02/07/2025 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB67 | |
| SB75 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 75 | TELECONFERENCED | |
| *+ | SB 67 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
February 7, 2025
3:30 p.m.
DRAFT
MEMBERS PRESENT
Senator Cathy Giessel, Chair
Senator Bill Wielechowski, Vice Chair
Senator Matt Claman
Senator Forrest Dunbar
Senator Scott Kawasaki
Senator Shelley Hughes
Senator Robert Myers
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 67
"An Act relating to municipal and state procurement preferences
for agricultural products harvested in the state and fisheries
products harvested or processed in the state; and providing for
an effective date."
- HEARD & HELD
SENATE BILL NO. 75
"An Act relating to timber on state lands; relating to timber
management leases; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 67
SHORT TITLE: PROCURE PREF: AGRIC. & FISH PRODUCTS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/24/25 (S) READ THE FIRST TIME - REFERRALS
01/24/25 (S) RES, FIN
02/07/25 (S) RES AT 3:30 PM BUTROVICH 205
BILL: SB 75
SHORT TITLE: TIMBER MANAGEMENT LEASES
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/27/25 (S) READ THE FIRST TIME - REFERRALS
01/27/25 (S) RES, FIN
02/07/25 (S) RES AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
PAULA VRANA, Commissioner
Department of Administration (DOA)
Anchorage, Alaska
POSITION STATEMENT: Introduced SB 67 on behalf of the
administration.
ANNA LATHAM, Deputy Commissioner
Department of Commerce, Community and Economic Development
(DCCED)
Juneau, Alaska
POSITION STATEMENT: Gave a presentation on SB 67.
TOM MAYER, Chief Procurement Office
Department of Administration (DOA)
Juneau, Alaska
POSITION STATEMENT: Answered questions on SB 67.
ANDREW JENSEN, Policy Advisor
Governor's Office
Anchorage, Alaska
POSITION STATEMENT: Answered questions on SB 67.
JOHN BOYLE, Commissioner
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Answered questions on SB 67.
JOHN BOYLE, Commissioner
Alaska Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Introduced a presentation on SB 75.
JEREMY DOUSE, State Forester and Director
Division of Forestry and Fire Protection
Department of Natural Resources
Fairbanks, Alaska
POSITION STATEMENT: Gave a presentation on SB 75.
RENA MILLER, Special Assistant
Commissioner's Office
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Provided the Sectional Analysis for SB 75
ACTION NARRATIVE
3:30:09 PM
CHAIR GIESSEL called the Senate Resources Standing Committee
meeting to order at 3:30 p.m. Present at the call to order were
Senators Claman, Kawasaki, Meyer, Hughes, Dunbar, Wielechowski
and Chair Giessel.
SB 67-PROCURE PREF: AGRIC. & FISH PRODUCTS
3:31:02 PM
CHAIR GIESSEL announced the consideration of SENATE BILL NO. 67
"An Act relating to municipal and state procurement preferences
for agricultural products harvested in the state and fisheries
products harvested or processed in the state; and providing for
an effective date."
3:31:35 PM
PAULA VRANA, Commissioner, Department of Administration (DOA),
Anchorage, Alaska, introduced SB 67 on behalf of the Department
of Administration, the [Dunleavy] administration, and the
Department of Commerce, Community and Economic Development
(DCCED). She said SB 67 strengthens Alaska's commitment to
supporting local agriculture and fisheries industries by
enhancing procurement preferences for state agencies,
municipalities and school districts that receive state funding,
by raising the required in state purchasing preference from
seven percent to ten percent and expanding discretionary
purchasing from 15 percent to 25 percent SB 67 ensures that more
Alaska grown and harvested products are prioritized in
procurement decisions. SB 67 aligns with the recommendations of
the governor's Food Security and Independence Task Force and has
received broad support from industry stakeholders by enabling
more flexibility to select Alaska grown products. SB 67 bolsters
the state's economy and food security and helps to ensure a
stronger, more self-reliant Alaska. She introduced Deputy
Commissioner of the Department of Commerce, Community and
Economic Development (DCCED), Anna Latham, and Chief Procurement
Officer for the State of Alaska, Department of Administration,
Tom Mayer to continue with the presentation.
3:33:25 PM
ANNA LATHAM, Deputy Commissioner, Department of Commerce,
Community and Economic Development (DCCED), Juneau, Alaska,
noted the role of the global [Covid] pandemic to bring attention
to Alaska's food security situation. She said one of the
Dunleavy administration's initiatives was to increase food
security and agricultural sector growth in the state.
Administrative order 331 in 2022, established the Alaska Food
Security and Independence Task Force, which recommended
increasing the procurement and use of Alaska sourced foods
within the state and local agencies, institutions and schools.
MS. LATHAM stated that Alaska currently imports 95 percent of
its food supplies at a cost of $2 billion a year.
3:34:44 PM
MS. LATHAM moved to slide 2 and reviewed Alaska's current
procurement code in relation to Alaska grown fisheries and
agricultural products. She emphasized that SB 67 addressed only
agricultural and fisheries products.
[Original punctuation provided.]
Current Procurement Code
• AS 36.15.050 and AS 29.71.040 require the use of
local agricultural and fisheries products by
state agencies, school districts, and
municipalities that receive state money
• Current statute requires agricultural and
fisheries products harvested in the state:
• Shall be purchased if the product is priced
not more than seven percent above a similar
product harvested outside the state
• May be purchased if the product is priced
not more than 15 percent above a similar
product harvested outside the state
SB 67: Procurement Preference: Agriculture and Fish
Products
Department of Commerce, Community and Economic
Development (DCCED)
3:35:34 PM
MS. LATHAM moved to slide 3 and sought to familiarize the
committee with the current purchasing process used by the
Department of Administration for state agencies.
