Legislature(2003 - 2004)

05/05/2003 03:34 PM Senate RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                          May 5, 2003                                                                                           
                           3:34 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Scott Ogan, Chair                                                                                                       
Senator Thomas Wagoner, Vice Chair                                                                                              
Senator Fred Dyson                                                                                                              
Senator Ralph Seekins                                                                                                           
Senator Ben Stevens                                                                                                             
Senator Kim Elton                                                                                                               
Senator Georgianna Lincoln                                                                                                      
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 149                                                                                                             
"An Act relating to timber and to the sale of timber by the                                                                     
state."                                                                                                                         
     MOVED CSSB 149(RES) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SENATE BILL NO. 185                                                                                                             
"An Act providing for a reduction of royalty on certain oil                                                                     
produced from Cook Inlet submerged land."                                                                                       
     HEARD AND HELD                                                                                                             
                                                                                                                                
BOARD OF FISHERIES APPOINTMENTS:                                                                                                
                                                                                                                                
     Mr. Melvan E. Morris, Jr.                                                                                                  
     Mr. Ed Dersham                                                                                                             
     Mr. Art Nelson                                                                                                             
     Mr. Floyd F. Bouse, DDS                                                                                                    
     CONFIRMATIONS ADVANCED                                                                                                     
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
SB 149 - See Resources minutes dated 5/2/03.                                                                                    
                                                                                                                                
SB 185 - No previous action to record.                                                                                          
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Ms. Bobby Jo Skevo                                                                                                              
No address provided                                                                                                             
POSITION STATEMENT:  Opposes CSSB 149(RES)                                                                                    
                                                                                                                                
Mr. Jeff Jahnke                                                                                                                 
Department of Natural Resources                                                                                                 
400 Willoughby Ave.                                                                                                             
Juneau, AK  99801-1724                                                                                                          
POSITION STATEMENT:  Answered questions about CSSB 149(RES)                                                                   
                                                                                                                                
Ms. Nancy Fresco                                                                                                                
Northern Alaska Environmental Center                                                                                            
830 College Rd.                                                                                                                 
Fairbanks, AK  99708                                                                                                            
POSITION STATEMENT:  Expressed concerns about CSSB 149(RES)                                                                   
                                                                                                                                
Mr. Robert Ott                                                                                                                  
Tanana Chiefs Conference                                                                                                        
122 First Ave.                                                                                                                  
Fairbanks, AK  99701                                                                                                            
POSITION STATEMENT:  Supports SB 149 with some changes                                                                        
                                                                                                                                
Mr. Eric Pyne                                                                                                                   
Boreal Forest Products &                                                                                                        
 International Woodcutters Association                                                                                          
PO Box 82694                                                                                                                    
Fairbanks, AK                                                                                                                   
POSITION STATEMENT:  Supports CSSB 149(RES)                                                                                   
                                                                                                                                
Ms. Jan Dawe                                                                                                                    
Alaska Boreal Forest Council                                                                                                    
PO Box 84530                                                                                                                    
Fairbanks, AK                                                                                                                   
POSITION STATEMENT:  Expressed concerns about CSSB 149(RES) and                                                               
suggested an amendment                                                                                                          
                                                                                                                                
BOARD OF GAME NOMINEES                                                                                                          
                                                                                                                                
Mr. Melvan E. Morris, Jr.                                                                                                       
917 Mill Bay Road                                                                                                               
Kodiak, AK 99615                                                                                                                
                                                                                                                                
Mr. Ed Dersham                                                                                                                  
Box 537                                                                                                                         
Anchor Point, AK                                                                                                                
                                                                                                                                
Mr. Art Nelson                                                                                                                  
431 W 7 Ave #103                                                                                                                
Anchorage, AK 99504                                                                                                             
                                                                                                                                
Mr. Floyd F. Bouse, DDS                                                                                                         
4020 Dunlap Ave.                                                                                                                
Fairbanks, AK 99709                                                                                                             
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-39, SIDE A                                                                                                            
                                                                                                                                
CHAIR SCOTT  OGAN called the Senate  Resources Standing Committee                                                             
meeting to  order at  3:34 p.m. All  members were  present except                                                               
Senator  Wagoner. Chair  Ogan called  a brief  at-ease and,  upon                                                               
reconvening, said the committee would first take up SB 149.                                                                     
                                                                                                                                
           SB 149-TIMBER/ TIMBER SALES/ STATE FORESTS                                                                       
                                                                                                                                
CHAIR  OGAN reminded  members that  the committee  had adopted  a                                                               
committee substitute (CS), Version H,  as its working document at                                                               
the last  meeting and announced  the committee would  take public                                                               
testimony.                                                                                                                      
                                                                                                                                
MS.  BOBBY  JO SKEVO  (ph),  representing  herself, said  the  CS                                                               
dramatically weakens  the planning process for  timber management                                                               
on state lands.  She said the existing  five-year management plan                                                               
process works. When people know a  timber sale is coming up, they                                                               
have  the  opportunity  to  plan ahead.  She  added  that  salmon                                                               
habitat is always a significant state interest.                                                                                 
                                                                                                                                
CHAIR  OGAN  noted that  Mr.  Jeff  Jahnke, State  Forester,  was                                                               
available to answer questions.                                                                                                  
                                                                                                                                
SENATOR ELTON noted the deletion of  language on page 2, lines 2-                                                               
4,  requiring  the  commissioner  to  consider  information  that                                                               
describes immediate  and long term  effects of  forest activities                                                               
on the timber base and on  other resources and uses. He asked Mr.                                                               
Jahnke  whether  the  information that  describes  immediate  and                                                               
long-term effects is useful.                                                                                                    
                                                                                                                                
MR.  JEFF JAHNKE,  Division of  Forestry,  Department of  Natural                                                               
Resources (DNR), said the intent  is to remove the requirement to                                                               
provide information  on the collective  effects on a  forest land                                                               
use plan  (FLUP) for  a relatively small  area of  the landscape.                                                               
The  Division   of  Forestry  believes  the   collective  effects                                                               
analyses would be  better placed in the area plan  and the forest                                                               
management plan for the state forest.                                                                                           
                                                                                                                                
SENATOR  ELTON asked  Mr. Jahnke  to describe  "collective forest                                                               
activities" and  suggested eliminating  the word  "collective" if                                                               
the terminology is the problem.                                                                                                 
                                                                                                                                
MR. JAHNKE  said by "collective  effects" he means the  effect of                                                               
multiple actions  across the landscape  or across a  watershed as                                                               
opposed to an individual project.                                                                                               
                                                                                                                                
SENATOR  ELTON  asked  why  it  is   a  bad  idea  to  have  that                                                               
information.                                                                                                                    
                                                                                                                                
MR. JAHNKE  said he is  not saying it's  a bad idea,  he believes                                                               
the best place for that information  is in the broader scale area                                                               
plan and forest management plan.                                                                                                
                                                                                                                                
SENATOR  ELTON referred  to language  on page  4, line  10, which                                                               
says the primary purpose of  establishing state forests is timber                                                               
management. He asked:                                                                                                           
                                                                                                                                
     Are  we  talking  about just  when  state  forests  are                                                                    
     established  and why  they are  established  or are  we                                                                    
     suggesting that,  for example,  if you  take a  look at                                                                    
     the  Haines  State  Forest where  there  are  competing                                                                    
     uses,  including  an  increasing  demand  from  tourism                                                                    
     operators  who  are  accessing  that  area,  does  this                                                                    
     suggest  that  timber  trumps tourism  each  and  every                                                                    
     time?                                                                                                                      
                                                                                                                                
