Legislature(2011 - 2012)BARNES 124

01/19/2011 01:00 PM House RESOURCES


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01:00:28 PM Start
01:02:04 PM Overview(s): Department of Natural Resources Commissioner's Office, Division of Agriculture, Division of Forestry, Office of Project Management and Permitting
04:07:16 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: Dept. of Natural Resources - TELECONFERENCED
Commissioner's Office, Division of Agriculture,
Division of Forestry, Office of Project
Management and Permitting
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                        January 19, 2011                                                                                        
                           1:00 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Eric Feige, Co-Chair                                                                                             
Representative Paul Seaton, Co-Chair                                                                                            
Representative Alan Dick                                                                                                        
Representative Neal Foster                                                                                                      
Representative Bob Herron                                                                                                       
Representative Cathy Engstrom Munoz                                                                                             
Representative Peggy Wilson                                                                                                     
Representative Berta Gardner                                                                                                    
Representative Scott Kawasaki                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Representative Dan Saddler                                                                                                      
Senator Cathy Giessel                                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW(S):  DEPARTMENT OF NATURAL RESOURCES - COMMISSIONER'S                                                                  
OFFICE, DIVISION OF AGRICULTURE, DIVISION OF FORESTRY, OFFICE OF                                                                
PROJECT MANAGEMENT AND PERMITTING                                                                                               
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DAN SULLIVAN, Commissioner                                                                                                      
Department of Natural Resources (DNR)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided an overview of the Department of                                                                
Natural Resources and the commissioner's office.                                                                                
                                                                                                                                
FRANCI HAVEMEISTER, Director                                                                                                    
Central Office                                                                                                                  
Division of Agriculture                                                                                                         
Department of Natural Resources (DNR)                                                                                           
Palmer, Alaska                                                                                                                  
POSITION  STATEMENT:   Provided a  PowerPoint presentation  about                                                             
the Division of Agriculture's responsibilities and activities.                                                                  
                                                                                                                                
JOHN "CHRIS" MAISCH, Director                                                                                                   
Department of Natural Resources (DNR)                                                                                           
Division of Forestry                                                                                                            
Fairbanks, Alaska                                                                                                               
POSITION  STATEMENT:   Provided a  PowerPoint presentation  about                                                             
the Division of Forestry's responsibilities and activities.                                                                     
                                                                                                                                
THOMAS CRAFFORD, Director                                                                                                       
Office of Project Management & Permitting (OPMP)                                                                                
Department of Natural Resources (DNR)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Provided a  PowerPoint presentation  about                                                             
the  responsibilities and  activities  of the  Office of  Project                                                               
Management and Permitting.                                                                                                      
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:00:28 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  PAUL   SEATON  called  the  House   Resources  Standing                                                             
Committee meeting  to order at 1:00  p.m. Representatives Seaton,                                                               
Feige,  P.  Wilson,  Kawasaki, Herron,  Dick,  and  Gardner  were                                                               
present at the  call to order.  Representatives  Munoz and Foster                                                               
arrived  as the  meeting was  in progress.   Senator  Giessel and                                                               
Representative Saddler were also present.                                                                                       
                                                                                                                                
^OVERVIEW(S):   Department  of  Natural Resources  Commissioner's                                                               
Office, Division of Agriculture,  Division of Forestry, Office of                                                               
Project Management and Permitting                                                                                               
 OVERVIEW(S):  Department of Natural Resources - Commissioner's                                                             
 Office, Division of Agriculture, Division of Forestry, Office of                                                           
               Project Management and Permitting                                                                            
                                                                                                                                
1:02:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  announced that  the order  of business  would be                                                               
overviews of  the Department of Natural  Resources commissioner's                                                               
office, the  Division of Agriculture,  the Division  of Forestry,                                                               
and the Office of Project Management and Permitting.                                                                            
                                                                                                                                
CO-CHAIR SEATON  further announced that Representative  P. Wilson                                                               
would  be  the  vice  chair   of  the  House  Resources  Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
1:03:37 PM                                                                                                                    
                                                                                                                                
DAN  SULLIVAN,  Commissioner,  Department  of  Natural  Resources                                                               
(DNR), first noted  he has been commissioner for  only six weeks.                                                               
He promised a responsive and  respectful relationship between his                                                               
department  and legislators,  which  is being  symbolized by  the                                                               
presence of the department's directors at today's overview.                                                                     
                                                                                                                                
1:08:13 PM                                                                                                                    
                                                                                                                                
COMMISSIONER   SULLIVAN    related   that    the   constitutional                                                               
underpinnings of what DNR does are  found in Sections 8.1 and 8.2                                                               
of the Alaska State Constitution, which he quoted respectively:                                                                 
                                                                                                                                
     It  is  the  policy  of  the  State  to  encourage  the                                                                    
     settlement  of  its land  and  the  development of  its                                                                    
     resources  by making  them  available  for maximum  use                                                                    
     consistent with the public interest.                                                                                       
                                                                                                                                
     The  legislature  shall  provide for  the  utilization,                                                                    
     development, and conservation  of all natural resources                                                                    
     belonging to the State, including  land and waters, for                                                                    
     the maximum benefit of its people.                                                                                         
                                                                                                                                
                                                                                                                                
COMMISSIONER   SULLIVAN   said   DNR  specifically   focuses   on                                                               
developing,  conserving,   and  enhancing  the   state's  natural                                                               
resources  for  present  and future  Alaskans.    The  department                                                               
manages approximately  100 million  acres of uplands;  60 million                                                               
acres of tidelands, shore lands,  and submerged lands; and 40,000                                                               
miles of  coastline.  The  department manages the  state's energy                                                               
and natural resources, state park  lands, is a primary partner in                                                               
wild land  fire suppression  in the  state, supports  the state's                                                               
agriculture and  timber industries, and obtains  and provides the                                                               
geologic, hydrolic, and land record  and other information needed                                                               
for managing and utilizing the state's natural resources.                                                                       
                                                                                                                                
COMMISSIONER SULLIVAN  stated DNR  currently employs  about 1,100                                                               
Alaskans  in  full-time  and seasonal  positions  throughout  the                                                               
state.  The  department's Fiscal Year (FY)  2011 operating budget                                                               
is $152.5  million and  the FY 2012  operating budget  request is                                                               
$153.6 million.                                                                                                                 
                                                                                                                                
1:11:34 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  SULLIVAN  directed  attention to  the  department's                                                               
organizational chart, pointing out that  Joe Balash and Ed Fogels                                                               
are the  two deputy commissioners.   The  Division of Oil  & Gas,                                                               
directed by Kevin Banks, develops  and implements the state's oil                                                               
and gas leasing  program, he continued.  The  Division of Mining,                                                               
Land and  Water, under acting  director Wyn Menefee,  manages the                                                               
160 million acres of state-owned  land and acquires land from the                                                               
federal  government  to  fulfill  statehood  entitlements.    The                                                               
Division of Forestry, under director  Chris Maisch, provides fire                                                               
protection services as well as  fire and aviation management, and                                                               
it manages the  three state forests.  The  Division of Geological                                                               
&  Geophysical  Surveys,  headed  by  Bob  Swenson,  surveys  the                                                               
state's  storehouse of  minerals.   The Division  of Coastal  and                                                               
Ocean  Management,  directed  by  Randy  Bates,  administers  the                                                               
Alaska Coastal Management Program.   The Division of Agriculture,                                                               
directed  by  Franci  Havemeister, offers  land  for  agriculture                                                               
development,   promotes   and  supports   Alaska's   agricultural                                                               
industry  through   financing  for  farmers,   processors,  plant                                                               
material  development,  conservation   education,  and  marketing                                                               
assistance, and inspects and certifies farm products.                                                                           
                                                                                                                                
1:18:14 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  SULLIVAN  continued  reviewing  the  organizational                                                               
chart.    The Division  of  Parks,  led  by Ben  Ellis,  provides                                                               
recreation  opportunities,  protects   and  interprets  areas  of                                                               
natural  and  cultural  significance, and  supports  the  state's                                                               
tourism industry.  The Division  of Support Services, directed by                                                               
Jean  Davis, provides  centralized administrative  and management                                                               
services in the areas of  finance, procurement, and budgeting for                                                               
all  of DNR's  divisions and  offices.   Mike Thompson  leads the                                                               
State Pipeline  Coordinator's office,  which is  part of  a joint                                                               
federal  and   state  program  that  oversees   the  Trans-Alaska                                                               
Pipeline  System   (TAPS)  as  well   as  other   common  carrier                                                               
pipelines.   That  office also  has  administrative oversight  of                                                               
pipeline right-of-way  leases.  The Office  of Project Management                                                               
&  Permitting, led  by Tom  Crafford, coordinates  review of  all                                                               
large-scale development  projects, including projects  related to                                                               
mining, oil,  gas, transportation, land use  planning, and Alaska                                                               
National Interest  Lands Conservation Act  (ANILCA) coordination.                                                               
Additionally, there are also boards and commissions within DNR.                                                                 
                                                                                                                                
