Legislature(2015 - 2016)BUTROVICH 205

02/13/2015 03:30 PM RESOURCES

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Audio Topic
03:30:13 PM Start
03:31:44 PM HJR10
03:35:48 PM Confirmation Hearings
03:49:43 PM SB32
04:27:05 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Confirmation of Governor's Appointments: TELECONFERENCED
Big Game Commercial Services Board - James
(David) Jones, Kelly Vrem
-- Public Testimony on Appointments --
*+ SB 32 TIMBER SALES TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled: TELECONFERENCED
HJR 10 OPPOSE ANWR WILDERNESS DESIGNATION
Moved SCS CSHJR 10(RES) Out of Committee
-- Companion Bill to SJR 10 --
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                       February 13, 2015                                                                                        
                           3:30 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Cathy Giessel, Chair                                                                                                    
Senator Mia Costello, Vice Chair                                                                                                
Senator John Coghill                                                                                                            
Senator Peter Micciche                                                                                                          
Senator Bill Stoltze                                                                                                            
Senator Bill Wielechowski                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Bert Stedman                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CS FOR HOUSE JOINT RESOLUTION NO. 10(RES)                                                                                       
Opposing   the  revised   Comprehensive  Conservation   Plan  and                                                               
Environmental Impact  Statement for the Arctic  National Wildlife                                                               
Refuge; opposing attempts by President  Obama to alter management                                                               
of  the coastal  plain of  the Arctic  National Wildlife  Refuge;                                                               
encouraging  the  United States  Congress  to  reject a  proposal                                                               
based  on   the  revised   Comprehensive  Conservation   Plan  or                                                               
accompanying Environmental Impact  Statement; and encouraging the                                                               
United States  Congress to reject  a proposal that does  not open                                                               
the coastal plain  of the Arctic National Wildlife  Refuge to oil                                                               
and gas development.                                                                                                            
                                                                                                                                
     - MOVED SCS CSHJR 10(RES) OUT OF COMMITTEE                                                                                 
                                                                                                                                
CONFIRMATION HEARINGS                                                                                                           
     Big Game Commercial Services Board                                                                                       
          James David Jones - Kodiak, Alaska                                                                                    
          Kelly Vrem - Wasilla, Alaska                                                                                          
                                                                                                                                
     - CONFIRMATIONS ADVANCED                                                                                                   
                                                                                                                                
SENATE BILL NO. 32                                                                                                              
"An  Act relating  to  the  sale of  timber  on  state land;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HJR 10                                                                                                                  
SHORT TITLE: OPPOSE ANWR WILDERNESS DESIGNATION                                                                                 
SPONSOR(s): REPRESENTATIVE(s) NAGEAK                                                                                            
                                                                                                                                
01/28/15       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/28/15       (H)       RES                                                                                                    
02/02/15       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/02/15       (H)       Moved  CSHJR 10(RES) Out of Committee                                                                  
02/02/15       (H)       MINUTE(RES)                                                                                            
02/04/15       (H)       RES RPT CS(RES) 7DP 1NR                                                                                
02/04/15       (H)       DP: SEATON, OLSON, HERRON, JOSEPHSON,                                                                  
                         JOHNSON, HAWKER, TALERICO                                                                              
02/04/15       (H)       NR: TARR                                                                                               
02/04/15       (H)       TRANSMITTED TO (S)                                                                                     
02/04/15       (H)       VERSION: CSHJR 10(RES)                                                                                 
02/06/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/06/15       (S)       RES                                                                                                    
02/13/15       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
BILL: SB  32                                                                                                                  
SHORT TITLE: TIMBER SALES                                                                                                       
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/30/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/30/15       (S)       RES, FIN                                                                                               
02/13/15       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
GARY ZEPP, staff to Representative Nageak                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Commented on CSHJR 10(RES) for the sponsor.                                                               
                                                                                                                                
JAMES DAVID JONES                                                                                                               
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT: Nominee for the Big Game Commercial Services                                                              
Board.                                                                                                                          
                                                                                                                                
KELLY VREM,                                                                                                                     
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT: Nominee to the Big Game Commercial Services                                                               
Board who also supported Mr. Jones' re-appointment to the same                                                                  
board.                                                                                                                          
                                                                                                                                
SAM ROHR, President                                                                                                             
Alaska Professional Hunters Association (APHA)                                                                                  
Kodiak, Alaska                                                                                                                  
POSITION  STATEMENT: Supported  the re-appointments  of Mr.  Vrem                                                             
and Mr. Jones to the Big Game Commercial Services Board.                                                                        
                                                                                                                                
