Legislature(1999 - 2000)
04/12/2000 03:10 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE RESOURCES COMMITTEE April 12, 2000 3:10 p.m. MEMBERS PRESENT Senator Rick Halford, Chairman Senator Robin Taylor, Vice Chairman Senator Pete Kelly Senator Jerry Mackie Senator Lyda Green Senator Georgianna Lincoln MEMBERS ABSENT Senator Sean Parnell COMMITTEE CALENDAR HOUSE BILL NO. 114 "An Act repealing the prohibition against the taking of antlerless moose." -MOVED SCSHB 114(RES) OUT OF COMMITTEE CS FOR HOUSE BILL NO. 204(RES) "An Act relating to elk farming." -MOVED CSHB 204(RES) OUT OF COMMITTEE CS FOR HOUSE BILL NO. 116(FIN) "An Act relating to the Board of Agriculture and Conservation, to the director of agriculture, to the agricultural revolving loan fund and to loans from the fund, to the disposal of interests in state agricultural land; and providing for an effective date." -HEARD AND HELD PREVIOUS SENATE COMMITTEE ACTION HB 114 - See Resources Committee minutes dated 3/29/00. HB 204 - No previous Senate action. HB 116 - No previous Senate action. WITNESS REGISTER Ed Grasser Aide to Representative Masek Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Testified for the sponsor of HB 114 Mr. Matt Robus Deputy Director Division of Wildlife Conservation Alaska Department of Fish and Game PO Box 25526 Juneau, AK 99802-5526 POSITION STATEMENT: Supports HB 114 Mr. Peter Feldman Legislative Aide to Representative Harris Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Testified for the sponsor of HB 204 Mr. Robert Wells, Director Division of Agriculture Department of Natural Resources 1800 Glenn Highway Anchorage, AK 99645 POSITION STATEMENT: Supports HB 204 Representative Jeanette James Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of HB 116 Ms. Marsha Ward PO Box 1087 Delta Junction, AK 99739 POSITION STATEMENT: Supports HB 116 Mr. Bob Franklin, President Alaska Farmers Bureau PO Box 75184 Fairbanks, AK 99707 POSITION STATEMENT: Supports HB 116 Mr. Bill Ward PO Box 1087 Delta Junction, AK 99739 POSITION STATEMENT: Supports HB 116 Mr. Craig Trytten PO Box 871628 Wasilla, AK 99739 POSITION STATEMENT: Commented on HB 116 Ms. Carol Carroll, Director Division of Support Services Department of Natural Resources 400 Willoughby Ave. Juneau, AK 99801-1754 POSITION STATEMENT: Answered questions regarding HB 116 Ms. Elizabeth Hickerson Assistant Attorney General Department of Law 1031 W 4th Ave., Suite 200 Anchorage, AK 99501-1994 POSITION STATEMENT: Answered questions regarding HB 116 ACTION NARRATIVE TAPE 00-23, SIDE A Number 001 CHAIRMAN HALFORD called the Senate Resources Committee meeting to order at 3:10 p.m. Present were Senators Pete Kelly, Green, Taylor, Mackie, Lincoln and Chairman Halford. The first order of business to come before the committee was HB 114. HB 114-REPEAL PROHIBITION ANTLERLESS MOOSE CHAIRMAN HALFORD announced that the committee has held one hearing on HB 114 and that the sponsor has prepared a committee substitute (CS). MR. ED GRASSER, legislative aide to Representative Beverly Masek, sponsor of HB 114, said that after working with the advisory committees and the Alaska Department of Fish and Game (ADFG), Representative Masek concluded that an outright repeal of the antlerless moose provision of statute was not workable so the groups came to a compromise solution. The CS relieves the Board of Game of the time and cost involved in implementing annual antlerless hunts. It allows the Board to adopt regulations that are effective for up to two consecutive regulatory years and requires a majority of local fish and game advisory committees with jurisdiction to object in writing to stop a hunt. MR. GRASSER explained that under the present statute, ADFG has had to arrange a meeting of the advisory committees to take action before the Board could take action. Arranging advisory committee meetings was problematic for ADFG because many of them are in rural Alaska and do not meet often. MR. MATT ROBUS, Deputy Director of the Division of Wildlife Conservation, ADFG, stated support for HB 114. SENATOR MACKIE moved to adopt the proposed CS (1-LS0538\D) as the working version of the committee. There being no objection, it was so ordered. CHAIRMAN HALFORD announced that SCSHB 114(RES) will need to be accompanied by a resolution to change the title because the House no longer wants the original title. He noted the resolution was being prepared. SENATOR GREEN moved SCSHB 114(RES) from committee with individual recommendations. There being no objection, the motion carried. CHAIRMAN HALFORD announced that SCSHB 114(RES) and its accompanying resolution moved from committee. HB 204-ELK FARMING MR. PETER FELDMAN, staff to Representative John Harris, sponsor of the measure, gave the following overview. HB 204 is a housekeeping bill that will transfer the management of domestic elk, not wild elk, to the Division of Agriculture in the Department of Natural Resources. That division is familiar with fencing regulations, quarantines, and practices associated with domestic animals. SENATOR TAYLOR stated his appreciation for Representative