[Original punctuation provided.]
Current Purchasing Process
• The DOA Office of Procurement and Property
Management administers a statewide contract with
US Foods (Mandatory for the Department of
Corrections and Non-mandatory for all others)
• Local growers register and indicate the products
they can provide
• State agencies set up a corporate account with
vendor
• Once they've set up an account, there is an
option to select Alaska Grown Products
• These are online mobile markets that display
Alaska products
• State buyers such as the Department of
Corrections and AMHS purchase products based on
price after the application of preferences
SB 67: Procurement Preference: Agriculture and Fish
Products
Department of Commerce, Community and Economic
Development (DCCED)
3:36:30 PM
MS. LATHAM noted that a recent review of the current list
contained only three products available for purchase, indicating
room for growth. She said entities qualified to use the US Foods
vendor website included, state agencies, federally recognized
tribes (those included on the Bureau of Indian Affairs list),
the legislative branch, the university, the court system, state
boards and commissions, municipalities and school districts.
3:37:10 PM
MS. LATHAM moved to slide 4.
[Original punctuation provided.]
What Does Senate Bill 67 Do?
• Increases allowable price differentials for state
agencies, school districts, and municipalities to
purchase more Alaskan agricultural and fisheries
products
• Changes the purchase price differential for
required in-state purchases from seven percent to
ten percent
• Changes the purchase price differential for
permissible in-state purchases from 15 percent to
25 percent
• Incentivizes more production of Alaska-grown
agricultural and Alaska fisheries products by
providing access to institutional markets
SB 67: Procurement Preference: Agriculture and Fish
Products
Department of Commerce, Community and Economic
Development (DCCED)
MS. LATHAM said Alaskan producers often face cost barriers to
market access and have advocated for increased institutional
purchases to scale up their production and keep dollars
circulating in the Alaska economy. She noted SB 67 made an
incremental change [in the required in-state purchases] from
seven to 10 percent in order to avoid an adverse effect on
school districts, municipalities or state agencies.
3:38:07 PM
MS. LATHAM moved to slide 5, titled Discussion of State
Procurement Data. Slide 5 is a chart comparing procurement by
state agencies. She explained that the Department of
Administration (DOA), Office of Procurement, recently completed
a survey of all the state agencies that purchased Alaska grown
agricultural and fish commodities in 2024. She noted from the
chart there's a lot of room for growth [to meet in-state
procurement requirements]. Out of the $17 million the state
spent on food items, only $236,000 were spent on Alaska grown.
MS. LATHAM offered to walk through the agencies' purchasing in
greater detail.
3:38:47 PM
CHAIR GIESSEL affirmed that would be helpful. She expressed
curiosity about the three items available for purchase that were
mentioned earlier in the presentation.
3:38:55 PM
MS. LATHAM answered that the three items were potatoes, lettuce
and sprouts.
3:39:08 PM
MS. LATHAM detailed the 2024 Alaska grown purchases by
department:
• Department of Commerce, Community and Economic Development
(DCCED), Alaska Seafood Marketing Institute purchased $117,000
worth of scallops and canned salmon for marketing displays at
conferences and for nutritional testing.
• Department of Corrections (DOC) exclusively purchased potatoes
for a variety of their correctional facilities.
• Department of Labor and Workforce Development (DOLWD) spent
seven dollars on sprouts at their culinary institute, Alaska
Vocational Technical Institute (AVTEC) in Seward.
• The Department of Transportation spent $1,000 on the marine
highways, on the Aurora and Tustemena [ferries] food service
for potatoes.
3:39:59 PM
SENATOR DUNBAR asked whether it was the opinion of the
Department of Commerce, Community and Economic Development
(DCCED) that SB 67 would increase the amount of Alaska grown
food the state would purchase.
3:40:14 PM
MS. LATHAM said that was the intent of SB 67.
3:40:20 PM
SENATOR DUNBAR asked whether there would be additional fiscal
notes for SB 67. He noted only one zero fiscal note from
Department of Commerce, Community and Economic Development
(DCCED), Division of Community and Regional Affairs (DCRA). He
asked whether more fiscal notes were anticipated.
3:40:43 PM
MS. LATHAM said Department of Administration (DOA) also
submitted zero fiscal notes which they were prepared to speak
about.
3:40:55 PM
SENATOR DUNBAR asked how more money would be spent [for Alaska
grown products] and have zero fiscal notes.
3:41:06 PM
MS. LATHAM said she would not speak on behalf of DOA, but she
expected the change in spending by DCCED would be very small.
She deferred to the Chief Procurement Officer for DOA.
3:41:34 PM
TOM MAYER, Chief Procurement Officer, Department of
Administration (DOA), Juneau, Alaska, referred to the chart on
slide 5. He pointed out that the increase from seven to ten
percent is only three percent or approximately $7,000 [based on
2024 procurement]. He noted the increase would be split between
Alaska Seafood Marketing Institute (ASMI) and Department of
Corrections (DOC). He acknowledged that spending would increase
[under SB 67]. He said he wasn't aware why other agencies had
not submitted fiscal notes.
3:42:17 PM
SENATOR KAWASAKI noted that SB 67 would apply to municipalities
and schools as well as state agencies. He asked whether schools
were expected to buy more local [foods under SB 67].
SENATOR KAWASAKI noted that Mr. Mayer nodded an apparent
affirmation.
