Legislature(2023 - 2024)SENATE FINANCE 532
05/08/2023 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB140 | |
| SB48 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 140 | TELECONFERENCED | |
| + | SB 48 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
May 8, 2023
9:07 a.m.
9:07:13 AM
CALL TO ORDER
Co-Chair Olson called the Senate Finance Committee meeting
to order at 9:07 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Donny Olson, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Jesse Kiehl
Senator Kelly Merrick
Senator David Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Maridon Boario, Staff, Senator Lyman Hoffman; Christine
O'Connor, Alaska Telecom Association, Juneau; Lacey
Sanders, Director, Administrative Services, Department of
Education and Early Development; Dr. Amy Philips Chan,
Director, Library and Archives Museum, Department of
Education and Early Development; Dr. Lisa Parady, Executive
Director, Alaska Council of School Administrators; Lon
Garrison, Executive Director, Association of Alaska School
Boards; Rena Miller, Special Assistant, Commissioners
Office, Department of Natural Resources; Senator Cathy
Giessel.
PRESENT VIA TELECONFERENCE
Heidi Teshner, Self, Anchorage; Ariel Burr, Quintillion,
Anchorage; Jim Wilson, Superintendent, Unalaska School
District, Unalaska; Willy Keppel, Self, Quinhagak; John
Boyle, Commissioner-Designee, Department of Natural
Resources; Jeanne Pigors, Lands Manager, Northern Region,
Division of Mining Land and Water, Department of Natural
Resources, Fairbanks; Helge Eng, State Forester, Division
of Forestry and Fire Protection, Department of Natural
Resources, Anchorage; Ashlee Adoko, Director, Office of
Project Management and Permitting, Department of Natural
Resources, Anchorage; Neil Steininger, Director, Office of
Management and Budget, Office of the Governor; Josh
Strauss, Senior Vice-President, ANEW, California.
SUMMARY
SB 48 CARBON OFFSET PROGRAM ON STATE LAND
SB 48 was HEARD and HELD in committee for further
consideration.
SB 140 INTERNET FOR SCHOOLS
SB 140 was HEARD and HELD in committee for
further consideration.
SENATE BILL NO. 140
"An Act relating to funding for Internet services for
school districts; and providing for an effective
date."
9:08:16 AM
MARIDON BOARIO, STAFF, SENATOR LYMAN HOFFMAN, introduced
the legislation. She read from the Sponsor Statement (copy
on file):
SB 140 increases broadband share for eligible schools
from 25 megabits per second (Mbps) to 100 Mbps of
download speed and provides funding to help those
schools reach 100 Mbps through the School Broadband
Assistance Grant (BAG).
The Alaska School Broadband Assistance Grant (BAG)
program was created to assist schools to increase
internet download speeds. Established in 2014 by the
Alaska State Legislature, this grant originally
allowed schools to reach download speeds of 10 Mbps.
In 2020, the State Legislature revised the statute to
help schools reach 25 Mbps download speeds. SB 140
seeks to increase the download speeds to 100 Mbps.
Co-Chair Olson asked Ms. Boario to slow down.
Ms. Boario continued:
Schools that qualify for a discounted rate for
internet services under The Universal Service
Administrative Company, Schools and Libraries Program,
commonly known as "E-rate," are eligible for the
School Broadband Assistance Grant (BAG). The E-rate
program provides discounts of up to 90 percent to help
eligible schools and libraries obtain affordable
broadband.
New and improved technologies and increases to
internet services have allowed for more and faster
delivery of internet services. Because the cost of
internet in some rural districts has decreased, the
annual internet costs have fallen below benchmarks
established by state law. To allow school districts to
utilize these advances, SB 140 will increase the
minimum requirement of Mbps from 25 to 100 which will
increase the amount of Broadband Assistance Grants
(BAG) to help school districts reach increased
download speeds. Increasing the funding available
through the BAG program in future years will allow
schools to leverage more E-Rate funds to bring Alaskan
schools in line with national standards for broadband
connectivity.
In 2023, 151 Alaskan schools in 27 school districts
benefited from the school BAG awards.
The funding leverages federal E-rate funds at
approximately 8:1. The program allows for up to 9:1
based on a formula for free and reduced lunch
calculation by district.