MR.  JAHNKE said  he believes  it  means timber  has priority  if                                                               
there is a conflict between the two.                                                                                            
                                                                                                                                
SENATOR ELTON asked:                                                                                                            
                                                                                                                                
     If there  is an  established tourism  organization that                                                                    
     is doing  canoe or raft  float trips down a  river that                                                                    
     runs through the Haines State  Forest and if there is a                                                                    
     proposal  that there  be a  timber harvest  in adjacent                                                                    
     lands  to where  that float  trip is  utilizing it  ...                                                                    
     this  language   to  me   suggests  that   that  timber                                                                    
     operation   would  always   be   prioritized  over   an                                                                    
     established  business that  is currently  that part  of                                                                    
     the state  forest. Would that  be a  correct assumption                                                                    
     on my part?                                                                                                                
                                                                                                                                
MR. JAHNKE  said only if  there is,  in fact, a  conflict between                                                               
the two users.                                                                                                                  
                                                                                                                                
SENATOR ELTON said he was assuming  that it is easy to perceive a                                                               
conflict  on  the  part  of  the float  trip  operator.  He  then                                                               
referred to language on  page 4, line 5, and asked  if there is a                                                               
statutory definition of the term "compelling state interest."                                                                   
                                                                                                                                
MR.  JAHNKE said  he is  not aware  of a  definition in  statute.                                                               
However,  he is  aware of  substantial case  law that  identifies                                                               
what a "compelling state interest" is.                                                                                          
                                                                                                                                
SENATOR  ELTON  asked  Mr.  Jahnke  if he  is  referring  to  the                                                               
judicial system.                                                                                                                
                                                                                                                                
MR. JAHNKE  replied, "I think  that the definition that  has come                                                               
about as  a result  of reviewing  'compelling state  interest' in                                                               
the  court system  would be  looked at  as providing  guidance to                                                               
what 'compelling state interest' is."                                                                                           
                                                                                                                                
SENATOR ELTON commented  that it would be interesting  to know if                                                               
DNR uses  a grid to  determine a "compelling state  interest" and                                                               
requested a  copy of such  a document  before SB 149  reaches the                                                               
Senate floor.                                                                                                                   
                                                                                                                                
CHAIR OGAN indicated the grid would  be art. VIII, sec. 1, of the                                                               
Alaska  Constitution, which  says resources  should be  developed                                                               
for the maximum benefit of the  people. They also must be managed                                                               
on  a  sustained  yield  basis  subject  to  preferences  amongst                                                               
beneficial  uses.  He  said  the  Constitution  clearly  provides                                                               
authority to  establish a preference.  He reads this bill  to say                                                               
the highest  use of  state forests is  for timber  production. He                                                               
said  some  would  argue  that  not  doing  that  would  be  poor                                                               
stewardship.  He maintained  that the  forests around  the Haines                                                               
area are not  healthy because of spruce  bark beetle infestation.                                                               
He pointed  out that forest  fires do  not occur in  Southeast so                                                               
the other  way to  manage timber is  through the  sustained yield                                                               
principle of timber harvest.                                                                                                    
                                                                                                                                
SENATOR ELTON said it sounds to  him like Mr. Jahnke has a pretty                                                               
good notion  of what  a "compelling state  interest" is  based on                                                               
court cases and asked for  that information before SB 149 reaches                                                               
the floor.                                                                                                                      
                                                                                                                                
MR. JAHNKE agreed to provide information.                                                                                       
                                                                                                                                
SENATOR LINCOLN  said she asked  Mr. Jahnke the same  question at                                                               
the  last  meeting and  Mr.  Jahnke  was  supposed to  provide  a                                                               
definition to the committee.                                                                                                    
                                                                                                                                
SENATOR SEEKINS  said he  believes it  is important  that members                                                               
remember  the  State of  Alaska  has  some very  strict  riparian                                                               
standards that  require 100  or 200-foot  buffer zones  along the                                                               
river, as well  as harvest limits. Those standards  would make it                                                               
very difficult  to not enjoy a  float trip on a  glacial river in                                                               
the Haines State Forest. He expressed concern that:                                                                             
                                                                                                                                
     We're  creating the  wrong picture  when we  think that                                                                    
     it's an  either-or situation and  that for  some reason                                                                    
     that it would  be offensive to every  tourist that came                                                                    
     into the  state if they  were to see where  someone had                                                                    
     cut down  a tree  in order to  provide jobs  for Alaska                                                                    
     people.  So,   in  the  terms  of   multiple  use,  the                                                                    
     agriculture  department  with  the national  forests  -                                                                    
     multiple use  originally meant  that it  allowed things                                                                    
     like  timber  harvesting,  mining, cattle  grazing,  as                                                                    
     well  as  other  uses,  but it  didn't  mean  that  you                                                                    
     couldn't timber harvest if someone  was going to object                                                                    
     that it might  take away their idea of  what a pristine                                                                    
     view  should  be.  There  are   millions  of  acres  of                                                                    
     national parks in the State  of Alaska that accommodate                                                                    
     that. There  are darn  few forests. And  to be  able to                                                                    
     say that some of these forests  should be put to use to                                                                    
     be harvested to  be able to sell timber, to  be able to                                                                    
     employ Alaskans, ... that if  for some reason that that                                                                    
     were to  offend an individual  of some kind  who didn't                                                                    
     want to see that, I don't  think is good policy for the                                                                    
     state.                                                                                                                     
                                                                                                                                
[SENATOR WAGONER arrived.]                                                                                                      
                                                                                                                                
CHAIR OGAN  said he  would continue to  take public  testimony at                                                               
this time.                                                                                                                      
                                                                                                                                
MR. ALBERT  POTT, a  Fairbanks sawmill operator  for the  last 33                                                               
years, said  he would  like to  see this  legislation pass  as is                                                               
because  it  puts  the  state's forests  back  to  their  primary                                                               
purpose. The  original state forest  bill passed  because 253,000                                                               
acres was  set aside  for the Chena  Hot Springs  recreation area                                                               
and because land earmarked for  timber harvest was being "chopped                                                               
up"  for   other  purposes.  When  that   legislation  was  being                                                               
considered,  the state  forester and  deputy commissioner  of DNR                                                               
opposed it  because they believed it  took too much land  for one                                                               
use. The result was the  establishment of 14 uses compatible with                                                               
timber  harvest.  Over  the  years,  timber  harvest  has  become                                                               
secondary to all of the other uses.                                                                                             
                                                                                                                                
MS. NANCY  FRESCO, Northern  Alaska Environmental  Center (NAEC),                                                               
told  members  that  although  the  Tanana  Valley  State  Forest                                                               
comprises only 2,000,000 acres, it  is under some of the greatest                                                               
competition for multiple use. The  NAEC believes the multiple use                                                               
designation is  the most  appropriate one.  She pointed  out that                                                               
under the  current plan,  almost all  of the  land in  the Tanana                                                               
Valley State Forest  is harvested on a sustained  yield basis. It                                                               
is  a  working  forest  used  for  hunting,  fishing,  non-timber                                                               
products,  recreation and  tourism. The  economic value  of those                                                               
uses has  not been  measured. A study  is being  undertaken right                                                               
now to  place a  value on the  other uses. SB  149 puts  the cart                                                               
before the horse by placing timber harvest as the top priority.                                                                 
                                                                                                                                