3:42:34 PM
MR. MAYER noted that the Polisubs spending on the slide 5 chart
totaled $263,000. He said the US Foods survey report was long
and detailed, covering about eleven months of food purchases,
predominantly by the Petersburg School District for about
$205,000 and the Delta Greeley School District for around
$58,000. He noted that a lot of schools don't take advantage of
[the US Foods contract].
3:43:11 PM
SENATOR KAWASAKI reiterated that many school districts do not
currently take advantage of the [US Foods contract], but if they
did, they would likely experience an increase in their costs. In
particular, the two school districts mentioned would [see an
increase].
3:43:33 PM
MR. MAYER said there would be a three percent difference and if
a school district bought $500,000 worth of food instead of
$200,000, they would experience an increase.
3:43:56 PM
SENATOR HUGHES asked for the grand total of spending on food by
state departments.
3:44:10 PM
MR. MAYER answered that the chart on slide 5 represented the
total spending reported by state departments and by US Foods. He
said the US Foods contract was mandatory for Department of
Corrections (DOC) and non-mandatory for all other state
agencies. If agencies are purchasing other food, that was not
reported, though it was information requested [by the DOA
survey]. He said other food was probably being purchased but
opined that it was not very much.
3:44:40 PM
SENATOR HUGHES noted the effort to incrementally increase the
percentage of Alaska grown food. She asked whether there had
been any cost comparisons between Alaska grown food and food
coming to Alaska on barges and whether the difference from seven
to ten percent would actually trigger the requirement to
purchase Alaska grown foods.
3:45:09 PM
MS. LATHAM said DCCED did not take the seven to ten percent
increase into consideration. She said they looked at making de
minimis changes to the existing statute. The purpose for that
was:
1. to increase the [amount of] food that is purchased in state
2. to increase awareness of in-state producers that want to
ramp up their production and have access to commercial
markets
3:45:35 PM
SENATOR HUGHES appreciated the effort expressed and affirmed
that it reflects the desire of producers. She wondered whether
the proposed percentage would be effective. She said producers
are providing potatoes and carrots and peas and things in the
schools and they are willing to step up and produce that, but
they need to know a year in advance. She asked whether there was
a system in place to gather information for the producers to be
able to provide carrots and potatoes.
3:46:50 PM
MR. MAYER said he was not aware of a system [to provide that
level of collaboration] from DOA. He explained that the Office
of Procurement establishes contracts but does not engage in
marketing. He noted the short growing season in Alaska and said
the fresh foods were available for a very limited time. He said
[limited food] storage was also a problem.
3:47:28 PM
SENATOR HUGHES emphasized that potatoes and carrots do last and
said there needed to be more effort to facilitate coordination
so growers could eventually reach economies of scale. She
acknowledged that she didn't know how to get there and suggested
an opportunity for upcoming conversations with producers. She
urged progress toward a real difference.
3:48:08 PM
CHAIR GIESSEL concurred and noted improvements in storage for
potatoes and carrots. She said there were full warehouses and
that producers were ready to meet the need but must know the
need is there. She noted that very few grocery stores were
carrying Alaska produce.
3:48:35 PM
SENATOR CLAMAN questioned whether there was evidence of the
capacity to produce enough food to meet the needs of state
agencies. He pointed out that DOC's [Alaska grown purchases]
totaled $117,000, less than one percent of their total spending
on food. He asked whether there were potatoes and carrots
rotting in warehouses because nobody was buying them or if they
were they selling. He asked whether SB 67 would result in
effectively increased production.
3:49:55 PM
MR. MAYER appreciated the question. He said the contract DOA
established with US Foods specifies that US Foods provides the
product. He said US Foods may source the product from local
producers or other growers and then customers shop from [the US
Foods] website. He was not aware of an effort [to determine how
much local produce US Foods sells].
3:50:16 PM
SENATOR CLAMAN asked how to determine the actual production
levels. restated his question about whether there was evidence
that SB 67 would result in growth of Alaska produced food to
meet the demand.
3:50:38 PM
CHAIR GIESSEL suggested that the commissioner of the Department
of Natural Resources (DNR) may be able to answer. She asked
whether Senator Claman had further follow-up questions.
3:50:47 PM
SENATOR CLAMAN restated his question about whether there was
evidence that SB 67 would result in growth of Alaska produced
food to meet the demand.
3:51:00 PM
MR. MAYER said the Department of Commerce, Community and
Economic Development (DCCED), Office of Procurement had not
looked at that.
3:51:08 PM
CHAIR GIESSEL noted the presenters were focused on what [Alaska
grown food products] had been used and not on issues of
production. She invited concluding statements.
3:51:38 PM
MS. LATHAM said there may not be a way to provide evidence of
exactly what is grown that is not being sold to the commercial
market. She suggested that [DCCED] could initiate conversations
with the growers about supply and demand to determine the level
of viability at a larger scale.
3:52:12 PM
CHAIR GIESSEL thanked the presenters. She noted available
experts on line who may be able to answer the committees
questions on SB 67.
3:52:45 PM
ANDREW JENSEN, Policy Advisor, Governor's Office, Anchorage,
Alaska, discussed the governor's proposals to enhance food
production and processing in Alaska. He highlighted the addition
of processing and storage equipment at the correctional farm in
Point MacKenzie, and said it was available to both the facility
and the community. Jensen also mentioned the new owner of a
slaughterhouse in Palmer, who seeks more markets, particularly
institutional ones, to increase production. He emphasized the
need to address market access and awareness to incentivize local
food production and improve food security. SB 67 is an attempt
to stimulate economic activity in the agricultural sector by
increasing Alaska grown food product purchases by state
agencies.
3:55:32 PM
CHAIR GIESSEL asked whether slaughterhouse products were
included under SB 67.