Harris's efforts. MR. MATT ROBUS, Division of Wildlife Conservation, ADFG, stated support for HB 204 as written. MR. ROBERT WELLS, Director of the Division of Agriculture, stated support for HB 204. MR. BILL WARD of Kenai said those in the domestic elk industry worked with DNR and ADFG to put together this legislation. SENATOR TAYLOR moved HB 204 from committee with individual recommendations and its accompanying fiscal note. There being no objection, the motion carried. HB 116-BOARD OF AGRICULTURE AND CONSERVATION REPRESENTATIVE JEANETTE JAMES, sponsor of HB 116, gave the following overview of the legislation. It took some time to get all parties involved in this legislation to agree to the provisions of HB 116. The purpose of the bill is to establish a Board of Agriculture and Conservation to provide continuity in agricultural policies over changing administrations. It creates an eight member board, comprised of seven people involved in grass roots and commercial and production agriculture, plus the Commissioner of DNR. The new board will submit names for selection of the director of the Division of Agriculture to the Commissioner. The bill requires that the Board be consulted prior to any disposal of agricultural land. HB 116 extends the life of the agricultural revolving loan fund (ARLF) by ensuring that the new board has control over ARLF funds. Last, the bill provides for much needed stability and long term planning and growth for the agricultural industry in Alaska. MS. MARSHA WARD, an agricultural producer from Delta Junction, stated support for HB 116. She commented that agriculture is a long term business operation that requires more stability than the State has provided in the past. The rules change every time a new governor or commissioner takes office. She urged committee members to pass HB 116. SENATOR GREEN asked how many people Representative James believes will qualify to serve on the Board given the restrictions in Section (d) on page 2. REPRESENTATIVE JAMES said those restrictions will limit the num- ber of people who can serve on the board to a great extent, but it would be very difficult to have board members with specific, personal interests in the ARLF managing it. She thought that forbidding board members to make changes to any existing state loans they have during their terms to be an ethical way to deal with the problem. SENATOR GREEN asked what the current restrictions are for ARLF Board members. REPRESENTATIVE JAMES read the following, (a) A member of the Agricultural Revolving Loan Board may not, during the member's term of office or within one year after ceasing to be a member of the Board, attain a loan under this Chapter other than a short term loan under AS 03.10.030(c). (b) A person may not serve on the board if the person is delinquent on payments on a loan obtained under this chapter. The governor shall discharge a member of the board who is delinquent on payments on a loan obtained under this chapter.... She pointed out these provisions are very similar to the language in the bill. CHAIRMAN HALFORD referred to the federal grain reserve program and asked whether the State is lending money to people to develop agriculture who can then sell their ability to produce for a contract price for non-production. REPRESENTATIVE JAMES deferred to Mr. Wells to answer that ques- tion. Number 796 MR. ROB WELLS, Division of Agriculture, answered that farmers do have the right to get State loans and then take advantage of federal grain reserve program contracts. CHAIRMAN HALFORD pointed out that the previous law, which was disregarded by the Administration, contained a specific prohibi- tion against subsidizing development to sell the subsidized value to the federal government. He stated he has a problem with that. REPRESENTATIVE JAMES asked if that prohibition could be added to HB 116. CHAIRMAN HALFORD stated, "I'd want to discuss it a little bit too. I don't want it to be unreasonable but the thing that was very frustrating about the original Delta work out is a lot of the CRP contracts had a value exceeding the value of the parcel after we wrote down huge amounts of money on the parcel purchases." He noted it is not an issue he has looked at recently. MR. BOB FRANKLIN, President of the Alaska Farm Bureau, informed committee members that the current CRP rate is about $37 per acre on the acreage that is put into CRPs, acreage that is not considered in HB 116. He noted that a majority of the members of the Alaska Farm Bureau support HB 116 and he encouraged committee members to support it. MR. JIM HARRISON informed committee members he has been farming since 1970. He feels the agricultural industry has been "yanked around" by changes in administrations. HB 116 will settle things down. The issue of CRPs is not a clear cut deal as it costs money to maintain CRPs. He does not see how regulation on CRPs will benefit the industry at all. MR. BILL WARD stated support for HB 116 as farmers have struggled for a long time to get where they are. Regarding the qualifications of Board members, he felt the restrictions