MS. FRESCO told members she has  a Masters degree in forestry and                                                               
environmental  studies so  this issue  is  near and  dear to  her                                                               
heart. She  said before  any changes  are made  to the  status of                                                               
value-added, the state  needs to determine some  means of showing                                                               
what value is being added to the  trees and it needs to provide a                                                               
more flexible  definition which adding  to the list will  not do.                                                               
Regarding buffer zones,  SB 88 adds buffer  standards to interior                                                               
waterways. A  lot of  scientific and  community effort  went into                                                               
reaching  agreement on  SB 88  but that  legislation has  not yet                                                               
been  enacted. She  would hate  to see  [SB 149]  undermine those                                                               
efforts. She emphasized that a  lot of positive public effort was                                                               
made to make  the Tanana Valley State Forest  a working, multiple                                                               
use forest. It  would be a mistake to change  that designation at                                                               
this point  in time, after so  many people have worked  to find a                                                               
balance between all of the viable uses.                                                                                         
                                                                                                                                
CHAIR  OGAN   stated  that  Senator   Lincoln  has   proposed  an                                                               
amendment,  which he  supports,  that  deletes "41.17.230(c)"  on                                                               
page  5,  line   17.  It  retains  the   public  hearing  process                                                               
requirement.                                                                                                                    
                                                                                                                                
SENATOR  LINCOLN  explained  the amendment  [Amendment  1]  would                                                               
retain the section that reads:                                                                                                  
                                                                                                                                
     A management plan  may not be adopted  or revised after                                                                    
     the  establishment of  the state  forest without  prior                                                                    
     review  by   the  Board  of   Forestry  and   by  other                                                                    
     appropriate  state  agencies  or without  prior  public                                                                    
     hearing held  in a  community approximately  located to                                                                    
     the state forest or to a unit of a state forest.                                                                           
                                                                                                                                
She moved to adopt Amendment 1.                                                                                                 
                                                                                                                                
SENATOR BEN STEVENS objected and asked for time to consider it.                                                                 
                                                                                                                                
CHAIR OGAN informed  those who are testifying  that the committee                                                               
is considering retaining the public process provision.                                                                          
                                                                                                                                
4:00 p.m.                                                                                                                     
                                                                                                                                
MR. ROBERT OTT told members  that the Tanana Chiefs Council (TCC)                                                               
supports  most of  the changes  in CSSB  149(RES) but  it remains                                                               
concerned  about a  few issues.  TCC's  first concern  is in  the                                                               
change to the primary purpose of  the forest from multiple use to                                                               
timber  production.  He  pointed   out  the  current  [statutory]                                                               
language says multiple use  provides for production, utilization,                                                               
and replenishment  of timber resources  so it  already emphasizes                                                               
timber. The Tanana Valley State Forest  is a public forest; not a                                                               
tree  farm. TCC  is concerned  that people  deriving income  from                                                               
non-timber forest  products may be  shortchanged if a  big timber                                                               
industry were  to develop.  TCC believes  that anyone  looking to                                                               
derive  revenue   from  the  state  forests   should  have  equal                                                               
opportunity to  do so. The  emphasis should  not be on  timber at                                                               
the exclusion of other things if a conflict arises.                                                                             
                                                                                                                                
MR. OTT  said TCC's second  concern is with Section  14. Removing                                                               
the requirement  to review  the plan every  five years  seems too                                                               
open-ended.  TCC  believes  there  should be  some  maximum  time                                                               
period within which  the forest plan must be reviewed  to keep it                                                               
up-to-date with  new management  approaches and  public concerns.                                                               
That change removes a time period  that is, perhaps, too short to                                                               
be reasonable but replaces it with no timeframe.                                                                                
                                                                                                                                
MR. OTT said  that TCC supports Senator  Lincoln's amendment. TCC                                                               
is  concerned about  removing the  Board of  Forestry review  and                                                               
public  hearing   process  prior   to  the  adoption   of  forest                                                               
management plans. He said TCC's  final concern is with Section 7;                                                               
high value  added wood  products are  finished products  but pulp                                                               
has  been added  to that  list. Pulp  is an  intermediate process                                                               
product. It  is more  finished than  wood chips but  it is  not a                                                               
finished product to  the degree the other items on  the list are.                                                               
He suggested some "wordsmithing" could  clean that section up. He                                                               
repeated  that  other  than  those  concerns,  TCC  supports  the                                                               
legislation.                                                                                                                    
                                                                                                                                
CHAIR OGAN  asked Mr.  Jahnke why the  requirement to  review the                                                               
forest management  plan at least  once every five years  is being                                                               
removed. He asked when a review would be considered necessary.                                                                  
                                                                                                                                
MR.  JAHNKE said  the  division looked  at  that requirement  and                                                               
realized the Tanana  Valley Forest Plan took five  to seven years                                                               
to complete so  a review every five years seemed  too frequent to                                                               
be  efficient. The  division felt  the drive  to change  a forest                                                               
management plan  should be triggered  by a significant  change in                                                               
condition  or  in  the  market  that  does  not  fit  within  the                                                               
timeframe of the existing plan.                                                                                                 
                                                                                                                                
MR.  DAVE  LACEY told  members  he  was  involved in  the  public                                                               
process on the Tanana basin  management plan and the state forest                                                               
for many  years. He is  concerned this legislation will  toss out                                                               
efforts made  by the public  to develop those plans.  He believes                                                               
the emphasis  on a single  purpose of timber management  is short                                                               
sighted. He is aware of  the state's immediate revenue needs, but                                                               
a long-term  outlook must be kept.  He said the state  must be as                                                               
conservative  as possible  in its  management  because of  future                                                               
unknowns. Cumulative impacts of multiple  uses must be taken into                                                               
consideration.  He   has  been   involved  in  the   tourism  and                                                               
recreation industries  for years. He  does not want to  see those                                                               
residents  who make  their living  from  those industries  pushed                                                               
aside for a single use emphasis.  He supports the buffer zones in                                                               
SB  88 to  protect  recreational and  commercial  fishing in  the                                                               
Interior.                                                                                                                       
                                                                                                                                
MS. JAN  DAWE, Alaska Boreal  Forest Council, stated  support for                                                               
several  sections of  CSSB 149(RES),  especially those  that make                                                               
the process  less burdensome for  the operators to get  access to                                                               
timber  sales. Simplifying  the timber  sale schedules  will save                                                               
money. She  suggested including a  sunset clause for  portions of                                                               
the  management plan  that  have not  been  revised. The  Council                                                               
agrees  that requiring  a review  once  every five  years is  too                                                               
frequent  but would  like to  see language  included to  say that                                                               
portions of the management plan  would be reviewed. The Council's                                                               
main concern  with the  bill is changing  the primary  purpose of                                                               
state forests. She read an amendment suggested by the Council:                                                                  
                                                                                                                                
     The  primary  purpose  in the  establishment  of  state                                                                    
     forests  is forest  management  that  provides for  the                                                                    
     production,    utilization,   and    replenishment   of                                                                    
     commercial  timber   and  non-timber   resources  while                                                                    
     allowing  other beneficial  uses  of  public lands  and                                                                    
     resources.                                                                                                                 
                                                                                                                                
MR. ERIC PYNE,  Alaska Forestry Products, said  the recently held                                                               
election in November  showed that the majority  of Alaskans favor                                                               
resource development. Changing the  emphasis of the state forests                                                               
to  timber  management will  go  a  long way  toward  encouraging                                                               
industry  to invest  in Fairbanks,  Delta,  Nenana, and  outlying                                                               
areas. Those  investments create jobs  and allow local  people to                                                               
create a lifestyle they enjoy.                                                                                                  
                                                                                                                                