CHRIS MAISCH, State Forester and Director                                                                                       
Division of Forestry                                                                                                            
Department of Natural Resources (DNR)                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Commented on SB 32.                                                                                       
                                                                                                                                
RICK ROGERS, Executive Director                                                                                                 
Resource Development Council (RDC)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Supported SB 32.                                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:30:13 PM                                                                                                                    
CHAIR  CATHY   GIESSEL  called  the  Senate   Resources  Standing                                                             
Committee meeting  to order at 3:30  p.m. Present at the  call to                                                               
order were  Senators Costello,  Micciche, Wielechowski  and Chair                                                               
Giessel.                                                                                                                        
                                                                                                                                
           HJR 10-OPPOSE ANWR WILDERNESS DESIGNATION                                                                        
                                                                                                                                
CHAIR GIESSEL  announced HJR 10  to be up for  consideration. She                                                               
said it  is a companion bill  to SJR 10, which  has already moved                                                               
from committee.                                                                                                                 
                                                                                                                                
SENATOR COSTELLO  moved to adopt  SCS CSHJR 10(RES),  version 29-                                                               
LS0429\E, as the working document.                                                                                              
                                                                                                                                
3:31:44 PM                                                                                                                    
CHAIR  GIESSEL objected  for  discussion  purposes and  explained                                                               
that the  changes in the  proposed committee substitute  (CS) are                                                               
clean-up provisions  that more accurately  fit the  provisions in                                                               
ANILCA. It also inserts two  clauses from the Senate version that                                                               
were identified as redundant and therefore removed.                                                                             
                                                                                                                                
SENATOR STOLTZE joined the committee.                                                                                           
                                                                                                                                
CHAIR  GIESSEL   invited  Mr.  Zepp  to   explain  the  sponsor's                                                               
perspective.                                                                                                                    
                                                                                                                                
3:32:13 PM                                                                                                                    
GARY  ZEPP,   staff  to   Representative  Nageak,   Alaska  State                                                               
Legislature,  Juneau, Alaska,  said the  sponsor agreed  with the                                                               
changes to CSHJR 10(RES).                                                                                                       
                                                                                                                                
CHAIR  GIESSEL  removed  her objection  and  finding  no  further                                                               
objections,  announced that  version  E was  adopted. She  opened                                                               
public comment and finding none, closed public testimony.                                                                       
                                                                                                                                
3:33:24 PM                                                                                                                    
SENATOR COSTELLO  moved to  report SCS  CSHJR (RES),  version 29-                                                               
LS0429\E,  from  committee  with individual  recommendations  and                                                               
attached zero  fiscal note. There  were no objections and  it was                                                               
so ordered.                                                                                                                     
                                                                                                                                
SENATOR COGHILL joined the committee.                                                                                           
                                                                                                                                
3:33:42 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
^CONFIRMATION HEARINGS                                                                                                          
                     CONFIRMATION HEARINGS                                                                                  
               Big Game Commercial Services Board                                                                           
                                                                                                                              
3:35:48 PM                                                                                                                    
CHAIR  GIESSEL called  the  meeting  back to  order  at 3:35  and                                                               
invited Mr.  Jones to let  the committee know about  his interest                                                               
in  serving on  the Big  Game Commercial  Services Board  and his                                                               
credentials to do so.                                                                                                           
                                                                                                                                
JAMES DAVID JONES,  nominee for the Big  Game Commercial Services                                                               
Board, Kodiak,  Alaska, said he  had already served on  the board                                                               
for three  years and  is just  starting to  get his  head wrapped                                                               
around it.  He moved to Kodiak  Island in 1977 after  getting out                                                               
of flight  school and  became an  air taxi pilot.  He acted  as a                                                               
fish spotter and  a sport fishing guide. He has  done quite a bit                                                               
of commercial  fishing and through  that, was able to  obtain his                                                               
Coast Guard license in the early  1980s. He used that to become a                                                               
marine  transporter for  big game  services. He  has also  been a                                                               
sport fishing  guide working on  both salt and fresh  water since                                                               
1985. He holds several  competitively-awarded special use permits                                                               
on the  Kodiak National  Wildlife Refuge.  These permits  are for                                                               
sport  fish,  but  they  are  issued in  the  same  manner  as  a                                                               
competitively-awarded  hunting  guide  permit,  so  he  has  some                                                               
background with that process.                                                                                                   
                                                                                                                                
