essentially a support program for value
added timber production and marketing efforts.
He explained that in the Department of Commerce a position has been
budgeted for a forest products specialist who will be Kathleen
Morse. She currently is working for the U.S. Forest Service and
under an intergovernmental personnel act agreement they will borrow
her for some time. Her background is an economist and she is also
very knowledgeable about value added timber products and
manufacturing. The DOCED wants to dedicate a large amount of Ms.
Morse's time to the duties described in the original version of the
bill. Since this is an existing position, there is a $0 fiscal
note for the marketing and research program.
MR. OHLS said that no matter what version passes, the Department
intends to dedicate a lot of time to value added products and will
be continuing forward with the duties as described in the original
version of the bill.
SENATOR TAYLOR said he was pleased to see the legislation and asked
if they were opposed to some of the changes in the CS. MR. BOUTIN
said he didn't oppose it at all. He spoke about raising the limit
on the size of timber sales from the 5 million board feet per year
to the 10 million board feet. He said they would much prefer the
5 - 7 million board feet. Secondly, the elimination of the forest
products research and development was important.
Number 450
SENATOR TAYLOR commented that he knew people who would harvest more
fire wood over a 10-year period than 10 million board feet. He
asked what the sustained yield was for the State.
MR. OHLS said they calculate sustained yield on an area basis. The
Haines State Forest has a sustained yield of 7.2 million board feet
and they do offer that and have been selling that without a
problem. On the Kenai Peninsula there is a special situation where
the sustained yield is a very small amount, but in the past 12 - 18
months they have offered about 35 million board feet which is a
multiple that Trustee For Alaska might argue for instance. Because
it's dead and dying, they don't include it in the sustained yield
calculation.
The Interior is the place where the State has a much larger
sustained yield than what it's offering, predominately in hard
woods which at the moment they don't have a market for. They are
not at the allowable cut in the river system at McGrath, but there
isn't a market for that spruce. He explained that the spruce they
can reach economically in the Interior is being offered. The mills
in the Interior use the kind of volume that is in the bill. The
largest mill uses about 4 million board feet a year. He knows from
a Tongass perspective this volume seems small, but in other parts
of the State it is a volume that people are willing to talk about.
SENATOR TAYLOR asked what is the sustained yield on our State
Forest lands that is annually available. MR. OHLS replied in the
Interior the hard wood is about 60 million board feet per year and
the soft wood that is economically accessible is about 12 million
board feet per year. In South Central it's 2 - 4 million board
feet. The State does have appreciable timber at Cape Yakutaga and
has agreed to a settlement whereby the University of Alaska has the
State's allowable cut for the next 20 years and there the sustained
yield is about 16 million board feet.
SENATOR TAYLOR said those are incredibly low numbers compared to
what he has been told. MR. OHLS commented that they do not include
areas that are not classified for forestry.
SENATOR TAYLOR asked what he meant by value added. MR. OHLS
replied that it is defined in the bill on page 4.
SENATOR LEMAN asked the specifications for a cant. MR. OHLS
answered that it has to be 8 3/4 inches or less on a side. MS.
MORSE said that you only have to cut two sides.
SENATOR FRANK asked why the CS doesn't include the marketing
program. ANNETTE KREITZER answered there was testimony in the
House earlier to the effect that the marketing program wouldn't
increase the fiscal note and the House is now considering putting
that marketing provision back in. SENATOR FRANK said he would like
to see that in the CS. It would aid the smaller timber operators
and give some perspective to the government that it might not
otherwise have.
MR. OHLS reiterated that there is already a position budgeted for
a forestry person. He said putting the marketing in statute
reinforces the administration's position.
Number 562
SENATOR LINCOLN said she also thought it was important to have the
whole marketing and research section included in the bill.
SENATOR TAYLOR commented that he thought it was ludicrous to
develop a marketing and research program so we can pay lip service
and pander to the public and then not put up any timber for them to
sell or do anything with.
