Legislature(2023 - 2024)SENATE FINANCE 532
04/12/2023 01:00 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB87 | |
| SB67 | |
| SB104 | |
| SB114 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 67 | TELECONFERENCED | |
| + | SB 87 | TELECONFERENCED | |
| + | SB 104 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 114 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
April 12, 2023
1:06 p.m.
1:06:58 PM
CALL TO ORDER
Co-Chair Olson called the Senate Finance Committee meeting
to order at 1:06 p.m.
MEMBERS PRESENT
Senator Donny Olson, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Jesse Kiehl
Senator Kelly Merrick
Senator David Wilson
MEMBERS ABSENT
Senator Lyman Hoffman, Co-Chair
ALSO PRESENT
Senator Jesse Bjorkman, Sponsor; Laura Achee, Staff,
Senator Jesse Bjorkman; Alison Arians, Deputy Director,
Division of Forestry and Fire Protection, Department of
Natural Resources; Kelsey Schober, Senior Policy Advisor,
The Nature Conservancy of Alaska; Cathy Schlingheyde,
Staff, Senator Jesse Kiehl; Andy Mills, Special Assistant
and Legislative Liaison, Department of Transportation and
Public Facilities; Senator Forrest Dunbar, Sponsor; Arielle
Wiggin, Staff, Senator Forrest Dunbar; Nikole Nelson,
Executive Director, Alaska Legal Services Corporation;
Nancy Meade, General Counsel, Alaska Court System; Ken
Alper, Staff, Senator Donny Olson; Senator Bill
Wielechowski, Sponsor.
PRESENT VIA TELECONFERENCE
Rodney Dial, Mayor, Ketchikan Gateway Borough, Ketchikan;
Joe Young, Owner, Young's Timber Inc., Tok; Patti Saunders,
Alaska Community Action on Toxics, Anchorage; Mike Craft,
Self, Fairbanks; Justin Mack, Secretary Treasurer, Alaska
Professional Firefighters Association, Anchorage; Dyani
Chapman, Alaska Environment, Anchorage; Lesa Hollen, Self,
Anchorage; Margaret Tarrant, Self, Anchorage; Sandra
Moller, Director, Division of Community and Regional
Affairs, Department of Commerce, Community and Economic
Development.
SUMMARY
SB 67 PFAS USE FIREFIGHTING
SB 67 was HEARD and HELD in committee for further
consideration.
SB 87 LUMBER GRADING PROGRAM
SB 87 was HEARD and HELD in committee for further
consideration.
SB 104 CIVIL LEGAL SERVICES FUND
SB 104 was HEARD and HELD in committee for
further consideration.
SB 114 OIL & GAS PRODUCTION TAX; INCOME TAX
SB 114 was HEARD and HELD in committee for
further consideration.
Co-Chair Olson discussed housekeeping.
SENATE BILL NO. 87
"An Act relating to a lumber grading training program
and lumber grading certificates; relating to use of
lumber graded and certified by a person holding a
lumber grading training program certificate; and
providing for an effective date."
1:08:24 PM
SENATOR JESSE BJORKMAN, SPONSOR, read the title of the bill
and offered a sponsor statement:
Senate Bill 87 would create a local lumber grading
program in Alaska Statute to allow dimensional lumber
produced in the state to be graded by locally trained
Alaskans and then used in some residential
construction applications. Currently, dimensional
lumber used in construction must be graded and stamped
in order to meet lender requirements and building
codes. However, the grading process is expensive, and
most Alaska sawmill operators do not produce enough
lumber to cover grading costs.
Under SB 87, locally milled dimensional lumber that
conforms to DNR's substitute equivalents for agency
grading standards consistent with Number 2 and better,
Stud and Number 3 grades could be sold directly to the
end user or a contractor for use in residential
structures with up to three units. This will create
economic opportunities for small businesses, provide
an opportunity for Alaskans to purchase local
products, and perhaps offer building materials at a
lower cost than dimensional lumber from the lower 48.
It could also help address Alaska's housing shortages
across the state, which are made worse by the
significant increase in the cost of construction
materials and lag time due to supply chain issues and
encourage higher value-added use of materials
harvested from forest thinning and hazardous fuels
reduction projects that would otherwise be piled and
burned.
A local lumber grading program would lower the barrier
for entry to create new sawmills. These sawmills can
serve as a catalyst to increase investment in forest
management and help build the timber sector statewide.
This will result in permanent, stable, family-wage
jobs in rural communities and villages, and strengthen
and diversify local economies. A larger timber sector
in turn can provide the additionality needed for
creating and selling forest carbon offset projects,
adding further investment and revenues to
the timber sector.
1:12:11 PM
Senator Bjorkman continued his testimony. He discussed the
high cost of lumber in rural communities. He noted support
for the legislation in the building as well as within the
lumber industry.
1:14:23 PM
LAURA ACHEE, STAFF, SENATOR JESSE BJORKMAN, introduced
herself and discussed a Sectional Analysis (copy on file):
SB 87 Ver. A: Lumber Grading Program Sectional
Analysis Section 1: Adds new statutes to AS 41.17
directing the Department of Natural Resources Division
of Forestry and Fire Protection to establish a local
lumber grading training program for conservative
grading standards established by DNR. It specifies the
frequency of the courses and directs the division to
identify the content of courses, qualifications for
instructors, and requirements for completion. The
section also provides guidance for issuing
certificates, specifies the duration of the
certificate, defines exceptions for certification
without taking a training course, and specifies how a
certificate may be revoked.