MR. JONES  said his recent  three years' experience on  the board                                                               
will make him more a more  valuable member and that he would like                                                               
to continue serving as the marine transporter seat.                                                                             
                                                                                                                                
CHAIR GIESSEL asked if he wanted  to change anything on the board                                                               
or in regulations.                                                                                                              
                                                                                                                                
MR. JONES responded that the  board is very heavily influenced by                                                               
the  big game  guide industry,  and as  a marine  transporter and                                                               
unguided hunter, he brings a  different perspective to the table.                                                               
He wanted  to be  consistent in  handling punitive  problems with                                                               
licensees and wanted  to make sure that any  regulations that are                                                               
developed  will be  beneficial not  only  to the  big game  guide                                                               
industry but to the state's resources and its people.                                                                           
                                                                                                                                
3:40:43 PM                                                                                                                    
CHAIR  GIESSEL thanked  Mr. Jones  and welcomed  Mr. Vrem  to the                                                               
table and  asked him to  tell them his  experience and why  he is                                                               
interested in serving on the Big Game Commercial Services Board.                                                                
                                                                                                                                
3:40:53 PM                                                                                                                    
KELLY VREM,  nominee to the  Big Game Commercial  Services Board,                                                               
Wasilla,  Alaska, said  he is  a medium-sized  operator who  uses                                                               
airplanes primarily and some horses.  He also endorsed Mr. Jones'                                                               
appointment.                                                                                                                    
                                                                                                                                
Mr. Vrem said  he was born and raised in  Alaska and received his                                                               
first assistant guide  license in July 1973. He had  been a close                                                               
observer  and participant  in the  Big  Game Commercial  Services                                                               
Board and  the Guide Board  before that. He brings  an historical                                                               
perspective to the  board and wants to  continue serving, because                                                               
he has  just figured the  system out  and is hitting  his stride.                                                               
The boards have  a steep learning curve. The  board has financial                                                               
challenges  and he  is working  on  ideas to  get it  on a  sound                                                               
fiscal footing.                                                                                                                 
                                                                                                                                
CHAIR GIESSEL  noted that this  particular board has  the largest                                                               
debt in the licensing division.                                                                                                 
                                                                                                                                
SENATOR STOLTZE  said he  appreciated Mr.  Vrem's service  on the                                                               
board  and  that he  knew  his  family  well,  many of  whom  are                                                               
involved  in the  profession.  Their conduct  as  members of  the                                                               
profession and  the community exemplifies  the type of  values he                                                               
wanted from Alaskans  who serve on boards.  He  had never met Mr.                                                               
Jones, but  people he  knows and  trusts have  resoundingly spoke                                                               
highly of him.                                                                                                                  
                                                                                                                                
SENATOR MICCICHE said  he had received two  additional letters of                                                               
support  for Mr.  Vrem  and  Mr. Jones.  A  common  theme in  the                                                               
letters was  that even people who  don't agree with all  of their                                                               
decisions still support  them in the process; they  are very hard                                                               
working and valuable.                                                                                                           
                                                                                                                                
CHAIR  GIESSEL  said  she  had  also  observed  only  letters  of                                                               
support.  Finding   no  further  questions,  she   opened  public                                                               
comment.                                                                                                                        
                                                                                                                                
3:45:49 PM                                                                                                                    
SAM  ROHR,  President,  Alaska Professional  Hunters  Association                                                               
(APHA), Kodiak,  Alaska, supported  the appointments of  Mr. Vrem                                                               
and  Mr. Jones  to the  Big Game  Commercial Services  Board. Mr.                                                               
Vrem is  an experienced  chair who knows  the process  and issues                                                               
well and is well-regarded within the guiding community.                                                                         
                                                                                                                                
Mr. Jones  represents an often  under-represented segment  of the                                                               
industry,   the  marine   transporters.   He   brings  a   unique                                                               
perspective  and  approaches issues  with  an  open mind.  He  is                                                               
continually becoming more familiar with  the issues that both the                                                               
guiding and the transporting industry face.                                                                                     
                                                                                                                                
3:47:52 PM                                                                                                                    
CHAIR  GIESSEL,  finding  no  further  questions,  closed  public                                                               
testimony  and   said  in  accordance  with   AS  39.05.080,  the                                                               
Resources  Committee reviewed  the following  and recommends  the                                                               
appointments be  forwarded to a joint  session for consideration:                                                               
James David Jones and Kelly Vrem.  She said this does not reflect                                                               
an intent by any members to  vote for or against the confirmation                                                               
of the  individuals during  any further  sessions. There  were no                                                               
objections.                                                                                                                     
                                                                                                                                