MS.  DAWE  explained to  members  that  the Council's  intent  in                                                               
requesting the  proposed amendment  is that all  extracted forest                                                               
products be given  equal weight. The rationale is  that there are                                                               
a lot of special  use areas in the state where  birch bark or sap                                                               
and other  products cannot  be extracted.  University researchers                                                               
have  said that  decades of  resource management  reports support                                                               
multiple   resource  management   rather  than   single  resource                                                               
management.  The   Council  is   also  working  on   an  economic                                                               
development project  with the  schools to  make birch  syrup. One                                                               
local person  plans to  go into  commercial production  next year                                                               
using about  2,000 trees. The  Council is trying to  look forward                                                               
to what  future resource development  might look like. It  is not                                                               
trying  to  distract from  timber  management.  She repeated  the                                                               
Council  wants the  primary purpose  of  the state  forest to  be                                                               
multiple use.                                                                                                                   
                                                                                                                                
CHAIR OGAN announced that public testimony was closed.                                                                          
                                                                                                                                
SENATOR  BEN STEVENS  removed his  objection to  the adoption  of                                                               
Amendment 1, therefore it was adopted.                                                                                          
                                                                                                                                
SENATOR  BEN  STEVENS moved  CSSB  149(RES)  from committee  with                                                               
individual recommendations.                                                                                                     
                                                                                                                                
SENATOR ELTON objected.                                                                                                         
                                                                                                                                
CHAIR OGAN stated that he sees  this legislation as an attempt to                                                               
get more timber  into the hands of value-added  processors in the                                                               
state.  He   supports  this  legislation  contingent   upon  that                                                               
happening; he  encouraged the Division  of Forestry to do  all it                                                               
can to  make that happen. He  said he is aware  of constitutional                                                               
limits  and the  Interstate  Commerce Clause,  which prevent  the                                                               
state  from banning  the  export  of logs.  He  said  he will  be                                                               
monitoring  this  legislation and  wants  to  be briefed  by  the                                                               
Division  on how  much of  this  timber is  used for  value-added                                                               
products.                                                                                                                       
                                                                                                                                
The  motion to  move CSSB  149(RES) from  committee carried  with                                                               
Senators Stevens, Dyson, Seekins, Wagoner  and Ogan in favor, and                                                               
Senators Lincoln and Elton opposed.                                                                                             
                                                                                                                                
The committee took a brief at-ease.                                                                                             
4:10 p.m.                                                                                                                     
                                                                                                                                
               CONFIRMATIONS: BOARD OF FISHERIES                                                                            
                                                                                                                                
CHAIR  OGAN asked  Mel Morris  to testify  and asked  him why  he                                                               
wanted to serve on the Board of Fisheries.                                                                                      
                                                                                                                                
MR. MEL MORRIS told members that  he has spent his life in Alaska                                                               
and studied wildlife  management at the University  of Alaska. He                                                               
has  sport  and commercial  fished,  worked  as a  biologist  and                                                               
worked  in marketing  and selling.  He said  the short  answer is                                                               
that  the resource  has  been good  to  him and  now  that he  is                                                               
retired, he has  a chance to use his  previous experience working                                                               
with the stakeholders in the fishing industry.                                                                                  
                                                                                                                                
CHAIR OGAN asked Mr. Morris if he is from Kodiak.                                                                               
                                                                                                                                
MR. MORRIS said he is.                                                                                                          
                                                                                                                                
CHAIR  OGAN said  the  last  Board of  Fisheries  made  a lot  of                                                               
changes  to  the  Cook Inlet  Management  Plan.  Biologists  have                                                               
stated on the record that a  large red salmon run puts a gauntlet                                                               
across Cook Inlet and the escapement  to the northern part of the                                                               
Matanuska Valley suffers. He said  there has been a turnaround in                                                               
the management  of that area during  the last two years  and fish                                                               
returns  to  the northern  valley  have  improved. He  asked  Mr.                                                               
Morris  what he  knows about  the cause  and effects  of managing                                                               
primarily for the Kenai River  on the upper Cook Inlet fisheries,                                                               
specifically the Susitna River.                                                                                                 
                                                                                                                                
MR.  MORRIS said  he has  not heard  any public  testimony on  or                                                               
discussed that topic  to date. He said he is  a good listener and                                                               
will be looking forward to dealing with the issue.                                                                              
                                                                                                                                
SENATOR  SEEKINS  asked  Mr.  Morris  on  what  basis  the  board                                                               
reversed  its decision  on the  customary  and traditional  (C&T)                                                               
finding  for the  Chitina dipnet  fishery and  whether he  agreed                                                               
with that finding.                                                                                                              
                                                                                                                                
MR. MORRIS  said he agreed  with the reversal from  a subsistence                                                               
fishery  to a  personal  use fishery.  He said  that  was a  very                                                               
contentious issue.  The board  heard a lot  of testimony  and got                                                               
new  information since  1999 from  the Division  of Subsistence's                                                               
survey,  which provided  information  on the  subsistence use  of                                                               
that  fishery.   The  board  voted   6:2  to  look  at   the  new                                                               
information.                                                                                                                    
                                                                                                                                
TAPE 03-39, SIDE B                                                                                                            
                                                                                                                                
MR. MORRIS said  what jumped out at him was  that over 80 percent                                                               
of the participants had been in  the fishery less than five years                                                               
and over 50 percent were  self-taught, indicating there was not a                                                               
long  history  of  trans-generational  participation.  The  board                                                               
dealt with eight criteria; numbers 4,  5, and 8 were important to                                                               
his decision. They  dealt with the social aspects  of the fishery                                                               
as   they   related   to   a  subsistence   way   of   life   and                                                               
intergenerational, long-term, non-commercial use.  He said he was                                                               
on the committee  that worked with participants on  both sides of                                                               
the issue. The  data from the survey led him  to believe that the                                                               
Chitina dipnet fishery did not qualify as a subsistence fishery.                                                                
                                                                                                                                
SENATOR  SEEKINS asked  Mr. Morris  if part  of his  decision was                                                               
based on the status of the users, not the uses.                                                                                 
                                                                                                                                
MR. MORRIS said he did not understand the question.                                                                             
                                                                                                                                
SENATOR SEEKINS asked if part  of Mr. Morris's decision was based                                                               
on who  was actually participating  in the fishery, not  the uses                                                               
of the fish.                                                                                                                    
                                                                                                                                
MR.  MORRIS said  not necessarily  because he  does not  know the                                                               
individuals. He said the survey  indicated that of the people who                                                               
were using the  fishery, close to 80 percent  had participated in                                                               
the fishery less than five years.                                                                                               
                                                                                                                                
SENATOR SEEKINS said  that answers his question and  that part of                                                               
Mr.  Morris's decision  was  based  on the  status  of the  users                                                               
rather than the status of the uses.                                                                                             
                                                                                                                                
CHAIR OGAN  asked Mr. Morris  if he  is familiar with  art. VIII,                                                               
sec.  4 of  the Alaska  Constitution, which  says that  resources                                                               
should  be  managed  on  a   sustained  yield  basis  subject  to                                                               
preferences amongst  beneficial uses.  He clarified  that Senator                                                               
Seekins  was trying  to determine  if Mr.  Morris understood  the                                                               
difference between a use and a user.                                                                                            
                                                                                                                                
MR.  MORRIS said  he  did  not feel  that  the fishery  qualified                                                               
because of the reasons he gave.                                                                                                 
                                                                                                                                
SENATOR LINCOLN  said she  appreciates the  fact that  Mr. Morris                                                               
has been in Alaska over 45 years  and lived in the Interior for a                                                               
year.  She thanked  him for  his decision  on the  Chitina dipnet                                                               
fishery. She said her concern  is with Mr. Morris's possible lack                                                               
of familiarity with the inland fisheries.                                                                                       
                                                                                                                                