The section also adds new statutes to AS 41.17 that
allow for the use of locally graded lumber in
residential construction of single homes, duplexes, or
triplexes. The new language allows an individual
holding a lumber grading certificate to grade and sell
lumber that they have produced directly to a person
constructing a residence or a contractor and specifies
the documentation the seller must provide. The
language also provides a building inspector the
authority to approve, conditionally approve, or reject
the lumber for use in a residence.
Section 2: Provides an immediate effective date.
1:16:24 PM
ALISON ARIANS, DEPUTY DIRECTOR, DIVISION OF FORESTRY AND
FIRE PROTECTION, DEPARTMENT OF NATURAL RESOURCES, discussed
a presentation entitled "SB 87 - Local Lumber Grading"
(copy on file).
1:17:07 PM
Ms. Arians looked at slide 2, "Grade Stamped Lumber":
• Grade Stamped lumber allows the purchaser to know
the wood meets a quality standard
• Grading agencies such as Western Wood Products
Association (WWPA) publishes the Western Lumber
Grading Rules for appearance grading
• Grading rules are accredited by the American Lumber
Standards Committee (ALSC)
• Members of WWPA receive mill training, quality
assurance (QA), market analysis, and professional
development
• Small mill operators find it economically
challenging to become a member of these types of
associations
Ms. Arians discussed lumber grading practices. She relayed
that appearance grading was when a piece of wood was bent
until broken to determine the strength of the wood. She
stressed that membership in grading agencies could be
prohibitively expensive for smaller mills.
1:19:17 PM
Ms. Arians spoke to slide 3, "Cost of grading agency
membership in Alaska":
• Membership Dues + Monthly Site Inspections +
Inspector Travel Costs ˜$2200/month
• Membership options for small mill operators:
- Only pay for membership fees during active
periods
- Stockpile milled material and bring in an
inspector when there is enough to justify the
travel costs
• Difficult for small mills to produce enough volume
to justify these costs and remain profitable
Ms. Arians stated that small mills would not have to pay
month to month and could be selective about membership
options. However, grading costs were high for smaller mills
producing a limited volume of wood. She relayed that
Northland Wood and Viking were the two mills in Alaska that
were members of the WWPA.
1:20:29 PM
Co-Chair Olson asked where the two WWPA members were
located.
Ms. Arians relayed that Northland Wood was in the Interior
and Viking was on Prince of Whales Island.
1:20:43 PM
Ms. Arians referenced slide 4, "What is a Local Use Lumber
Program?":
• It is state law/regulation in seven states allowing
non graded/stamped locally produced dimensional lumber
in some construction applications
• It is often an exemption to a building code that
requires grade stamped lumber
• It is focused on small mill operators providing
opportunities for them to enter home construction
markets
Ms. Arians shared that building homes offered structural
redundancy and predictability.
1:21:53 PM
Co-Chair Olson asked about the lumber from mills and
whether the lumber was 2x4 and 4x4, or larger pieces of
wood.
Ms. Arians relayed that a list of wood products would be
addressed later in the presentation.
1:22:34 PM
Ms. Arians turned to slide 5, "What is a Local Use Lumber
Program?":
• It includes a training program for small mill
operators on grading their own lumber and includes a
recertification schedule
• Because of the code exemption, it allows for
traditional home construction financing
• Gives building inspectors an opportunity to inspect
and reject the wood if necessary
Ms. Arians said that if a person currently wanted to build
a home, they could use cash to buy lumber but would not be
able to get a loan. The bill would allow for a loan.
1:24:00 PM
Ms. Arians considered slide 6, "What is a Local Use Lumber
Program?":
• Local use lumber must be sold to the end user or the
contractor building the home
• Most states only allow residential (1 3 family
home) construction as well as outbuildings
• Mill operator must take and pass a grading course
• Certification only lasts for 5 years
• Mill operator provides a certificate with the local
lumber
Only applies to softwood
1:25:06 PM
Co-Chair Olson asked whether there was any place in the
state that milled hard wood.
Ms. Arians thought there were mills that made hardwood for
cabinets and flooring but not dimensional lumber.
1:25:34 PM
Ms. Arians displayed slide 7, "Why is this program needed
in Alaska?":
• Wood prices have increased dramatically for home
construction
National Association of Home Builders notes
wood prices add $36k to new single family home
construction
Alaska Housing Finance Corporation cites high
cost of construction as a reason new building
permits fell 15%
• Canadian import tariffs on softwood were raised to
17.99% in early 2022
Alaska imports ~$20 million annually in wood
products from Canada (Canadian Trade Commission)
• Forest Management
Salvage harvest of beetle-killed trees less
than 4 years past mortality
Increase forest management opportunities for
private landowners
• Increase economic activity in rural communities
• Increase milling capacity
1:27:18 PM
Ms. Arians highlighted slide 8, "Mill Capacity and
Production in Alaska," which showed a graph of dimensional
lumber production capacity in Alaska. She noted that the
graph was sourced from the United States Forest Service
Southeast Alaska mill survey. The graph showed how much
capacity the state had in the past, how much was still
available, and how much could be available in the future.