3:48:20 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
                      SB  32-TIMBER SALES                                                                                   
                                                                                                                                
3:49:43 PM                                                                                                                    
CHAIR GIESSEL called  the meeting back to order  and announced SB                                                               
32,  expanding   the  Department  of  Natural   Resources'  (DNR)                                                               
authority to  offer negotiated timber  sales statewide, to  be up                                                               
for consideration.                                                                                                              
                                                                                                                                
CHRIS MAISCH, State Forester and  Director, Division of Forestry,                                                               
Department of  Natural Resources (DNR), Juneau,  Alaska, began by                                                               
walking the  committee through options  for selling  state timber                                                               
in the "Review of State Timber Sale Types."                                                                                     
                                                                                                                                
He  explained  that he  would  refer  to  the statutes  by  their                                                               
shorthand, the last three digits of the statute number.                                                                         
                                                                                                                                
The 120  authority is  for competitive  sales: timber  sales that                                                               
are offered  in a competitive  way either through an  oral outcry                                                               
auction  or  a sealed  bid  auction.  The  best bidder  with  the                                                               
highest price is  successful in acquiring that  timber sale. Oral                                                               
outcry auctions  are used in  areas where  there are a  number of                                                               
purchasers. Sealed  bid sales are  used in areas where  there may                                                               
be just  one or two  potential purchasers. That tends  to achieve                                                               
the best purchase price for the state.                                                                                          
                                                                                                                                
MR.  MAISCH said  negotiated  sales use  three  methods. The  115                                                               
authority is  the small  negotiated sales  for less  than 500,000                                                               
board feet.  It may  sound like  a lot of  timber volume,  but it                                                               
really isn't. There would be  about 20 acres in Southeast Alaska,                                                               
about 125  acres in  Southcentral Alaska, and  about 80  acres in                                                               
Interior  Alaska. This  has to  do  with the  different types  of                                                               
forests and  their productivity in  terms of how much  acreage it                                                               
takes to meet that volume.                                                                                                      
                                                                                                                                
The sales currently  can only be for one year  in length, but the                                                               
division  is in  the process  of changing  a regulation  to allow                                                               
those sales to be two years  in length. These sales are typically                                                               
purchased by very small operators,  someone who might have a sole                                                               
proprietorship or a one or two-person  kind of a mom and pop-type                                                               
sawmill operation.                                                                                                              
                                                                                                                                
3:53:40 PM                                                                                                                    
The 123 authority is for  negotiated sales that are high-value 10                                                               
million board feet  per year for 10 years. They  have to meet the                                                               
definition of high-value  added wood products as  opposed to just                                                               
a  definition of  value-added wood  products. A  value-added wood                                                               
product would be a-sawmill that  produces sawn lumber but doesn't                                                               
kiln  dry,   plane  it  or  grade   it,  so  it  could   be  used                                                               
structurally.  High-value added  would  be a  facility that  does                                                               
that:  kiln dry,  planed and  graded.  Wood pellets  are on  this                                                               
list. This  enables the  department to use  the 123  authority to                                                               
prepare a timber  sale for a pellet mill that  is located between                                                               
Fairbanks and North Pole.                                                                                                       
                                                                                                                                
3:54:59 PM                                                                                                                    
MR.  MAISCH  said  the  118  authority is  the  subject  of  this                                                               
proposed legislation. It  is also a negotiated sale  that fits in                                                               
between the  other two. It  can be up to  25 years in  length and                                                               
has three criteria:                                                                                                             
                                                                                                                                
1. There  has to be  a high level  of unemployment in  the census                                                               
district  as calculated  by the  Alaska Department  of Labor  and                                                               
Workforce  Development (DOLWD).  It has  to be  greater than  135                                                               
percent of the statewide average,  a high hurdle. But places that                                                               
meet  it  are  the  Fairbanks  North  Star  Borough,  the  Mat-Su                                                               
Borough,  the  Kenai  Peninsula,  and the  Juneau  Borough.  That                                                               
authority  cannot  be  used  in those  areas  currently  and  the                                                               
proposed change  would allow the  department to start  using this                                                               
authority in those areas if it is the best way to sell timber.                                                                  
                                                                                                                                