3:55:47 PM
MR. JENSEN noted that livestock was considered an agricultural
product. He said hamburger, pork, dairy and poultry products
would qualify for the [provisions of SB 67].
3:56:10 PM
SENATOR WIELECHOWSKI asked whether there were any constitutional
issues with SB 67. He said SB 67 essentially imposed price
control and mandated that in-state products be purchased. He
opined that it may violate free-market ideals. He asked whether
there was a constitutional limit, noting the increase from 15 to
25 percent.
3:56:53 PM
MR. JENSEN answered that when state funds are used, some of the
constitutional issues are mitigated. He noted that when ferries
were built in Ketchikan using state funds, those questions were
mitigated. He said that was why the preference [threshold] was
limited to entities that receive state funding. He said he had
not heard of any legal questions around increasing the optional
preference to 25 percent and if an entity had the money within
their budget and could go to 25 percent over, they certainly
would be able to purchase that Alaska product.
3:58:03 PM
CHAIR GIESSEL noted the struggle for school districts with their
budgets and observed that it appeared SB 67 would require them
to pay three percent more for Alaska [food] products [to be
included in school menus]. She asked how that policy meshed with
the budget constraints faced by school districts.
3:58:33 PM
MS. LATHAM said SB 67 was investing 3 percent back in the state
from state agencies and from school districts that receive state
funding. She said there would be a very incremental cost to the
school districts, and that would have to be considered during
the legislative process.
3:59:04 PM
SENATOR CLAMAN noted that all school districts receive state
money. He posed a hypothetical scenario in which there are
Alaska grown potatoes available on the US Foods website and they
cost ten percent more than potatoes grown in Washington, also
available through the website. He observed that, under SB 67,
the school district would be required to get the Alaska grown
potatoes.
3:59:37 PM
MS. LATHAM affirmed that the school district would be required
to buy the Alaska potatoes.
3:59:46 PM
SENATOR CLAMAN noted that when there are no Alaska potatoes, the
school district is allowed to buy the Washington potatoes. It is
only when Alaska grown products are available that [state
entities] would be required to purchase them over [out of state
products].
4:00:16 PM
MS. LATHAM affirmed that was correct according to existing
statute.
4:00:30 PM
SENATOR CLAMAN commented that when school districts are prepared
to purchase, Alaska produce is not usually available.
4:00:41 PM
SENATOR DUNBAR asked whether Petersburg and Delta Junction
school districts were the only school districts to purchase
Alaska grown products. He noted that the Matanuska Susitna (Mat-
Su) district produces a lot of [the available Alaska grown
foods].
4:01:07 PM
MR. MAYER said the report DOA received from US Foods showed only
the two school districts.
4:01:15 PM
SENATOR DUNBAR noted that the larger school districts were not
purchasing local foods. He emphasized the financial constraints
on Alaska school districts and suggested they might purchase
alternate products, rice instead of potatoes, for example, to
avoid having to pay extra for Alaska produced foods. He asked
what enforcement mechanism would be imposed to prevent school
districts from making those choices.
4:02:10 PM
MS. LATHAM said there was enforcement in statute, but not when
there is substitution of, for example, one starch food for
another.
4:02:25 PM
SENATOR DUNBAR opined that [school districts] would choose to
purchase less expensive options over Alaska produced foods when
Alaska produced foods were more expensive. He proposed that
state funding for school districts be increased to offset the
projected increase to their spending.
4:03:26 PM
CHAIR GIESSEL invited the Commissioner of the Department of
Natural Resources (DNR) to address the issue of production and
storage of Alaska grown products and their availability.
4:04:02 PM
JOHN BOYLE, Commissioner, Department of Natural Resources (DNR),
Anchorage, Alaska, introduced himself and emphasized that
agriculture was within DNR's wheelhouse. He highlighted the
capacity of Alaska producers to grow more if they had a stable
market. He noted the existing farm-to-school program previously
housed with Department of Natural Resources (DNR), now
administered by Department of Education and Early Development
(DEED). He advocated for effective collaboration between DEED
and DNR to link producers with procurement officers in school
districts and establish a consistent demand for Alaska-grown
products, allowing producers to plan and supply [food products]
accordingly.
COMMISSIONER BOYLE expanded the farm-to-school example to other
state funded entities, advocating for the role of government to
eliminate communication gaps and facilitate the exchange between
producers and procurement officers. He opined that Alaska
producers could compete with lower 48 suppliers if given the
right market conditions.
4:08:29 PM
CHAIR GIESSEL noted future hearings on Alaska agriculture were
scheduled.
4:08:47 PM
SENATOR WIELECHOWSKI noted the assertion that most Alaska
producers could be competitive with outside producers and
asserted that Alaskan consumers would prefer to buy Alaskan
grown products, over products from out of state. He asked why it
was necessary for government to step in and basically force
organizations to pay higher prices for those goods. He suggested
that governments role might be to educate and advertise rather
than forcing organizations to pay more.
4:09:34 PM
COMMISSIONER BOYLE noted the dual nature of the issue,
emphasizing that some Alaska producers can already compete with
imported products, while others may need certainty to scale up
their operations to become competitive. He highlighted the
potential for producers to invest in equipment and processing
tools which could lower their costs and achieve economies of
scale, bringing their products to competitive levels.
COMMISSIONER BOYLE offered Alaska Range Dairy as an example. He
said the dairy produced high-quality milk that was competitively
priced compared to organic or other premium milks from the Lower
48. He stated that Alaska products might initially cost more,
but their superior quality and potential for cost reduction
through scaling made them competitive.
4:11:52 PM
SENATOR CLAMAN asked how much of the food products grown in
Alaska, except for fish products, were exported or if they were
all consumed in Alaska.