1:20:48 PM                                                                                                                    
                                                                                                                                
COMMISSIONER SULLIVAN reiterated that the  presence of all of the                                                               
division directors at  this hearing is to show they  are ready to                                                               
work with committee members.  He  said he has spent his first six                                                               
weeks  on   the  job  in  meetings   with  legislators,  industry                                                               
representatives, Native  organizations, conservation  groups, and                                                               
other groups to hear what they  have to say about the department.                                                               
Three  themes  kept  popping  up  during  these  meetings:    the                                                               
challenges, the significant potential  and opportunities, and the                                                               
critical  need to  achieve  partnership  among all  stakeholders.                                                               
The department  will be  focusing on what  is clearly  the number                                                               
one  challenge -  the  declining TAPS  throughput.   The  average                                                               
throughput  in  2006  was  840,000 barrels  per  day;  today  the                                                               
average has declined to 640,000 barrels per day.                                                                                
                                                                                                                                
1:24:32 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  SULLIVAN advised  that other  challenges are  aging                                                               
infrastructure throughout the state,  including the TAPS line and                                                               
Cook Inlet; high energy costs  throughout the state, particularly                                                               
rural  communities in  the Interior;  the "gasline  project;" and                                                               
energy  in  the  Cook  Inlet  area.   An  internal  challenge  is                                                               
permitting efficiencies and redundancies  within DNR and the need                                                               
for a regulatory system that is predictable and timely.                                                                         
                                                                                                                                
COMMISSIONER SULLIVAN pointed out,  however, that Alaska has more                                                               
opportunities   than  challenges.     One   enormous  opportunity                                                               
recognized by  Governor Parnell  is that  Alaska is  the nation's                                                               
"storehouse."    The North  Slope  remains  a world-class  energy                                                               
basin   with   43  billion   barrels   of   oil,  not   including                                                               
unconventional energy like heavy oil  and shale, and 236 trillion                                                               
cubic feet of gas.  In  terms of "storehouse," the department has                                                               
taken a look  at Alaska as if  it were a country  relative to the                                                               
rest of  the world.  The  estimates for every category  looked at                                                               
put Alaska  in the top  10 in the  world.  For  example, Alaska's                                                               
estimated  coal  deposits are  number  two  in  the world.    The                                                               
state's copper, lead, gold, zinc,  and silver deposits are all in                                                               
the  top  10 in  the  world.    Additionally,  if Alaska  were  a                                                               
country, its permanent fund would be  one of the top 10 sovereign                                                               
wealth funds in  the world.  Commissioner  Sullivan reported that                                                               
another opportunity  is the number  of business  newcomers, which                                                               
indicates that  the newcomers view  the state as  having promise.                                                               
It  is important  from a  policy perspective,  he said,  that the                                                               
state  continues  to  encourage  new  business  people  to  come,                                                               
invest, and  employ Alaskans.   He added  that innovation  in the                                                               
resource development sector is also occurring in Alaska.                                                                        
                                                                                                                                
1:30:56 PM                                                                                                                    
                                                                                                                                
COMMISSIONER SULLIVAN related that  from his meetings with people                                                               
across the  state he  has found  a sense  among most  groups that                                                               
responsible  development must  occur to  give Alaska  an economic                                                               
future.   This resource  development needs to  be done  through a                                                               
partnership   among  key   and  widely   divergent  stakeholders,                                                               
including legislators,  energy companies, and  those conservation                                                               
groups  that believe  in responsible  development.   However,  he                                                               
further related,  there is enormous frustration  across the state                                                               
about a lack  of partnership from the federal  government on many                                                               
issues.   This  chills  investment  opportunities and  undermines                                                               
economic, energy, and national  security interests.  Commissioner                                                               
Sullivan urged that  every Alaskan let the  people in Washington,                                                               
DC, know  that this  lack of federal  partnership is  hurting the                                                               
state's interests as well as  the country's national, energy, and                                                               
economic security.  Because the  state's economic future is based                                                               
on  resource  development,  the  federal  government  must  be  a                                                               
partner,  not  an  inhibitor,  of   resource  development.    The                                                               
department will  be re-doubling  its efforts  of reaching  out to                                                               
the federal  government.  The  litigation front is the  last step                                                               
and even  though the state has  worked hard, he said  he does not                                                               
think the federal government has been listening.                                                                                
                                                                                                                                
1:36:06 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  requested  the commissioner  to  let  committee                                                               
members know if there are issues the legislature should address.                                                                
                                                                                                                                
CO-CHAIR FEIGE  agreed with  the commissioner's  statements about                                                               
the federal  government, saying  it was  this issue  that brought                                                               
him to  Juneau.  He said  it is not the  local federal officials,                                                               
but rather  a top-down directed  effort that is occurring  on all                                                               
fronts and it is up to Alaskans to do something about it.                                                                       
                                                                                                                                
COMMISSIONER  SULLIVAN,  in  response to  Representative  Wilson,                                                               
agreed to  provide committee members  with the  information about                                                               
where  Alaska   stands  in  the   world  regarding   its  mineral                                                               
storehouse.  He cautioned that  the details are not always easily                                                               
available  because of  the issues  of  private land  and what  is                                                               
available  for leasing.   He  further related  that the  governor                                                               
wants this storehouse  information publicized to the  rest of the                                                               
country.                                                                                                                        
                                                                                                                                
1:41:13 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  SULLIVAN,  in  response to  Representative  Herron,                                                               
said it is  not in anyone's interest for there  to be any tension                                                               
between  DNR  and   the  legislature.    While   there  might  be                                                               
disagreement  on policies,  he will  be demanding  that his  team                                                               
deal with any  disagreements in a respectful, honest  manner.  It                                                               
is particularly important for DNR to  be responsive, he said.  He                                                               
requested that  it be brought to  his attention if this  does not                                                               
happen.  In further response  to Representative Herron, he stated                                                               
that the  buck stops with him.   He explained that  the executive                                                               
branch, led by the governor,  comes up with policy positions, but                                                               
that  these are  not always  integrated within  departments while                                                               
the  policy positions  are  being  evolved and  debated.   It  is                                                               
important  for  the commissioner  and  directors  to give  honest                                                               
answers, but it is also important  that a director not get out in                                                               
front of the  commissioner and that the commissioner  not get out                                                               
in  front of  the  governor.   Therefore,  he  continued, when  a                                                               
director states  that the department has  not yet come up  with a                                                               
defined internal  policy, it is important  that committee members                                                               
respect such an answer.                                                                                                         
                                                                                                                                
1:47:01 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  SULLIVAN,  in   response  to  Representative  Dick,                                                               
agreed there are federal policies  relating to Alaska that do not                                                               
abide by  what is  set in  federal statute.   For  example, under                                                               
federal law  the National Petroleum Reserve-Alaska  (NPR-A) is to                                                               
be developed for oil and gas, not treated as a wilderness area.                                                                 
                                                                                                                                
COMMISSIONER  SULLIVAN,  in  response  to  Representative  Munoz,                                                               
agreed  to  look  into  the issue  of  shellfish  permitting  and                                                               
leasing  and  whether such  development  is  being encouraged  or                                                               
impeded.                                                                                                                        
                                                                                                                                
REPRESENTATIVE FOSTER commented he would  like to hear more about                                                               
what Alaska is doing to develop  rare earth elements.  He offered                                                               
his   appreciation of the  commissioner's support for  finding an                                                               
affordable energy solution, particularly for rural communities.                                                                 
                                                                                                                                
1:51:07 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  SULLIVAN,  in  response to  Co-Chair  Seaton,  said                                                               
DNR's  organizational  chart  indicates  that  the  oil  and  gas                                                               
industry is  enormously important  to the  state, which  makes it                                                               
easy  for the  department  to  get pulled  into  only one  issue.                                                               
However,  he  continued, agriculture  is  an  example of  another                                                               
industry that  is very important to  many people.  He  said he is                                                               
into team building with strong  deputies, something he thinks the                                                               
department already has.   He wants to ensure -  from a management                                                               
and leadership standpoint  - that the department  is cognizant of                                                               
the many aspects  in which it touches upon the  lives of Alaska's                                                               
citizens.  He  cannot be critical of  previous department leaders                                                               
because it  is natural to  gravitate toward  an issue that  is of                                                               
enormous importance to the state.                                                                                               
                                                                                                                                
1:55:25 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  expressed  his  concern  about  the  future  of                                                               
Alaska's  natural  resources.    For example,  he  said,  natural                                                               
resource  studies are  being terminated  this year  on the  Kenai                                                               
Peninsula, there is no longer  a statewide coordinator for Future                                                               
Farmers  of America  (FFA), and  there is  no DNR  person working                                                               
with school  districts to provide  classes on  natural resources.                                                               
He offered his  hope that such educational  partnerships will not                                                               
go just to industry partnerships.                                                                                               
                                                                                                                                
1:57:36 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 1:57 p.m. to 2:00 p.m.                                                                       
                                                                                                                                
