03/15/2023 03:15 PM House LABOR & COMMERCE

                 HB  93-LUMBER GRADING PROGRAM                                                                              
                                                                                                                                
3:15:48 PM                                                                                                                    
                                                                                                                                
CHAIR SUMNER announced that the  first order of business would be                                                               
HOUSE BILL NO. 93, "An Act  relating to a lumber grading training                                                               
program  and  lumber grading  certificates;  relating  to use  of                                                               
lumber graded and certified by  a person holding a lumber grading                                                               
training  program certificate;  and  providing  for an  effective                                                               
date."                                                                                                                          
                                                                                                                                
Chair Sumner passed the gavel to Vice Chair Ruffridge.                                                                          
                                                                                                                                
3:16:52 PM                                                                                                                    
                                                                                                                                
CHAIR  SUMNER, as  prime sponsor,  introduced HB  93.   He stated                                                               
that the  proposed legislation  would create  a program  to grade                                                               
lumber  in the  state and  make it  available for  building.   He                                                               
explained that  lumber used in  residential construction  must be                                                               
graded  and stamped,  but small  lumber  mills in  Alaska do  not                                                               
produce  enough  lumber  to justify  the  costs  associated  with                                                               
residential  lumber grading.   He  said the  bill would  create a                                                               
program allowing smaller lumber mills  to directly sell lumber to                                                               
individuals or  contractors looking to  build a home.   He stated                                                               
that  the proposed  bill  would save  on  lumber shipping  costs,                                                               
particularly for barges  in rural communities.   He expressed the                                                               
opinion  that  local  lumber  grading  programs  would  grow  the                                                               
economy  by  increasing  investment   in  forest  management  and                                                               
increasing  the number  of  lumber  mills.   He  stated that  the                                                               
program for lumber  certification would be offered  at least once                                                               
a year.                                                                                                                         
                                                                                                                                
3:22:13 PM                                                                                                                    
                                                                                                                                
JEREMY DOUSE,  Northern Regional  Forester, Division  of Forestry                                                               
and Fire Protection, Department  of Natural Resources, provided a                                                               
PowerPoint presentation on HB 93,  titled "Local Lumber Grading."                                                               
He began  his presentation on slide  2 and slide 3,  stating that                                                               
grade stamped  lumber allows a  purchaser to know the  quality of                                                               
the  lumber.     He  stated   that  the  Western   Wood  Products                                                               
Association  (WWPA)  publishes  the   rules  for  western  lumber                                                               
grading, and  it is accredited  by the American  Lumber Standards                                                               
Committee.   He  said  that it  is  economically challenging  for                                                               
small mills  to become a  member of these types  of organizations                                                               
because of the smaller operational  scale.  He continued that the                                                               
membership fee,  monthly site  inspections, and  inspector travel                                                               
costs could cost approximately $2200 a month.                                                                                   
                                                                                                                                
3:25:44 PM                                                                                                                    
                                                                                                                                
MR.  DOUSE continued  to slide  4 through  slide 6,  stating that                                                               
seven other states  have similar programs to the  one proposed in                                                               
HB  93.   He said  that these  states have  training for  smaller                                                               
mills  so the  mill  would  be able  to  visually  grade its  own                                                               
lumber.   He said that  building inspectors would still  have the                                                               
ability to reject  wood being used if necessary.   Lumber sold as                                                               
part of the program would be required  to be sold to the end user                                                               
or  the contractor  building the  home.   He added  that most  of                                                               
these states  only allow this lumber  to be used when  building a                                                               
one to three family home.                                                                                                       
                                                                                                                                
3:29:03 PM                                                                                                                    
                                                                                                                                
MR. DOUSE  continued to slide  7 and  stated that the  program is                                                               
needed  in  Alaska  because of  several  factors,  including  the                                                               
rising costs  of lumber used  in the construction  of residential                                                               
homes.   He stated  that the  Alaska Housing  Finance Corporation                                                               
has  reported a  15  percent decrease  in  new building  permits,                                                               
citing the  high costs of  construction materials as  the reason.                                                               
He  said  that  tariffs  on Canadian  lumber  imports  have  also                                                               
contributed  to  the increase  in  costs.    He stated  that  the                                                               
proposed bill  would create  opportunities for  forest management                                                               
by allowing the salvage of trees affected by beetles.                                                                           
                                                                                                                                
MR.  DOUSE continued  to slide  8 through  slide 10  and gave  an                                                               
overview of  mill production  and lumber  grading standards.   He                                                               
stated that  in 2000, approximately  87 million board  feet (MBF)                                                               
of lumber was produced in Alaska compared  to 15 MBF in 2020.  He                                                               
stated that  the focus of the  proposed bill is to  provide a way                                                               
to grade lumber  which would be used for light  framing and studs                                                               
for residential construction.  He  provided the equivalent grades                                                               
for what would  be used in Alaska's local  lumber grading program                                                               
to those used by WWPA.                                                                                                          
                                                                                                                                
3:34:23 PM                                                                                                                    
                                                                                                                                
MR. DOUSE  moved to  slide 11  and slide 12  and stated  that the                                                               
one-day  class  used to  train  individuals  in Alaska  would  be                                                               
similar to  the class  offered in Wisconsin.   He  continued that                                                               
recertification would  be required  on a  five-year basis,  and a                                                               
handbook with  the different grades  would be issued to  those in                                                               
the program.   He reiterated that the  certification would follow                                                               
the individual, rather  than the lumber mill, and  there would be                                                               
a requirement to sell the lumber to the end user.                                                                               
                                                                                                                                