MR. MORRIS  said he worked as  a biologist in the  Kuskokwim area                                                               
from 1961 to 1963 and he worked  for the Division of Game for one                                                               
year in the  Interior.  He said  he met quite a  few people [from                                                               
the  Interior] while  attending the  University in  Fairbanks. He                                                               
plans  to educate  himself  on  Interior issues,  as  well as  on                                                               
Southeast issues,  where he  has spent very  little time.  He has                                                               
worked  closely with  the  public  and staff  and  has been  very                                                               
active in the committee process in  Southeast. He plans to do the                                                               
same in the Interior.                                                                                                           
                                                                                                                                
SENATOR  LINCOLN  said she  appreciates  Mr.  Morris's desire  to                                                               
learn more  about the parts of  Alaska he is less  familiar with.                                                               
She then  asked Mr.  Morris's belief on  the Board  of Fisheries'                                                               
role in carrying out the mandate for a subsistence priority.                                                                    
                                                                                                                                
MR. MORRIS  said the board  has dealt with subsistence  issues in                                                               
Ketchikan and  Sitka. The  board heard a  lot of  testimony about                                                               
the traditional uses of certain  resources. Some of the testimony                                                               
showed a  longstanding harvest of specific  resources in specific                                                               
areas over many generations. He  said he believes the board needs                                                               
to listen to the public and learn.                                                                                              
                                                                                                                                
CHAIR OGAN asked what  he sees as the one thing  the board can do                                                               
to help  the commercial fishing  industry in the state.  He noted                                                               
that  industry is  suffering  everywhere  because of  competition                                                               
from farmed fish.                                                                                                               
                                                                                                                                
MR. MORRIS  said many  people do not  see the  commercial fishing                                                               
industry as  one industry or  one unit. Some people  believe that                                                               
no  processors  should  be  involved  in  the  quota  system.  He                                                               
believes  the Governor  has come  up with  the right  approach to                                                               
provide funds  for entrepreneurial efforts.  He said a  number of                                                               
fishermen in Kodiak are thinking  about putting freezers on their                                                               
boats  to  provide  a  better  product.  He  believes  in  ASMI's                                                               
educational  efforts  to inform  people  that  harvesting a  wild                                                               
resource does not mean that all  of the wildlife is being killed.                                                               
He said  it is important  that Alaska  gets the message  out that                                                               
its fish  are from  a pristine  environment. In  addition, Alaska                                                               
has to deal  with the fact that most of  the farmed fish industry                                                               
is  subsidized. If  Alaskan fishermen  must  continue to  compete                                                               
with farmed fish, they will  need special considerations, such as                                                               
reinvestment tax  credits, to provide  a better product.  He said                                                               
many things can be accomplished working as one industry.                                                                        
                                                                                                                                
CHAIR OGAN  asked Mr.  Morris if he  believes more  allocation is                                                               
part of the answer regarding salmon.                                                                                            
                                                                                                                                
MR. MORRIS  said he  does not  know how that  would play  out. He                                                               
said it is necessary to make more [products] from what we have.                                                                 
                                                                                                                                
CHAIR OGAN  said he agrees  that a simple allocation  scheme will                                                               
not fix  everything. He then  informed members he  would consider                                                               
forwarding the names of appointees  for the Board of Fisheries to                                                               
the Senate floor on an individual basis.                                                                                        
                                                                                                                                
SENATOR WAGONER moved the nomination  of Mr. Melvan Morris to the                                                               
full Senate for consideration.                                                                                                  
                                                                                                                                
CHAIR OGAN announced that without  objection, the motion carried.                                                               
He then asked Mr. Nelson to testify.                                                                                            
                                                                                                                                
4:42 p.m.                                                                                                                     
                                                                                                                                
MR.  ART  NELSON,  appointee  to the  Board  of  Fisheries,  told                                                               
members  that  as a  lifelong  Alaska  resident involved  in  the                                                               
fisheries,  he  has  seen the  Alaska  fisheries  from  different                                                               
perspectives and hopes to be a positive addition to the board.                                                                  
                                                                                                                                
SENATOR SEEKINS asked Mr. Nelson  the basis for reversing the C&T                                                               
designation  on the  Chitina dipnet  fishery,  whether he  agreed                                                               
with that finding and, if so, why.                                                                                              
                                                                                                                                
MR. NELSON  said he  believes Mr.  Morris answered  that question                                                               
well.  He  said the  board  first  examined the  new  information                                                               
prepared  from  the Division  of  Subsistence's  user survey  and                                                               
found  it contained  significant new  information that  warranted                                                               
reexamination of the C&T criteria.  After examining the criteria,                                                               
he voted to  reverse the C&T finding and return  the fishery to a                                                               
personal use fishery. He  said, regarding differentiating between                                                               
use  and users,  many of  the criteria  focus on  aspects of  the                                                               
uses, for example transfer of knowledge between generations.                                                                    
                                                                                                                                
SENATOR SEEKINS  asked Mr. Nelson  if he would consider  the fact                                                               
that his family,  including his father, self,  son and grandsons,                                                               
has  used  that  dipnet  fishery   and  passed  down  traditional                                                               
information for four generations.                                                                                               
                                                                                                                                
MR. NELSON said  he agrees that some users of  that fishery would                                                               
fall into the  C&T category more than the vast  majority but that                                                               
raised the question  of what portion of the users  should be used                                                               
as the measuring stick and where to draw the line.                                                                              
                                                                                                                                
SENATOR SEEKINS asked if it is fair  to say that at least a major                                                               
portion  of his  decision was  based on  the [characteristics  of                                                               
the] user, not on how the fish was used.                                                                                        
                                                                                                                                
MR. NELSON replied  that with the criteria the board  had to use,                                                               
it was  very difficult to  separate the users,  particularly when                                                               
looking at patterns of use.                                                                                                     
                                                                                                                                
SENATOR SEEKINS asked who actually performed the user survey.                                                                   
                                                                                                                                
MR. NELSON  said the Division  of Subsistence staff  compiled the                                                               
survey.                                                                                                                         
                                                                                                                                
SENATOR SEEKINS asked if the work was contracted out.                                                                           
                                                                                                                                
MR. NELSON said it was not,  but the division had some assistance                                                               
from an individual from the Ahtna Corporation.                                                                                  
                                                                                                                                
SENATOR  SEEKINS asked  for  a  description of  some  of the  new                                                               
information used by the board.                                                                                                  
                                                                                                                                
MR. NELSON  said the  survey was very  detailed. It  examined the                                                               
users and profiled the long-term  pattern of use and particularly                                                               
how long each individual participated in that fishery.                                                                          
                                                                                                                                
SENATOR SEEKINS asked  Mr. Nelson if he voted to  reverse the C&T                                                               
category.                                                                                                                       
                                                                                                                                
MR. NELSON said he did.                                                                                                         
                                                                                                                                
SENATOR WAGONER asked Mr. Nelson  if he believes the board should                                                               
continue  the  process it  currently  uses,  which entails  using                                                               
subcommittees, or  whether it  should go  back to  using advisory                                                               
committees only.                                                                                                                
                                                                                                                                
MR. NELSON  said he believes  a combination  of both is  best. He                                                               
said  the   board's  current   committee  process   is  extremely                                                               
valuable.   It  provides   the   public   with  a   much-improved                                                               
opportunity  to  interact with  board  members  and to  hash  out                                                               
different  ideas. He  said before  the committee  process was  in                                                               
place, a person  would provide testimony and then try  to talk to                                                               
a board  member during a  break. He said the  advisory committees                                                               
still have  a very valuable  role with local  representatives and                                                               
their ability to hold meetings prior to the board meetings.                                                                     
                                                                                                                                