4:12:10 PM
COMMISSIONER BOYLE said he would provide that figure at a future
meeting.
4:12:14 PM
SENATOR CLAMAN also asked for more data demonstrating that there
is a market to produce more and price data to support the
expectation of economies of scale.
4:12:53 PM
CHAIR GIESSEL held SB 67 in committee.
SB 75-TIMBER MANAGEMENT LEASES
4:12:56 PM
CHAIR GIESSEL announced the consideration of SENATE BILL NO. 75
"An Act relating to timber on state lands; relating to timber
management leases; and providing for an effective date."
4:13:18 PM
JOHN BOYLE, Commissioner, Alaska Department of Natural Resources
(DNR), Anchorage, Alaska, introduced a presentation on SB 75 by
first introducing himself and Jeremy Douse, the new state
forester.
COMMISSIONER BOYLE said SB 75 aimed to revitalize the timber
industry in Alaska in line with the broader theme for Department
of Natural Resources (DNR) which is to think about how the state
monetizes and considers these neglected sectors [agriculture and
timber] of the economy.
COMMISSIONER BOYLE reminisced about the robust timber industry
in Alaska with multiple pulp mills and logging camps and noted
notes that Alaska's timber played a significant role in building
towns and supplying timber worldwide. He said the industry's
decline began in the 1990s with changes in federal forest
management, particularly on the Tongass National Forest and that
the economic challenges and the lack of a market for various
timber products led to the industry's steady decline.
4:17:42 PM
COMMISSIONER BOYLE said the state had over 50 million acres of
forested land, a relatively small amount of which was classified
as state forest and most of the land was not actively managed
for timber. He noted loss of timber due to bark beetle
infestations and wildfire and suggested those losses were due to
lack of management. He said those losses impacted the commercial
activities of businesses that were creating cabin kits, cabinets
and other types of furniture.
COMMISSIONER BOYLE said SB 75 aimed to create a structure to
incentivize private investment in state forested lands to
manage, replant trees, apply commercial thinning techniques and
other forest management practices to maximize timber production.
He said SB 75 was based on successful practices in Canada and
other countries with robust timber industries. He highlighted
Sweden's successful silviculture program and its multi-billion-
dollar timber industry and suggested that Alaska could adopt
similar management philosophies to create new opportunities in
the timber sector.
COMMISSIONER BOYLE said the state would continue to exercise its
regulatory and constitutional responsibilities to protect the
natural environment and ensure sustained yield while allowing
private investment to create new jobs and economic growth. He
said SB 75 would revitalize Alaska's timber industry and make it
a more significant contributor to the state's economic growth.
4:22:37 PM
JEREMY DOUSE, State Forester and Director, Division of Forestry
and Fire Protection, Department of Natural Resources, Fairbanks,
Alaska, moved to slide 2 and began a presentation on SB 75.
Slide 2 is a map of Alaska, illustrating the Forested Lands in
State Ownership. He said the presentation aimed to provide some
background and a snapshot of forestry in Alaska now and describe
a plan. He emphasized the challenge of inaccessibility and
timber quality variations of these forests. He said Alaska owned
52.5 million acres of forested land, with the Division having
inventoried 3.7 million acres, primarily focusing on state
forests and accessible lands suitable for management.
[Original punctuation provided.]
Forested Lands in State Ownership
52.5 million acres of state-owned forested land
3.7 million acres of forest inventory complete.
2.1 million acres of designated state forest
Forested Lands by Area
Area Acres
Chugach 136,314
Copper River 3,730,988
Delta 1,658,487
Fairbanks 5,910,490
Galena 2,989,325
Haines 175,367
Kenai 551,237
Military 8,214
MatSu 4,245,016
SouthWest 18,454,307
Tanana 7,525,903
Tok 281,656
Tongass 281,656
Upper Yukon 3,488,127
4:23:57 PM
MR. DOUSE noted the lack of [state] ownership in Southeast
[Alaska] and on the Kenai Peninsula and in South Central
[Alaska], where some of our most productive forests are. He
explained these were federal forests, the Tongass and Chugach
National Forests.
4:24:17 PM
MR. DOUSE moved to slide 3 and said the administration's vision
for the state's forest assets focused on increasing stewardship
and use of state forested lands to improve forest health and
community protection. Increased management activities include
building more infrastructure, roads and bridges, to gain access
and conducting more silvicultural activities to manipulate
forest stands and meet desired future conditions. He said these
activities would boost the forest products industry and its
impact on the state's economy, particularly in rural areas, and
utilize local resources more effectively. He noted that Alaska
consumes approximately 100 to 120 million board feet of forest
products annually and a significant portion was imported from
Canada and the lower 48 states. The desire was to use more of
the local resource to meet the local need.
[Original punctuation provided.]
[Photo of milled lumber.]
Vision for Alaska's forest assets
• Maximum use of Alaska's land and resources
consistent with Alaska Constitution
• Increase forest management activity on state
lands
• Create economic opportunities
• Increase the in-state manufacture of forest
products
4:26:07 PM
MR. DOUSE moved to slide 4 and said SB 75 aimed to enhance
forest management by partnering with the private sector to
increase on-the-ground activities. He expressed gratitude for
the legislature's support in passing the lumber grading bill in
2024 and the expedited timber sale bill, which benefit the
industry. He emphasized that SB 75 was the next step toward
allowing the industry to build and grow capacity by focusing on
actively managing forest resources.
[Original punctuation provided.]
[Photo of a log yard.]
How to get there?