1:27:54 PM
Ms. Arians looked at slide 9, "Grading Agency lumber
standards," which showed a table with categories of lumber
and grades of lumber. She said that the program would train
people in the categories of light framing, stud, structural
light framing, and joists and planks. The training covered
the scope of materials for smaller, residential homes.
1:29:11 PM
Ms. Arians addressed slide 10, "Alaska Local Use Lumber -
Substitute Equivalent Grades," which showed a table of
lumber grades. The grades included Number 2 and Better,
Stud, and Number 3. The one-day class would cover these
three grades.
1:29:57 PM
Ms. Arians advanced to slide 11, "Alaska Training and
Certification":
• One day free class focusing on visually grading
lumber to the three Alaska grades.
o Issuance of Alaska Local Use Lumber handbook
o Issuance of Air-Drying Best Practices document
• Offered at least annually in Southeast, Southcentral
and Interior
• Recertification required every five years
• Certification issued to the person, not the mill
1:30:55 PM
Senator Wilson wondered whether the department had already
implemented a one-day training course to gauge
effectiveness of the program.
Ms. Arians relayed that DNR was modelling its program after
what was done in the state of Wisconsin, which was like the
proposal in the bill and had proven successful in the state
of Wisconsin.
1:32:13 PM
Ms. Arians looked at slide 12, "Selling the lumber (special
conditions)":
• Mill owner/operator sells the lumber directly to the
end user or to the contractor building the home
• Lumber sale must include documentation that
describes the 5 designations (grade, species, moisture
content, surface condition, size)
• Lumber sale must include a copy of the mill owner's
certification with the Alaska Local Use Lumber program
• Building inspector may refuse the lumber
Ms. Arians said that builders would be encouraged to reach
out to inspectors early in the process.
Ms. Arians showed slide 13, "Thank you!":
Jeremy Douse
Northern Region Forester
Alaska Division of Forestry And Fire Protection
Alaska Department of Natural Resource
907.451.2670
jeremy.douse@alaska.gov
http://forestry.alaska.gov/
https://forestrymaps-soa-dnr.hub.arcgis.com/
1:33:29 PM
Senator Kiehl asked how tall the residential units could
be.
Ms. Arians replied that she was not sure of the specific
height. She offered to get back to the committee with the
information.
Senator Kiehl wondered about graders being limited to
grading the products in their own mills and not that of
other mills.
Ms. Arians thought that the benefit of mill owners grading
only their own wood gave them a deeper knowledge of the
wood they were selling. She said that mill owners could pay
for someone else to come in and grade their wood, but that
grading their own wood offered integrity of product and
saved money.
Senator Bjorkman interjected that through the program was
like other state programs in which people could sell the
products they produced. He thought Alaska had the advantage
of having less species of trees, which provided for less
complexity. Further, the state had wood that was slow-
growing and strong, despite not being hardwood. He cited
that the spruce under discussion was most recently used in
helicopter rotors. He said that when people attested to the
quality of wood that they produced themselves it
highlighted the quality of the product.
1:37:33 PM
Co-Chair Olson asked what kind of money could be saved by
using locally harvested wood.
Senator Bjorkman thought that local production helped to
eliminate transportation costs for materials.
1:38:59 PM
Co-Chair Olson OPENED public testimony.
1:39:10 PM
KELSEY SCHOBER, SENIOR POLICY ADVISOR, THE NATURE
CONSERVANCY OF ALASKA, spoke in support of the bill. She
testified that a critical component of community
sustainability was a sustainable and regenerative economy.
She noted a report by her organization from 2021, that
explored economic opportunities for her region. She said
that one of the opportunities identified by the report was
a sustainable timber market. He said that the bill would
ensure that lumber harvests from young growth timber would
meet a certifiable standard and that the workforce would be
available to create that certifiable standard. She stated
that supporting the implementation of a lumber standard
would help to move the industry forward.
1:41:40 PM
RODNEY DIAL, MAYOR, KETCHIKAN GATEWAY BOROUGH, KETCHIKAN
(via teleconference), testified in support of the bill. He
stated that the borough was facing a housing crisis;
affordability and availability were hindering economic
growth. He believed that the proposed program was important
to increase the availability of lumber, particularly when
the supply chain was strained. He spoke of the recent high
prices of lumber in Ketchikan. He noted the long history of
lumber mills and sawmills in the area. He felt that the
bill would facilitate local access to local lumber, support
new housing, and create jobs.
1:43:47 PM
JOE YOUNG, OWNER, YOUNG'S TIMBER INC., TOK (via
teleconference), testified in support of the bill. He
relayed that he had been in business since 1993, producing
a wide range of value-added products. He said that
currently, it was cost prohibitive to bring in a lumber
grader. He asserted that SB 87 would create more jobs and
would address the housing shortage in rural areas of the
state. He noted that Alaska producers need a long-term and
steady supply of timber for the program to be successful.
1:45:58 PM
Senator Bishop asked Mr. Young whether he had done any
estimates on potential increase in timber sales if the bill
were to become law.