2. There  has to be  an under-utilized allowable cut.  That means                                                               
extra  volume has  to be  available to  offer under  a negotiated                                                               
sale; for example, in Southern  Southeast Alaska where the annual                                                               
allowable  cut is  13 million  feet  per year  off the  Southeast                                                               
State  Forest. That  is managed  on a  10-year basis,  so in  any                                                               
given year they  may sell 13 million or 5  million board feet. If                                                               
they only sell  5 million, they put 8 million  feet in reserve to                                                               
be brought forward  at a later time and can  actually have a sale                                                               
for over 13  million feet. The key  is that it has  to be managed                                                               
on a  10-year rolling basis,  so the  allowable cut can  never be                                                               
exceeded in a 10 year period.                                                                                                   
                                                                                                                                
MR. MAISCH explained that right  now the department is ramping up                                                               
the timber sale program in  Southern Southeast Alaska to help the                                                               
mills survive the downturn in  the federal timber sale program on                                                               
the  Tongass,  because  it  is going  through  a  plan  amendment                                                               
process in which very little  timber is being made available. The                                                               
department  is  essentially  trying  to buy  some  time  for  the                                                               
remaining  industry in  Southeast,  especially the  manufacturing                                                               
industries.                                                                                                                     
                                                                                                                                
3.  The facility  that the  wood  would be  used in  has to  have                                                               
underutilized  manufacturing capacity.  This  would  mean a  mill                                                               
could  add a  second  shift to  the operation  or  it might  mean                                                               
instead of  operating only eight  months the mill  could actually                                                               
operate 12 months, because they have enough wood to do so.                                                                      
                                                                                                                                
MR. MAISCH explained  that the reason they use  the 118 authority                                                               
in  Southern Southeast  so  much is  because  of the  competition                                                               
between round-log export and  domestic manufacturing. The Pacific                                                               
Rim markets  can afford to  pay a much  higher value for  a round                                                               
log,  so if  the competitive  timber  sale authority  is used  in                                                               
Southeast, the  wood would  go mostly  offshore. However,  it has                                                               
long been a policy of  the department and various administrations                                                               
to try and  have state-owned wood go  to manufacturing facilities                                                               
in  Alaskan communities.  That's what  this 118  authority allows                                                               
them to do; it allows them  to use other factors besides price in                                                               
their decision process.                                                                                                         
                                                                                                                                
3:58:45 PM                                                                                                                    
SENATOR WIELECHOWSKI  asked if competitive  bids typically  go to                                                               
outside organizations.                                                                                                          
                                                                                                                                
MR. MAISCH answered yes.                                                                                                        
                                                                                                                                
SENATOR WIELECHOWSKI asked if they  are trying to get timber that                                                               
will  get  sold, no  matter  what,  to Alaskan  manufacturers  as                                                               
opposed to outside corporations.                                                                                                
                                                                                                                                
MR. MAISCH replied that was correct.                                                                                            
                                                                                                                                
4:00:28 PM                                                                                                                    
SENATOR  MICCICHE asked  if  he had  any areas  in  mind (with  a                                                               
harvestable surplus  above the 135  percent of  statewide average                                                               
for unemployment).                                                                                                              
                                                                                                                                
MR.  MAISCH answered  yes. He  explained that  Southern Southeast                                                               
Alaska has  three state  forests, two of  them are  the Southeast                                                               
State  Forest and  the Haines  State Forest,  both of  which have                                                               
forest management  plans and associated  allowable cuts.  It also                                                               
has  lands that  are classified  for forestry  use under  various                                                               
areas  plans around  the state.  The department  determines where                                                               
timber  sales will  happen based  on  the five  year schedule  of                                                               
timber  sales.  That can  be  put  out  every  year but  is  only                                                               
required  to be  put  out every  other year.  This  is the  early                                                               
notice  to  industry and  the  public  of  areas where  they  are                                                               
contemplating proposing a timber sale.                                                                                          
                                                                                                                                
SENATOR MICCICHE  asked if  the vast  majority of  communities in                                                               
Southeast  where the  sales will  take  place are  above the  135                                                               
percent statewide average for unemployment.                                                                                     
                                                                                                                                
MR. MAISCH  answered that was  correct. That criterion is  not an                                                               
issue;  the criterion  that is  the issue  is the  allowable cut.                                                               
Because after  this ramped-up  program is used  for two  or three                                                               
years, that  criteria will no longer  be met (because all  of the                                                               
available  surplus will  have been  used) and  the 120  authority                                                               
will be used to sell all of the remaining wood.                                                                                 
                                                                                                                                
SENATOR MICCICHE  asked if  anywhere else in  the state  would be                                                               
able to satisfy all three criteria.                                                                                             
                                                                                                                                