3:37:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FIELDS asked why the  program would only allow the                                                               
lumber to be used in single family homes.                                                                                       
                                                                                                                                
MR. DOUSE answered that the program  is not meant to compete with                                                               
larger lumber  mills, as they  pay more  money to have  access to                                                               
lumber  grading.    He  expressed   the  understanding  that  the                                                               
greatest  need  for  residential construction  is  single  family                                                               
homes in  rural areas of the  state.  In response  to a follow-up                                                               
question,  he  said that  it  would  be  possible  for HB  93  to                                                               
contribute to the number of carbon credits available.                                                                           
                                                                                                                                
3:40:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER asked  whether  larger commercial  lumber                                                               
mills have "more hoops to jump through."                                                                                        
                                                                                                                                
MR. DOUSE  answered that  the larger  mills have  more employees,                                                               
produce  more  lumber,  and  pay   the  dues  to  lumber  grading                                                               
organizations.   In response to  a follow-up question,  he stated                                                               
that there  are certain qualifications smaller  mills would still                                                               
be unable to meet in  the one-day training course offered through                                                               
a local lumber grading program.                                                                                                 
                                                                                                                                
REPRESENTATIVE  SADDLER   asked  whether  a  one-day   course  is                                                               
sufficient to qualify an individual to grade lumber.                                                                            
                                                                                                                                
MR. DOUSE answered  that the local lumber grading  program uses a                                                               
simplified  grading system  which  would allow  an individual  to                                                               
learn how  to grade lumber  in a single day.   He added  that the                                                               
state of Wisconsin  uses a similar system, which  he described as                                                               
successful.                                                                                                                     
                                                                                                                                
3:43:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CARRICK  asked what the degree  requirements would                                                               
be to train  individuals under the program.   She also questioned                                                               
the fiscal notes relating to the University of Alaska Fairbanks.                                                                
                                                                                                                                
MR. DOUSE  answered that an  individual with a  bachelor's degree                                                               
in Wood Sciences, or a  similar discipline, would not be required                                                               
to take  the one-day  class to  grade lumber.   He said  that the                                                               
fiscal  notes referred  to  having an  individual  to "train  the                                                               
trainers."  In  response to a follow-up question,  he stated that                                                               
allowing the  certification to stay  with the  individual instead                                                               
of the mill  would allow for the possibility of  more training in                                                               
rural Alaska.                                                                                                                   
                                                                                                                                
3:48:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER asked  why there is a  requirement to sell                                                               
the lumber directly to end users or their contractors.                                                                          
                                                                                                                                
CHAIR SUMNER answered  that lumber bought at a  store is stamped,                                                               
while  lumber bought  directly from  the mill  and graded  by its                                                               
employees would not be stamped.                                                                                                 
                                                                                                                                
REPRESENTATIVE SADDLER  asked what protections there  are against                                                               
an inspector giving deference to a local lumber mill.                                                                           
                                                                                                                                
MR.  DOUSE  suggested  that  this would  be  up  to  professional                                                               
ethics.                                                                                                                         
                                                                                                                                
CHAIR  SUMNER  added  that  such a  scenario  would  require  the                                                               
contractor, inspector,  and mill  to conspire together,  which is                                                               
difficult to  prevent with  certainty and  can still  happen with                                                               
stamped lumber.                                                                                                                 
                                                                                                                                
REPRESENTATIVE SADDLER questioned the rise in cost of lumber.                                                                   
                                                                                                                                
MR. DOUSE answered  that the cost had been $12  a square foot and                                                               
now it has risen to $20 a square foot.                                                                                          
                                                                                                                                
3:51:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FIELDS expressed  the  opinion that  it would  be                                                               
beneficial if  the proposed  bill were  expanded to  cover multi-                                                               
family structures.                                                                                                              
                                                                                                                                
3:52:39 PM                                                                                                                    
                                                                                                                                
VICE CHAIR  RUFFRIDGE questioned  the number  of lumber  mills in                                                               
rural Alaska.                                                                                                                   
                                                                                                                                
MR. DOUSE answered  that most villages have their  own mills, and                                                               
he  suggested that  the  Native Corporations  are  willing to  do                                                               
business.  He made the observation  that there is an abundance of                                                               
timber resources.                                                                                                               
                                                                                                                                
3:55:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  questioned  why  the  training  for  the                                                               
program would not fall under  the jurisdiction of the Division of                                                               
Labor and Workforce Development.                                                                                                
                                                                                                                                
MR.  DOUSE  answered  that  the Division  of  Forestry  and  Fire                                                               
Protection is specifically looking to  build up the program using                                                               
resources which would already be available.                                                                                     
                                                                                                                                
3:56:31 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 3:56 p.m. to 3:57 p.m.                                                                       
                                                                                                                                
3:57:18 PM                                                                                                                    
                                                                                                                                
RODNEY DIAL,  Mayor, Ketchikan Gateway Borough,  provided invited                                                               
testimony on HB 93.  He  pointed out that Ketchikan and Southeast                                                               
Alaska has a long history of  logging, and the cost of lumber has                                                               
a  significant  impact  on  the  cost  of  homebuilding  and  the                                                               
economy.  He expressed the belief  the proposed bill is a step in                                                               
the right  direction for  solving the problem  posed by  the high                                                               
cost of housing.                                                                                                                
                                                                                                                                
3:59:00 PM                                                                                                                    
                                                                                                                                
[Vice Chair Ruffridge passed the gavel back to Chair Sumner.]                                                                   
                                                                                                                                
CHAIR SUMNER announced that HB 93 was held over.