2015-01-30                     Senate Journal                      Page 0105
SB 32                                                                                                                         
SENATE BILL NO. 32 BY THE SENATE RULES COMMITTEE                                                                                
BY REQUEST OF THE GOVERNOR, entitled:                                                                                           
                                                                                                                                
          "An Act relating to the sale of timber on state land;                                                                 
          and providing for an effective date."                                                                                 
                                                                                                                                
was read the first time and referred to the Resources and Finance                                                               
Committees.                                                                                                                     
                                                                                                                                
The following fiscal information was published today:                                                                           
 Fiscal Note No. 1, zero, Department of Natural Resources                                                                       
                                                                                                                                
Governor's transmittal letter dated January 28:                                                                                 
                                                                                                                                
                                                                                                                                
                                                                                                                                

2015-01-30                     Senate Journal                      Page 0106
Dear President Meyer:                                                                                                           
                                                                                                                                
Under the authority of Article III, Section 18 of the Alaska                                                                    
Constitution, I am transmitting a bill relating to the sale of timber on                                                        
State land. The bill would amend AS 38.05.110 and 38.05.118 to                                                                  
expand the authority of the Commissioner of Natural Resources to                                                                
negotiate the sale of timber at appraised value.                                                                                
                                                                                                                                
The Department of Natural Resources (DNR) may offer timber sales                                                                
either through competitive bid or through negotiation. Currently under                                                          
AS 38.05.118, the Commissioner of Natural Resources may negotiate                                                               
the sale of timber to a local manufacturer at appraised value. However,                                                         
negotiated sales larger than 500,000 board feet may only be offered in                                                          
areas of high unemployment, excess manufacturing capacity, and an                                                               
underutilized allowable cut of timber. These criteria prohibit larger                                                           
negotiated timber sales in many areas of the state that are actively                                                            
managed for forestry, and where there is high demand for wood for                                                               
timber products and biomass energy. The proposed bill would provide                                                             
that, in addition to sales to local manufacturers of wood products, sales                                                       
may also be negotiated with users of wood fiber. This change clarifies                                                          
that negotiated sales may be used to support wood energy production                                                             
as well as traditional products. In addition, the bill would eliminate the                                                      
current limitations that negotiated timber sales be based on a finding                                                          
that in the area of the sale there is a high level of unemployment, an                                                          
underutilized manufacturing capacity, and an underutilized supply of                                                            
timber that will lose value if not cut. The requirement that all three                                                          
conditions be met substantially limits the Commissioner of Natural                                                              
Resources' authority and flexibility to approve negotiated sales that                                                           
would be in the best interest of the State.                                                                                     
                                                                                                                                
Competitively bid timber sales are the preferred sale method under                                                              
most conditions. However, negotiated sales provide the ability to tailor                                                        
some sales to the needs of local processors in areas that lack                                                                  
competitive interest or where there is competition from round log                                                               
export markets in a region with a constrained timber supply. The latter                                                         
situation exists in Southern Southeast Alaska where the State of                                                                
Alaska is a small landowner compared to the Tongass National Forest,                                                            
and the State of Alaska's full allowable cut is a critical source of logs                                                       
for the remaining sawmills.                                                                                                     
                                                                                                                                

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The provisions in the bill would enable the Commissioner of Natural                                                             
Resources to better respond to the economic and geographic realities                                                            
of the forest products sector in our state's economy. All timber sales,                                                         
including negotiated sales, must comply with the constitutional                                                                 
requirement to manage State timber for sustained yield.                                                                         
                                                                                                                                
I urge prompt and favorable action on this measure.                                                                             
                                                                                                                                
Sincerely,                                                                                                                      
/s/                                                                                                                             
Bill Walker                                                                                                                     
Governor