Mr. Young estimated there would be a 10 percent to 15
percent increase initially.
1:46:52 PM
Co-Chair Stedman asked Mr. Young about the size of his
operation, including the number of employees and size of
the sawmill.
Mr. Young explained that his company bought timber from the
Division of Forestry and harvested it with a mechanical
harvesting side. Once the logs were brought to the mill,
they were processed into saw logs. He had four different
types of sawmills that produced various lengths of timber.
1:48:40 PM
Co-Chair Olson CLOSED public testimony.
1:48:51 PM
Ms. Achee thanked the committee for hearing the bill. She
asserted that the bill allowed for greater use of Alaskas
timber products for the use of construction and would be
beneficial to the state.
1:49:34 PM
Co-Chair Stedman asked whether the bill would allow for the
timber to be cut and used for residences.
Ms. Achee understood that if someone had a personal use
harvest of lumber and was living in an area where graded
lumber was required, they could work with a sawmill that
was certified to grade lumber and use that lumber for
construction.
1:50:50 PM
Senator Bishop considered that it would be nice to have a
stamp specific to Alaska.
Ms. Arians thought the bill would be a first step in
building a market for more lumber and suggested that once
the market was built a stamp could be considered in the
future.
1:52:19 PM
Ms. Arians addressed FN 1 from the Department of Natural
Resources. She explained that the Department would contract
the implementation of a training program through the
University of Alaska Fairbanks - Cooperative Extension
Service through a Reimbursable Services Agreement. The
University has the capacity to develop training,
professional development, and outreach programs to natural
resources-based industry. She stated that the expenditure
would include $206,000 annually to fund the Cooperative
Extension Service to train graders and mill workers. There
would be $5,000 allocated for the lumber grading handbook
and minimal travel.
Co-Chair Olson set the bill aside.
SB 87 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 67
"An Act relating to firefighting substances; and
providing for an effective date."
1:54:07 PM
Senator Jesse Kiehl, Sponsor, provided an opening sponsor
statement:
Per- and polyfluoroalkyl substances (PFAS) are a group
of chemicals harmful to human health. They are linked
to serious health conditions including low birth
weight, thyroid disease, and cancereven at extremely
small concentrations.
They also make excellent ingredients in firefighting
foams, in part because they resist breaking down. When
firefighting foams or other compounds containing PFAS
seep into drinking water, the toxic "forever
chemicals" linger for years.
The Alaska Department of Environmental Conservation
declared PFAS hazardous substances several years ago.
Senate Bill 67 protects Alaskans' health and prevents
future pollution by banning PFAS foams unless federal
law preempts. The bill also requires the state to take
back small quantities of PFAS foam to ensure it's
disposed of safely.
Because there is not yet an effective alternative for
the intensity of fire threat oil & gas operations face
at refineries or the Trans Alaska Pipeline terminal,
the bill exempts those producing, transporting, or
refining oil and gas until the State Fire Marshal
determines an effective non-PFAS substance could do
the job.
Senator Kiehl shared that in the past the Department of
Transportation had been required by the Federal Aviation
Administration (FAA) to use PFAS laden firefighting foams.
He said that the bill would put the requirement on the
state Fire Marshall to phase out PFAS foams for a safe
alternative. He stressed the importance that the PFAS
substances be removed and disposed of responsibly. He cited
an effective date of January 1, 2024.
1:59:56 PM
Co-Chair Olson thought there had been changes to the bill
in the Senate Resources Committee.
Senator Kiehl noted that the Senate Resource Committee had
made 2 changes to the legislation:
The Senate Resource Committee adopted the following
changes:
1. In Section 1 (AS 46.03.340), page 1, lines 9-
12:
a. Deleted "engaged in the business of oil
of gas production, transmission,
transportation, or refining"
b. Added "to respond to a fire that
originates in relation to oil or gas
production, transmission, transportation, or
refining"
This change allows for any respondent to a
fire relating to oil or gas production,
transmission, transportation, or refining to
use PFAS or PFAS containing substances to
fight the fire.
2. In Section 1 (AS 46.03.340), page 2, line 6:
a. Deleted "25"
b. Added "40"
This change allows the state to accept for
disposal a quantity not to exceed 40 gallons
per year, up from 25 gallons in the previous
version; 40 gallons covers the estimated 35
gallons of substance anticipated to be
accepted from impacted Project Code Red
communities.
2:01:11 PM
Senator Wilson asked which department was referenced on
page 2, line 4, regarding the state fire marshal.
Senator Kiehl clarified that the fire marshal had some
regulatory authority to delay the implementation when there
was an alternate for oil and gas industry fires. He said
that the department referenced in the bill was the
Department of Environmental Conservation. He said that the
most important thing was that the administration be
proactive in the cleanup; the administration could put the
responsibility within whichever department seemed a cost
effective fit.
Senator Wilson wondered whether the bill should narrow the
language to specify one department rather than using
language that indicated "the department."
Senator Kiehl relayed that the language had been
recommended by the executive branch to provide for
flexibility.
