Legislature(2021 - 2022)BARNES 124
04/23/2021 10:30 AM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| HB98 | |
| HB135 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 98 | TELECONFERENCED | |
| *+ | HB 135 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 98-FOREST LAND USE PLANS; TIMBER SALES
10:35:46 AM
CHAIR PATKOTAK announced that the first order of business would
be HOUSE BILL NO. 98, "An Act relating to forest land use plans;
relating to forest land use plan appeals; relating to negotiated
timber sales; and providing for an effective date."
10:36:35 AM
REPRESENTATIVE HOPKINS, who had previously withdrawn Amendment 4
during the House Resources Standing Committee meeting on
4/19/21, said that he wasn't able to find a way to work the
amendment through and restated that he withdrew Amendment 4.
10:37:01 AM
REPRESENTATIVE FIELDS, who had moved to adopt Amendment 6 during
the House Resources Standing Committee meeting on 4/19/21, when
it was subsequently set aside, moved again to adopt Amendment 6,
labeled 32-GH1607\A.17, Radford, 4/27/21, which read as follows:
Page 7, lines 17 - 18:
Delete "[TO A LOCAL MANUFACTURER OF WOOD PRODUCTS
OR A USER OF WOOD FIBER]"
Insert "to a local manufacturer of wood products or a
user of wood fiber"
10:37:03 AM
CHAIR PATKOTAK restated his objection from 4/19/21 for purposes
of discussion.
REPRESENTATIVE FIELDS explained that his amendments emerged from
a desire to maximize local benefit; should natural resources
related to fisheries or tourism, for example, be damaged through
timber harvesting activities, support for local jobs and local
manufacturers should be prioritized. He said Amendment 6 would
limit the sale of timber to a local manufacturer, maximizing
local economic benefits.
10:38:37 AM
TIM DABNEY, Acting State Forester, Acting Director, Division of
Forestry (DOF), Department of Natural Resources (DNR), directed
attention to a letter from the Alaska Forest Association (AFA)
[included in the committee packet], which read as follows
[original punctuation provided]:
In light of recent amendments that are under
consideration to the Bill regarding limitations on
exports and local hire requirements, AFA is concerned
that the Bill will have negative unintended
consequences on the timber industry and our member
operators.
MR. DABNEY said that HB 98 designed to allow local industry to
sell the timber harvested and to find a market for types of wood
that can't be manufactured locally. While AS 38.05.118
currently gives DOF the authority to negotiate a timber sale, it
doesn't clearly state that the local business may export the
timber after the work has been done to build roads and transport
the logs. He explained that local mills aren't equipped to
process young growth, there is a lack of local demand for wood
products from small logs, and the only market for hemlock is in
the Pacific Northwest.
10:41:59 AM
CHRISTOPHER ORMAN, Assistant Attorney General, Natural Resources
Section, Civil Division (Juneau), Department of Law (DOL),
explained that Amendment 6 would be returning to that which is
in current statute in AS 38.05.118. The problem, he explained,
is that the timber sale provisions regarding 500,000 board feet
specified in current AS 38.05.115 would be moved to AS 38.05.118
under HB 98.
10:44:53 AM
CLAIR RADFORD, Legislative Counsel, Legislative Legal Services,
Legislative Affairs Agency, said that Mr. Orman summarized the
possible effects of Amendment 6 very well.
10:45:16 AM
REPRESENTATIVE HANNAN asked Mr. Dabney whether the sales of less
than 500,000 board feet are the same as those of hemlock and
other timber that can't be processed locally.
MR. DABNEY replied that both AS 38.05.115 and AS 38.05.118 can
have an export component.
REPRESENTATIVE HANNAN spoke of the protectionist views
concerning the benefits of local manufacturing and noted that
simply selling timber to local manufacturers may not be in the
best interest of the state. Of there not being a domestic
market for a certain type of timber, she asked, "Is that reason
enough to negotiate a sale?"
REPRESENTATIVE FIELDS responded that the lack of a domestic
market is the reason for including an amendment to push local
industry towards stability and job creation.
10:49:05 AM
REPRESENTATIVE MCKAY expressed that while he sees the benefits
of driving local industries, he would prefer to "let the free
market prevail" because the state needs the revenue. He then
asked Mr. Dabney whether selling timber overseas would generate
more revenue than using it for firewood.
MR. DABNEY said that in a competitive bid sale, the contract
goes to the highest bidder; for material desirable as an export
product, the out-of-state companies can outbid the local
companies. This is one of the reasons, he said, that a
negotiated timber sale with domestic business would be
preferable.
REPRESENTATIVE MCKAY said that trees are a renewable resource,
and more value could be obtained by selling to out-of-state
buyers.
MR. DABNEY replied that balance is important, which is why it's
important to have multiple mechanisms for entering into a sale.
