SENATE BILL NO. 28 "An Act relating to the sale of timber on state land; establishing the Susitna State Forest; and providing for an effective date." 9:09:47 AM JOE BALASH, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES, explained the legislation. He stressed that the governor was interested in a positive investment, and he felt that the legislation was in line with the governor's intention. The bill would create a state forest in the Susitna Valley and expand the Department of Natural Resources (DNR) authority to offer negotiated timber sales statewide. He stated that DNR currently managed 9.5 million acres of state land in the Mat-Su valley under the area plans. This bill would establish the Susitna State Forest from land that the plans classify for forestry and DNR manages for timber harvest and multiple use. Remaining state land in the area was designated for land sales, agriculture, recreation, water resources, and fish and wildlife habitat, including over 3. 1 million acres of legislatively designated state parks, refuges, and public use areas. The proposal excludes lands that were priorities for the state's land disposal program. It was consistent with the area plans, and was recommended by the Alaska Timber Jobs Task Force. The proposed state forest included approximately 686,800 acres of land in 20 parcels. The state forest would help meet the growing regional demand for state timber sales and personal use firewood harvesting. Local mills depend heavily on state timber for their raw materials. Interest in logs, chips, and wood pellets for commercial, public school, and residential space heating also continues to expand. Active forest management provided forest stand with a variety of ages to support diverse and healthy wildlife habitat. It also helped reduce wild land fire risk by breaking up large expanses of hazardous fuel types and encouraging regeneration by less-flammable hardwood species. The state forest would be managed as part of the State Forest System, and would continue to be open for public use and access, including wildlife habitat management, harvest, and recreational activities. He announced that DNR had conducted extensive outreach on the proposal. In additions to meetings on the area plans, DNR held community meetings, and made a presentation at a legislative town meeting in Wasilla. Co-Chair Meyer understood that the legislation would not make the land unavailable for property development for the private sector to add to the borough's property tax base. Commissioner Balash replied that there were various conversations with the borough and in the region. He stated that DNR had a received an endorsement from the Mat-Su Borough assembly, and referred to a resolution in the member's packets. He stated that there were some concerns that were addressed in order to alleviate some impacts to municipal and residential developments. Co-Chair Meyer wondered if the land could return to the private sector after it was designated as forest land. Commissioner Balash responded that state forests were public lands that were still managed for multiple use, but not considered for settlement or residential development. He stressed that there was still economic activity on the land. He stated that moving the land back to the general use category would require legislative action. 9:16:16 AM Co-Chair Meyer wondered if there would be anything that would prevent timber harvest in the state forest. Commissioner Balash replied that all of the activities in the forest would be governed by the Forest Resources Practices Act, and other regulatory authorities. He stated that the forest would be sustainably managed with a long- term management plan. Senator Olson wondered how the designation would result in the prohibition of exploiting the resources within the designation. Commissioner Balash replied that the designation of the forest did not preclude other uses of the land, particularly the mineral rights associated with the land. He stressed that DNR would still have the ability to issue mining leases and provide for exploration of the other minerals on the land. He agreed that the land would not be available for residential development. Senator Olson queried the effect of the legislation on the traditional campsites that were used to harvest fish and game seasonally. Commissioner Balash replied that DNR must continue to maintain the other uses in the area. He deferred to Mr. Maisch. Senator Olson queried the effects of the established camps. Commissioner Balash responded that the designations that were already public lands would remain in public lands. He stressed that the inholdings would remain outside of the designated forest. Senator Olson stressed that an individual with a camp might have their claim overrun. Commissioner Balash replied that he had worked hard to ensure that it would not be an issue. 