TAPE 96-17, SIDE B
MR. BOUTIN said the Governor's office had given them very firm
direction about putting timber up for sale on Wrangell and Mitkoff
Islands. In Southeast for this calendar year the Division of
Forestry will be offering 25,420,000 board feet. That's with about
eight and a half foresters.
Number 550
JACK PHELPS, Alaska Forest Association, said they support CSSB 180.
They had basically three major areas of concern with the original
bill; the 5 million board feet limitation on individual sales, the
50 percent allocation for value added products which they felt was
unworkable, and the definition of high-value added was entirely too
restrictive. All of those concerns were adequately addressed in
the CS.
He added that the increase to 10 million feet was a step in the
right direction, and he asked that they resist attempts to reduce
the maximum sale size. He said he thought the Division of Forestry
was underfunded and it would be appropriate if the legislature
could fund additional State foresters.
SENATOR LEMAN asked what he thought about the marketing and
research. MR. PHELPS said he didn't have a position on that, he
did think it was important for the Department of Commerce to have
forestry represented.
BUCK LINDEKUGEL, Conservation Director, SEACC, supported the
concept of SB 180. He was not familiar with the CS. He thought it
was appropriate to work with the industry to create the most jobs
per board foot cut from State lands. Such action would reduce and
avoid conflicts with other forest users who depend upon the fish,
wildlife, and scenic values of State forests to protect their
livelihoods as well.
Number 434
SENATOR TAYLOR asked if there was anything preventing round logging
of timber. MR. LINDEKUGEL said he wasn't aware of anything in the
bill that prevents that.
SENATOR TAYLOR asked if he supported round log exports from Alaska.
MR. LINDEKUGAL said he didn't.
SENATOR TAYLOR asked who funded their organization. MR. LINDEKUGAL
said they are made up of 15 volunteer citizen groups and 12
different communities in Southeast. The majority of their funding
is through private membership fees and private grants from
foundations. He said their dues are a minimum of $15.
SENATOR LINCOLN said that she appreciated the public testifying in
front of any legislative committee whether she agreed with them or
disagreed.
SENATOR TAYLOR pointed out that their dues aren't paying for their
organization, but there is a lot of money from "Outside."
MR. LINDEKUGAL clarified that they are not funded completely by
membership dues. They do seek funding and grants from different
foundations across the country.
SENATOR LEMAN explained that Senator Taylor's district had been hit
hard by losses of jobs in the timber industry. MR. LINDEKUGAL said
he understood that and SEACC supported Wrangell's request for money
from the federal government for certain projects they had proposed.
Number 425
SARAH HANNAN, Alaska Environmental Lobby, said they had been
incorporated in the State of Alaska for 14 years and are a
coalition of 20 Alaskan environmental groups; they have a staff of
one and are largely a volunteer organization. They have a dual
mission: to lobby on behalf of their coalition and to train
Alaskans in the process.
She pointed out Mr. Boutin said this bill is not intended to change
the volume of timber sales the State is doing. There is very
little State forested land in Southeast, most of the trees largely
belong to the federal government.
Negotiated sales is a new way to sell trees. The reason is because
in the last couple of years many Alaskans who work in forest
products say their problem is that they cannot get a steady supply
and a certain volume. This bill will not add more timber sales,
but it will give the opportunity to the small value added processor
to be able to negotiate with the State and not have to compete with
open bidding.
MARK WHEELER, Alaska Environmental Lobby, said they support the
concepts behind this legislation, but they have specific concerns
about its present form. It represents a good first step on the
road toward high value added forest products industry in Alaska.
Their major concerns with SB 180 as originally drafted are first
they feel 10 years is too long for negotiated contracts.