2:03:12 PM
CATHY SCHLINGHEYDE, STAFF, SENATOR JESSE KIEHL, addressed a
Sectional Analysis (copy on file):
Sec. 1 of the bill creates a new section:
Sec. 46.03.340(a): Everyone outside the oil & gas
industry must stop using PFAS-containing foams,
unless federal law preempts Alaska law.
Sec. 46.03.340(b): People fighting fires in the
oil & gas industry may continue using PFAS-
containing foams until an alternative is approved
by regulation.
Sec. 46.03.340(c): The state fire marshal can
determine there is a safe and effective PFAS-free
foam for fighting oil or gas fires if the
alternate foam is listed by an organization in
OSHA's Nationally Recognized Testing Laboratory
Program. The fire marshal must require the new
foam by regulation, with a stated effective date.
Sec. 46.03.350(d): DEC must take up to 40 gallons
per year of PFAS-containing firefighting foam
from Alaskans for disposal.
Sec. 2 of the bill sets an effective date of January
1, 2024.
2:04:39 PM
ANDY MILLS, SPECIAL ASSISTANT AND LEGISLATIVE LIAISON,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES,
addressed FN 1 from Department of Transportation and Public
Facilities, OMB Component 2355:
This legislation requires the state fire marshal to
make a determination and promulgate regulations
consistent with federally mandated firefighting
substances containing perfluoroalkyl or
polyfluoroalkyl substances (often referred to as PFAS
or PFOA/PFOS or colloquially as "forever chemicals").
The Department of Transportation & Public Facilities
(DOT&PF) state airports are mandated by the Federal
Aviation Administration (FAA) to utilize
PFAS-containing aqueous film forming foam (AFFF) for
firefighting purposes and not subject to state fire
marshal regulations given the federal requirement.
Under this language, the Department of Environmental
Conservation would ensure the state accepts "a
firefighting substance" containing PFAS. Clarification
provided by the sponsor identified that DOT&PF was the
state entity who would accept for disposal the AFFF
from persons in Alaska with a cap of 40 gallons per
year. There was further clarification that the
communities where this collection and disposal effort
would be targeted are those who participated in the
Project Code Red initiative (details below).
As context, Project Code Red was an initiative
spanning two decades (earliest mentions found are from
the early 2000s) that supplied a Conex container full
of firefighting equipment to rural Alaska villages
(see standard equipment manifest provided with this
fiscal note). Research indicates original funding for
Project Code Red was found to be a combination of
federal funds and state grants to the Alaska Villages
Initiative (AVI). In consultation with the AVI, the
entity who organized, assembled, and distributed
Project Code Red, a list of 138 rural communities were
cited as receiving Project Code Red equipment.
Research further indicates training on this equipment
was also provided by the Department of Public Safety
and their Office of Rural Fire Protection at each
village where equipment was provided. Review of a
community list (also attached) shows 132 communities
with some quantity of PFAS-containing AFFF for
disposal.
Given that context, DOT&PF anticipates, as directed by
this legislation and in cooperation with above listed
state and private entities, operating a contracted
program to ensure specialized environmental
contractors collect and dispose of any PFAS-containing
AFFF substance. One state funded position would be
required to coordinate the outreach, inventory
verification, contracting, and logistics of this
program with the following costs:
One FTE: PFAS Disposal Coordinator at Range 21, step
F; in the General Government Union (GGU)
Advance step placement up to F step allows department
to recruit an experienced contract coordinator.
Salary & Benefits: annually $87.0 salary, COLA
positioned in Fairbanks of $3.5, associated benefits
of $59.5 (total of $150.0)
Travel: $30.0 in FY 24 and FY 25 to establish program,
then taper down to $15.0 for FY 26 and FY 27 (travel
to rural villages for situations where community wants
it out but doesn't know status of AFFF inventory)
Commodities: $5.0 (computer, phone, etc.)
This PFAS disposal coordinator would be responsible
for reaching out to the 132 villages identified to
alert them to the existence of this disposal program.
Upon receipt of a request from an interested village,
the coordinator will draft and post a competitive bid
for contractor services to go out and collect
PFAS-containing substance(s). Referencing the Project
Code Red manifest, each village is anticipated to have
a baseline minimum of 5 gallons of AFFF and a 30-gallon
tank filled with a water/AFFF mixture in a "ready
state" for firefighting purposes. Given the 40 gallon
per year limit, the contractor would have to mobilize
once to dispose of the estimated 35 gallons for each
community. If the village has purchased, acquired, or
been gifted additional AFFF, additional years would be
necessary to capture the additional amounts, up to 40
gallons per year.
To get a cost estimate, the department reached out to
several environmental contractors for scenarios on
general cost estimates based on scope provided,
location and mode of transporting the disposal effort.
Contractor-A scenario used a methodology of provided a
range of costs from ~$6.0 for disposal via mostly
road, to ~$10.0 by mostly barge, and ~$15.0 by mostly
air to dispose of the 35 gallons (5-gallon AFFF
container in an overpack container and the 30 gallons
substance in the firefighting equipment to be drained
into a 55-gallon drum). This did not include site
survey cost estimates. The list of communities that
received Project Code Red equipment appears to require
more air travel than road or barge and, therefore, the
estimate provided reflects a higher average between
the barge and air options. Using this methodology, to
dispose of estimated 35 gallons in 132 villages would
cost $12.5 for each community for a total contractor
cost of $1,650.0.