9:22:55 AM Senator Dunleavy asked for a brief history of the proposed concept. Commissioner Balash deferred to Mr. Maisch. JOHN "CHRIS" MAISCH, DIRECTOR, DIVISION OF FORESTRY, DEPARTMENT OF NATURAL RESOURCES, explained the history of the proposed concept. He stated that there were two area plans that were updated in 2009, and public meetings were held in seven communities. He stated that the idea of state forest classified lands was discussed as part of an area planning process, and the concept that a state forest proposal would be drafted at the conclusion of the process. In addition, there were six open houses when the Division of Forestry took over the project. There were twelve additional public meetings, when the legislation was initially proposed three years prior. He stated that there had been recent meetings to outreach to local entities that were not on the road system. There was a concern for the need for community expansion lands in Houston, Willow, and Wasilla, so 70,000 acres were removed from the proposal to alleviate that concern. He shared that there was a blocking nature in the way that the state forest was proposed, because there was a forest inventory for the lands, which showed a good commercial interest. The area planning process determined that the proposed lands were the most preferred lands for the forestry process, which was why the location was spread across the valley with twenty parcels. He stated that there was some concern regarding access, and the need for access development, which was one of the key features of state forests. 9:26:28 AM Senator Dunleavy looked at the earmarked parcels, and noted that there was a considerable amount of acreage that could be logged. He wondered how the approach was different form the forest designated parcels versus the state-owned parcels that were already designated for logging. Commissioner Balash replied that the area plan processes for a particular primary use did not preclude other uses including disposals of the land. While the blocks may be designated for forestry purposes, in the area plan implementation, it would not preclude someone from applying for the land to be disposed in a different way. Senator Dunleavy wondered if logging was the only activity that could occur on the state forest. He wondered if, for example, mining would occur on the land. Commissioner Balash responded that logging was the primary development interest, but mining could occur given the process time. Co-Chair Meyer wondered if there would be a problem with bringing a pipeline through the forest area. Mr. Maisch responded that a pipeline in the forest would not be an issue, as there were utilities across other state forests. 9:30:28 AM Co-Chair Meyer queried the state royalty from the timber sale. Mr. Maisch responded that the sales were sold through a competitive process for the majority of timber. He stated that there was no royalty, but rather by sealed bid or outcry auction, so the best dollar took the sale which was known as "stumpage return." Vice-Chair Fairclough wondered if the pale yellow on the map was current forestry. Commissioner Balash responded that the pale yellow was considered general state lands. Vice-Chair Fairclough restated her question Commissioner Balash replied that the lands were designated as habitat under the area plans. Mr. Maisch furthered that the yellow lands were classified as forestry use, but were dropped from the designation in the state forest. The hatched lands were considered habitat classified lands under the area plans. Vice-Chair Fairclough wondered if there was a separate land classification for habitat, which was not considered forest. Commissioner Balash replied in the affirmative, and stated that the habitat lands were currently not included in the legislation as part of the forest. Senator Hoffman queried the number of acres that were considered for the proposal. Commissioner Balash replied that there was an initial proposal which was around 760,000 acres, but had been adjusted and was currently 688,000 acres. Senator Hoffman queried the classifications within the proposed lands. Commissioner Balash replied that the land was currently designated forestry lands. 9:36:07 AM Senator Hoffman asked if there was a plan for the private selection. Commissioner Balash responded that there was a planning cycle for the disposals, but was not certain that the map included any in the cycle. Senator Hoffman requested those plans and how many acres were considered for the program in the region. Commissioner Balash agreed to provide that information. Senator Dunleavy noted a testimony in the packet from the Grouse Society, and there were some issues raised. He wondered if those concerns were considered. Commissioner Balash stated that the Grouse Society would like to see that the forest be larger, and include some of the habitat lands to ensure that those lands were not disposed of for some other purpose. 9:39:26 AM JOHN STURGEON, CEO, OUZINKI NATIVE CORPORATION, ANCHORAGE (via teleconference), testified in support of the legislation. He shared that he had been in the timber industry in Alaska for 43 years. He stated that his operation logged approximately 50 million board feet each year. He shared that there had been many conversations regarding losing the oil resource in Alaska. He felt that it was time to examine alternatives to bring additional revenue into Alaska, and he felt that the timber industry could provide some of that revenue. 9:42:32 AM GLEN HOLT, SELF, FAIRBANKS (via teleconference), spoke in support of the legislation. He stated that he was in further favor of further land designations of habitat lands currently designated, because of the opportunity to enhance those lands through forest management programs. 9:45:54 AM MARK STAHL, SELF, TALKEETNA (via teleconference), testified in favor of the legislation. He stated that he owned and operated a small saw mill in Talkeetna. He stated that many of his customers and neighbors expressed appreciation for access to local resources. His ability to grow the business was hampered by the lack of a predictable and reliable timber base. There was too little private land in the Susitna valley to provide a steady raw materials supply, so establishing a state forest would resolve the issue. 