• Partner with private sector to increase
management activity while protecting public lands
principles provided for in Alaska Constitution
• Recreation and public access
• Hunting/fishing
• Subsistence
• Benefits of public land while addressing
challenges regarding lack of private land
4:27:04 PM
MR. DOUSE moved to and narrated slide 5. He said current forest
conditions in Alaska are typically mature or old forests with
difficult access. He contrasted that with actively managed
forests and explained that active management results in a
variety of age classes and forest cover types, increasing the
system's resilience to disturbances and benefiting the forest
products sector by providing more raw materials for value-added
products. He said forest succession trajectories are altered by
active management, diversifying forest stands on the ground,
increasing resilience and aiding in community protection by
mitigating risks from wildfires and beetle outbreaks.
[Original punctuation provided.]
[Autumn photo of diverse species forest.]
Defining 'active forest management'
• The intentional, planned and science-based
actions foresters engage in to meet society's
needs of forested ecosystems
• Diversifies habitat conditions
• Provides for essential wood products and
economic opportunity
• Creates resiliency for disturbance and the
effects of a changing climate
• Sets a successional trajectory for a desired
condition
• Passive management perpetuates a forest condition
until a natural disturbance introduces
successional change
• Depending on disturbance severity, can lead
to undesired conditions or a lack of forest
cover
4:28:39 PM
MR. DOUSE moved to slide 6, illustrating examples of disturbance
events in mature forests.
[Original punctuation provided.]
Benefits of active forest management
[Photo of a forest impacted by windfall.]
[Photo of a bark beetle.]
[Photo of a forest following a recent fire.]
4:29:05 PM
MR. DOUSE explained that the first photo on slide 6 was from a
significant wind event that occurred in the upper Tanana region
in 2014, highlighting the lack of management due to
inaccessibility. He said old forests in these areas often suffer
from root rot and various stem rots, which are exacerbated by
wind events leading to blow downs. Big blow down areas often
result in outbreaks of insects like IPS beetles or spruce
beetles. He compared that with examples of management activities
in specific areas like Willard Creek Road in the Susitna Valley
and Wise Owl Road near Soldotna, where vigorous spruce seedlings
are observed, explaining that young trees are more resistant to
insect infestation.
4:30:29 PM
MR. DOUSE said fire was another common disturbance, especially
in the boreal forest, where black spruce requires it for
regeneration. Management strategies include creating fuel breaks
and thinning to prevent fires near communities and to utilize
the material for market purposes, enhancing forest health and
resilience.
4:31:08 PM
MR. DOUSE moved to slide 7 and highlighted the benefits of
active forest management, using an example from the southeast
state forest comparing two areas of a forest, one of which was
thinned, and the other was not. He emphasized the necessity of
increasing thinning projects in Southeast Alaska to enhance
forest health and habitat suitability for wildlife.
[Original punctuation provided.]
Benefits of active forest management
[Photo of a forest with space between trees and
diverse undergrowth.]
Thinned 30-year-old stand, Southeast State Forest
[Photo of a forest with dense tree population and
little undergrowth.]
Un-thinned 30-year-old stand, Southeast State Forest
4:31:59 PM
MR. DOUSE moved to and narrated slide 8.
[Original punctuation provided.]
Senate Bill 75: Timber Management Leases
• New framework to enable leases of state timber
resource with agreement to manage forest for state
values
• Provides timber operators greater certainty that
drives additional investment
• Includes built-for-purpose terms covering competition,
public input
• Flexible to accommodate range of project/lease
concepts
• Leases possible on state forested land and state
forests
4:32:53 PM
MR. DOUSE moved to slide 9 and discussed the potential for
leases to include management activities to forestry operations.
These activities could include road construction and
maintenance, bridge construction, timber harvest, and
silvicultural practices like reforestation and site preparation.
He suggested suggested that the industry could take on
responsibilities usually managed by the state, including
intermediate treatments such as pre-commercial thinning and fire
mitigation. He said this approach could increase efficiency in
meeting reforestation requirements and forest management
overall.
[Original punctuation provided.]
Management activities under leases
• Road construction and maintenance
• Bridge construction
• Timber harvest
• Reforestation and site preparation
• Intermediate treatments
• Planning
• Fire mitigation
4:33:45 PM
RENA MILLER, Special Assistant, Commissioner's Office,
Department of Natural Resources, Anchorage, Alaska, provided the
Sectional Analysis for SB 75. Slide 10 provided an outline of
the sectional analysis.
[Original punctuation provided.]
Senate Bill 75 Sectional Analysis
Short Title: Timber Management Leases
Section 1 adds a new paragraph to AS 36.30.850(b)
exempting timber management leases from state
procurement laws.
Section 2 amends AS 38.05.035(e)(6) to exempt timber
management leases from the typical best interest
finding requirement as Section 4 provides a process
specific to timber leases.
Section 3 amends AS 38.05.075(a) to exempt a timber
management lease (proposed AS 38.05.124) from typical
competitive bid requirements, as Section 4 proposes a
process specific to timber management leases.
4:35:14 PM
MS. MILLER continued to explain the sectional analysis for SB 75
and said Section 4 was the heart of the new timber management
leasing program.
Section 4 amends AS 38.05 by adding new section
38.05.124 governing timber management leases. The
proposed new section allows for timber management
leases for harvest and management of timber on state
forest land for the result of sustained yield of
merchantable timber, managed in accordance with the
Forest Resource Practices Act's regulatory and
administrative standards under AS 41.17.060, if the
Department of Natural Resources (DNR) commissioner
finds it is in the best interest of the state. The
section, among other things:
• Sets minimum lease requirements
• Establishes a competitive process and sets
award criteria
• Requires public notice before issuing a lease
• Limits leases to 55 years with a one-time
renewal option
• Enables DNR to terminate a lease if terms are
not met
• Requires a fair return to the state, and
• Defines "forest land."