9:10:15 AM
Senator Kiehl wondered whether a district was able to get
help with the high cost of maintenance.
Ms. Boario replied that the district would still qualify
for the discount through the federal government.
Senator Kiehl wondered whether the state provided any
partial match to that discount.
Ms. Boario replied in the negative.
Co-Chair Hoffman noted that there had been some questions
about the fiscal note, and remarked that the committee may
want to change the effective date. He stressed that the
intention was not to implement it in the current school
year.
Co-Chair Olson wondered whether the administration
supported the bill.
Co-Chair Hoffman replied that the department could respond
to that question.
9:13:59 AM
Co-Chair Olson OPENED public testimony.
9:14:31 AM
CHRISTINE O'CONNOR, ALASKA TELECOM ASSOCIATION, JUNEAU,
testified in support of the bill.
9:16:58 AM
HEIDI TESHNER, SELF, ANCHORAGE (via teleconference),
discussed the fiscal note for the bill.
Co-Chair Olson wondered whether the administration was in
favor of the bill.
Ms. Teshner replied that the administration was in favor of
adequate education for students.
9:18:07 AM
LACEY SANDERS, DIRECTOR, ADMINISTRATIVE SERVICES,
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, discussed
the fiscal note.
9:19:29 AM
DR. AMY PHILIPS CHAN, DIRECTOR, LIBRARY AND ARCHIVES
MUSEUM, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT,
introduced herself.
Senator Wilson wondered whether the Lower Yukon School
District needed assistance.
Ms. Teshner agreed to provide that information.
9:22:40 AM
DR. LISA PARADY, EXECUTIVE DIRECTOR, ALASKA COUNCIL OF
SCHOOL ADMINISTRATORS, spoke in support of the bill.
9:25:52 AM
LON GARRISON, EXECUTIVE DIRECTOR, ASSOCIATION OF ALASKA
SCHOOL BOARDS, spoke in support of the legislation.
9:28:02 AM
ARIEL BURR, QUINTILLION, ANCHORAGE (via teleconference),
testified in support of the bill.
9:30:31 AM
JIM WILSON, SUPERINTENDENT, UNALASKA SCHOOL DISTRICT,
UNALASKA (via teleconference), testified in support of the
legislation.
9:32:30 AM
WILLY KEPPEL, SELF, QUINHAGAK (via teleconference),
testified against the legislation.
Co-Chair Olson CLOSED public testimony.
9:36:06 AM
AT EASE
9:39:35 AM
RECONVENED
SB 140 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 48
"An Act authorizing the Department of Natural
Resources to lease land for carbon management
purposes; establishing a carbon offset program for
state land; authorizing the sale of carbon offset
credits; and providing for an effective date."
9:39:52 AM
JOHN BOYLE, COMMISSIONER-DESIGNEE, DEPARTMENT OF NATURAL
RESOURCES (via teleconference), presented the legislation.
9:48:23 AM
RENA MILLER, SPECIAL ASSISTANT, COMMISSIONERS OFFICE,
DEPARTMENT OF NATURAL RESOURCES, discussed the
presentation, "Senate Bill 48: Carbon Offset Program on
State Land, Senate Finance Committee" (copy on file).
Co-Chair Olson stated that public testimony would be
postponed until the afternoon meeting.
Ms. Miller addressed slide 2, "Carbon Management -
Simplified." She explained that the slide showed how the
emissions could be captured at the point of generation and
stored to set aside for future use.
9:50:46 AM
Ms. Miller pointed to slide 3, "Carbon Management -Not So
Simple!"
Ms. Miller highlighted slide 4, "Carbon Offsets -Markets."