Contractor-B scenario used a methodology based on bulk
activity for all work to be performed. This scope
included an initial site survey at an estimated cost
of $500.0, administrative duties and fees of $15.0,
mobilization and packing of disposal AFFF at $1,770.0,
transportation at $600.0, disposal at $500.0 and a
summary of disposal certification at $50.0 to address
all 132 remote site disposals. The total estimated for
this contractor to handle all disposal activities is
estimated at $3,435.0 (a competitive bid would be
required for each contract).
Averaging the two contractor cost estimates gives a
total minimum estimated capital appropriation of
$2,550.0 along with the personnel costs and all
assumptions detailed in this analysis. One significant
caveat to this analysis is with the language of the
legislation stating a "person in the state" leaves the
option for unknown quantities of AFFF yet to be
identified eligible for disposal. If individuals
outside of the villages listed on the Project Code Red
list come forward and qualify, capital funds
appropriated will be used on a first-come, first-serve
basis until such time as the capital appropriation is
exhausted. While unknown and therefore not captured in
the capital estimate of this fiscal note, the state
contemplates there could be a significant amount of
AFFF disposal from sources outside of Project Code Red
areas given the broad eligibility and the annual
nature of the disposal language proposed in this
legislation (no end date for acceptance of disposal
outside of department's personnel backout at the end
of FY 27).
The effective date of this bill, if enacted, would be
January 1, 2024. DOT&PF would look to hire the PFAS
disposal coordinator once the FY 24 budget was enacted
with capital funds available for contractor collection
and disposal starting the first quarter of calendar
year 2024.
Assumptions used in this analysis:
- In addition to disposal contract program costs, there
is the real potential for liability costs associated
with PFAS disposal
that cannot be quantified at this time but, under
reasonable consideration, could far exceed the costs
of this fiscal note should a spill or mishandling of
the PFAS-containing AFFF occur, even outside of the
states control.
- There are likely some villages where their AFFF is no
longer retrievable, either used for firefighting or
disposed of prior to
outreach, and would result in fewer gallons for
disposal in some contracts. An offset to this
assumption are communities that have procured
additional AFFF beyond the Project Code Red supply.
Given the unknowns in quantities of qualifying
parties, the department chose to use the presumed
numbers available in the absence of better inventory
data.
- The legislation only contemplates disposal of the "a
firefighting substance" and not the contaminated
equipment or container that is left behind.
- No alternative PFAS-free AFFF is currently authorized
at the time of this analysis and no provision of this
bill specifies replacement of firefighting substances.
- Toxic levels in drinking water have been established
at a federal level and classification as a hazardous
material is in progress at the federal level.
Mr. Mills stressed that the fiscal note was an estimate
based on the information currently available.
2:08:50 PM
Co-Chair Olson OPENED public testimony.
2:08:59 PM
PATTI SAUNDERS, ALASKA COMMUNITY ACTION ON TOXICS,
ANCHORAGE (via teleconference), spoke in support of the
bill. She cited that there were currently PFAS poising
water supplies at 469 cites throughout Alaska. She
referenced the Alaska Community Water Quality Report
published by her organization (copy on file). She said that
all the waters tested were used for fishing and recreation.
She said that there were safe and economical alternatives
to PFAS currently being used all over the world. She said
that there were 33 alternatives that had been Green
Screen certified. She believed that the bill was a
critical first step in the prevention of future
environmental harm.
2:13:01 PM
MIKE CRAFT, SELF, FAIRBANKS (via teleconference), testified
in support of the legislation. He offered a brief history
of the use of PFAS and the known environmental impacts of
the substance. He lamented that people could be watering
their gardens with contaminated water and not know the
water was poisoned.
2:15:01 PM
JUSTIN MACK, SECRETARY TREASURER, ALASKA PROFESSIONAL
FIREFIGHTERS' ASSOCIATION, ANCHORAGE (via teleconference),
spoke in support of the bill. He worked as a captain in the
Anchorage Fire Department. He asserted that PFAS was a
known problem in the profession. He said that even with all
the best practices in place, firefighters were still
getting cancer due to PFAS exposure. He noted that there
were strict policies surrounding the chemical. He believed
that there were alternative chemicals available for
fighting fires.
2:17:09 PM
DYANI CHAPMAN, ALASKA ENVIRONMENT, ANCHORAGE (via
teleconference), testified in support of the bill. She
reiterated previous testimony about PFAS contamination in
Alaskas waters and wildlife. She listed states that had
chosen to use alternatives to PFAS to protect firefighters
and the environment. She thought alternatives to PFAS had
been well tested in states with wildfires. She urged the
passage of the legislation.
2:19:07 PM
LESA HOLLEN, SELF, ANCHORAGE (via teleconference), spoke in
support of the bill. She shared that she was a
neuroscientist. She asserted that PFAS affected every part
of a mammal's body, passing through the blood/brain
barrier. She listed the myriad of ill effects of PFAS on
humans, predominately cancer. She spoke to the cost of
Medicare to address illnesses in the state.