in the bill will limit the number of people who can serve. He asked committee members to review it in relation to the Ethics Act. He thought the requirement that a Board member wait one year after serving before applying for a loan will be difficult for many farmers. MR. CRAIG TRYTTEN told committee members that both he and his wife would like to serve on the Board but cannot because their lease is due in 2½ years and they could not re-lease or purchase their farm under the conditions set out in HB 116. He emphasized that HB 116 has bipartisan support but he would like to see all regions of the State represented. MR. FELDMAN, also a Delta farmer, explained to committee members that in order to qualify for a CRP, a farmer must have a production base. Whether the farmer borrows money from the FSA or the ARLF does not matter, what matters is that the farmer can prove his or her production base. To prove that, a farmer must grow crops for a certain number of years, show a history with a farm service agency of how much was grown. With that information, the CRP or payments are based on the production history. He said a person cannot just borrow money and put it on CRP. CHAIRMAN HALFORD asked Mr. Feldman if he has a CRP contract. MR. FELDMAN said he does not. CHAIRMAN HALFORD asked if the CRP contract is $37.50 per acre per year. MR. FELDMAN answered that is probably an average because when a farmer applies for a CRP, the farmer makes a bid. The County Committee meets and reviews the federal regulations. If the bid is too high, the bid is disqualified; if it is too low, the County Committee will accept it. The CRP program requires the farmer to maintain the land so it has to be planted for erosion control. CHAIRMAN HALFORD indicated that this issue has been under discussion for 15 years but when the Legislature did the DNR and ARLF combined work out several years ago, it contained a specific provision that said a farmer could not get the work out and use the CRP or the State would be in violation. The State did it contrary to the law. The problem was that the value of some of the property was written down to $200,000 or $300,000 when those pieces of property had outstanding CRP contracts. The contracts themselves were worth $500,000. Chairman Halford thought that was a very serious abuse of the system. MR. FELDMAN agreed that it was a serious problem in the early 1980's. He noted that today, any CRP subsidies come from the federal government. The State does not subsidize agriculture; it puts the money in for loans that revolve. Interest charged on ARLF loans is used to support the revolving loan fund and the farmers, and to keep the Division of Agriculture alive. The Division of Agriculture has had no State funding for ten years. He maintained the Division is working toward a whole different scenario today. SENATOR TAYLOR commented that because the Division is drawing interest on the ARLF, the fund will remain stagnant or diminish over time. MR. FELDMAN stated that at this point, the ARLF will last five years. The ARLF has almost $6 billion left and it costs about $1 million per year to run the Division of Agriculture to disperse land. CHAIRMAN HALFORD asked if it is to the farmers' advantage that the Division of Agriculture be as small as possible. MR. FELDMAN explained that it is to the farmers' advantage to have control of the Division of Agriculture. If they can put the Division of Agriculture in the hands of a farmers' board, they will be very conservative about who they loan money to and how the money is spent. Number 1459 SENATOR GREEN pointed out that the language about the disposal of land was a lot stronger in the original version of HB 116, and that the bill now uses the word "may" instead of "shall" on page 3. REPRESENTATIVE JAMES said that she originally wanted to create a board to oversee the sale of land. That approach brought a huge fiscal note because the board would have to use the Division of Land's personnel to do that work. Compromise language was then inserted into the bill which says that the division will cease to exist when no more land is available to sell. SENATOR GREEN asked Senator Taylor if he recalls from prior discussions about agricultural lands any language that pertains to agricultural land designations. SENATOR TAYLOR replied, "There is, and if you look in - I can't remember the number of the bill right now. It's a lands bill that's been locked up in Finance now for two years. They were prepared to move that bill out - I think it may have even moved to Rules, because what they did was to put an appropriation bill along with it to carry a fiscal note and that fiscal note was $9 million to sell 25,000 acres of land - actually 75,000 - but 50..." CHAIRMAN HALFORD asked if delivering it to the people was expensive rather than the sale cost. SENATOR TAYLOR said that is correct and that the Commissioner of DNR would sell land if the Legislature pays him enough to do so. He suggested creating a land board within the bill that would make recommendations to the Division and the Legislature on which lands