2:00:32 PM                                                                                                                    
                                                                                                                                
FRANCI  HAVEMEISTER,   Director,  Central  Office,   Division  of                                                               
Agriculture,   Department   of   Natural  Resources,   said   her                                                               
division's mission  "is to promote and  encourage the development                                                               
of an agriculture  industry in the state."  This  is done through                                                               
cooperation and partnership with  industry itself, she continued.                                                               
The division's  47 employees work  from three offices:   the main                                                               
office in Palmer, the Plant  Materials Center in "the butte" near                                                               
Palmer, and the  northern region office in Fairbanks.   The total                                                               
budget for Fiscal  Year 2011 is just over $7  million.  Employees                                                               
include administrative  staff, equipment  operators, agronomists,                                                               
production  managers, natural  resource specialists,  development                                                               
specialists and technicians, loan officers, and inspectors.                                                                     
                                                                                                                                
MS.  HAVEMEISTER  noted  that  the  division  has  three  funding                                                               
components:   agriculture development, the  Agriculture Revolving                                                               
Loan Fund,  and the  Plant Materials  Center.   Under agriculture                                                               
development   is   marketing,   inspection  service,   and   land                                                               
management.    The  marketing development  program  includes  the                                                               
Alaska  Grown  Program,  the Farm  to  School  Program,  industry                                                               
support,  education and  outreach,  conference  hosting, and  the                                                               
Farmers Market  Directory.  Grants the  division has successfully                                                               
obtained  are the  Specialty Crop  Block Grant  programs and  the                                                               
Federal-State Marketing Improvement Program.                                                                                    
                                                                                                                                
2:03:02 PM                                                                                                                    
                                                                                                                                
MS. HAVEMEISTER said the number  one goal of her division's long-                                                               
term  plan is  to  assist producers  in  increasing market  share                                                               
development.   For  example, cooperation  with the  Department of                                                               
Corrections has  increased the movement  of Alaska  grown product                                                               
into correctional  facilities.   The marketing  department's work                                                               
with farmers markets statewide was  instrumental in the formation                                                               
of  the  Alaska Farmers  Market  Association.   The  division  is                                                               
continuing  its work  with local  chefs to  move in-season  fresh                                                               
product  into  restaurants.   Additionally,  during  the  growing                                                               
season the  division provides a  wholesale newsletter  that lists                                                               
available local products.                                                                                                       
                                                                                                                                
MS. HAVEMEISTER,  in response to Co-Chair  Seaton, explained that                                                               
Alaska producers  can join the Alaska  Product Preference Program                                                               
under  which a  producer placing  a  bid for  state contracts  is                                                               
given a seven  percent allotment above a non-state  producer.  In                                                               
further response,  she confirmed  that an  example of  this would                                                               
include a produce provider to  the Department of Corrections.  In                                                               
response   to  another   question  from   Co-Chair  Seaton,   Ms.                                                               
Havemeister  stated that  under the  Farm to  School Program  the                                                               
division has  hired a phenomenal  farm to school  organizer whose                                                               
master's thesis was done on this subject.                                                                                       
                                                                                                                                
2:05:16 PM                                                                                                                    
                                                                                                                                
MS. HAVEMEISTER, in response  to Representative Gardner, affirmed                                                               
the division has attended meetings  put on by Robin Richardson as                                                               
well as meetings put on by the Global Food Collaborative.                                                                       
                                                                                                                                
MS.  HAVEMEISTER continued  her  presentation,  stating that  the                                                               
division   provides    industry   support    through   conference                                                               
facilitation,  the  Alaska  Grown  Source  Book,  the  "Wholesale                                                             
Newsletter," staff  participation at conferences and  events, and                                                               
the division's newsletter.   In response to  Co-Chair Seaton, she                                                               
agreed  to   provide  committee   members  with  copies   of  the                                                               
division's newsletter.                                                                                                          
                                                                                                                                
MS.  HAVEMEISTER, regarding  education and  outreach, noted  that                                                               
the division continues "to partner  with educators, agencies, and                                                               
the  private  sector to  promote  knowledge  transfer within  the                                                               
industry."   Agriculture education is important,  she emphasized,                                                               
because  most children  are three  generations  removed from  the                                                               
farm  and have  little understanding  of where  their food  comes                                                               
from.  Regarding  education, she said the  division partners with                                                               
Agriculture in  the Classroom, Future  Farmers of  America (FFA),                                                               
4-H, teacher education, and youth education events.                                                                             
                                                                                                                                
2:07:26 PM                                                                                                                    
                                                                                                                                
MS. HAVEMEISTER,  in response to  Co-Chair Seaton, said  there is                                                               
no specific  position within the  division for Future  Farmers of                                                               
America.   She added, however,  that she firmly supports  FFA and                                                               
the division does everything it can to support that program.                                                                    
                                                                                                                                
CO-CHAIR SEATON  pointed out that  the Alaska  Envirothon Program                                                               
is being shut  down because of no support from  the Department of                                                               
Natural Resources.  He asked  whether the Division of Agriculture                                                               
is  giving  any  support  to  this program  or  worked  with  the                                                               
Department  of Education  and Early  Development (EED)  regarding                                                               
natural resource courses.                                                                                                       
                                                                                                                                
MS. HAVEMEISTER  replied that  she works  closely with  the state                                                               
FFA coordinator.  Additionally,  the division volunteers employee                                                               
time and  assists with  the promoting  and sponsoring  of certain                                                               
events, such as the FFA state  convention.  She has not, however,                                                               
had direct conversation with the EED.                                                                                           
                                                                                                                                
CO-CHAIR SEATON said  it is a tragedy in the  making that FFA and                                                               
natural  resource   classes  are  being  cut   from  the  state's                                                               
classrooms.     Courses  that  engage  students   are  not  being                                                               
supported at all or only minimally.                                                                                             
                                                                                                                                
MS. HAVEMEISTER responded that the  division is doing what it can                                                               
and she fully supports that program.                                                                                            
                                                                                                                                
CO-CHAIR  SEATON added  that the  Kenai Peninsula  Borough School                                                               
District has terminated that entire program.                                                                                    
                                                                                                                                
2:10:32 PM                                                                                                                    
                                                                                                                                
MS.  HAVEMEISTER, returned  to her  presentation, reporting  that                                                               
the   division  offers   inspection   services,  including   U.S.                                                               
Department   of   Agriculture   (USDA)   Grade   Inspection   and                                                               
Certification, food safety  audits, export certification allowing                                                               
for the export  of plants outside of the U.S.,  Country of Origin                                                               
Labeling  (COOL), and  the Cooperative  Agricultural Pest  Survey                                                               
(CAPS).                                                                                                                         
                                                                                                                                
MS. HAVEMEISTER,  in response to Representative  Munoz, explained                                                               
that  the   division  deals   specifically  with   a  cooperative                                                               
agreement with the USDA, whereas  the Department of Environmental                                                               
Conservation (DEC)  does not.  Thus,  DNR and DEC do  not perform                                                               
any cross inspections.                                                                                                          
                                                                                                                                
REPRESENTATIVE MUNOZ related a story  about a farmer who was shut                                                               
down by DEC because the source  of the water used for washing the                                                               
farm's  cucumbers  was  undetermined.   She  asked  whether  such                                                               
inspection functions could be consolidated between DNR and DEC.                                                                 
                                                                                                                                
MS. HAVEMEISTER  said those  are two  separate functions  and the                                                               
Division of Agriculture does not currently do that portion.                                                                     
                                                                                                                                
2:12:38 PM                                                                                                                    
                                                                                                                                
MS. HAVEMEISTER  resumed her  presentation, explaining  that land                                                               
management  within  her  division includes  land  sales,  grazing                                                               
leases,  and agriculture  leases.   She  further  noted that  the                                                               
Agricultural Revolving Loan  Fund (ARLF), statutorily established                                                               
in AS 03.10.010  and operating for 57  continuous years, promotes                                                               
"the  more  rapid  development  of  agriculture  as  an  industry                                                               
throughout the state by means  of long-term, low-interest loans."                                                               
The types  of loans available  include short term,  chattel, farm                                                               
development, irrigation, product  processing, and clearing loans.                                                               
In 2010  the delinquency rate was  only 2.1 percent and  the cash                                                               
balances available  for loan  as of June  30, 2010,  totaled $4.7                                                               
million.   The value  of the  loan fund  is $22.8  million, which                                                               
includes  outstanding  loans,  assets,  and cash  balances.    In                                                               
response  to  Representative  Munoz,  Ms.  Havemeister  said  she                                                               
believes the  ARLF satisfies  the demand  that is  being received                                                               
from Alaska  farmers.  In  response to Representative  P. Wilson,                                                               
she said  she believes that  farmers are aware of  the division's                                                               
function [in regard to the availability of the ARLF].                                                                           
                                                                                                                                
2:15:04 PM                                                                                                                    
                                                                                                                                
MS. HAVEMEISTER, in response to  Co-Chair Seaton, stated that the                                                               
Board  of  Agriculture  and   Conservation  has  heavily  debated                                                               
whether  mariculture operations  qualify for  ARLF, although  the                                                               
division has not  yet received such an application.   She related                                                               
that   according  to   the  attorney   general's  last   opinion,                                                               
mariculture does fall  under the ARLF.  In  further response, she                                                               
said it is  her understanding that applications to  the ARLF from                                                               
mariculturists would be accepted.                                                                                               
                                                                                                                                