2:21:36 PM
MARGARET TARRANT, SELF, ANCHORAGE (via teleconference),
testified in support of the bill. She spoke of members of
her community that had been exposed to PFAS and
subsequently diagnosed with cancer. She reiterated previous
testimony on the ills of PFAS.
2:23:13 PM
AT EASE
2:23:31 PM
RECONVENED
2:23:57 PM
Co-Chair Olson CLOSED public testimony.
Senator Kiehl thanked the committee for considering the
legislation.
Co-Chair Olson set SB 67 aside.
SB 67 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 104
"An Act relating to appropriations to the civil legal
services fund."
2:24:17 PM
Co-Chair Olson invited Senator Dunbar to the table.
2:24:36 PM
SENATOR FORREST DUNBAR, SPONSOR, explained that the bill
would increase funding for the Alaska Civil Legal Services
Fund. He shared that legislation allowing the legislature
to appropriate filing fees for ALSC was passed in 2018 and
was originally set at 25 percent but lowered to 10 percent
with the intention to reassess the need for a higher
appropriation later; those contributions were now necessary
to fully support their clients in need. He spoke of his
internship at Alaska Legal Servies and his passion for
providing free legal services to residents in the state.
2:26:45 PM
ARIELLE WIGGIN, STAFF, SENATOR FORREST DUNBAR, discussed a
Sectional Analysis (copy on file):
SECTIONAL ANALYSIS
SB 104: CIVIL LEGAL SERVICES FUND
Section 1: amends AS 37.05.590 Civil Legal Services
Fund so that up to twenty-five percent, instead of ten
percent, of Court System filing fees can be
appropriated by the Legislature to the existing Civil
Legal Services Fund each year.
2:27:14 PM
Senator Wilson referred to the statute and asked where the
remainder of the court filing fees would go.
2:28:03 PM
NIKOLE NELSON, EXECUTIVE DIRECTOR, ALASKA LEGAL SERVICES
CORPORATION, asked whether Senator Wilson was referring to
the 50 percent of punitive damages that were part of the
fund.
Senator Wilson replied in the affirmative.
Ms. Nelson explained that the fund had two components: the
first allowed for 50 percent of punitive damages awarded to
the state to go into the fund, which had not generated much
revenue. She said that the statute that governed the fund
had been amended in 2018 to include 10 percent of court
system filing fees, on top of the punitive damages award.
She said that when the bill was amended in 2018, it had
originally been 25 percent, which was negotiated down to 10
percent, with the caveat that it would be increased if the
fund did not meet community need.
2:30:05 PM
Senator Wilson asked whether the increase would increase
court fees, and if those fees were needed by the Court
System. He wondered whether putting them in the general
fund would leave the Court System in financial need.
Ms. Nelson understood that the funds did not go to the
Court System, but rather into the general fund.
2:31:10 PM
Senator Wilson reiterated his question about court filing
fees.
2:31:47 PM
NANCY MEADE, GENERAL COUNSEL, ALASKA COURT SYSTEM, relayed
that the bill did not impact the finances of the Alaska
Court System. She said that every dollar that the system
collected for filing fees went directly to the general
fund. She stated that the systems budget was not based on
filing fees.
Senator Wilson asked when the last time the Court System
had considered increasing filing fees.
Ms. Meade believed fees had been increased in 2018. She
thought that the increase had been written into intent
language in the Operating Budget. She said that the basic
filing fee for a civil case was $250.
2:33:41 PM
Ms. Nelson continued her testimony. She thanked the
committee for hearing the bill. She stressed that both the
state and federal constitutions guaranteed due process and
equal protection under the law, but a right to council was
not guaranteed in the civil justice system. She said that
there was a gap between those who needed civil legal aid
and those who received it. She said that legal aid had not
kept pace with community need. She provided a background
and the mission of Alaska Legal Services (ALS).
MS. Nelson shared that the mission of ALS was to ensure
fairness to all in the justice system, regardless of
economic status or geographical location. The work was done
through providing individual advice and representation,
providing selfhelp materials, and providing guidance for
those going through the system on their own. The work was
done through twelve regional offices, and the organization
maintained a statewide footprint.
Ms. Nelson continued that the work was done by employees
and volunteers. She listed typical consumers who sought the
help of ALS from day to day, which included some of the
state's most vulnerable residents.
2:37:11 PM
Ms. Nelson emphasized that access to justice in the civil
system was paramount. She cited that ALS received
contributions from communities where their offices were
located. She shared that ALS had provided representation to
thousands of Alaskans, 86 percent of which had resulted in
positive outcomes.
Ms. Nelson noted that there was a $5 to $1 return on funds
invested into the program. She said that ALS had saved the
state $2.6 million in avoided medical and counselling
costs.
Ms. Nelson cited the problem of turning away hundreds of
families per year due to lack of resources. She noted that
the target population continued to grow, while funding had
not kept pace. She said that in 1984, ALS had been
appropriated $1.2 million to serve a target population of
40,000. She stated that in the current state fiscal year
the state appropriation, coming from 2 sources, was equal
to $681,600 to serve a target population of 128,000. She
said that in 1984 the state was spending $28 per person,
which when inflation adjusted for 2023 would be $81 per
person. She lamented that the funds had not increased, or
been adjusted for inflation, and that the state currently
spent $5 per person.