Ms. Miller discussed slide 5, "Carbon Offsets -State
Resource Base":
-Tremendous State land and resource base
•100 million acres uplands
•Tens of millions acres forested land
•60 million acres tide and submerged lands
Ms. Miller pointed to slide 6, "Carbon Offsets -Potential
Affirmed":
Anew report affirms potential:
• Identifies 3 'pilot' projects
• Improved Forest Management protocols timber harvest
continues
• Revenue potential* of all three:
-approx. $81.6 million over 10 years
-approx. $311 million over 40 years
9:54:17 AM
Ms. Miller displayed slide 7, "Carbon Offsets - Benefits to
Alaska":
• New source of State revenue
• Compatible with existing land and resource use
• Positive environmental impact
• Incentivizes active forest management and rebuilding
State's timber stock
• Supports the general State economy
• 'Maximum use' per Alaska Constitution
• Does not:
• 'lock up land'
• institute emission limits/ cap and trade rules
for Alaska businesses
Ms. Miller looked at slide 9, "SB48 -Overview":
• Tasks DNR with setting up frameworks to support
carbon offset opportunities that align with Alaska's
resource and land interests, responsibilities
Enables carbon offset projects on State land and
shorelines
• Does not authorize a specific project
Ms. Miller addressed slide 10, "SB48 -Overview":
• Provides a process for third parties to lease State
land for carbon management purposes (Section 4)
• Establishes the Carbon Offset Program at DNR to
undertake State projects (Section 6)
Ms. Miller looked at slide 11, "Two Distinct Paths Under
SB48":
Carbon Leases:
Provides process for third parties to lease State land
for carbon management purpose (bill sections 3-5)
State Projects:
Establishes 'Carbon Offset Program' at DNR for State
to undertake carbon offset projects (bill sections 1-
2, 6-13)
Ms. Miller pointed to slide 13, "Path 1: Carbon Management
Purpose Leases":
• New carbon lease program situated within Alaska Land
Act (AS 38.05)
• Body of statute, regulation under Alaska Land
Act applies
• Best interest findings processes,
including preliminary decisions noticed for
public comment
• Bill provides alternative competitive award process
to accommodate range of State values (vs. competitive
bid at auction)
• Division of Mining, Land and Water to administer
leasing program
Ms. Miller looked at slide 14, "Path 1: Carbon Leases":
Costs:
• Promulgate regulations; receive, process
applications
• Monitor leases, ensure conditions met
• 1 full-time, permanent position (total $151.9
in FY24, $141.9 in FY25 onward; Unrestricted
General Fund (UGF) until leasing revenue
sufficient to cover costs)
• Will seek to fill out staffing based on program
demand through annual legislative budget process
Revenue:
• Indeterminate in amount, timing
• Driven by private sector demand, project value, area
of lands leased
• Sec. 4 requires lease compensation to maximize
returns to the State
10:00:01 AM
Ms. Miller highlighted slide 15, "Path 1: Carbon Leases":
• Hypothetical examples:
• Company leases 10,000 acres of State land for
55 years, invests capital to plant
trees/regenerate forest; may be 20+ years before
project generates credits; State gets annual fee
for land lease, percentage of carbon revenue once
generating credits
• Kelp farm overlays carbon offset project to
help kelp production economics; State gets annual
fee for land lease, some percentage of carbon
revenue
Senator Wilson wondered whether the private entities would
pay for the carbon offsets.
Ms. Miller replied that the bill dealt strictly with the
leasing of state land.
Senator Wilson asked whether one could sublease a carbon
offset on state land.
10:03:11 AM
JEANNE PIGORS, LANDS MANAGER, NORTHERN REGION, DIVISION OF
MINING LAND AND WATER, DEPARTMENT OF NATURAL RESOURCES,
FAIRBANKS (via teleconference), replied that eventually
subleases could occur. She explained that there would need
to be a primary amendment that the state would lease.
Senator Kiehl wondered who would own the trees if the
purpose of the land was to offset the carbon.
Ms. Miller replied that the state owned the trees.
10:05:49 AM
Senator Kiehl wondered whether the lease for carbon
management would put the management of the trees as
separate from the carbon management.
Ms. Miller replied that those were the kinds of activities
that could occur.
Senator Kiehl surmised that the state would need to
separately sell the trees, but wondered about the carbon in
the soil.
Ms. Miller agreed to provide that information.
Co-Chair Stedman surmised that the Department of Natural
Resources (DNR) had dedicated plans for certain areas. He
wondered whether the bill removed or changed the habitat
plans.
Ms. Miller replied that the bill would require forest
management plan amendments.
Co-Chair Stedman wondered whether an old growth forest
stored more carbon than a clear cut and new beginning.
Ms. Miller replied deferred to Ms. Eng.