Experiences in the Tongass have shown how dangerous it is to allow
contract obligations rather than sound resource policy drive forest
management. They suggest three year contracts as small value added
operations in the interior have indicated they need a three year
guaranteed supply to acquire loans. More than 50% of the trees
should remain in state. They would like to see a base level of 70
percent of timber cut on State lands to undergo high value added
processing. Above that, the Commissioner should insure the maximum
percentage feasible should be dedicated to high value added
processing.
Volume should be determined on a regional basis rather than one
Statewide maximum and they feel 10 million board feet per year is
too large to accommodate regional variations in timber.
CSSB 180 misrepresents the Board of Forestry's recommendations on
this issue. It says that the first three years the Commissioner
will allow two contracts per year and then no less than two
contracts per year. The original recommendations were that for the
first three years there would be a maximum of two contracts per
region and after that the Commissioner would set the number of
contracts per region through regulation.
SENATOR LEMAN asked what he thought about the marketing and
research program. MR. WHEELER said they feel it is a good idea to
help in selling product.
SENATOR TAYLOR asked how he would apply the 70 percent for high
value added timber in Southeast. MS. HANNAN replied that she
didn't think it applied in Southeast, since the State is not able
to negotiate a sale in Southeast that comes anywhere close to
meeting the needs of any of the timber operators here.
SENATOR TAYLOR said that 10 million board feet per year would be
attractive to his small mills. MS. HANNAN added that if 70 percent
of it could stay in Alaska for high value added processing, they
would support it.
SENATOR TAYLOR pointed out they make it look like they support the
bill knowing that 50 percent of the timber is utilizable for only
low value added processing, but in reality they are killing any
timber sale in Southeast.
MS. HANNAN replied that their concerns are at a policy level of
going into a new style of negotiated sales, allowing exports. This
is the place where provisions are built in guaranteeing some new
developments. A reduced stumpage rate is a reasonable trade off
for 70 percent of the timber to be processed in high value added
processing.
MR. WHEELER asked SENATOR TAYLOR if he meant there are no forests
in Southeast that would have 70 percent of timber utilizable for
high value added processing. SENATOR TAYLOR replied there is a lot
of good timber here, but it is sitting next to a salmon stream or
something like that.
SENATOR TAYLOR asked him what experience he had to recommend the 70
percent. MR. WHEELER replied that they represent 20 different
environmental groups all over Alaska, some of whom have done polls
in their area. They talked to small value added processors and
asked what return they make on what they harvested and they came up
with 70 percent as a reasonable figure. He said they did not want
to see a token industry covering for a pulp mill or for the
exporting of round logs if there is no minimum percent of the trees
that must undergo high value added processing.
SENATOR TAYLOR asked if there was some basis for him suggesting in
Southeast Alaska you could somehow get more than 50 percent of the
timber that would be good for high value? MS. HANNAN replied they
are suggesting that as State policy, not for Southeast. They think
the volumes should be set on a regional basis because the forests
of Southeast and the forests of the Kuskokwim are very different.
Setting those differences out at the statute level is very
cumbersome. She said they represent timber experts within their
group and these are their recommendations.
Number 258
SENATOR LEMAN stated they would set aside CSSB 180 for the time
being.
SRES 2/21/96
SCR 24 REESTABLISH ADFG DIVISION OF GAME
SENATOR LEMAN announced SCR 24 to be up for consideration.
SENATOR HALFORD moved to adopt the CS to SCR 24. There were no
objections and it was so ordered.
SENATOR HALFORD moved to pass SCR 24 from committee with individual
recommendations and a $0 fiscal note. There were no objections and
it was so ordered.
SENATOR LINCOLN asked what the changes were in the CS. SENATOR
LEMAN said the ADF&G comments from another meeting were
incorporated in the CS.
ANNETTE KREITZER, Staff to Senate Resources Committee, reviewed the
changes in the CS.
SENATOR LEMAN thanked Ms. Kreitzer for her review.