MS. HAVEMEISTER,  in response to  Representative P.  Wilson, said                                                               
she toured  the mariculture facility  in Homer last year  and the                                                               
facility is  aware of ARLF.   In  further response, she  said she                                                               
did not know  whether mariculturists in Southeast  Alaska know of                                                               
ARLF, but  offered to check in  this regard.  In  response to Co-                                                               
Chair Feige, she  agreed to also check  on whether mariculturists                                                               
operating in Prince William Sound are aware of ARLF.                                                                            
                                                                                                                                
2:16:39 PM                                                                                                                    
                                                                                                                                
MS.  HAVEMEISTER continued  her  presentation,  stating that  the                                                               
mission of  the Northern Latitude  Plant Materials  Center (PMC),                                                               
established in 1972,  is to "promote the  use of Alaskan-produced                                                               
agriculture  crops for  re-vegetation and  seed production."   In                                                               
response to  Co-Chair Seaton, she said  the PMC does not  at this                                                               
time do work related to trees or reforestation.                                                                                 
                                                                                                                                
MS. HAVEMEISTER reported  that the primary activities  of the PMC                                                               
include the  Foundation Seed Program,  the Certified  Potato Seed                                                               
Program,  the   Certified  Seed  Laboratory,  the   Native  Plant                                                               
Evaluation,  high latitude  germplasm research,  invasive species                                                               
management,  re-vegetation  technology and  design,  conservation                                                               
plant   technology,   seed   cleaning   and   conditioning,   the                                                               
Ethnobotany Teaching  Garden, and rural village  seed production.                                                               
The PMC  also provides training, outreach,  and publications, and                                                               
is a web conference hosting facility.                                                                                           
                                                                                                                                
MS.  HAVEMEISTER  elaborated  that   the  Certified  Potato  Seed                                                               
Program, established  in 1984, is industry  requested and driven.                                                               
It ensures  that pathogen tested  seed is available  to certified                                                               
seed  growers.    Prior  to  the  seed  program's  establishment,                                                               
growers routinely  had disease losses  of 30-50 percent,  but the                                                               
yearly losses today  are now minimal.  The  program also provides                                                               
field  certification  inspections,  which are  required  for  the                                                               
legal sale  of seed potatoes  in the state  of Alaska.   In 2009,                                                               
Alaska  potato  producers  harvested 137,000  hundred  weight  of                                                               
potatoes, with a value of $3.3 million.                                                                                         
                                                                                                                                
2:19:50 PM                                                                                                                    
                                                                                                                                
MS.  HAVEMEISTER  explained that  under  the  Invasive Weeds  and                                                               
Pests  Program a  strategic  plan has  been  developed.   Through                                                               
cooperative  efforts  projects  have been  initiated  around  the                                                               
state, and federal funds have  been secured for further projects.                                                               
In response  to Representative P.  Wilson, she said she  does not                                                               
know  the status  of the  invasive weeds  program on  the Tongass                                                               
National  Forest.    In response  to  Representative  Feige,  she                                                               
stated  that  whether  bison  in  the  Delta  Junction  area  are                                                               
considered an invasive species is being openly debated.                                                                         
                                                                                                                                
2:21:44 PM                                                                                                                    
                                                                                                                                
MS. HAVEMEISTER,  in response  to Representative  Dick, explained                                                               
that funding for the export of  Alaska seed potatoes to Japan was                                                               
through  the  Department  of   Commerce,  Community,  &  Economic                                                               
Development    under   the    Alaska   Manufacturing    Extension                                                               
Partnership.  The  program funds the University  of Alaska's lab,                                                               
which  enables the  export.   The producers  have partnered  with                                                               
Larson  Farms of  Idaho to  ship to  China.   Last week  in Delta                                                               
Junction 9  vans were loaded with  21 tons of potatoes  each.  In                                                               
further  response, Ms.  Havemeister  said there  is potential  to                                                               
this industry and that this has  been an ongoing debate in Juneau                                                               
for many  years.  This  is the most  that has ever  been exported                                                               
and she believes Larson Farms is  a viable partner because it has                                                               
the needed connections  in China along with  Alaska producers who                                                               
are willing to partner with  them.  In response to Representative                                                               
Gardner, Ms.  Havemeister elaborated that while  these are Alaska                                                               
seed potatoes,  it is  Larson Farms that  has partnered  with the                                                               
Chinese.   Thus, Larson Farms  is acting  as a broker  for Alaska                                                               
producers.                                                                                                                      
                                                                                                                                
2:23:59 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 2:23 p.m. to 2:28 p.m.                                                                       
                                                                                                                                
2:28:55 PM                                                                                                                    
                                                                                                                                
MS. HAVEMEISTER reported  that there were 680 farms  in Alaska in                                                               
2009.   They generated over  $31.9 million in cash  receipts from                                                               
900,000  acres  of agricultural  land.    She  added that  it  is                                                               
important to  note the average age  of an Alaskan farmer  is 56.2                                                               
years.  In response to  Co-Chair Seaton about bringing new people                                                               
into  agriculture,   Ms.  Havemeister  said  there   are  several                                                               
programs for youth.  One program,  based out of Fairbanks but not                                                               
affiliated  with the  division,  provides  training and  hands-on                                                               
experience.  The Division of  Agriculture has not [provided small                                                               
parcels  of  farm  lands  close to  population  centers  for  the                                                               
purpose of  bringing new people  into the  agriculture industry];                                                               
rather,  the  division  has provided  promotion,  education,  and                                                               
outreach.                                                                                                                       
                                                                                                                                
MS.  HAVEMEISTER  concluded  her   presentation  by  noting  that                                                               
Alaska's  primary crops  include  greenhouse nursery  production,                                                               
hay, specialty crops, potatoes, livestock, dairy, and barley.                                                                   
                                                                                                                                
2:31:20 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  surmised the Lower 48  is not a prime  market for                                                               
Alaska  agriculture   products  and  that  expansion   of  Alaska                                                               
agriculture industry will  have to be in  local and international                                                               
sales.    He  asked  what  the  division  has  done  to  help  in                                                               
international marketing efforts.                                                                                                
                                                                                                                                
MS.  HAVEMEISTER replied  that  in addition  to  the seed  potato                                                               
program  that  is  exporting  to   China,  the  division  has  an                                                               
inspector  who issues  phytosanitary certificates  to the  timber                                                               
industry.  This industry falls  under agriculture in the USDA and                                                               
it is exporting to China.   She pointed out that the division has                                                               
a very limited number of staff.   In response to another question                                                               
from  Co-Chair   Feige,  she  confirmed  there   is  interest  in                                                               
purchasing agricultural  land.  Since beginning  her tenure three                                                               
years ago every parcel  that has come up for sale  has sold.  She                                                               
added that  it is  a very  long and tenuous  process to  get land                                                               
surveyed and processed for sale.                                                                                                
                                                                                                                                
MS.  HAVEMEISTER,  in  response   to  Representative  P.  Wilson,                                                               
replied that  the division deals  with state land [as  opposed to                                                               
federal land].   In further  response, she explained that  to get                                                               
the land surveys  done the Division of  Agriculture works closely                                                               
with the  Division of  Mining, Land  and Water.   She  offered to                                                               
provide the  committee with further  information in  this regard.                                                               
In response  to Representative  Munoz, Ms.  Havemeister confirmed                                                               
that land sold for farming purposes retains a restricted title.                                                                 
                                                                                                                                
2:34:44 PM                                                                                                                    
                                                                                                                                
JOHN "CHRIS"  MAISCH, Director, Department of  Natural Resources,                                                               
Division of  Forestry, began by quoting  DNR's mission statement,                                                               
which is to "develop, conserve,  and maximize the use of Alaska's                                                               
natural   resources  consistent   with   the  public   interest."                                                               
Continuing,   he   said   the  Division   of   Forestry   creates                                                               
opportunities for Alaska's communities  and residents by focusing                                                               
on  its  primary  mission  to   "serve  Alaskans  through  forest                                                               
management and wildland fire protection."                                                                                       
                                                                                                                                
MR. MAISCH explained that the  division's role is to support jobs                                                               
in timber  harvesting and processing, sustainably  manage forests                                                               
on  state land,  protect water  quality and  fish habitat  during                                                               
forest operations  on all non-federal  lands through  the state's                                                               
Forest Practices  Act, and provide technical  forestry assistance                                                               
to communities,  private landowners, agencies,  fire departments,                                                               
and others.                                                                                                                     
                                                                                                                                
2:37:33 PM                                                                                                                    
                                                                                                                                
MR. MAISCH  reported that  the Fiscal  Year (FY)  2012 governor's                                                               
operating  request  for  the  division's  forest  management  and                                                               
development  component is  $6.8 million,  which would  support 45                                                               
full time, 5 part time, and  13 temporary employees.  This budget                                                               
would be through the state's  general fund, federal funds, timber                                                               
receipts, and other miscellaneous funds.                                                                                        
                                                                                                                                