2:40:36 PM
Ms. Nelson stressed that when the fund was amended in 2018
to include the 10 percent filing fees, the promise was to
revisit the matter should it be found that funding was not
sufficient. She stressed that funding had not kept pace,
and the issue needed to be addressed.
2:41:08 PM
Ms. Nelson mentioned that ALS was incredibly cost-efficient
and did the best it could with the available resources.
2:41:47 PM
Senator Bishop understood that ALS turned away 200 cases
per year.
Ms. Nelson clarified that half of the cases brought before
them were turned away due to lack of resources.
Senator Bishop asked whether Ms. Nelson could put a
monetary figure to the number of people that ALS had to
turn away.
Ms. Nelson said that she would provide the information.
She cited that for every additional $100,000 added to the
ALS budget, 180 more clients could be served.
2:43:04 PM
Ms. Nelson mentioned that ALS was leveraging resources with
donated office space and other support from local
communities where offices were located. She said that the
pro bono program had leveraged nearly 4,000 hours of
donated time in the last year. She emphasized that the
state needed to address the civil justice crisis and assure
that access to justice was a reality for everyone.
2:44:24 PM
SANDRA MOLLER, DIRECTOR, DIVISION OF COMMUNITY AND REGIONAL
AFFAIRS, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC
DEVELOPMENT (via teleconference), addressed the zero FN 1
from DCCED.
2:45:23 PM
AT EASE
2:45:52 PM
RECONVENED
Senator Wilson considered FN 1, which showed fiscal impact
on the 'Grants and Benefits' line and the 'Legal Services'
line through FY24. He asked why there were no reflected
outgoing costs, FY25 through FY29. He thought the note
should be indeterminate rather than zero.
Ms. Moller affirmed that the numbers on the note were
correct. She admitted that the numbers in the outgoing
years were indeterminate.
Senator Wilson argued that the note reflected a zero cost
rather than an indeterminate cost.
Ms. Moller relayed that the fiscal note should be
indeterminate and not zero.
2:48:37 PM
Senator Bishop addressed FN 1 from DCCED, OMB Component
2879.
2:49:11 PM
Co-Chair Olson OPENED public testimony.
2:49:48 PM
AT EASE
2:50:05 PM
RECONVENED
Co-Chair Olson CLOSED public testimony.
SB 104 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 114
"An Act establishing an income tax on certain entities
producing or transporting oil or gas in the state;
relating to the oil and gas production tax; and
providing for an effective date."
2:50:22 PM
Co-Chair Stedman MOVED to ADOPT proposed committee
substitute for SB 114, Work Draft 33-LS0641\U (Nauman,
4/3/23).
Co-Chair Olson OBJECTED for discussion.
2:51:04 PM
KEN ALPER, STAFF, SENATOR DONNY OLSON, addressed a summary
of changes documents (copy on file):
CS for Senate Bill 114: Oil and Gas Production Tax,
Income Tax
Changes from initial version ("S" to "U")
Original bill was 42 pages long and had 47 sections.
Current CS is five pages long and has nine sections.
Four main changes:
1) Remove the addition of a "ringfence" on the North
Slope, which would have required separate calculation
of company spending on each field with a separate
profit and thus tax calculation for each field.
2) Remove substantial conforming language throughout
the bill that referred to the ringfence and the
various separate calculations required for it.
3) Corrects an error in the "per barrel credit"
change, so that the credit goes all the way to zero at
high prices.
4) Removed the repeal of AS 43.55.024(a) and (b). This
is an obsolete, sunsetted credit having to do with new
field development outside both Cook Inlet and the
North Slope.
This was removed because it is unnecessary and enabled
the elimination of about another 10 pages of
conforming text.
What the bill still does:
1) Expands the current petroleum corporate income tax
to all oil and gas producers and transporters,
regardless of business form. The tax is 9.4% of
taxable income greater than
$4 million / year. (Section 1)
2) Reduces the "per taxable barrel credit" by $3, from
$8 to $5 at the highest point (wellhead value below
$80), declining to zero at wellhead value of $120.
(Section 2-3)
3) Limits use of the per-barrel credits earned in a
year for production from a particular field to no more
than the producer's qualified capital spending on that
field. (Section 4)
4) Changes are retroactive to January 1, 2023
2:54:36 PM
Co-Chair Olson WITHDREW his objection. There being NO
OBJECTION, it was so ordered. The CS for SB 114 was
ADOPTED.
2:55:02 PM
SENATOR BILL WIELECHOWSKI, SPONSOR, thought ring fencing
was a concern that was compounded by the complex tax
structure of the state. He supported the new bill version
and thanked the committee for their work.
2:55:37 PM
Co-Chair Stedman asked for help understanding the
retroactive date.
2:55:59 PM
Senator Wielechowski said that corporate income tax
structure operated on a calendar year rather than a fiscal
year. He added that there was precedent for retroactivity
in oil tax structures. He said that the committee should
decide what was in the best interest of the state.
2:57:07 PM
Co-Chair Olson set the bill aside.
SB 114 was HEARD and HELD in committee for further
consideration.
Co-Chair Olson discussed housekeeping.
ADJOURNMENT
2:57:53 PM
The meeting was adjourned at 2:57 p.m.