should be designated for sale. He thought that may be one of the only ways to get around this Administration and its "fiefdom" of land holdings. REPRESENTATIVE JAMES asked if Senator Taylor was thinking of a land board in general because the board created in HB 116 could designate agricultural land. She pointed out she originally intended that the proceeds from the sales be deposited in the ARLF. SENATOR TAYLOR said a board that can designate or select agricultural lands is a good idea but that Representative James will run into Executive Branch frustration if the board itself is responsible for sales or determining the price, especially if the board is comprised of people who will be buying the land. He suggested that the board submit a report to the Legislature, in the same manner as the Local Boundary Commission, and if there is no action taken against it, it will become effective. REPRESENTATIVE JAMES thought that was a good idea. She stated, "The other comment that I wanted to make too, which I didn't say here, is that because it's not in the statute - is the Creamery Board currently is a separate board and this board will also be the Creamery Board so there is a reduction in the number of folks that would be on that Board and the Creamery has been paying some of the per diem of the Creamery Board meetings so there would be some - a little bit of money coming from them for this board as well so - and then of course we have those two properties we need to sell or liquidate in some way and that is the Creamery and the meat packing plant. And there is right now someone interested in that, whether or not that materializes or not, but I think we should be aggressive in trying to liquidate those properties and that money then will go back into the Agricultural Revolving Loan Fund because that is an asset of the Agricultural Revolving Loan Fund. I think there's about 20 - with the book value they got $26 million in that - in contracts that are out there and in those two properties." CHAIRMAN HALFORD asked Representative James if she thinks this legislation advances the cause of selling those two properties. REPRESENTATIVE JAMES said she believes it does. CHAIRMAN HALFORD replied he hopes so. Number 1744 SENATOR GREEN asked if under the current procedure the Governor may appoint a director of the Division of Agriculture with no approval by the Legislature. REPRESENTATIVE JAMES said that is correct. SENATOR GREEN asked if the Legislature has the opportunity to approve or deny the Governor's appointments to the ARLF board. REPRESENTATIVE JAMES explained that no legislative confirmation is required on this board because it has no regulatory duties. The board members then submit two names to the Commissioner of DNR from which to appoint a director of the Division of Agriculture. SENATOR GREEN asked Carol Carroll to respond. MS. CAROL CARROLL, Director of the Division of Support Services, DNR, clarified that the members of the Board of Agriculture are not confirmed by the Legislature now, nor will they be under HB 116. SENATOR GREEN pointed out the nominations to the Board of Agriculture were reviewed by the Senate Resources Committee. MS. CARROLL clarified that she was referring to the members of the ARLF. SENATOR GREEN indicated that was what she was referring to. MS. CARROLL stated it is her understanding that the names are not now presented to the Legislature for confirmation nor would they be under HB 116. CHAIRMAN HALFORD indicated they could require legislative approval but the question is whether they fit the current constitutional provision of regulatory or quasi-judicial appointments. If the Board is given any regulatory authority, the appointees would require legislative confirmation. REPRESENTATIVE JAMES said in the original bill, the board would write all of the regulations for the Division of Agriculture. SENATOR GREEN asked if the Administration would not agree to that. REPRESENTATIVE JAMES indicated that was correct. Number 1865 CHAIRMAN HALFORD stated that the bill cannot be made perfect at this time and trying to make it perfect could prevent any action from being taken. He said although it lacks other provisions he would like to see included, it is a step in the right direction. REPRESENTATIVE JAMES said she would like to see other provisions included in the bill but this legislation is a first step. SENATOR LINCOLN asked if the language that prevents a board member or one's immediate family member from entering into contracts, purchasing land or borrowing money from the ARLF for one year after leaving office is existing language (page 2, line 17). She noted the statutory definition of a family member is quite broad. She questioned who would want to serve on the board with that restriction because many members of the same family are usually involved in farming. REPRESENTATIVE JAMES said HB 116 expands the existing definition. SENATOR LINCOLN asked why Representative James would want to include immediate family members. REPRESENTATIVE JAMES said she would rather not. SENATOR LINCOLN asked where the new definition came