SENATOR LINCOLN  thanked Mr. Nelson  for submitting his  name for                                                               
reappointment.  She   asked  what   he  believes  the   Board  of                                                               
Fisheries' role  is in carrying  out the state's mandate  for the                                                               
subsistence priority.                                                                                                           
                                                                                                                                
MR.  NELSON said  that is  a good  question that  he could  think                                                               
about for  a long time.  He has  worked on subsistence  issues in                                                               
western Alaska in  the past. Once the board makes  a positive C&T                                                               
finding,  by  statute  it  must  make sure  that  it  provides  a                                                               
reasonable opportunity for people's  subsistence needs to be met.                                                               
He said, in  his opinion, it is a very  important issue the board                                                               
needs to address.                                                                                                               
                                                                                                                                
SENATOR LINCOLN asked Mr. Nelson  if he supports a constitutional                                                               
amendment for a rural subsistence priority.                                                                                     
                                                                                                                                
MR. NELSON said  at this point he does but  he believes there are                                                               
different  ways to  look at  the issue.  He would  like to  see a                                                               
resolution that ensures that sustained  yield is met and that the                                                               
users who  need it  the most get  the first  opportunity, whether                                                               
that entails a local preference or a rural preference.                                                                          
                                                                                                                                
SENATOR  WAGONER  noted  that  there  are  a  lot  of  allocation                                                               
problems in  some of the  fisheries between sport,  personal use,                                                               
subsistence, and commercial users. He  asked how Mr. Nelson feels                                                               
about  the  board making  decisions  based  on maximum  sustained                                                               
yield and  on allocating  the resource  where it  is used  to its                                                               
maximum.                                                                                                                        
                                                                                                                                
MR.  NELSON said  once the  sustained  yield mandate  is met  and                                                               
subsistence  uses  are  provided for,  allocating  the  remaining                                                               
resources for the  rest of the user groups is  always a balancing                                                               
act.  He  does not  feel  any  of  the  remaining groups  have  a                                                               
priority over  another group but,  in some  areas it may  be more                                                               
important to lean  harder on the sport side and,  in other areas,                                                               
on the commercial side.                                                                                                         
                                                                                                                                
CHAIR OGAN  informed members he  would like to take  testimony on                                                               
SB 185 today  and planned to recess  to the call of  the chair to                                                               
continue the meeting tomorrow.                                                                                                  
                                                                                                                                
SENATOR WAGONER moved  that Mr. Nelson's nomination  to the Board                                                               
of Fisheries be put before the full Senate for consideration.                                                                   
                                                                                                                                
CHAIR OGAN stated that without objection, the motion carried.                                                                   
                                                                                                                                
SENATOR ELTON  apologized that he had  to leave at 5:00  p.m. but                                                               
wanted to pass  along his endorsement of Rupe Andrews  as a Board                                                               
of Fisheries member.                                                                                                            
                                                                                                                                
CHAIR OGAN called Ed Dersham to testify.                                                                                        
                                                                                                                                
MR. ROBERT (ED) DERSHAM, a  resident of Unalaska, told members he                                                               
has  served on  the  Alaska  Board of  Fisheries  for six  years.                                                               
During that time,  he has become a great supporter  of the public                                                               
and regulatory process for Alaska's  fisheries. Since the board's                                                               
inception, the  delegation of authority  from the  legislature to                                                               
develop  Alaska's fisheries  resources  has led  to policies  and                                                               
procedures  over time.  The recent  subcommittee system  provides                                                               
for  a better  public process  than that  in any  of the  western                                                               
states. He has served as the chair  of the board for the last two                                                               
years.  The board  has  five  new members  now.  He  asked to  be                                                               
reappointed for  another term because  he believes  his knowledge                                                               
of the process will be beneficial to new members.                                                                               
                                                                                                                                
CHAIR OGAN stated:                                                                                                              
                                                                                                                                
     ...the balance  of the people  in my neck of  the woods                                                                    
     are  holding their  breath to  see what  happens. We've                                                                    
     had  a  major shift  in  philosophy  on the  board  and                                                                    
     you've heard my concerns  about managing Cook Inlet for                                                                    
     the  Kenai River  -  if we  get  a big  run  there -  I                                                                    
     remember well years ago testimony  by the Department of                                                                    
     Fish and  Game saying  yea, the upper  Susitna's pretty                                                                    
     much managed by  default when we get a big  run of fish                                                                    
     in the Kenai  River. What can you say that  will get me                                                                    
     off the hook,  so to speak, with my  sport fishermen in                                                                    
     the Valley that are worried about this current board?                                                                      
                                                                                                                                
MR.  DERSHAM said  he  has  worked with  four  of  the new  board                                                               
members  since  January and  has  been  very impressed  with  the                                                               
Governor's choices in that all  four are very fair-minded people,                                                               
hard workers, and  none of them came to the  board with a private                                                               
agenda.  He said  they study  the  issues in  depth. He  believes                                                               
everyone  who  comes  before  them  has  a  good  opportunity  to                                                               
testify, lobby, and affect the outcome.                                                                                         
                                                                                                                                
CHAIR OGAN  asked if he is  aware of the problem  of managing the                                                               
Upper Cook Inlet by default when  the fish run in the Kenai River                                                               
is large.                                                                                                                       
                                                                                                                                
MR. DERSHAM  said the board has  done many, many days  of work on                                                               
that issue  over the last six  years. That work resulted  in many                                                               
of  the regulations  that are  in  place today  that give  Valley                                                               
residents  more   comfort.  He   has  supported  most   of  those                                                               
regulations.  He said  he  believes this  board  will take  these                                                               
issues on  a case-by-case basis  and fairly apply  the allocation                                                               
criteria to the final solution.                                                                                                 
                                                                                                                                
SENATOR SEEKINS asked  Mr. Dersham what, in his  opinion, was the                                                               
basis  for  reversing the  C&T  finding  for the  Chitina  dipnet                                                               
fishery and whether he agreed with that finding.                                                                                
                                                                                                                                
MR. DERSHAM  said he did  agree with the  finding. He sat  on the                                                               
board both  in 1999 and  this year when  this issue came  up. The                                                               
issue has  been very  difficult both times.  He said  he believes                                                               
that the C&T  issue is a microcosm of  defining subsistence. Both                                                               
times,  he came  to the  same conclusion.  In reviewing  criteria                                                               
number 8, the  pattern of use and dependence on  the resource, he                                                               
did not feel the  pattern of use over the last  40 years met that                                                               
test. That does not mean he  does not believe that fishery is not                                                               
important to the state.                                                                                                         
                                                                                                                                
SENATOR  SEEKINS asked  Mr. Dersham  what weight  he gave  to the                                                               
user survey in making his decision.                                                                                             
                                                                                                                                
MR.  GERSHAM said  the board  took two  votes. The  first was  on                                                               
whether to  bring the issue  up for reconsideration based  on new                                                               
information or an error on the  part of the prior board. The vote                                                               
was  5 to  2,  based on  the decision  that  new information  was                                                               
provided.  After that  vote  was  taken, he  relied  on the  same                                                               
agonizing process  used in  1999. He  found a  few things  in the                                                               
survey but based  his decision primarily on  the same information                                                               
he used in 1999.                                                                                                                
                                                                                                                                