10:10:58 AM
HELGE ENG, STATE FORESTER, DIVISION OF FORESTRY AND FIRE
PROTECTION, DEPARTMENT OF NATURAL RESOURCES, ANCHORAGE (via
teleconference), replied that it was a close rate, and
there was no definitive determination of what age forest
carbon would contain.
Co-Chair Olson wondered what would happen if the forest
were to destroy the trees, and whether the state would have
financial input.
Ms. Miller replied that the forests would be for state
projects, so there would be a protocol by the registry.
Senator Kiehl wondered how the biologists were incorporated
into the proposal.
Ms. Pigors replied that biologists and experts would be
involved in the best interest findings of the lease.
10:15:46 AM
Ms. Miller stated that there were also forest management
plans that incorporated broader issues than only timber.
Ms. Miller looked at slide 17, "Path 2: State Projects -
Overview":
• SB48, section 6, stands up 'Carbon Offset Program'
for State to undertake its own carbon offset projects
• State is project proponent 'owns' the project
• State may work with a partner, contractors (project
developer)
• Costs to start up, manage project over term
• Project generates credits for carbon stored on
landscape
• State sells credits to buyers
• Revenue from sales flows to new Carbon Offset
Revenue Fund established in section 6
Co-Chair Olson asked about details of bullet one.
Ms. Miller replied that bullet point one assumed that the
legislation would pass and begin work on the framework.
Co-Chair Olson asked the time it would take from the
passage of the bill to the point of revenue to the state.
Ms. Miller estimated that it would be four years.
Ms. Miller looked at slide 18, "Path 2: State Projects -
Parties."
10:20:45 AM
Co-Chair Hoffman requested examples of the major buyers
that would be voluntary mission reduction targets.
Ms. Miller replied that examples of companies were JP
Morgan, Goldman Sachs, Disney, Loreal, and a number of
others. She stated that there were approximately 2000
companies in the voluntary carbon market.
Co-Chair Hoffman wondered whether corporations outside the
U.S. were include din that total.
Ms. Miller replied in the affirmative.
Co-Chair Stedman wondered whether the Securities and
Exchange Commission (SEC) would examine the credits and any
potential rulings that would have regulatory issues.
Ms. Miller responded that the SEC had been considering some
regulation for corporations that might look to how they
determine their emissions to apply against the credits.
Senator Wilson queried the minimum acreage of carbon
credits.
Ms. Miller replied that it depended on the type of project.
She replied that, for forest projects, 5000 to 6000 acres
was the minimum. She explained that there was also a
consideration for the types of trees.
Senator Wilson wondered whether there was a way to redefine
the natural resources.
Ms. Miller replied that she would be happy to discuss that
issue.
10:24:43 AM
Ms. Miller addressed slide 19, " Path 2: State Projects -
Costs":
- Fixed program costs regardless of number of projects
• New Carbon Offset Program housed under existing
Office of Project Management and Permitting
(OPMP); 2 full-time, permanent positions ($192.4
in FY24; $367.8 in FY25; $309.8 in FY26 onward,
UGF until revenues sufficient to replace UGF)
• Supported by Division of Forestry and Fire
Protection (DOF); 1 full-time, permanent position
(total $147.3 in FY24; $137.3 in FY25onward, UGF
until revenues sufficient to replace UGF)
• Initial capital to OPMP to establish framework,
retain expertise ($425.0 UGF in FY24 only)
- Project-dependent costs
• Project feasibility analysis, implementation,
ongoing project maintenance (inventories,
modeling, audits)
Senator Kiehl wondered whether the money would go to the
Office of Project Management and Permitting (OPMP).
Ms. Miller deferred to Ms. Adoko.
10:27:34 AM
ASHLEE ADOKO, DIRECTOR, OFFICE OF PROJECT MANAGEMENT AND
PERMITTING, DEPARTMENT OF NATURAL RESOURCES, ANCHORAGE (via
teleconference), replied that it would be a different
framework.
10:29:41 AM
Ms. Miller looked at slide 20, " Path 2: State Projects
Project-dependent costs, cont.":
• Variety of ways for State to approach projects
• State use State staff, funds
• State contract with project developer(s),
service providers
• Project developer(s) offer range of terms, services
• 'Turnkey' developer fronts project costs;
receives fixed share of revenue once project
generates credits
• 'Ala carte' one or more companies are
contracted in fee-for-services approach to
perform specific project tasks (inventory,
marketing, etc.)