MR. MAISCH answered  yes; Tok is where they last  proposed to use                                                               
the 118 sale authority for a  power facility that would have used                                                               
wood chips to  produce electricity. They entered  the 118 process                                                               
with  a preliminary  best interest  finding and  in that  process                                                               
another competitor showed up. That  competitor proved to have the                                                               
ability to perform, and so that sale was offered as a 120 sale.                                                                 
                                                                                                                                
SENATOR  WIELECHOWSKI noted  the zero  fiscal note,  but said  he                                                               
thought   that  revenues   should   increase   as  the   industry                                                               
diversifies. To be  fair, though, there could also  be a decrease                                                               
since they will no longer go out to a competitive process.                                                                      
                                                                                                                                
4:03:51 PM                                                                                                                    
MR.  MAISCH  agreed   that  was  correct  and   added  that  it's                                                               
definitely  a tradeoff  in Southern  Southeast. The  decision has                                                               
been  made  to support  the  communities'  manufacturing and  the                                                               
associated jobs that come with that  because of the wood going to                                                               
a domestic source rather that selling for price only.                                                                           
                                                                                                                                
The  department has  the ability  under the  current timber  sale                                                               
program to collect some timber  sale receipts and that amounts to                                                               
about  $850,000  per year.  This  is  used  to support  a  couple                                                               
forester  positions, do  reforestation and  to maintain  roads in                                                               
the state forest system. Roads  are typically built by the timber                                                               
purchasers  and are  appraised against  the value  of the  timber                                                               
sale.  So,   the  roads  are   initially  constructed   by  those                                                               
purchasers  who  maintain them  while  they  are being  used  for                                                               
timber purposes. Once they are  not, the maintenance reverts back                                                               
to the Division of Forestry.                                                                                                    
                                                                                                                                
SENATOR WIELECHOWSKI  asked what  happens when  foreign companies                                                               
want to negotiate a sale.                                                                                                       
                                                                                                                                
MR. MAISCH  explained that first it  has to meet the  criteria of                                                               
why a  sale would  be negotiated.  If it's in  an area  where the                                                               
department  would  normally do  a  competitive  sale, they  would                                                               
politely say no.  As a state agency, they don't  want to pick who                                                               
the  winner and  loser is  in a  negotiation process  if the  two                                                               
parties are not on equal footing.                                                                                               
                                                                                                                                
SENATOR  WIELECHOWSKI said  except they  are trying  to pick  the                                                               
winners. So, there  could be problems down the  line with foreign                                                               
organizations.                                                                                                                  
                                                                                                                                
MR. MAISCH  explained that  an RFP process  is associated  with a                                                               
negotiated sale.  Some of the questions  they can ask in  the RFP                                                               
are  the number  of jobs  created, how  many high-value  products                                                               
will be made  and where they will be sold,  so they can determine                                                               
what will produce  the most value in terms of  jobs and community                                                               
support. Points are awarded for  the different types of questions                                                               
and a high bidder is chosen;  then they negotiate the terms. Even                                                               
when  they negotiate,  the  buyer  has to  meet  all the  bonding                                                               
requirements,  fiscal due  diligence and  sign a  standard timber                                                               
sale contract.                                                                                                                  
                                                                                                                                
4:07:29 PM                                                                                                                    
SENATOR WIELECHOWSKI  said he appreciated  what they  were trying                                                               
to  do,  but  wondered  if  the  language  could  be  tweaked  to                                                               
specifically give  Alaskans preference, because legally  they are                                                               
allowed to be given some preference.                                                                                            
                                                                                                                                
MR. MAISCH  replied that the  department has a good  track record                                                               
of using  118 authorities  in Southeast  and currently  has three                                                               
active timber  sales that were  sold under it.  Foreign interests                                                               
have come to Alaska to look  at purchasing timber - all the time,                                                               
actually.  But no  offshore party  has  been willing  to make  an                                                               
investment in Alaska,  because of the cost and the  fact that the                                                               
state  doesn't have  that  much timber  to  support the  industry                                                               
(that went  from 5,000  direct employees  in Southeast  Alaska to                                                               
about 250 today) when the  Forest Service quit selling the amount                                                               
of timber it should be selling.                                                                                                 
                                                                                                                                
SENATOR COGHILL  asked if  what he  has been  talking about  is a                                                               
part of the criteria in the best interest finding.                                                                              
                                                                                                                                