MR. MAISCH  said the division's Fire  Management Program provides                                                               
wildland fire  protection on state, private,  and municipal lands                                                               
commensurate  with values  at risk.   This  program also  ensures                                                               
that the  division's wildland suppression resources  are ready to                                                               
safely  and  cost-effectively  fight  fire.    Additionally,  the                                                               
program  promotes  community  wildlife  protection  planning  and                                                               
hazard fuel reduction projects.   He noted that hazardous fuel in                                                               
the Interior is usually stands  of black spruce and white spruce.                                                               
On the Kenai Peninsula, grass  that has replaced the trees killed                                                               
by spruce bark beetles is a  flash fire hazard, especially in the                                                               
spring  when  the grass  is  dry.    He  further noted  that  the                                                               
division provides wildland fire training.                                                                                       
                                                                                                                                
2:40:19 PM                                                                                                                    
                                                                                                                                
MR.  MAISCH   explained  that   the  division's   statewide  Fire                                                               
Suppression  Program has  two components:   the  Fire Suppression                                                               
Preparedness Component with  an FY 2012 request  of $17.7 million                                                               
and  the Fire  Suppression  Activity Component  with  an FY  2012                                                               
request of $13.6 million.   This funding would come from Alaska's                                                               
general  fund, federal  funds, and  other  funds.   There are  33                                                               
full-time  year-round   employees  and  181   full-time  seasonal                                                               
employees.   He said if  the fire suppression component  runs out                                                               
of  money, the  governor's office  can declare  a disaster  which                                                               
then provides additional funds for fire suppression activities.                                                                 
                                                                                                                                
2:43:06 PM                                                                                                                    
                                                                                                                                
MR. MAISCH turned to the  five forest resources programs:  Forest                                                               
Management; Forest  Practices; Forest Stewardship  which provides                                                               
technical assistance to private  land owners; Forest Health which                                                               
deals  with   statewide  forest  health  issues;   and  Community                                                               
Forestry which works  directly with the urban  communities.  Many                                                               
Alaska  communities  are  Arbor  Day  Foundation  Tree  City  USA                                                               
communities,  all of  Alaska's military  bases  are certified  as                                                               
Tree City  USA facilities, and  two of Alaska's  universities are                                                               
certified under the Tree Campus USA program.                                                                                    
                                                                                                                                
MR. MAISCH  noted that there  are four fire  management programs:                                                               
Fire Preparedness,  Fire Suppression, State Fire  Assistance, and                                                               
Volunteer Fire Assistance.                                                                                                      
                                                                                                                                
2:44:43 PM                                                                                                                    
                                                                                                                                
MR.  MAISCH elaborated  on the  Forest  Management Program  which                                                               
manages  47 million  acres of  forest on  state lands  across the                                                               
state.    The  division  is  the lead  agency  for  planning  and                                                               
management  on the  Tanana Valley,  Haines,  and Southeast  state                                                               
forests.  He noted that  the division also administers the Forest                                                               
Practices Program which implements  the Alaska Forest Resources &                                                               
Practices  Act   (FRPA)  on   state,  municipal,   trust,  Native                                                               
corporation,  and  other private  lands  throughout  Alaska.   He                                                               
clarified that this  is not a permit program, but  rather a "one-                                                               
stop-shopping program" that enables a  private land owner to file                                                               
a  Detailed  Plan  of  Operation  (DPO)  when  the  landowner  is                                                               
planning to  conduct a forestry  operation.  The division  has 30                                                               
days  to  take action  on  a  DPO; if  no  action  is taken,  the                                                               
activity can proceed without the division taking action.                                                                        
                                                                                                                                
2:46:40 PM                                                                                                                    
                                                                                                                                
MR. MAISCH, in response to  Representative Wilson, explained that                                                               
a series of regulations, including  regulations for water quality                                                               
and fish habitat,  go along with the statute  that authorizes the                                                               
Forest  Resources Practices  Act.   Three agencies  participate -                                                               
the Department  of Environmental  Conservation (DEC),  the Alaska                                                               
Department of Fish & Game  (ADF&G), and the Department of Natural                                                               
Resources,  Division  of  Forestry  - and  each  agency  has  due                                                               
deference for its  area of expertise.  For example,  ADF&G is the                                                               
lead  agency on  fish issues.   The  Division of  Forestry is  in                                                               
charge of coordinating inspections by the three agencies.                                                                       
                                                                                                                                
2:47:42 PM                                                                                                                    
                                                                                                                                
MR.  MAISCH, in  response  to Representative  Kawasaki, said  the                                                               
actions taken by the division in  response to a DPO are to ensure                                                               
that  the proposed  activity meets  the standards  of the  Forest                                                               
Resources  Practices  Act.   For  example,  within the  Southeast                                                               
State Forest buffers are mandatory  along anadromous fish streams                                                               
on both public and private lands,  so maps must be submitted that                                                               
show in detail what the operator plans  to do.  The DPO must also                                                               
identify and  locate any anadromous fish  streams.  Additionally,                                                               
the division looks  at the DPO and conducts  field inspections to                                                               
ensure that the best management  practices embodied in the Forest                                                               
Resources  Practices  Act are  being  implemented  and are  being                                                               
effective.  He reiterated that it  is not a permit, but rather an                                                               
activity that  is allowed  as long  as it  is compliant  with the                                                               
best management  practices in the  act.  In further  response, he                                                               
clarified that  the division  is the lead  agency; it  copies the                                                               
DPO notices  to ADF&G  and DEC and  coordinates the  responses of                                                               
those agencies to  the operator.  Thus, the  operator only speaks                                                               
to one entity - the Division  of Forestry.  He stressed that this                                                               
is a good system that has worked very well.                                                                                     
                                                                                                                                
2:50:15 PM                                                                                                                    
                                                                                                                                
MR.  MAISCH noted  that  the  Board of  Forestry  is a  governor-                                                               
appointed  board   with  staggered   three-year  terms.     Board                                                               
representatives/interests are  in statute and include  the timber                                                               
industry, mining industry, fishing  industry, foresters, fish and                                                               
wildlife  scientists,  recreationists, Native  corporations,  and                                                               
environmentalists.  He said he  serves as ex-officio chair of the                                                               
board.  The  board reports to the legislature  annually about the                                                               
effectiveness of  the Forest Resources Practices  Act, whether it                                                               
is being  implemented, and whether  it is effective  in achieving                                                               
the objectives of the act.   He specified that it is an advisory,                                                               
not a regulatory, board.                                                                                                        
                                                                                                                                
MR. MAISCH, in regard to  the Fire Preparedness Program, said the                                                               
division  protects  152 million  acres.    That acreage  includes                                                               
almost all of  the roaded area of the state,  which is where most                                                               
Alaskans live.   The  division responds to  an annual  average of                                                               
500-600  fires; over  a  10-year  period an  average  of about  2                                                               
million  acres are  burned.   The years  2004 and  2005 were  the                                                               
state's first and third highest  years on record, and either 2007                                                               
or 2008  was the fourth  highest year  on record.   He reiterated                                                               
that the  Fire Preparedness Program  is responsible  for managing                                                               
wildland fire  on state, private,  and municipal land.   To carry                                                               
out the fire program in  Alaska, the division cooperates with the                                                               
U.S. Bureau of  Land Management Alaska Fire Service  and the U.S.                                                               
Forest Service, as well as structure fire departments.                                                                          
                                                                                                                                
2:53:08 PM                                                                                                                    
                                                                                                                                
MR.  MAISCH,  in  response to  Representative  Gardner,  said  he                                                               
attributes the increase in the number  of fires to changes in the                                                               
weather patterns,  especially in  Interior Alaska.   Summers have                                                               
been drier than what the state  used to have and the fire seasons                                                               
are  earlier and  longer.   For example,  May 2010  had a  record                                                               
number of more than 280 fires.                                                                                                  
                                                                                                                                
MR. MAISCH,  in response to  Representative Dick, noted  that the                                                               
Alaska Interagency  Wildland Fire Management Plan  identifies the                                                               
benefits  of  fire,  of  which  there are  many.    The  plan  is                                                               
structured around trying  to allow fire to play  its natural role                                                               
in the Alaska  ecosystem.  Fire turns over the  resource and most                                                               
of Alaska's  Interior wildlife species  are early-succession-type                                                               
species that depend on fire  to maintain that type of vegetation.                                                               
The plan  identifies areas where fire  can be allowed to  burn or                                                               
not be aggressively put out;  however, the division still manages                                                               
those  fires and  conducts  site protection.    For areas  around                                                               
communities and  places of infrastructure, the  division conducts                                                               
aggressive initial attack  to try to limit the size  of the fire.                                                               
This strategy  is partly a  fiscal issue because if  the division                                                               
tried to  extinguish every fire  or keep  every fire as  small as                                                               
possible, it would cost hundreds of millions of dollars.                                                                        
                                                                                                                                
2:55:41 PM                                                                                                                    
                                                                                                                                
MR.  MAISCH, in  response to  Co-Chair Feige,  said there  are no                                                               
plans  to contract  out  the division's  aviation  section.   The                                                               
division owns the two air  attack planes that provide the initial                                                               
air control  over a fire and  that are also the  lead planes when                                                               
air  tankers drop  retardant.   Those two  planes are  being sold                                                               
through a  broker to enable the  division to purchase two  new or                                                               
used aircraft on a different  platform that will provide for more                                                               
efficient operation.   The  division also  owns and  operates two                                                               
other  utility aircraft,  but otherwise  hires  from the  private                                                               
sector  all   the  other  necessary  aviation   assets,  such  as                                                               
helicopters.  In further response,  he said the division hopes to                                                               
purchase aircraft  replacements that are like  an Aero Commander,                                                               
which is a turbine twin engine platform.                                                                                        
                                                                                                                                