9:48:27 AM ERIN MCLARNON, SELF, WILLOW (via teleconference), testified in support of the legislation. She stated that she was a business owner and six year Board of Forestry member. She stated that the Mat-Su valley was a wonderful place to live. She felt that a state forest would help to grow the local economy, and guarantees all users place to recreate. She frequently utilized state forest lands for her training, because of the access to trails. ROD ARNO, EXECUTIVE DIRECTOR, ALASKA OUTDOOR COUNCIL, JUNEAU, testified in support of the concept of a state forest in the Mat-Su valley, multiple use in the state forest such as resource development and recreational pursuit. He stressed that the location should be kept intact. He felt that there were a number of Alaskans that were interested in food harvest. He stated that the tax burden on the Mat-Su valley could be counteracted by the resource development. 9:56:28 AM NICK STEEN, MEMBER, RUFFED GROUSE SOCIETY, WASILLA (via teleconference), testified in support of the legislation. He believed that the establishment of a state forest would help solidify and expand the forest product industry. It would be an economic boost to the Mat-Su borough and all Southcentral Alaska residents. Through proper forest management, the forest should be either revenue enhancing or revenue neutral. In addition to the timber resource, the wildlife would greatly benefit. 9:58:38 AM BARBARA J. MILLER, SELF, WASILLA (via teleconference), urged the committee to develop the west side of the Susitna River. She encouraged the private development of the land on the east side of the Susitna River. She felt that the land on the east side would provide a boundary, because it was difficult determine where one was located. 10:00:10 AM GARY STEVENS, SELF, CHUGIAK (via teleconference), felt that the forest aspect of the legislation was too disconnected, and would be difficult to manage. 10:01:51 AM CARL PORTMAN, DEPUTY DIRECTOR, RESOURCE DEVELOPMENT COUNCIL, ANCHORAGE (via teleconference), spoke in strong support of the legislation. He felt that the new state forest would enhance access and encourage a broad range of multiple uses. The new state forest would allow the Division of Forestry to more actively manage lands and vegetation to promote a variety of forest ages, which in turn would maximize the sustainable supply of timber to provide a more diverse and healthy habitat for wildlife. He added that active forest management would reduce the risk of wildfires. The Division of Forestry would manage the forest to help meet growing regional demand for state timber sales. 10:04:37 AM THOMAS MALONE, CHAIR, TANANA VALLEY STATE FOREST CITIZENS ADVISORY COMMITTEE, FAIRBANKS (via teleconference), spoke in favor of the legislation. He felt that dedicated lands would provide the multiple use aspects of the land, in addition to specific forestry uses. 10:07:51 AM AL BARRETTE, SELF, FAIRBANKS (via teleconference), spoke in support of aspects of the proposal, but remarked that there should be a focus on maintaining traditional uses. Co-Chair Meyer CLOSED public testimony. 10:10:41 AM Co-Chair Meyer wondered if this was the same bill that was proposed two years prior, and asked why that particular bill did not pass through the legislature. Commissioner Balash replied that the legislation that was proposed two years prior included more parcels than the current legislation. There was local opposition, and the local assembly did not support the bill. Mr. Maisch added that there was a difference in the definition from timber to fiber in the current legislation, and there was also a recommendation of three clauses for the 118 timber authority in order to apply authority statewide. Co-Chair Meyer noted that the Alaska Outdoor Council (AOC) did not previously support it, and still expressed some concerns that the legislation was not robust enough. He wondered if the current legislation was considered a compromise. Commissioner Balash replied that there were some suggestions, and remarked that he would be willing to work with the committee to establish a more workable outline for the proposal. Co-Chair Meyer noted that the fiscal note was currently zero, but wondered if the proposal may have a positive fiscal impact to the state. Commissioner Balash replied that the state forests were, at worst, revenue neutral. The funds that were raised from the sale of the timber resources supported the expenses of managing them and building infrastructure. Co-Chair Meyer wondered if the Mat-Su borough was in favor of the bill. Senator Dunleavy indicated that there was support from the borough. 10:15:49 AM Vice-Chair Fairclough noted three concerns that were worth addressing: 1) the establishment of language of the patchwork; 2) the natural boundary issue, and posting trespassing warnings; and 3) the issue of public access. Commissioner Bishop stated that Vice-Chair Fairclough had pointed out his concerns. Senator Dunleavy queried a timeline for the proposal. He wondered what was expected of the individuals who had contracts. Mr. Maisch replied that there was a published five year timber sale program. SB 28 was HEARD and HELD in committee for further consideration. 10:19:57 AM AT EASE 10:23:18 AM RECONVENED