MR.  MAISCH  answered  yes;  it  can be  made  the  criteria.  He                                                               
explained that  section 1 adds  a subsection clarifying  that the                                                               
commissioner currently  has the authority to  choose which timber                                                               
sale authority  is the appropriate  one to  use and the  way that                                                               
would  be done  will  be with  a best  interest  finding. A  best                                                               
interest finding is  not needed for 115 sales. He  added that the                                                               
small  "b"  best interest  finding  is  not  the large  "B"  Best                                                               
Interest Finding, which means an actual best interest finding.                                                                  
                                                                                                                                
4:10:24 PM                                                                                                                    
SENATOR COGHILL asked for the  criteria under the little "b" best                                                               
interest finding.                                                                                                               
                                                                                                                                
MR.  MAISCH  replied  that  it  has to  be  read  as  a  two-part                                                               
statement. First you  choose the authority you're going  to use -                                                               
the applicable  sale method. If  the commissioner decided  to use                                                               
the  118 authority,  then a  large "B"  Best interest  finding is                                                               
required  (and  for most  of  the  other authorities).  The  only                                                               
authority  that  doesn't  require  that  big  "B"  Best  Interest                                                               
Finding is the 115 small  negotiated sales, because it's too much                                                               
process to  go through for 500,000  board feet, but it  still has                                                               
to  comply  with  all  the  normal  forest  practices  and  other                                                               
standards.  He asked  the Department  of  Law (DOL)  for a  legal                                                               
opinion on  their interpretation  and that should  be forthcoming                                                               
soon.                                                                                                                           
                                                                                                                                
4:11:36 PM                                                                                                                    
SENATOR COSTELLO said  she understood that this bill  came out of                                                               
a  recommendation from  the  Alaska Timber  Jobs  Task Force  and                                                               
asked if this is the first or highest priority recommendation.                                                                  
                                                                                                                                
MR. MAISCH answered that this  is one of the recommendations that                                                               
came out of the Alaska Timber  Jobs Task Force under the previous                                                               
administration that was completed in  2012. It made roughly 32 or                                                               
36 specific recommendations; some  were prioritized and some were                                                               
not. This  did not  fall in  that top five  priority, but  it was                                                               
worth pursuing. It  was in the first two sections  of the Susitna                                                               
State  Forest  legislation that  was  discussed  in the  previous                                                               
legislature.  The  Board  of Forestry  and  the  Tanana  Citizens                                                               
Advisory Committee support this legislation.                                                                                    
                                                                                                                                
SENATOR  MICCICHE asked  when the  department determines  maximum                                                               
and best use, if someone wants  to create wood pellets and employ                                                               
three people  in a particular piece  of forest where there  is no                                                               
volume  limit  and  someone  else   comes  along,  maybe  another                                                               
company, that  wants to manufacture  staircase spindles  for some                                                               
company outside of  Alaska, except they want to  hire hundreds of                                                               
Alaskans, finish the product here  and send it outside, that they                                                               
are  not just  focused  on  some Alaskan  company  when they  may                                                               
potentially be  able to  employ hundreds  of other  Alaskans with                                                               
the other option under the 118 authority.                                                                                       
                                                                                                                                
MR.  MAISCH agreed  with  that example,  but  clarified that  "no                                                               
volume limit"  means they can do  a large sale, but  it still has                                                               
to  comply with  sustained yield  and annual  harvest quantities.                                                               
However, the second  company he described would  perhaps fit much                                                               
better under their 123 authority,  because they are making a very                                                               
high-value  finished  product  in  Alaska that  gets  shipped  to                                                               
markets in other parts of the world.                                                                                            
                                                                                                                                
4:16:12 PM                                                                                                                    
SENATOR  STOLTZE  said he  didn't  see  any dialogue  about  this                                                               
legislation  from   the  pro-development  group  in   the  Mat-Su                                                               
Borough.                                                                                                                        
                                                                                                                                
MR. MAISCH said the Susitna State  Forest is not part of this; he                                                               
just mentioned it because it was in that previous legislation.                                                                  
                                                                                                                                
4:18:26 PM                                                                                                                    
SENATOR  WIELECHOWSKI asked  if deleting  the provision  of "must                                                               
have  a  high level  of  local  unemployment" would  include  the                                                               
Susitna State Forest if it were to become a state forest.                                                                       
                                                                                                                                
MR.  MAISCH  answered  yes,  because  it  would  be  a  statewide                                                               
authority.                                                                                                                      
                                                                                                                                
CHAIR GIESSEL  opened public  comment and  invited Mr.  Rogers to                                                               
comment.                                                                                                                        
                                                                                                                                