As far as trees growing back, he said, harvested areas
previously populated with old-growth trees now contain young
growth, which is a desirable commodity overseas. He said that
taking advantage of overseas markets and allowing export for
negotiated sales is the point of HB 98.
10:54:26 AM
REPRESENTATIVE HANNAN asked Mr. Dabney to clarify whether, if
Amendment 6 were to be adopted, the statute would then say that
the sale cannot be negotiated. She then asked whether that
means a competitive bid process involving either foreign or
domestic companies would be possible.
MR. DABNEY reiterated that if a negotiated timber sale is
disallowed, a competitive bid process could take place, and
foreign companies have a competitive advantage in being able to
outbid domestic companies. He noted that a foreign or out-of-
state purchaser would use local equipment and labor rather than
sending their own employees and equipment to Alaska.
10:56:55 AM
CHAIR PATKOTAK withdrew his objection to Amendment 6.
10:57:01 AM
REPRESENTATIVE CRONK objected.
10:57:03 AM
A roll call vote was taken. Representatives Hannan, Hopkins,
and Fields voted in favor of Amendment 6. Representatives
Schrage, Gillham, Rauscher, Cronk, McKay, and Patkotak voted
against it. Therefore, Amendment 6 failed to be adopted by a
vote of 3-6.
10:58:03 AM
REPRESENTATIVE FIELDS said that Amendment 7 would not be
offered.
CHAIR PATKOTAK clarified that Representative Fields would not be
[re]offering Amendment 7, which was labeled 32-GH1607\A.16,
Radford, 4/17/21. [Amendment 7 - moved for adoption by
Representative Fields on 4/19/21, with an objection for
discussion purposes stated by Chair Patkotak, and subsequently
tabled - remained tabled.]
10:58:33 AM
The committee took a brief at-ease.
10:59:22 AM
REPRESENTATIVE FIELDS moved to adopt Amendment 8, labeled 32-
GH1607\A.15, Radford, 4/17/21, which read as follows:
Page 7, following line 13:
Insert a new bill section to read:
"* Sec. 6. AS 38.05.115 is amended by adding a new
subsection to read:
(d) The commissioner may negotiate a sale of
timber under AS 38.05.110 - 38.05.123 only to a
prospective purchaser whose main office or
headquarters is located in the state."
Renumber the following bill sections accordingly.
CHAIR PATKOTAK objected for purposes of discussion.
REPRESENTATIVE FIELDS said that, like Amendment 6, the intention
of Amendment 8 is to support local businesses. He asked Ms.
Radford to explain the differences between the two.
11:00:25 AM
MS. RADFORD explained that Amendment 8 would allow the DNR
commissioner to negotiate a timber sale only to a purchaser with
a head office or headquarters within the state.
11:00:58 AM
The committee took a brief at-ease.
11:01:41 AM
REPRESENTATIVE FIELDS said that milling jobs have declined over
the past 30 years due to management of federal lands and
international dynamics in the marketplace, but that there is
expansive authority to create local jobs on state lands. He
said that Alaska has historically had policies regarding in-
state hiring.
11:03:05 AM
CHAIR PATKOTAK asked to have someone address the potential
constitutional concerns with Amendment 8.
11:04:05 AM
MS. RADFORD said that Amendment 8 raises some constitutional
issues under the Privileges and Immunities Clause, Commerce
Clause, and Equal Protection Clause; she said that she has not
done an in-depth analysis, but the Privileges and Immunities
Clause restrains efforts to discriminate against out-of-state
citizens.
REPRESENTATIVE FIELDS said that the issue of restricting hiring
to Alaska residents in terms of state lands and resources,
versus private or federal lands, goes back decades to when the
State originally tried to mandate in-state hiring for
development on the North Slope; the legislature gradually passed
a series of laws, he said, "eventually arriving at an Alaska
hire requirement statute called the Zone of Underemployment
statute." He characterized the policy as permissible when
certain economic decisions related to high unemployment. He
said that the current administration was the first one in 30
years to stop pursuing in-state hiring, "departing from
longstanding bipartisan support for Alaska hire."
11:07:24 AM
MR. ORMAN expressed his agreement with Ms. Radford's assessment
of which constitutional clauses could affect Amendment 8 and
listed several specific statutes that would apply to cases
involving the Equal Protection Clause and the Privileges and
Immunities Clause. He said that they key issue when looking at
Amendment 8 is identifying the rational basis for restricting
timber sales to only include businesses with a main office
located inside the state; when considering Amendment 8 in terms
of the Equal Protection Clause, he explained that there has
historically been legislative intent language explaining the
rational basis. When considering the Privileges and Immunities
Clause, he said, the question is, "Does the law place a burden
on the privileges or immunities protected by the U.S.
