Legislature(2023 - 2024)SENATE FINANCE 532

04/12/2023 01:00 PM Senate FINANCE

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                 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                                                                    
SB 67     PFAS USE FIREFIGHTING                                                                                                 
          SB 67 was HEARD and HELD in committee for further                                                                     
SB 87     LUMBER GRADING PROGRAM                                                                                                
          SB 87 was HEARD and HELD in committee for further                                                                     
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                                                                    
     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                                                                    
     •   Small   mill   operators   find   it   economically                                                                    
     challenging  to  become  a member  of  these  types  of                                                                    
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                                                                          
          - 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                                                                    
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                                                                    
     • 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                                                                    
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                                                                    
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                                                                    
     •  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                                                                      
     • 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                                                                      
       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                                                                         
             National  Association  of Home  Builders  notes                                                                    
          wood  prices add  $36k to  new single  family home                                                                    
             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                                                                    
     • 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                                                                    
     • 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                                                                                      
1:33:29 PM                                                                                                                    
Senator  Kiehl asked  how tall  the residential  units could                                                                    
Ms. Arians  replied that  she was not  sure of  the specific                                                                    
height. She  offered to get  back to the committee  with the                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
     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                                                                        
          1. In Section 1 (AS 46.03.340), page 1, lines 9-                                                                      
               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                                                                    
               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                                                                    
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                                                                    
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                                                                    
     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                                                                    
     - 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                                                                                                                    
2:23:57 PM                                                                                                                    
Co-Chair Olson CLOSED public testimony.                                                                                         
Senator  Kiehl thanked  the  committee  for considering  the                                                                    
Co-Chair Olson set SB 67 aside.                                                                                                 
SB  67  was   HEARD  and  HELD  in   committee  for  further                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                                                                    
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                                                                    
2:49:11 PM                                                                                                                    
Co-Chair Olson OPENED public testimony.                                                                                         
2:49:48 PM                                                                                                                    
AT EASE                                                                                                                         
2:50:05 PM                                                                                                                    
Co-Chair Olson CLOSED public testimony.                                                                                         
SB  104  was  HEARD  and   HELD  in  committee  for  further                                                                    
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,                                                                          
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                                                                    
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                                                                    
Co-Chair Olson discussed housekeeping.                                                                                          
2:57:53 PM                                                                                                                    
The meeting was adjourned at 2:57 p.m.                                                                                          

Document Name Date/Time Subjects
SB 67 Letter of Support for Senate Bill 67.pdf SFIN 4/12/2023 1:00:00 PM
SB 67
SB 67 Urgent action is needed to address PFAS in Alaska to prevent further harm and to protect public health - pass SB 67 with protective amendments!.pdf SFIN 4/12/2023 1:00:00 PM
SB 67
SB 87 Support rec'd by 03.23.23.pdf SFIN 4/12/2023 1:00:00 PM
SB 87
SB 87 DOF Lumber Grading Presentation 04.12.23.pdf SFIN 4/12/2023 1:00:00 PM
SB 87
SB 87 Sponsor Statement ver. A 03.15.23.pdf SFIN 4/12/2023 1:00:00 PM
SRES 3/15/2023 3:30:00 PM
SB 87
SB 87 Sectional Analysis ver. A 03.15.23.pdf SFIN 4/12/2023 1:00:00 PM
SRES 3/15/2023 3:30:00 PM
SB 87
SB 87 ASHBA_Letter of Support_Lumber Grading Program_3.22.23.pdf SFIN 4/12/2023 1:00:00 PM
SB 87
SB 104 Sectional Analysis version A 3.17.2023.pdf SFIN 4/12/2023 1:00:00 PM
SJUD 3/20/2023 1:30:00 PM
SJUD 3/24/2023 1:30:00 PM
SJUD 3/27/2023 1:30:00 PM
SB 104
SB 104 Supporting Testimony - Received as of 3.26.2023.pdf SFIN 4/12/2023 1:00:00 PM
SJUD 3/27/2023 1:30:00 PM
SB 104
SB 104 Sponsor Statement version A 3.17.2023.pdf SFIN 4/12/2023 1:00:00 PM
SJUD 3/20/2023 1:30:00 PM
SJUD 3/24/2023 1:30:00 PM
SJUD 3/27/2023 1:30:00 PM
SB 104
SB 104 Supporting Document - ALSC Civil Legal Services Fund Fact Sheet 3.17.2023.pdf SFIN 4/12/2023 1:00:00 PM
SJUD 3/20/2023 1:30:00 PM
SJUD 3/24/2023 1:30:00 PM
SJUD 3/27/2023 1:30:00 PM
SB 104
SB 67 Letters of Support received by 2023-04-11.pdf SFIN 4/12/2023 1:00:00 PM
SB 67
SB 114 Support Vernon.pdf SFIN 4/12/2023 1:00:00 PM
SB 114
SB114 CS in Finance summary of changes.pdf SFIN 4/12/2023 1:00:00 PM
SB 114
SB 114 work draft version U.pdf SFIN 4/12/2023 1:00:00 PM
SB 114
SB 67 Saunders backup - Report of Findings of PFAS Contamination in Waters of Anchorage and FNSB FINAL 2-13-23.pdf SFIN 4/12/2023 1:00:00 PM
SB 67
SB 87 2023.04.14 Response to Senate Finance Committee on SB 87.pdf SFIN 4/12/2023 1:00:00 PM
SB 87