MR.  MAISCH  directed attention  to  a  map delineating  Alaska's                                                               
Wildland  Fire Protection  Areas.   He  explained  that the  U.S.                                                               
Bureau of Land  Management Alaska Fire Service  is the division's                                                               
partner and the  lead agency for the northern half  of the state;                                                               
the  Division  of Forestry  has  primary  responsibility for  the                                                               
[southern/southcentral/Aleutian chain] area;  and the U.S. Forest                                                               
Service  is  the  division's  partner and  the  lead  agency  for                                                               
[Prince William Sound and Southeast Alaska].                                                                                    
                                                                                                                                
2:58:27 PM                                                                                                                    
                                                                                                                                
MR. MAISCH  discussed three  current "hot topics."   He  said the                                                               
first hot  topic is  the governor's  proposed legislation  to add                                                               
23,181  acres  of  state-owned  land  to  the  newly  established                                                               
Southeast State  Forest.    The second  hot topic is  the state's                                                               
effort  in implementing  the 2008  Tongass  Land Management  Plan                                                               
(TLMP).  The state is an  official cooperating agency and is thus                                                               
working side-by-side with the U.S.  Forest Service to ensure that                                                               
the timber sales  offered under TLMP are economic  and follow the                                                               
conservation  strategy enumerated  in the  plan.   The third  hot                                                               
topic is the state's Personal  Use Firewood Program that provides                                                               
thousands of  cords of wood to  individual families, particularly                                                               
those  families  located  in Interior  and  Southcentral  Alaska.                                                               
People must  get the wood  themselves, but  it is supplied  at an                                                               
economical price.   The  2008 hike  in the cost  of oil  led more                                                               
people  to install  wood boilers,  which in  turn created  issues                                                               
regarding wood smoke particulate.                                                                                               
                                                                                                                                
3:01:21 PM                                                                                                                    
                                                                                                                                
MR.  MAISCH concluded  with  three success  stories.   First,  he                                                               
noted,  is the  Tok  biomass  boiler at  the  Tok Gateway  School                                                               
District, which  is off-setting  55,000 gallons  of fuel  oil and                                                               
operates  on approximately  40 acres  of  hazardous fuel  removal                                                               
annually.   He  directed attention  to a  related article  in the                                                               
committee  packet.    He  said the  program  is  successful,  and                                                               
another boiler like the  one in Tok will be built  in Delta.  The                                                               
division has worked  closely with the Alaska  Energy Authority on                                                               
this project,  and he expressed  gratitude for  the legislature's                                                               
funding of  AEA's Alternative  Energy Program.   He  relayed that                                                               
approximately  30,  or  13 percent,  of  the  alternative  energy                                                               
projects that have been funded are woody biomass projects.                                                                      
                                                                                                                                
MR.  MAISCH said  the  second  success story  is  the New  Growth                                                               
Initiative,  which tracks  new investments  in the  wood products                                                               
sector in Interior  Alaska.  He explained that there  is a large,                                                               
under-utilized allowable cut in  the Interior, and the initiative                                                               
advertises the  type of wood  that is  available and where  it is                                                               
located.   He announced  that a  new pellet  mill was  built last                                                               
year between North Pole and Fairbanks.   He said the facility was                                                               
between  a  $7-$12  million  investment,  and  it  employs  15-20                                                               
people.   He noted  that there  is further  information regarding                                                               
this initiative included in the committee packet.                                                                               
                                                                                                                                
MR. MAISCH  related that  the third success  story is  the Alaska                                                               
Wildland Firefighter  Academy, which was  initiated in 2010.   He                                                               
said this  is a  new approach, and  he offered  his understanding                                                               
that  39 of  the 40  students  graduated and  received 9  credits                                                               
toward an associate  degree in Fire Science at  the University of                                                               
Alaska Fairbanks  (UAF).   He said the  students spent  two weeks                                                               
"on the  fire line," and some  of the crew members  who graduated                                                               
are already working in that field.   Mr. Maisch said the division                                                               
is looking for ways to continue this program.                                                                                   
                                                                                                                                
3:05:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE noted  that there  are a  number of  small lumber                                                               
mills in the Matanuska-Susitna (Mat-Su)  area that rely on public                                                               
timber  sales to  provide feedstock  for their  mills, but  these                                                               
small mills  do not  know from  year to year  what the  supply is                                                               
going to  be.   He asked whether  there is any  way to  produce a                                                               
steady feedstock for  these mills with enough  advance notice for                                                               
the mills to be able to plan their investments.                                                                                 
                                                                                                                                
MR. MAISCH responded  that the division has a  5-year schedule of                                                               
timber  sales  published  biannually  that  attempts  to  do  the                                                               
aforementioned.   For  each sale,  the division  writes a  forest                                                               
land  use management  plan.   He  explained that  where there  is                                                               
state  forest, the  division  has  the ability  to  offer a  more                                                               
consistent program;  however, general  use land is  classified as                                                               
part of  an area planning process  for forestry intent.   He said                                                               
the amount of timber that can  be offered is sometimes limited by                                                               
staff.   He  expressed interest  in finding  out precisely  which                                                               
producers have what concerns.                                                                                                   
                                                                                                                                
3:08:50 PM                                                                                                                    
                                                                                                                                
MR.  MAISCH,  in  response to  Representative  Herron,  said  the                                                               
state's policy is to keep the  cut that comes off state lands in-                                                               
state  to be  used in  domestic manufacture;  however, the  state                                                               
cannot restrict  round log export  due to  statute.  He  said one                                                               
issue with  export is that  the round log is  approximately three                                                               
times more  valuable than "a  domestic log."   He said this  is a                                                               
complicated issue, but indicated that  the reason there are still                                                               
mills in  Alaska is because of  the state's efforts to  give what                                                               
timber it can to the mills.                                                                                                     
                                                                                                                                
3:10:42 PM                                                                                                                    
                                                                                                                                
MR.  MAISCH,  in  response  to  Representative  P.  Wilson,  said                                                               
Superior Pellet,  LLC is the  name of the private  sector company                                                               
in the Interior whose parent company  is based in Oklahoma.  Some                                                               
of  the  wood  is  being supplied  from  Northland  Wood's  waste                                                               
products,  which buys  a lot  of  its wood  from the  state.   He                                                               
indicated that  Superior Pellet  is trying to  make use  of lower                                                               
quality wood  that is unsuitable  for manufacturing  into lumber.                                                               
The company is still in a  start-up phase, he added.  In response                                                               
to a follow-up question, he  said the harvest is forest-wide, and                                                               
there  are  buffer  requirements  along the  Tanana  River.    He                                                               
relayed  that  currently  less  than 10  percent  of  the  annual                                                               
allowable  harvest  is  being  used.    With  the  mill  at  full                                                               
production, he  said, it would  need approximately 1,000  acres a                                                               
year, which would  be double the current harvest  size, but still                                                               
would be a small amount.                                                                                                        
                                                                                                                                
3:13:02 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
THOMAS  CRAFFORD,  Director,  Office   of  Project  Management  &                                                               
Permitting  (OPMP), Department  of  Natural Resources,  specified                                                               
that  one  of  OPMP's  core  services  is  the  coordination  and                                                               
integration  of state  and  federal  permitting requirements  for                                                               
large natural  resource development projects for  applicants that                                                               
voluntarily request  and pay for  this service.  The  second core                                                               
service  is  review and  comment  on  various federal  plans  and                                                               
actions to ensure  protection of the state's  interests under the                                                               
Alaska National Interest Lands Conservation  Act (ANILCA).  These                                                               
interests  include  resource  development,  wise  stewardship  of                                                               
state  resources,  and  continued opportunities  for  access  and                                                               
public use of federal lands.                                                                                                    
                                                                                                                                
3:17:22 PM                                                                                                                    
                                                                                                                                
MR. CRAFFORD,  in regard to private  sector development projects,                                                               
explained that OPMP  assigns a coordinator to  oversee the review                                                               
and  permitting process  of  the larger  scale  projects.   Large                                                               
scale  projects are  complex due  to the  many different  permits                                                               
that are required and OPMP's  coordination provides the developer                                                               
the benefit  of having a single  point of contact.   He said OPMP                                                               
deals with many kinds of  projects, including transportation, oil                                                               
and  gas, and  mining  projects, along  with  federal grants  and                                                               
ANILCA issues.   A Memorandum of Understanding  (MOU) between the                                                               
applicant  and  OPMP  provides  a  means for  OPMP  to  bill  the                                                               
applicant for  state agency  reviewers.   The MOU  also specifies                                                               
that there is no guarantee of  what the outcome of the permitting                                                               
process will be as a result of entering into this agreement.                                                                    
                                                                                                                                