Constitution, and if a burden does exist, can the state provide
a substantial reason for the discrimination?" He then explained
that the Dormant Commerce Clause should also be considered,
citing South-Central Timber Development v. Wunnicke, 467 U.S.
82, 104 S. Ct. 2237 (1984). In response to a follow-up question
by Chair Patkotak, Mr. Orman clarified that Amendment 8 would
cause redundancy in AS 38.05.
11:17:22 AM
REPRESENTATIVE FIELDS noted the need for rational basis and
discussed the tendencies of local companies to hire local,
support local charities, pay into the local tax base, and are
attuned to the products that local people need.
11:18:18 AM
REPRESENTATIVE MCKAY said that sometimes business can't find
qualified employees and that others can't pass a drug test. He
characterized Amendment 8 as trying to solve a problem that
doesn't exist and said that DOF is tasked with getting the most
revenue for the timber.
11:20:14 AM
MR. DABNEY noted that negotiated sales under AS 38.05.123 are
already allowed only for local manufacturers. He also said that
the six factors of determination under AS 38.05.110(c) contain
provisions for local benefits. Regarding Representative McKay's
assertions, he explained that timber harvests tend to have
predominately local hires in all aspects, and he said that
maximizing revenue isn't the goal of DOF. While price is
important, he said, he could foresee a situation in which a
proposal with the highest price would fail to a proposal with a
lower price but more local benefits.
11:25:29 AM
REPRESENTATIVE RAUSCHER opined that needed labor can't always be
supplied locally, but that a company with a bottom line won't
want to pay for plane tickets. He expressed that he does want
HB 98 to pass and that he does not support Amendment 8.
11:27:36 AM
REPRESENTATIVE HANNAN noted that Amendment 8 does not specify
hiring Alaska residents, it says that the business needs to be
headquartered in Alaska in order to take part in negotiated
sales; there is nothing in Amendment 8 restricting a company
from bringing staff from elsewhere. She said that most of the
old-growth has been harvested in the last 40 years, and that in
southeast Alaska the few remaining areas of old-growth adjoin
university or tribal land. She said that one of her prime
concerns with HB 98 overall is the difference between negotiated
sales and competitive bid sales. It's clear, she said, that the
goal of bid sales is to give the contract to the highest bidder;
however, negotiated sales are intended to address local need
and, she said, "Asking for the business to be located here seems
like a fairly low bar." She said that it would be ideal for the
business to either be, or intent to remain, a longstanding
member of the community, but that it's not difficult to start a
business in Alaska.
11:30:09 AM
CHAIR PATKOTAK removed his objection to Amendment 8.
11:30:10 AM
REPRESENTATIVE CRONK objected.
11:30:16 AM
A roll call vote was taken. Representatives Fields, Hopkins,
and Hannan voted in favor of Amendment 8. Representatives
McKay, Cronk, Rauscher, Gillham, Schrage, and Patkotak voted
against it. Therefore, Amendment 8 failed by a vote of 3-6.
11:30:55 AM
REPRESENTATIVE FIELDS moved to adopt Amendment 9, labeled 32-
GH1607\A.14, Radford, 4/17/21, which read as follows:
Page 7, following line 13:
Insert a new bill section to read:
"* Sec. 6. AS 38.05.115 is amended by adding a new
subsection to read:
(d) A timber sale contract entered into under
AS 38.05.117, 38.05.118, or 38.05.123 must require the
purchaser to hire only resident workers."
Renumber the following bill sections accordingly.
11:30:58 AM
CHAIR PATKOTAK objected for purposes of discussion.
REPRESENTATIVE FIELDS pointed out that workers have often been
brought in from out of state, and that as timber sales become
increasingly international, there becomes less incentive for
multinational corporations to hire local workers. As the timber
will be harvested on state lands, he said, the legislature has
the authority to mandate local hiring. He recounted a story of
a federal logging job in which the purchaser brought in
undocumented immigrants from Mexico and classified them as
independent contractors in order to defraud them of workers'
compensation, minimum wage, and insurance benefits. He said
that the situation was noticed only because one of the workers
was killed by a bear, largely due to insufficient equipment and
safety measures which would have otherwise been obligatory.
11:33:54 AM
MR. DABNEY said that the industry will not survive much longer
if it is not provided with adequate timber and with the
flexibility to export and that the collapse of the industry
would affect local workers. He opined that the problem is the
lack of available timber, not competition from outside the
state. He said that HB 98 is intended to create more
flexibility for the next few years, since the supply of timber
from the U.S. Forest Service lands is severely limited, young-
growth timber has not yet reached an amount sufficient to feed
the industry, and DOF is already providing the maximum amount of
timber available on state lands. He said that if a company is
required to hire only local workers, the contract may be at
risk. He stated that DOF opposes Amendment 9.
