Legislature(2015 - 2016)HOUSE FINANCE 519
04/12/2016 08:30 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB300 | |
| SB32 | |
| SB145 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 300 | TELECONFERENCED | |
| + | SB 32 | TELECONFERENCED | |
| + | SB 145 | TELECONFERENCED | |
| + | TELECONFERENCED |
CS FOR SENATE BILL NO. 32(RES)
"An Act relating to the sale of timber on state land;
and providing for an effective date."
9:57:17 AM
CHRIS MAISCH, DIRECTOR, DIVISION OF FORESTRY, DEPARTMENT OF
NATURAL RESOURCES, provided a quick overview of the bill.
The bill would change the authority process of timber
sales:
The bill would amend AS 38.05.110 and 38.05.118 to
expand the authority of the Commission of Natural
Resources to negotiate the sale of timber at appraised
value.
The Department of Natural Resources 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 al 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 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.
10:04:26 AM
Representative Wilson relayed that the pellet plant was in
North Pole.
Representative Kawasaki remarked that there was concern
about the ability of the commissioner to engage in the 25-
year process. He requested an explanation of the 5-year
appraisal process.
Mr. Maisch replied that sales occurred at a base rate. The
rate was determined by an appraisal that covered the cost
of the division to offer and administer a sale. The
division negotiated from the base rate point. He stressed
that the 25 years was the maximum, and the commissioner
determined the best interest for the state. He remarked
that financing was the most important reason for longer
term sales. He explained that there were no restrictions in
the 120 sales to any particular length of time. He stated
that, as a matter of practice, those sales were typically
three to five years. He remarked that there was a
reappraisal clause in both the contact and legislation.
Representative Kawasaki wondered whether, under the
reappraisal, there would be another submitted best interest
finding.
Mr. Maisch replied in the negative, and stated that it
would be a part of the contract.
Co-Chair Neuman noted that the legislation considered
negotiated sales with areas with high unemployment, and
wondered how those areas were identified.
Mr. Maisch replied that it was 125 percent of the statewide
average. He shared that the statewide average was published
by the DLWD was currently 6.5 percent. He stated that the
level must be above 7.6 percent to employ the authority.
The current unemployment rate in Ketchikan was Ketchikan.
Co-Chair Neuman asked whether the Fairbanks and Mat-Su
boroughs qualified for the sales.
Mr. Maisch answered that currently the areas did not, but
the bill would allow for the authority consistently
statewide.
Co-Chair Neuman remarked that the timber sales must be
added value sales, where they process the log.
Mr. Maisch answered in the affirmative. He shared that it
had long been the department's policy to encourage managing
in Alaska.
10:09:28 AM
Co-Chair Neuman wondered if the funds would be directed
into forestry management in Southeast Alaska.
Mr. Maisch replied in the affirmative, and explained that
currently all the forestry positions in Southeast Alaska
were funded under the timber sale receipt authority.
Vice-Chair Saddler queried what would occur without a
timber source for the Viking Mill.
Mr. Maisch replied that the mill was currently operating
one forest service sale to big foreign sales, so there was
roughly one year of timber under contract. He stated that
it was likely that there would not be enough timber to keep
the mill open, without the ability to negotiate sales.
OWEN GRAHAM, ALASKA FOREST ASSOCIATION, KETCHIKAN (via
teleconference), spoke in support of the bill. He remarked
that it was very difficult to have two operators operating.
10:12:52 AM
CARL PORTMAN, RESOURCE DEVELOPMENT COUNCIL, ANCHORAGE (via
teleconference), testified in support of the bill. The
basic premise of the bill was to allow long-term sales
where appropriate.
Vice-Chair Saddler CLOSED public testimony.
Representative Kawasaki had originally thought the bill may
have been related to special interest, but he had come
around and believed it was good policy.
10:16:28 AM
Representative Wilson supported the bill. She remarked that
the bill provided another way to best utilize the timber.
Co-Chair Neuman remarked that the department had the
opportunity to offer the high value processing timber or
logging companies to enter into contracts for up to $10
million board of feet a year consistent with principles for
a term of up to ten years. He did not believe that the
department had every utilized that allowance.
Representative Guttenberg remarked that it occasionally
paid off to "not be first."
Co-Chair Thompson addressed the zero fiscal note from the
Department of Natural Resources (DNR).
Co-Chair Neuman MOVED to REPORT HCS CSSB 32(RES) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HCS CSSB 32(RES) was REPORTED out of committee with a "do
pass" recommendation and with one previously published zero
fiscal impact note: FN2 (DNR).
10:21:21 AM
AT EASE
10:22:46 AM
RECONVENED