MR. CRAFFORD added  that OPMP is currently  managing 17 different                                                               
MOUs  with  a  total  reimbursement   commitment  of  about  $4.4                                                               
million; this  commitment is an  estimated cumulative  budget for                                                               
these projects.  He noted that  OPMP is a small organization with                                                               
only 12  full-time positions  and 1 intern  position.   The full-                                                               
time positions  are filled by relatively  senior individuals, and                                                               
most of these individuals were appointed to their positions.                                                                    
                                                                                                                                
3:21:16 PM                                                                                                                    
                                                                                                                                
MR. CRAFFORD  discussed the mining projects  being coordinated by                                                               
OPMP.    He  said  "Greens  Creek"  is  currently  operating,  is                                                               
renewing  its permits,  and  is seeking  to  expand its  tailings                                                               
disposal facility.  In response  to Co-Chair Seaton, he explained                                                               
that  a  currently  operating  mine will  still  have  some  OPMP                                                               
oversight  because  permits  need  renewal  and  mining  projects                                                               
typically get modified.  In  further response to Co-Chair Seaton,                                                               
he  confirmed  that  a  mine  could elect  to  depart  from  OPMP                                                               
coordination, but that up to this  point none have because of the                                                               
benefit of having coordinated state involvement.                                                                                
                                                                                                                                
3:25:12 PM                                                                                                                    
                                                                                                                                
MR.  CRAFFORD continued  his review  of  mining projects,  noting                                                               
that "Pogo Gold  Mine" is currently operating and  in the process                                                               
of  renewing  permits.   "Red  Dog"  is currently  operating  and                                                               
recently went through a major  permitting effort to allow for the                                                               
transition of  mining from  the original  ore body  to a  new ore                                                               
body.    "Fort  Knox"  is  in the  process  of  renewing  several                                                               
permits, the  most significant  being a  dam raise.   "Kensington                                                               
Gold Mine"  is in its first  year of operation.   "Rock Creek" is                                                               
currently in temporary closure status  while the operator decides                                                               
whether to  sell the  project, re-open  it, or  permanently close                                                               
it.  "Chuitna Coal Project" is  in full coordination with OPMP as                                                               
it  goes through  the National  Environmental  Policy Act  (NEPA)                                                               
process for a Supplemental  Environmental Impact Statement, which                                                               
is  expected  to  be  completed  toward  the  end  of  2011,  and                                                               
permitting decisions anticipated sometime in 2012.                                                                              
                                                                                                                                
3:27:19 PM                                                                                                                    
                                                                                                                                
MR.  CRAFFORD, in  response to  Co-Chair  Seaton, confirmed  that                                                               
coordination by  OPMP does not  change any of the  standards that                                                               
are required  by a particular permit.   He pointed out  that OPMP                                                               
itself  has  no permitting  authority,  it  only coordinates  the                                                               
process.   It is the  agencies having the  regulatory authorities                                                               
that are responsible for making those permitting decisions.                                                                     
                                                                                                                                
MR. CRAFFORD resumed his review  of mining projects, stating that                                                               
the "Pebble Project" is currently  in a pre-application phase and                                                               
is  still  conducting exploration;  it  is  unknown if  and  when                                                               
applications might  be submitted, although  it might be  in 2012.                                                               
In response to  Representative P. Wilson, he  confirmed that this                                                               
project is still  in exploration and no  development designs have                                                               
yet been submitted.   Conceptual designs were  submitted when the                                                               
project  applied for  some water  rights in  2006.   However, the                                                               
project  subsequently  asked  that  those  water  rights  not  be                                                               
adjudicated and all of that has been on hold since then.                                                                        
                                                                                                                                
3:30:12 PM                                                                                                                    
                                                                                                                                
MR. CRAFFORD said "Donlin Creek" is  a large gold project that is                                                               
currently  in   pre-application.    He  noted   that  the  energy                                                               
requirements  for this  project  are  substantial and  difficult.                                                               
Another difficulty with this mine's  development and operation is                                                               
the use  and the  traffic that  it would  cause on  the Kuskokwim                                                               
River.  He anticipated that  permit applications for this project                                                               
will occur later in 2011.                                                                                                       
                                                                                                                                
MR.  CRAFFORD  related  that  "Livengood"  is  an  advanced-stage                                                               
exploration project  that is currently  working with  agencies on                                                               
baseline studies; applications  are likely a few years  away.  He                                                               
said  the  "Jumbo   Dome  Project"  is  currently   in  the  pre-                                                               
application  phase  and OPMP  is  working  with that  project  on                                                               
baseline  data   and  preparatory  work  for   the  submittal  of                                                               
applications.  In response to  Co-Chair Seaton and Representative                                                               
P. Wilson, respectively,  he stated that the  project is adjacent                                                               
to the "Usibelli operations" at Healy and it is a coal property.                                                                
                                                                                                                                
MR. CRAFFORD  said the "Niblack  Project" on  southeastern Prince                                                               
of  Wales Island  is in  on-going exploration  for copper,  lead,                                                               
zinc, and  gold.   "Nixon Fork"  is a  small, previously-operated                                                               
gold mine  in the Interior and  a new operator is  seeking to re-                                                               
open that  project.   He added  that OPMP  and the  state's large                                                               
mine  team  are  also  involved  in  monitoring,  reviewing,  and                                                               
commenting on  Canadian mine projects that  have potential trans-                                                               
boundary  implications  for  Alaska.   He  pointed  out  that  no                                                               
permitting is involved with the Canadian mines, just review.                                                                    
                                                                                                                                
3:34:01 PM                                                                                                                    
                                                                                                                                
MR. CRAFFORD, in response to  Co-Chair Feige, elaborated that the                                                               
Canadian  projects   include  the  "Tulsequah  Project"   up  the                                                               
Tulsequah  tributary  to  the  Taku   River,  the  "Galore  Creek                                                               
Project"  up the  Stikine  River, "Shaft  Creek"  farther up  the                                                               
Stikine  River, and  the "KSM  Project" up  the Unuk  River.   He                                                               
understood that the  KSM Project would have  the tallest headwall                                                               
of any mine  in North America and perhaps anywhere  in the world.                                                               
In response  to Co-Chair Seaton,  he defined "headwall"  as being                                                               
the tallest wall on  the side of a pit, and  that he believes the                                                               
TSM headwall would be about 1.4  kilometers tall.  In response to                                                               
Co-Chair  Feige,  Mr.  Crafford   said  the  Canadian  mines  are                                                               
generally copper,  molybdenum, and gold properties.   In response                                                               
to Representative P. Wilson, he said  the KSM Project would be an                                                               
open pit  mine located immediately  at the  toe of a  glacier and                                                               
that it would have acid-draining potential into Alaska.                                                                         
                                                                                                                                
3:37:20 PM                                                                                                                    
                                                                                                                                
MR.  CRAFFORD, in  response to  Co-Chair  Seaton, confirmed  that                                                               
OPMP  is following  the KSM  mine because  no agencies  in Alaska                                                               
have permitting  authority and OPMP  is ensuring  protection from                                                               
things coming  into the country.   He said the  Alaska Department                                                               
of  Fish &  Game's Alaska  Sustainable Salmon  Fund is  providing                                                               
funding from  federal sources for the  involvement and engagement                                                               
of  state  agencies  with  OPMP's   coordination.    The  state's                                                               
opportunity to engage  with the Canadian agencies  is through the                                                               
Boundary Waters  Treaty Act  and other  international agreements,                                                               
such  as  the  Migratory  Bird   Treaty  Act.    In  response  to                                                               
Representative P.  Wilson, Mr. Crafford affirmed  that Alaska has                                                               
some say  in what happens  upstream from  the state, but  it does                                                               
not issue  any permits and  therefore does not have  any control.                                                               
In further response to Representative  P. Wilson, he complimented                                                               
the  Canadian agencies  for their  hospitality and  for affording                                                               
OPMP a seat at the table throughout the review process.                                                                         
                                                                                                                                
3:39:50 PM                                                                                                                    
                                                                                                                                
MR. CRAFFORD next  reviewed the energy projects in  which OPMP is                                                               
involved.  He  said the "Cook Inlet Natural  Gas Storage Project"                                                               
proposes  to  develop  a  natural gas  storage  facility  in  the                                                               
"Cannery Loop  Unit" at the  mouth of the  Kenai River.   Many of                                                               
the permitting  decisions are complete, the  project is currently                                                               
under review by the Regulatory  Commission of Alaska, and is also                                                               
awaiting  the  resolution  of  some  issues.   He  said  OPMP  is                                                               
involved with  Outer Continental  Shelf (OCS)  leasing, something                                                               
which is  of real concern  for keeping the  Trans-Alaska Pipeline                                                               
System  operating.     The  Office  of   Project  Management  and                                                               
Permitting  is also  engaged in  the National  Petroleum Reserve-                                                               
Alaska Integrated  Activity Plan that  is being conducted  by the                                                               
U.S. Bureau of Land Management.                                                                                                 
                                                                                                                                