11:36:11 AM
MR. ORMAN said that the same legal issues as described earlier,
concerning the Equal Protection Clause and the Privileges and
Immunities Clause, are also issues with Amendment 9.
11:36:45 AM
REPRESENTATIVE SCHRAGE asked what kind of training is required
for the jobs in question.
MR. DABNEY said there are multiple types of workers involved in
the industry and listed chainsaw, heavy equipment, dump truck,
and logging truck operators. He said that high-skill labor is
required for the mechanized equipment, and noted the
administrative staff required for the clerical work. He said
that they're living-wage jobs that are important to the economy.
REPRESENTATIVE SCHRAGE asked whether Amendment 9 would apply to
all staff, or only those actively involved in the harvesting of
the timber.
11:39:06 AM
REPRESENTATIVE FIELDS responded that the intent is to specify
local hires for the harvest of the lumber, not the entire
company.
REPRESENTATIVE SCHRAGE noted his discomfort with the prior
amendments addressing related issues but said that he could
support Amendment 9 after hearing descriptions of the hands-on
jobs. He referenced Representative Cronk's notes about the many
firefighters who possess the specialized skills that would be
transferable to the timber industry.
11:39:55 AM
REPRESENTATIVE CRONK recalled that Southeast Alaska used to have
a thriving timber industry and opined that development of
resources is being hampered by the federal government. He then
characterized Alaska as having the best-managed resources and
best environmental protections in the world.
11:43:06 AM
REPRESENTATIVE GILLHAM said that he agrees with hiring local,
but there are times when qualified local employees can't be
found.
11:43:56 AM
REPRESENTATIVE HOPKINS expressed that revenue being funneled
into the general fund is not the only way to increase the wealth
of the state. He characterized local hire amendments as having
a "snowball effect" on local and regional well-being.
11:45:20 AM
REPRESENTATIVE RAUSCHER opined that over 90 percent of the
committee members agree with the benefits of hiring local
residents, but that it should not be mandated. He said that he
would not support Amendment 9.
11:46:33 AM
REPRESENTATIVE HANNAN said that the goal should be to create the
biggest economic impact possible when it comes to resource
extraction. She discussed the possibility of having taxation on
income earned in Alaska. Noting that Amendment 9 would likely
not be adopted, she said that she would support it because
hiring local workers keeps money in the local economy.
11:47:49 AM
REPRESENTATIVE FIELDS reminded committee members of the
constitutional mandate to provide Alaska residents the maximum
benefit from resource development on state lands and said that
one of the most basic benefits is job production. He opined
that, without mandates, the state would not achieve the local
hire rates it needs.
11:48:11 AM
CHAIR PATKOTAK removed his objection to Amendment 9.
11:48:14 AM
REPRESENTATIVE CRONK objected.
11:48:19 AM
A roll call vote was taken. Representatives Schrage, Hannan,
Hopkins, and Fields voted in favor of Amendment 9.
Representatives Gillham, Rauscher, Cronk, McKay, and Patkotak
voted against it. Therefore, Amendment 9 failed to be adopted
by a vote of 4-5.
11:49:25 AM
CHAIR PATKOTAK stated that a committee substitute would be
drafted to incorporate the amendments adopted thus far. He
announced that HB 98, as amended, was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 98 DNR Response to Remaining Amendments 4.23.2021.pdf |
HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM |
HB 98 |
| HB 98 HRES Action on Amendments 4.19.2021.pdf |
HRES 4/19/2021 1:00:00 PM HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM |
HB 98 |
| HB 98 Amendment Cronk A.24 4.19.2021.pdf |
HRES 4/19/2021 1:00:00 PM HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM |
HB 98 |
| HB 98 Memo Amendment A.15 4.19.2021.pdf |
HRES 4/19/2021 1:00:00 PM HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM |
HB 98 |
| HB 98 HRES Amendment Packet 1 4.19.2021.pdf |
HRES 4/19/2021 1:00:00 PM HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM |
HB 98 |
| HB 135 Sponsor Statement 4.23.2021.pdf |
HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM HRES 4/26/2021 1:00:00 PM HRES 1/21/2022 1:00:00 PM |
HB 135 |
| HB 135 Sectional Analysis Version A 4.23.2021.pdf |
HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM HRES 4/26/2021 1:00:00 PM HRES 1/21/2022 1:00:00 PM |
HB 135 |
| HB 135 DNR Presentation 4.23.2021.pdf |
HRES 4/23/2021 10:30:00 AM HRES 4/23/2021 1:00:00 PM HRES 4/26/2021 1:00:00 PM |
HB 135 |
| HB 98 Letter Alaska Forest Association 4.23.2021.pdf |
HRES 4/23/2021 10:30:00 AM |
HB 98 |