SENATOR  LINCOLN  thanked  Mr.  Dersham for  his  willingness  to                                                               
continue to serve  and asked his position on the  board's role in                                                               
carrying out the state's mandate for a subsistence priority.                                                                    
                                                                                                                                
MR.  DERSHAM  said the  board  members  are the  regulators  that                                                               
oversee  the  subsistence  priority. They  provide  a  reasonable                                                               
opportunity to harvest the needed  amount to specific subsistence                                                               
cases.                                                                                                                          
                                                                                                                                
SENATOR   LINCOLN   asked   Mr.   Dersham  if   he   supports   a                                                               
constitutional amendment for a rural subsistence priority.                                                                      
                                                                                                                                
MR. DERSHAM  said he  does and  that mostly goes  to his  lack of                                                               
faith in  the federal  government. He said  his prior  career was                                                               
with  the  federal  government  and   he  has  knowledge  of  the                                                               
processes  it uses.  He feels  if there  was a  rural subsistence                                                               
priority,  all  Alaskans  would be  better  protected  and  their                                                               
access  would  be  better  cared for  with  Alaskans  making  the                                                               
decisions  as  opposed to  regional  federal  directors who  have                                                               
little experience in Alaska.                                                                                                    
                                                                                                                                
SENATOR LINCOLN  asked Mr. Dersham  what he believes the  role of                                                               
fish hatcheries are in Alaska.                                                                                                  
                                                                                                                                
MR.  DERSHAM said  they vary  in  different parts  of the  state.                                                               
They've been extremely beneficial  to the commercial fisheries in                                                               
Southeast but that has caused  some difficulty in Western Alaska,                                                               
which has  suffered declining runs at  the same time. He  said it                                                               
is a  complicated issue and  requires one to  look at all  of the                                                               
aspects when making decisions. However,  the board's authority in                                                               
making decisions about hatcheries is fairly limited.                                                                            
                                                                                                                                
SENATOR  SEEKINS asked  Mr.  Dersham if  the  Board of  Fisheries                                                               
allocates now to meet the federal subsistence mandate.                                                                          
                                                                                                                                
MR. DERSHAM  said it  does not; it  makes its  decisions strictly                                                               
under  state  law.  So  far,  the federal  board  is  making  its                                                               
decisions  according to  federal law  on federal  lands only.  He                                                               
said there  are some  incredibly difficult  overlaying management                                                               
schemes  on places  like  the Kuskokwim  and  Copper Rivers  with                                                               
patchworks of  federal and  state lands.  The Kenai  Peninsula is                                                               
another place where big problems might occur in the future.                                                                     
                                                                                                                                
SENATOR  WAGONER   moved  Mr.  Dersham's  name   for  legislative                                                               
confirmation to  the Board  of Fisheries to  the full  Senate for                                                               
consideration.                                                                                                                  
                                                                                                                                
CHAIR OGAN noted that without objection, the motion carried.                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
CHAIR OGAN called Dr. Floyd Bouse  to testify. He asked Dr. Bouse                                                               
why  he wants  to  subject himself  to this  "no  good deed  goes                                                               
unpunished" board.                                                                                                              
                                                                                                                                
DR. FLOYD  BOUSE said  serving as  a board member  seems to  be a                                                               
sure way  to make somebody mad.  He said he has  been involved in                                                               
the process for a  long time and does his best  to make sure that                                                               
everyone is  treated equally. He has  decided it is time  to give                                                               
service to  the state. He intends  to be a good  student, bring a                                                               
good attitude to the process and to try to be fair.                                                                             
                                                                                                                                
TAPE 03-40, SIDE A                                                                                                            
                                                                                                                                
SENATOR SEEKINS noted  that Dr. Bouse has been a  good friend for                                                               
a long time.  He has faith in his abilities  and believes that he                                                               
will represent all Alaskans well on this board.                                                                                 
                                                                                                                                
SENATOR LINCOLN asked Dr. Bouse what  he sees as the board's role                                                               
in  carrying  out its  mandate  for  a subsistence  priority  and                                                               
whether  he  supports  a constitutional  amendment  for  a  rural                                                               
subsistence priority.                                                                                                           
                                                                                                                                
DR.  BOUSE  said he  thinks  the  board's  role is  to  implement                                                               
legislation. He  noted at  this point the  state does  not really                                                               
have a  subsistence priority but where  C&T determinations exist,                                                               
the board  has to implement  them. He said, regarding  whether or                                                               
not  he   supports  a  constitutional   amendment  for   a  rural                                                               
subsistence priority, he feels that  question is too personal. He                                                               
said he believes everyone should be treated equally.                                                                            
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
SENATOR LINCOLN asked  Dr. Bouse his position on  the reversal of                                                               
the C&T determination for the Chitina dipnet fishery.                                                                           
                                                                                                                                
DR. BOUSE replied:                                                                                                              
                                                                                                                                
     ...I  would ask  the  question of  are  we meeting  the                                                                    
     criteria that  the board has  set before them as  for a                                                                    
     C&T determination  based on the history  of the fishery                                                                    
     and  by   the  criteria  that  I   understand,  and  my                                                                    
     experience  there -  I started  fishing there  in   '85                                                                    
     with a gentleman  that started fishing in  the '60s and                                                                    
     I'm not sure who taught him  how to fish down there but                                                                    
     I can  just tell you  my personal experience is  it's a                                                                    
     lifetime experience  that's multigeneration so  to hear                                                                    
     somebody say  there isn't a  multigeneration experience                                                                    
     criteria that's  being fulfilled  there - I  think it's                                                                    
     an error. And I would  argue with the board members and                                                                    
     try to  convince them that everybody  deserves an equal                                                                    
     shot  in this  life and  that includes  - I  would have                                                                    
     voted  for  a  C&T   determination  on  Chitina  unless                                                                    
     there's  new information  that really  is relevant  and                                                                    
     that's what I would be looking for.                                                                                        
                                                                                                                                
SENATOR LINCOLN asked  if, before he made  that determination, he                                                               
would look at all of the information.                                                                                           
                                                                                                                                
DR. BOUSE said  he found the previous  discussion curious because                                                               
he was not  aware that any important new  information was brought                                                               
before the  board. He  said he  has not read  through all  of the                                                               
information and was not at that meeting.                                                                                        
                                                                                                                                
SENATOR  WAGONER cited  a statement  in a  letter from  Dr. Bouse                                                               
that said we  must find more good ideas and  recognize the status                                                               
quo  is no  longer possible  and find  ways to  compete with  the                                                               
farmed  fish industry.  He agrees  with Dr.  Bouse. He  said wild                                                               
fish is  beginning to  find a  niche in  the domestic  market and                                                               
that needs to be pushed.                                                                                                        
                                                                                                                                
DR. BOUSE said that is his intent.                                                                                              
                                                                                                                                
CHAIR  OGAN said  he would  like  to discuss  his concerns  about                                                               
upper Cook Inlet management at another time.                                                                                    
                                                                                                                                
DR. BOUSE  said he believes it  is a mistake to  allow management                                                               
to proceed  in a haphazard  way. He said  the board must  be very                                                               
careful about  incidental catches.  He pointed out  another issue                                                               
that has  come up  in discussion  is the  False Pass  fishery and                                                               
incidental catches. He  said it is something the  board must look                                                               
at because it cannot let things happen by accident much longer.                                                                 
                                                                                                                                
SENATOR LINCOLN asked Dr. Bouse to clarify his last statement.                                                                  
                                                                                                                                