RICK  ROGERS, Executive  Director,  Resource Development  Council                                                               
(RDC), Anchorage, Alaska,  supported SB 32. It's a  small step to                                                               
adjust statutes to help get some  timber supply, which is the big                                                               
impediment  to the  industry, particularly  in Southeast  Alaska.                                                               
The DNR  has been very effective  in using what limited  lands it                                                               
holds  in Southeast  Alaska to  help  bridge the  gap for  timber                                                               
supply for  the remaining  mills. The  timber sale  statutes have                                                               
not  been modified  for  a  couple of  decades,  and this  change                                                               
acknowledges  the market  for  wood chips,  a  new industry  with                                                               
respect to biomass energy.                                                                                                      
                                                                                                                                
4:22:53 PM                                                                                                                    
CHAIR GIESSEL left public testimony  open and said she would hold                                                               
SB 32.                                                                                                                          
                                                                                                                                
SENATOR  WIELECHOWSKI   asked  the  department  for   a  list  of                                                               
competitive  sales with  a comparison  to their  appraised values                                                               
for the past  couple of years, to  get a handle on  how much this                                                               
bill would cost.                                                                                                                
                                                                                                                                
MR.  MAISCH answered  he would  do that,  but he  also knew  that                                                               
there was a range of 30-50  percent difference in what they would                                                               
get if  they offered a sale  under a 120 authority.  That amounts                                                               
from  tens  of  thousands  to maybe  a  hundred  thousand  dollar                                                               
difference  in  purchase  price  for  an  export  sale  versus  a                                                               
negotiated sale.                                                                                                                
                                                                                                                                
SENATOR MICCICHE asked if there is  any way to quantify the value                                                               
of  local  employment  and  its   trickle-down  effect  into  the                                                               
community using a per board foot measurement.                                                                                   
                                                                                                                                
MR. MAISCH replied that the  Forest Service and others have tried                                                               
to  do  that,  but it  is  tough,  because  there  are a  lot  of                                                               
intangibles. The  economic, social  and an  environmental aspects                                                               
of managing the forests are hard  to put numbers on, but he would                                                               
do  his  best to  at  least  give him  some  rules  of thumb  the                                                               
department uses in making those decisions.                                                                                      
                                                                                                                                
SENATOR COSTELLO  asked what  problem as  identified by  the task                                                               
force that this bill solves.                                                                                                    
                                                                                                                                
MR. MAISCH answered  that he would provide a  written response to                                                               
that question.                                                                                                                  
                                                                                                                                
CHAIR GIESSEL said she would hold SB 32 for a further hearing.                                                                  
4:27:05 PM                                                                                                                    
Finding no further  business to come before  the committee, Chair                                                               
Giessel adjourned the Senate Resources  Committee meeting at 4:27                                                               
p.m.                                                                                                                            
                                                                                                                                

Document Name Date/Time Subjects
SRES-Agenda and Hearing Materials-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SRES-Resume-James David Jones-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SRES-Resume-Kelly Vrem-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SRES-Support Letter for Kelly Vrem and David Jones-Aaron Bloomquist-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SRES-Support Letter for Kelly Vrem-Henry Tiffany-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SRES-Support Letter for Kelly Vrem-Loren Karro-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SRES-Support Letter for Kelly Vrem-Steve Perrins-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SRES-Support Letter for Kelly Vrem-Wayne Kubat-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SRES-HJR10W-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SRES-HJR10 Sponsor Statement-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SRES-CSHJR10E-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SRES-HJR 10-Explanation of Changes-W to E-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SRES-SB 32 Governor Transmittal Letter-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SB 32
SRES-SB 32-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SB 32
SRES-SB 32-Fiscal Note-DNR-DOF-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SB 32
SRES-SB 32 Negotiated Timber Sales Briefing Paper-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SB 32
SRES-SB 32- Letter of Support-RDC-02-06-2015.pdf SRES 2/13/2015 3:30:00 PM
SB 32
SRES-HJR 10-Fiscal Note-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SRES-SB 32-Letter of Support-Viking Lumber-02-10-2015.pdf SRES 2/13/2015 3:30:00 PM
SB 32
SRES-SB 32-Letter of Support-(TVSFCAC)-2-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SB 32
SRES-Letter of Support for Vrem and Johnson-APHA-02-13-2015.pdf SRES 2/13/2015 3:30:00 PM
SB 32 Sectional Analysis.pdf SRES 2/13/2015 3:30:00 PM
SB 32