Number 203
SB 180 VALUE-ADDED TIMBER SALES; MARKETING
SENATOR LEMAN announced SB 180 to be back up for consideration and
asked Mr. Boutin to respond to the question of exports. He said
the bill does not prohibit exports, but the rationale the
Department of Law has provided is that a percentage of timber
specified by the Commissioner for the specific timber sale would go
into these high value added and value added products.
SENATOR LINCOLN asked to clarify on page 1 the difference between
"affecting" and "impacting." MR. BOUTIN replied that the Forest
Practices Act prohibits DNR from impacting fish habitat, water
quality, and specific wildlife habitat. SENATOR LINCOLN asked him
to get back to her with the reasoning for the word change and then
asked about the letter that was written from the Chief Forester of
Ahtna Corporation saying the bill was unconstitutional and required
timber be value added in state rather than outside the State which
was detrimental to their company. MR. BOUTIN replied that he
hadn't talked to Ahtna and they hadn't been a bidder on State
timber sales. He explained that Ahtna has a timber export program
and this bill would in no way affect it.
Number 113
SENATOR FRANK asked Mr. Boutin to respond to the letter because it
might change people's opinions about this bill.
SENATOR LEMAN said they would hold the bill over for a couple of
days to give him a chance to look over the letter and anything else
they have discussed.
SENATOR FRANK said that some people think a negotiated timber sale
is subsidizing the forest industry. He didn't think that was the
case and he was concerned with the implication in the CS that that
is the case, as in line 9 where it says one means of encouraging
such facilities is through the use of an incentive by reducing the
stumpage price of timber. This language was not in the original
bill.
MR. BOUTIN explained that sentence addresses a Board of Forestry
resolution that said if there is a subsidy, it should only be in
the stumpage price, not in other ways like low interest loans.
SENATOR FRANK said he was still uncomfortable implying there was
going to be a subsidy. MR. BOUTIN replied in any negotiated sale
someone can second guess the price later whereas in the current
timber sale program, almost all sales are sold by competitive sale
and they know the market price.
SENATOR FRANK asked if he envisioned a negotiated sale that is not
competitive. MR. BOUTIN replied that he didn't really know if
there would be competing proposals. SENATOR FRANK asked if it
would be the State's policy to exclude competing proposals, for
example, from a company that was going to do value added and hire
Alaskans, etc. That wouldn't make sense. MR. BOUTIN agreed. One
of the considerations for the Commissioner is the stumpage price
(page 3, line 17). He said they could just eliminate that
sentence.
TAPE 96-18, SIDE A
Number 001
PAM LA BOLLE, President, Alaska State Chamber of Commerce, said
they represent 700 business members who employ approximately 70,000
Alaskans and the 35 local Chambers of Commerce and the 6,000
business members they represent.
One of their top ten priorities is maintaining the viability of
Alaska's forest products industry. They support expansion of the
State sales program on State lands. They support CSSB 180. They
believe the 10 million board feet is less than desirable; 15
million would be better in drawing the kind of economic development
and impact that is needed to establish long term investment
conditions.
SENATOR LEMAN asked Senator Lincoln if the Committee could take up
her amendment when the bill is back before them. SENATOR LINCOLN
replied that was fine and added that there would need to be a new
section added as well as a title change.
SENATOR LINCOLN asked if they could also address section 3 where it
says, "may negotiate no more than two sales of timber." Its
calendar year is 1996, 1997, and 1998. She wanted to know why that
was added. MR. BOUTIN explained that was also a recommendation of
the Board of Forestry. Some of the public was concerned there
would be too many lease sales.
SENATOR FRANK asked if the marketing program would apply to the
high value added products only. MR. OHLS answered the original
bill applied to the high valued added category, but he had no
objection to helping everyone in the timber industry as much as
they could. SENATOR LINCOLN said she intended for it to apply to
both.
Number 123
SENATOR LEMAN thanked everyone for their participation and
adjourned the meeting at 5:25 p.m.
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