MR. CRAFFORD  said OPMP  is coordinating  the state's  review and                                                               
comment on  the "ExxonMobil Point  Thomson Gas  Cycling Project."                                                               
In response  to Co-Chair Seaton,  he deferred to the  Division of                                                               
Oil  &  Gas  for  answering any  questions  about  litigation  or                                                               
negotiation on  Point Thomson unitization and  leases.  Returning                                                               
to his  review of energy  projects, Mr. Crafford said  "Shell" is                                                               
involved  in  an Environmental  Impact  Statement  (EIS) for  its                                                               
proposed  OCS exploration  off the  North  Slope.   Additionally,                                                               
OPMP is  involved in the  "BP Liberty Development  and Production                                                               
Project."   In response  to Co-Chair  Seaton, he  understood that                                                               
BP's  decision   to  reassess  this   project  was   an  internal                                                               
engineering and decision-making process.                                                                                        
                                                                                                                                
3:44:44 PM                                                                                                                    
                                                                                                                                
MR. CRAFFORD  turned to the transportation  projects that involve                                                               
OPMP.   He said the  final EIS/Record  of Decision (ROD)  for the                                                               
"Northern Rail  Extension Project"  has been  issued and  OPMP is                                                               
now coordinating  the processing of  state permits for  the first                                                               
phase of  this project.   Responding to Representative  Feige, he                                                               
offered his understanding that  the U.S. Environmental Protection                                                               
Agency's (EPA)  opposition to  a bridge  across the  Tanana River                                                               
has  created a  "bump in  the road"  in the  project's permitting                                                               
process.   The  EPA's opposition  is because  at that  particular                                                               
location the  river is  considered to  have Aquatic  Resources of                                                               
National Importance  (ARNI).   This is an  instance in  which the                                                               
state and the EPA have been bumping heads, he added.                                                                            
                                                                                                                                
MR. CRAFFORD,  in response to  Representative P. Wilson,  said he                                                               
could  not state  the average  number  of permits  that would  be                                                               
needed for  most projects  because the suite  of permits  and the                                                               
number of  permits varies so much  from project to project.   For                                                               
example,  transportation  projects  and access  roads  associated                                                               
with  any   of  the  aforementioned   projects  can   require  an                                                               
individual permit for each stream crossing.                                                                                     
                                                                                                                                
3:47:25 PM                                                                                                                    
                                                                                                                                
MR. CRAFFORD reported that the  draft EIS for the "Port MacKenzie                                                               
Rail Extension Project" has been  issued and OPMP is awaiting the                                                               
Final  EIS/ROD  while  continuing   to  work  on  pre-application                                                               
coordination  with  the  state  and  federal  agencies  that  are                                                               
involved.   He noted  that OPMP has  been coordinating  the "King                                                               
Cove/Izembek Land Exchange and Road  EIS" for a lengthy period of                                                               
time.    Regarding  the  Knik   Arm  Bridge  and  Toll  Authority                                                               
(KABATA), he said  the final EIS came out in  2008 and the Record                                                               
of Decision was anticipated in  2010; thus, OPMP's involvement in                                                               
this project has declined.                                                                                                      
                                                                                                                                
MR.  CRAFFORD,  in  regard  to  other  activities  that  OPMP  is                                                               
involved  in, noted  that  OPMP has  two  employees engaged  with                                                               
federal  agencies  on  issues  related  to  the  Alaska  National                                                               
Interest  Lands Conservation  Act (ANILCA).   In  response to  an                                                               
observation by Co-Chair  Feige that the rate  of federal employee                                                               
turnover is high,  he said training on ANILCA is  provided to new                                                               
federal  employees  and  any  other   interested  people  by  the                                                               
Institute  of Social  and Economic  Research  (ISER); those  OPMP                                                               
coordinators   involved  with   the  state's   input  on   ANILCA                                                               
participate in providing this training.                                                                                         
                                                                                                                                
3:50:55 PM                                                                                                                    
                                                                                                                                
MR. CRAFFORD  related that OPMP's  workload for  coordinating the                                                               
Endangered Species Act (ESA) is  increasing due to the listing of                                                               
new  ESA species  and the  designation of  critical habitat.   In                                                               
regard to  lands managed  by the U.S.  Bureau of  Land Management                                                               
(BLM), he  explained that the  agency uses a  Resource Management                                                               
Plan (RMP)  as its management  tool.   The RMP's for  various BLM                                                               
lands in  Alaska are  periodically revised and  the state  has an                                                               
opportunity  to comment  on these  plans, which  are done  via an                                                               
EIS.   For each of  these plans, an OPMP  coordinator coordinates                                                               
and consolidates  the comments of  the state's  various agencies.                                                               
He said  there are  a number  of issues common  to many  of these                                                               
plans, including "d(1) withdrawals"  established under ANILCA and                                                               
U.S. Secretary Salazar's order regarding "wild lands."                                                                          
                                                                                                                                
3:54:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON observed  that other  issues being  addressed by                                                               
OPMP include the Exxon Valdez  oil spill and restoration, federal                                                               
grant programs, Tongass National  Forest coordination, and health                                                               
impact assessments.                                                                                                             
                                                                                                                                
MR.  CRAFFORD,  in response  to  Representative  P. Wilson,  said                                                               
[newly appointed]  DNR deputy commissioner  Ed Fogels used  to be                                                               
the person responsible for  Tongass National Forest coordination,                                                               
and questions about the Tongass could be directed to Mr. Fogels.                                                                
                                                                                                                                
MR.  CRAFFORD  pointed out  that  health  impact assessments  are                                                               
becoming a part of the permitting  sphere in Alaska.  For private                                                               
sector  major  development projects,  the  idea  is that  greater                                                               
attention should  be paid to  an evaluation of  potential impacts                                                               
to human  health as a consequence  of developments.  He  said the                                                               
state is  attempting to get  in front  of this growing  effort so                                                               
that such assessments do not spiral out of control.                                                                             
                                                                                                                                
3:56:44 PM                                                                                                                    
                                                                                                                                
MR. CRAFFORD, in response to  Representative P. Wilson, confirmed                                                               
that health impact assessments  would include addressing diseases                                                               
that  could  be caused  by  development  projects.   However,  he                                                               
continued,  concerns have  been  raised that  the  scope of  such                                                               
assessments could get  out of control and include  such things as                                                               
how a person's  diet might change as a result  of being employed,                                                               
or  that a  person might  smoke more  cigarettes as  a result  of                                                               
being  employed.   In response  to  Co-Chair Feige,  he said  the                                                               
concept of health impact assessments  initially came about from a                                                               
public health physician affiliated  with the Alaska Native Tribal                                                               
Health Consortium  and other organizations.   As a  result, there                                                               
is now  a position in this  regard in the Department  of Health &                                                               
Social Services.   In response  to Representative P.  Wilson, Mr.                                                               
Crafford confirmed that  educating employees could be  one of the                                                               
outcomes  of an  assessment.   For OPMP,  however, it  is a  pre-                                                               
permitting  assessment of  the health  of the  state's population                                                               
prior to  permitting, what the  concerns might be, and  how those                                                               
concerns  might  be  addressed  as  the  project  moves  forward.                                                               
Educating employees could be a  consequence of this attention, he                                                               
allowed, but not necessarily a part of the effort.                                                                              
                                                                                                                                
4:01:10 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  related that farmers  in the Delta  Junction area                                                               
are looking  for more help  than the Division of  Agriculture has                                                               
been  able to  provide.   He  further related  that farmers  have                                                               
discussed whether it  would be appropriate to  either elevate the                                                               
division  into its  own department  or move  the division  to the                                                               
Department   of  Commerce,   Community  &   Economic  Development                                                               
(DCCED).   He  asked for  Commissioner Sullivan's  comments about                                                               
how farmers could be better served.                                                                                             
                                                                                                                                
COMMISSIONER SULLIVAN  responded that at  the moment he  does not                                                               
advocate for moving  the division because he first  wants to hear                                                               
directly from the  Delta Junction farmers and wants to  get up to                                                               
speed on Alaska's agricultural issues in general.                                                                               
                                                                                                                                
CO-CHAIR SEATON noted that the  statewide board for Alaska's soil                                                               
and water  conservation districts  has been  unable to  meet with                                                               
the DNR commissioner for four  years.  He encouraged Commissioner                                                               
Sullivan to look carefully at  that program, especially since two                                                               
of  the  districts have  closed  over  the  past few  months  and                                                               
therefore the vehicle for making  contact with farmers is rapidly                                                               
fading into oblivion.   He expressed his  support for sustainable                                                               
agriculture in Alaska  as a means for providing  jobs and keeping                                                               
people within Alaska's communities.                                                                                             
                                                                                                                                
COMMISSIONER  SULLIVAN  said he  looks  forward  to working  with                                                               
legislators and forming a partnership to get things done.                                                                       
                                                                                                                                
4:07:16 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Resources Standing Committee meeting was adjourned at 4:07 p.m.                                                                 

Document Name Date/Time Subjects
OPMP Overview 1-18-2011.pdf HRES 1/19/2011 1:00:00 PM
DOF Overview 1-18-2011.pdf HRES 1/19/2011 1:00:00 PM
DOF Tok School Wood Energy Article 11-16-10.pdf HRES 1/19/2011 1:00:00 PM
DNR ORG CHART 11.1.10.pdf HRES 1/19/2011 1:00:00 PM
DOA Overview 1-18-2011.pdf HRES 1/19/2011 1:00:00 PM