DR. BOUSE said  the board has to beware of  letting things happen                                                               
incidentally  instead of  using  good  management principles.  He                                                               
said  he is  a  firm believer  in  meeting biological  escapement                                                               
goals and  determining what those  are. He said, in  his opinion,                                                               
the board must  make sure that fish go home  to spawn first. Many                                                               
creeks are not getting enough returning fish.                                                                                   
                                                                                                                                
SENATOR LINCOLN  commented that Dr.  Bouse's statement  sounds as                                                               
though he does  not think the Board of Fisheries  in the past has                                                               
done exactly what he purports to do.                                                                                            
                                                                                                                                
DR.  BOUSE  said  he  believes  the board  has  worked  hard  but                                                               
sometimes a  question is so  complicated it is difficult  to find                                                               
the right answer and takes continuing work.                                                                                     
                                                                                                                                
SENATOR SEEKINS  moved Dr.  Bouse's name to  the full  Senate for                                                               
consideration as a member of the Board of Fisheries.                                                                            
                                                                                                                                
CHAIR OGAN noted without objection, the motion carried.                                                                         
                                                                                                                                
5:25 p.m.                                                                                                                     
                                                                                                                                
        SB 185-ROYALTY REDUCTION ON CERTAIN OIL/TAX CRED                                                                    
                                                                                                                                
CHAIR OGAN asked Mr. Gary Carlson to testify.                                                                                   
                                                                                                                                
MR. GARY CARLSON, Senior Vice President of Forest Oil                                                                           
Corporation, a major investor in Cook Inlet over the past five                                                                  
years, read the following testimony.                                                                                            
                                                                                                                                
     My testimony  on SB 185  will focus on  the maintenance                                                                    
     of critical  and scarce infrastructure  associated with                                                                    
     mature  oil fields  in the  Cook Inlet.  The platforms,                                                                    
     associated  pipelines, and  related onshore  facilities                                                                    
     represent   irreplaceable  infrastructure,   which  may                                                                    
     facilitate the  exploration, discovery  and development                                                                    
     of as  yet undiscovered reserves if  their useful lives                                                                    
     could  be   extended.  Any   delay  in   abandoning  or                                                                    
     decommissioning  of  this infrastructure  will  provide                                                                    
     opportunities to the industry  to develop smaller scale                                                                    
     oil and  gas prospects  that won't stand  the economics                                                                    
     if  new infrastructure  needs to  be developed.  As the                                                                    
     mature   fields  approach   the   economic  life,   the                                                                    
     operators  need  to  get   creative  and  manage  costs                                                                    
     carefully,  which   includes  changing  the   way  they                                                                    
     operate.  They need  the cooperation  of their  vendors                                                                    
     and contractors  to share these  efforts. I  believe it                                                                    
     is appropriate  for the state  to step in as  a partner                                                                    
     also. This bill provides a way  for the state to make a                                                                    
     difference.                                                                                                                
                                                                                                                                
     Keeping the  Cook Inlet oil  fields on line a  few more                                                                    
     years  will maintain  good jobs,  provide local  taxes,                                                                    
     and  the  possibility  of new  development  that  could                                                                    
     easily exceed  any anticipated  shortfall in  the state                                                                    
     revenues resulting from reducing the state's royalty.                                                                      
                                                                                                                                
     I want to commend the  bill sponsors and the Department                                                                    
     of Natural Resources for  their foresight in supporting                                                                    
     this bill and  I want to thank the  committee for their                                                                    
     opportunity   to  provide   this   testimony  on   this                                                                    
     legislation. Thank you.                                                                                                    
                                                                                                                                
SENATOR WAGONER  said he campaigned  on this issue. He  asked Mr.                                                               
Carlson to expand on what losing  the platforms could mean to the                                                               
economy.                                                                                                                        
                                                                                                                                
MR.  CARLSON  said as  an  independent  explorer in  Cook  Inlet,                                                               
Forest Oil  looked at all  of the infrastructure there  and found                                                               
it is  critical to  developing any  new prospects  to be  able to                                                               
access that  infrastructure. The  mood of  the operators  in Cook                                                               
Inlet has  changed; there is  now cooperation  among competitors.                                                               
Keeping the  pipelines available and providing  access to onshore                                                               
and  offshore  facilities  is  critical for  some  of  the  small                                                               
projects.                                                                                                                       
                                                                                                                                
CHAIR OGAN  asked Mr. Carlson  if he  is familiar with  the areas                                                               
[named in Section  1 of the bill] in which  the royalty reduction                                                               
will  be allowed:  Dolly, Grayling,  King Salmon,  Steelhead, and                                                               
Monopod.                                                                                                                        
                                                                                                                                
MR. CARLSON said he is.                                                                                                         
                                                                                                                                
CHAIR  OGAN asked  if the  royalty reduction  will take  place if                                                               
[production] drops below 1200.                                                                                                  
                                                                                                                                
MR. CARLSON said that is correct.                                                                                               
                                                                                                                                
CHAIR  OGAN asked  Mr.  Carlson if  he is  aware  of the  current                                                               
production levels of those wells.                                                                                               
                                                                                                                                
MR. CARLSON  said he is not  but he would guess  the well closest                                                               
to  1200 is  Steelhead and  that the  range goes  up to  4,000 or                                                               
5,000 barrels per day.                                                                                                          
                                                                                                                                
CHAIR OGAN asked which platforms Forest Oil owns an interest in.                                                                
                                                                                                                                
MR. CARLSON  said Forest  Oil has an  interest in  the Steelhead,                                                               
Dolly Varden, King Salmon, Grayling, and Monopod platforms.                                                                     
                                                                                                                                
CHAIR OGAN asked if Forest Oil has a sole or joint interest.                                                                    
                                                                                                                                
MR. CARLSON  said Unocal is  the operator and majority  owner and                                                               
Forest Oil owns approximately 47 percent of those facilities.                                                                   
                                                                                                                                
CHAIR  OGAN  asked   how  many  platforms  in   Cook  Inlet  this                                                               
legislation does not apply to.                                                                                                  
                                                                                                                                
MR.  CARLSON said  five  other platforms  and  one small  onshore                                                               
field are not  under secondary recovery. The  operating costs are                                                               
not as high.                                                                                                                    
                                                                                                                                
CHAIR OGAN  asked Mr. Myers to  provide the committee with  a map                                                               
of the leases in Cook Inlet.                                                                                                    
                                                                                                                                
MR. MYERS agreed to do so.                                                                                                      
                                                                                                                                
SENATOR LINCOLN  noted the sponsor  statement says the  intent of                                                               
SB 185  is to  encourage production in  the marginal  fields. She                                                               
asked Mr. Carlson if he believes the legislation will do that.                                                                  
                                                                                                                                
MR.  CARLSON  said  he  thinks it  could  encourage  putting  off                                                               
decommissioning  those   facilities  for  one  to   three  years,                                                               
depending upon the  decline rate of the field  itself, until they                                                               
are uneconomical  to operate. As  an independent operator,  it is                                                               
critical  to  Forest Oil  that  the  infrastructure remains.  The                                                               
development  of  one  new  field   would  far  offset  any  small                                                               
reduction in royalty to the state.                                                                                              
                                                                                                                                
SENATOR LINCOLN asked what percent of Forest Oil's hire is out-                                                                 
of-state.                                                                                                                       
                                                                                                                                
MR. CARLSON said all Forest Oil employees are residents.                                                                        
                                                                                                                                
SENATOR WAGONER added  that Union Oil has very few,  if any, out-                                                               
of-state employees that work in Cook Inlet.                                                                                     
                                                                                                                                
CHAIR OGAN thanked  all participants and recessed  the meeting to                                                               
the call of the chair at 5:37 p.m.                                                                                              

Document Name Date/Time Subjects