4:36:42 PM
MS. MILLER continued to explain the sectional analysis for SB
75.
Sections 5-7 amend statutes governing the Haines State
Forest Resource Management Area, which is located
separately in statute from laws governing other state
forests.
Section 5 amends AS 41.15.300(b) to allow DNR to
delegate the management of timber located in the
Haines State Forest Resource Management Area (HSF) in
a timber management lease.
Section 6 amends AS 41.15.315(a) to exempt timber
management leases within HSF from the general
provisions of the Forest Resources and Practices Act
(AS 41.17), except as required under the new leasing
provisions in proposed AS 05.124 in bill Section 4, as
the lease will include management guidelines specific
to that lease.
Section 7 amends AS 41.15.315(d) which governs the
sale and disposal of lands within HSF. Allows the
commissioner to issue a timber management lease in
HSF. Page 2 of 2 34-GS1450\A.
Section 8 amends AS 41.15.315(e) regarding timber
management plans in HSF. Requires that a timber
management lease issued in HSF be consistent with the
applicable management plan, which must identify land
appropriate for timber management leases, and allows
for the management plan to be amended to allow for
timber management leases.
4:37:15 PM
MS. MILLER continued to explain the sectional analysis for SB
75.
Sections 9-12 amend the Forest Resources and Practices
Act, AS 41.17.
Section 9 amends AS 41.17.200(b) to allow the DNR
commissioner to delegate the management of timber
located in a state forest through a timber management
lease.
Section 10 amends AS 41.17.220, management of state
forests, to exempt timber management leases from
Forest Resources and Practices Act management
principles for land within a state forest, except as
required under the new leasing provisions in proposed
AS 05.124 in bill Section 4, as the lease will include
management guidelines specific to that lease.
Section 11 amends AS 41.17.230(a) to include
consideration and permit uses of forest land for
timber management leasing under AS 38.05.124 in forest
management plans.
Section 12 amends AS 41.17.230(g) to require a timber
management lease within a state forest to be
consistent with the applicable forest management plan,
requires the management plan to identify the land
appropriate for a timber management lease, and allows
the department to amend the management plan for this
purpose.
4:37:46 PM
MS. MILLER continued to explain the sectional analysis for SB
75.
Section 13 amends AS 41.17.900(a) regarding the
applicability of the Forest Resources and Practices
Act to all forested land under state, municipal, and
private ownership by exempting timber management
leases under AS 38.05.124, except as required under
the new leasing provisions in proposed AS 05.124 in
bill Section 4.
Section 14 provides for an immediate effective date.
4:38:47 PM
SENATOR MYERS questioned the nomination process for leasing
state forest land, expressing concern about potential
outbidding.
4:39:44 PM
MS. MILLER explained that the process allowed interested parties
to express interest in using specific land, which is then
assessed by the Commissioner for suitability. If suitable, a
public solicitation for competing proposals ensues. This
approach ensures that the state explores the best options,
maximizing benefits and aligning with constitutional
requirements, by considering public input and alternative
proposals.
4:41:01 PM
SENATOR MYERS suggested a scenario where only a few proposals
out of many were deemed acceptable. He proposed introducing a
right of first refusal for those who nominate land, allowing
them to have the first opportunity to purchase it if they
believe they can utilize it effectively. He cautioned against
granting an absolute right of first refusal to prevent
underbidding. He sought to balance the interest in nominating
land with the need for fair and competitive bidding.
4:42:02 PM
MS. MILLER asked for the opportunity to consider Senator Myers'
suggestion with the Department of Natural Resources
(DNR)Commissioner's office and the Department of Law (DOL) and
respond in writing or at a future hearing.
4:42:15 PM
CHAIR GIESSEL concurred.
4:42:19 PM
SENATOR DUNBAR inquired about the scale of forest leases. He
referenced systems in Canada and Sweden and sought clarification
on the typical size of these leases, questioning whether it is
1,000 acres or 100,000 acres, acknowledging that the size can
vary depending on the forest.
4:42:57 PM
MS. MILLER said SB 75 does not set a maximum acreage on one of
these leases for Alaska. She deferred to Mr. Douse to answer
about Canada and Sweden.
4:43:08 PM
MR. DOUSE said he had some awareness of Canada's system, though
not of Sweden's. He described Canada's system of forest tenures
managed at the province level. He said forested Crown lands were
leased out for management and the scale of the leases depended
on the [expected] profitability. He said Sb 75 would be similar.
4:44:01 PM
SENATOR DUNBAR asked for a better sense for the size of
management areas.
4:44:31 PM
SENATOR DUNBAR inquired about the operation of land leasing in
Canada, specifically questioning the size of leased areas and
the feasibility of small parcels.
SENATOR DUNBAR expressed concern about the historical practice
in the U.S. where some users of Bureau of Land Management lands
benefited from low prices, leading to wealth and political
influence, potentially at the expense of fair market value to
the state. He questioned the lack of a competitive bid process
for leasing land, suggesting that the highest bidder could
ensure objective value, unlike the proposed system. He asked how
minimum value would be determined and why not lease to the
highest bidder.
4:45:54 PM
MS. MILLER clarified that a lessee may bring non-monetary
factors to the partnership. She highlighted the importance of
managing state forest lands for multiple state values, including
revenue and healthier forests, and for recreation, hunting,
fishing, and subsistence, which are valued by Alaskans. She
acknowledged the importance of a fair return to the state and
said that included revenue and public benefits, such as
employment in remote areas. She said the qualifications of
lessees would include their experience and willingness to manage
activities. She said those would be crucial factors considered
by the commissioner.