from. REPRESENTATIVE JAMES said it is the language that was negotiated with DNR. SENATOR LINCOLN asked if DNR asked to expand the definition. REPRESENTATIVE JAMES said yes. SENATOR GREEN asked what Representative James learned about restrictions on comparable board members. She expressed concern that the pool of people with a background in agriculture in Alaska is small. REPRESENTATIVE JAMES thought Senator Green was absolutely right but noted there are not a lot of other boards to compare to. She felt the restrictions are too tight and that it will be difficult to find people to serve. She pointed out that four board members need to be from different enterprises in commercial production of agriculture of which there are a limited number. She thought it might be possible to delete the provision that prohibits board members from entering into contracts or loans for one year after their terms have ended. She noted the Executive Ethics Act contains restrictions because board members may get information that will serve their interests. SENATOR GREEN asked how the private sector handles restrictions on board members of banks. REPRESENTATIVE JAMES said through disclosure. SENATOR GREEN asked if that same standard could apply. REPRESENTATIVE JAMES said the problem she sees is that people managing a fund of money are insiders. When they take advantage of knowledge they gain from their board membership, it is assumed they are acting unethically, even though some actions may not be. She noted the farmers she spoke to believe they can find people to serve so she considers this bill to be a start. CHAIRMAN HALFORD informed committee members that according to the existing law, the board is comprised of seven members appointed by the Governor and confirmed by the legislature in a joint session. He asked Senator Green and Senator Taylor to work with Representative James to come up with "the strongest version of this that we can get passed." SENATOR LINCOLN asked the subcommittee to look at the section that pertains to the immediate family because she was told it was added because the bill repeals the current conflict of interest language. SENATOR GREEN asked if DNR opposed including the conflict of interest language in the bill. REPRESENTATIVE JAMES asked Elizabeth Hickerson to answer that question. MS. ELIZABETH HICKERSON, Assistant Attorney General, explained that Representative Harris recommended that the one-year restriction be included. Under the existing Executive Ethics Act, people would be prohibited from serving on the board if they had any existing loans, permits, leases, or financing arrangements with the ARLF. The provision in HB 116 is a limited exemption from the Executive Ethics Act that was worked out with Representative James, Assistant Attorney Jim Baldwin and herself and it was acceptable to the Administration. CHAIRMAN HALFORD asked where the definition of "immediate family" is located in the bill. MS. HICKERSON said it is in the Executive Ethics Act, AS 39.52.060, which is referred to on line 31 of page 2 of the bill. SENATOR LINCOLN read from the statute, "aunts, uncles, brothers, stepchildren, adopted children, people who are living with you ...." CHAIRMAN HALFORD stated that a person living in the same economic unit will obviously have an economic benefit but it is a different situation if it applies to a brother who lives down the road and with whom you've been arguing for 20 years. SENATOR GREEN asked if the Legislature has any input into the selection, confirmation, complaint or removal of board members. REPRESENTATIVE JAMES replied that confirmation would have to be included in the bill because it is not automatic. CHAIRMAN HALFORD clarified that as long as the board has some quasi-judicial or regulatory function, it qualifies under the section of the Constitution that allows for legislative confirmation. REPRESENTATIVE JAMES replied, "This one has every bit, and maybe a little bit more, than the current one. If the current one says it can do it, then we can say this one can do it." SENATOR GREEN asked whether the Governor can remove the entire ARLF board if he chooses. REPRESENTATIVE JAMES said the Governor can unless the bill contains a "for cause" provision. She said the bill started out with that provision. TAPE 00-23, SIDE B SENATOR GREEN said what she would like to get at is that to remove an appointed member, the Governor must first provide a written statement to the member of the reasons for removal and make a statement to the public. She believes the removal must be public and not a dark secret. REPRESENTATIVE JAMES said in other cases that only means the Governor must write the board member a letter saying he does not like the board member's philosophy. SENATOR GREEN asked what would happen if all board members were removed by the Governor and not replaced. CHAIRMAN HALFORD announced that the subcommittee would work on those questions and that the bill would be brought before the committee in a couple of days. There being no further business to come before the committee, he adjourned the meeting at 4:20 p.m.