Ms. Miller addressed slide 21, "Path 2: State Projects -
Scenarios":
• Scenarios feature potential pilot projects
identified by Anew
• Not conclusive view of State's carbon offset
potential DNR anticipates additional opportunities
• DNR may or may not proceed with pilots, as described
in Anew report, if SB48 passes
• State Forests are likely primary objectives due to
high carbon storage potential
Revenue dependent on number, timing, size of
projects; verifiable carbon stored; credit price;
marketing success
• On credit sale, revenue flows to Carbon Offset Fund
Ms. Miller highlighted slide 22, "Path 2: State Projects
1-Project Scenario."
10:36:36 AM
Ms. Miller pointed to slide 23, "Path 2: State Projects 3-
Project Scenario."
Ms. Miller discussed slide 24, "Path 2: State Projects
Carbon Offset Fund":
• The fund is outside the general fund (GF)
• Revenue automatically flows into the fund "shall"
be deposited
• Appropriations do not lapse
• Used for purposes of Carbon Offset Program
• Required project maintenance over term (varies;
recurring inventories, audits, to support further
credit issuance)
• Program administrative costs (including DNR
staff)
• Initiate new carbon offset projects
(feasibility, start-up, implementation costs)
Co-Chair Stedman asked for more detail about why the
administration did not want more appropriation.
Ms. Miller replied that that the issue may be due to the
translation in the legal drafting of the bill. She deferred
to Mr. Steininger.
Co-Chair Stedman asked for further information about the
general fund issue.
10:38:49 AM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR (via teleconference), replied that
the desire was to ensure that the balance of the fund would
not be subject to the CBR sweep.
Co-Chair Stedman stated that most small sub-funds would
want to be out of the general fund and felt that it was to
be addressed by the committee.
Co-Chair Hoffman asked about the constitutional requirement
to not have dedicated funds.
Mr. Steininger replied that it was designed to be similar
to the higher education fund.
10:40:37 AM
Senator Wilson wondered whether it should be set up like a
royalty.
Mr. Steininger agreed to discuss that issue.
Senator Wilson remarked on the definition of carbon.
10:44:45 AM
JOSH STRAUSS, SENIOR VICE-PRESIDENT, ANEW, CALIFORNIA (via
teleconference), introduced himself.
10:45:44 AM
Mr. Strauss discussed the presentation, "Forest Carbon in
Alaska" (copy on file). He addressed slide 3, "About Anew":
• Oldest and largest carbon offset developer in North
America (20+ years)
• Voted Environmental Finance's Best Project Developer
(North America) and Best Offset Developer (California)
for seven years running
• Dedicated forestry team: in house finance,
marketing, and legal experts, plus >30 professional
foresters with unparalleled forest carbon experience
Mr. Strauss highlighted slide 4, "Existing Forest Carbon
Project in AK":
Since 2016, 18 Forest Carbon Projects have
successfully issued credits
• 11 Compliance
• 7 Voluntary
Ms. Strauss addressed slide 6, "Forest Carbon Markets":
Voluntary Market
Companies voluntarily choose to purchase offsets
to reduce their emissions
• Greater variation in pricing
• $4 to $35
• Premium value attributed to "charismatic"
projects
• Less certain demand
Compliance Market
Companies purchase offsets to help meet their
legally mandated emissions targets
(CA and Quebec)
More consistent pricing
$17 to $24
Built in demand through 2030
Additional Compliance Programs
Washington
CORSIA (international aviation)
Canada (Federal and Provincial)
Oregon
10:55:52 AM
Mr. Strauss discussed slide 7, "Credit Buyers."
Co-Chair Stedman wondered whether there were standardized
contracts.
Mr. Strauss replied that the contracts for the purchasing
of the units.
Co-Chair Stedman wondered whether the IRS had taken
interest in the industry.
Mr. Strauss replied that he was not aware of any IRS
interest.
Senator Wilson looked at slide 6, and queried the
measurement of unit.
Mr. Strauss replied that the unit was one offset equals one
metric ton of emissions reductions.
11:00:22 AM
Co-Chair Olson discussed the afternoon's agenda.
SB 48 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
11:00:52 AM
The meeting was adjourned at 11:00 a.m.