4:47:57 PM
SENATOR WIELECHOWSKI expressed concern that SB 75 fails to
uphold constitutional obligations to manage timber and wildlands
responsibly. He noted the absence of key protections for public
interest, such as procurement processes, best interest findings,
and competitive bidding, which he argued are crucial for
transparency and fairness. The speaker also notes the lack of
public opportunity to comment and the potential for long-term
(110 years) leases. He said he would need time for a thorough
review of the bill.
4:48:57 PM
MS. MILLER explained that Department of Natural Resources (DNR)
incorporated new ways to get to the same constitutional
responsibilities and obligations in SB 75, noting that the
Constitution doesn't explicitly require [specific protections,
such as] a best interest finding. She described SB 75 as a new
framework that is more of a partnership, contracting with
another party to execute the state's management
responsibilities, while the state retains its constitutional
responsibilities for sustained yield and setting annual
allowable cut.
4:49:44 PM
SENATOR CLAMAN noted that SB 75 proposes a whole new sale
procedure which will lead to new regulations. He asked whether
Department of Natural Resources (DNR) was selling or leasing
other things under procedures comparable [to SB 75].
4:50:17 PM
MS. MILLER asked to get back to the committee after consultation
with DNR.
4:50:34 PM
SENATOR CLAMAN referred to SB 75, page eight [line 18] and asked
how DNR arrived at the lease period of 55 years.
4:50:53 PM
MS. MILLER said 55 years was the standard lease duration used in
statutes. She explained that it was considered a reasonable
timeframe for partnerships, equating to an adult lifetime. She
noted that SB 75 also provided for reassessment at the 55 year
point to ensure both parties were still willing to continue the
partnership. She suggested that this approach was particularly
relevant to forestry and deferred to Mr. Douse for further
insights.
4:51:52 PM
MR. DOUSE explained that a new stand of timber would be
established after 55 years, but not likely to be ready for
harvest until another full 55 year rotation [ 110 years total].
4:52:33 PM
SENATOR CLAMAN asked what the typical seedling to merchantable
timber size timeline would be for Alaskan forests. He said 55
years seemed short.
4:53:01 PM
MR. DOUSE concurred. He said some of the hardwoods [in Alaska]
like birch or aspen might be ready [for harvest after 55 years]
if there was a market for it. Conifers would not be ready after
55 years.
4:53:21 PM
SENATOR CLAMAN called attention to the allocation of
merchantable timber in Alaska, particularly the Tongass, noting
that the federal government and native corporations had priority
over state-owned forests. He questioned whether there was good
merchantable timber on state lands and asked where those forests
were that could produce 110 to 120 million board feet a year.
4:54:26 PM
MR. DOUSE affirmed that the state did get "third pick", however
he emphasized that there are forests that can be managed for
valuable timber resources, particularly in the interior. He said
timber was being managed where there was access, and there was
saw timber in stands without access, that therefore can't be
managed. He reiterated that there was demand for 120 million
board feet a year, and there was market opportunity. He offered
to show members of the committee [the applicable forests].
4:55:30 PM
SENATOR MYERS noted the mention of the Haines State Forest and
asked why there no mention of the Tanana Valley State Forest.
4:55:47 PM
MR. DOUSE noted that the HSF was created under a different
statute and pointed out that the Haines State Forest designation
included multiple use designations that distinguished it [from
other state forests].
4:56:24 PM
MS. MILLER clarified that the Haines State Forest was the only
named state forest in statute; the other state forests were
referred to [in statute] as state forests generally and so were
not called out specifically in SB 75.
4:56:44 PM
CHAIR GIESSEL invited closing remarks by the commissioner of
DNR.
4:56:58 PM
COMMISSIONER BOYLE emphasized the need for a paradigm shift in
Alaska's forest management. He suggested that incentivizing new
investments could yield merchantable timber more quickly,
benefiting future generations. He highlighted the importance of
investing in Alaska's forestry sector now for long-term economic
gains, noting that while current public servants may not see
direct benefits, future Alaskans will reap the rewards. He
expressed gratitude for the committee's hearing and looked
forward to further discussions on revitalizing Alaska's forestry
industry.
5:00:21 PM
CHAIR GIESSEL held SB 75 in committee.
5:00:38 PM
There being no further business to come before the committee,
Chair Giessel adjourned the Senate Resources Standing Committee
meeting at 5:00 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2.7.25 SB 67 Transmittal Letter.pdf |
SRES 2/7/2025 3:30:00 PM |
SB 67 |
| 2.7.25 SB 67 Fiscal Note DCCED-DCRA.pdf |
SRES 2/7/2025 3:30:00 PM |
SB 67 |
| 2.7.25 SB67 PowerPoint Presentation to SRES.pdf |
SRES 2/7/2025 3:30:00 PM |
SB 67 |
| 2.7.25 SB 67 Sectional Analysis version A.pdf |
SRES 2/7/2025 3:30:00 PM |
SB 67 |
| 2.7.25 SB 75 Sectional Analysis Timber Management Leases 1.28.2025.pdf |
SRES 2/7/2025 3:30:00 PM |
SB 75 |
| 2.7.25 SB75 Timber Mgmt. Leases Transmittal Letter.pdf |
SRES 2/7/2025 3:30:00 PM |
SB 75 |
| 2.7.25 SB75 DNR presentation to SRES Timber Management Leases.pdf |
SRES 2/7/2025 3:30:00 PM |
SB 75 |
| 2.7.25 SB 75 Fiscal Note DNR.pdf |
SRES 2/7/2025 3:30:00 PM |
SB 75 |