Legislature(2017 - 2018)BUTROVICH 205

02/12/2018 03:30 PM Senate RESOURCES

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSSB 86(RES) Out of Committee
-- Public Testimony --
Heard & Held
-- Public Testimony --
Scheduled but Not Heard
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                       February 12, 2018                                                                                        
                           3:30 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Cathy Giessel, Chair                                                                                                    
Senator John Coghill, Vice Chair                                                                                                
Senator Natasha von Imhof                                                                                                       
Senator Bert Stedman                                                                                                            
Senator Kevin Meyer                                                                                                             
Senator Bill Wielechowski                                                                                                       
Senator Click Bishop                                                                                                            
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 86                                                                                                              
"An  Act relating  to the  sale  or other  disposal, leasing,  or                                                               
encumbrance of  Alaska Railroad  Corporation land;  and providing                                                               
for an effective date."                                                                                                         
     - MOVED CSSB 86(RES) OUT OF COMMITTEE                                                                                      
SENATE BILL NO. 173                                                                                                             
"An Act  relating to the liability  of a person or  the state for                                                               
the  release  of  certain  pesticides  during  application  on  a                                                               
utility pole."                                                                                                                  
     - HEARD & HELD                                                                                                             
SENATE BILL NO. 92                                                                                                              
"An Act relating  to abandoned and derelict  vessels; relating to                                                               
the registration  of vessels; relating  to certificates  of title                                                               
for  vessels;  relating  to  the  duties  of  the  Department  of                                                               
Administration;  relating  to the  duties  of  the Department  of                                                               
Natural  Resources; establishing  the derelict  vessel prevention                                                               
program;  establishing  the  derelict vessel  prevention  program                                                               
fund; and providing for an effective date."                                                                                     
     - SCHEDULED BUT NOT HEARD                                                                                                  
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB  86                                                                                                                  
SHORT TITLE: ALASKA RAILROAD CORPORATION LAND                                                                                   
SPONSOR(s): SENATOR(s) COGHILL                                                                                                  
03/10/17       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/10/17       (S)       RES, FIN                                                                                               
04/07/17       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
04/07/17       (S)       Heard & Held                                                                                           
04/07/17       (S)       MINUTE(RES)                                                                                            
02/09/18       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/09/18       (S)       Heard & Held                                                                                           
02/09/18       (S)       MINUTE(RES)                                                                                            
02/12/18       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
BILL: SB 173                                                                                                                  
SHORT TITLE: LIABILITY: PESTICIDES & UTILITY POLES                                                                              
SPONSOR(s): SENATOR(s) MICCICHE                                                                                                 
02/02/18       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/02/18       (S)       RES                                                                                                    
02/12/18       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
WITNESS REGISTER                                                                                                              
KARL GOHLKE, representing self                                                                                                  
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Supported CSSB 86 (RES).                                                                                  
BARBARA BLAKELY, representing herself                                                                                           
Sterling, Alaska                                                                                                                
POSITION STATEMENT: Had concerns with SB 86.                                                                                  
BILL O'LEARY, President and CEO                                                                                                 
Alaska Railroad Corporation (ARRC)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Commented on SB 86.                                                                                       
JOHN COOK, Chair                                                                                                                
Board of Directors                                                                                                              
Alaska Railroad Corporation (ARRC)                                                                                              
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Commented on SB 86.                                                                                       
SENATOR MICCICHE                                                                                                                
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Sponsor of SB 173.                                                                                        
KRISTIN RYAN, Director                                                                                                          
Spill Prevention and Response (SPAR)                                                                                            
Department of Environmental Conservation (DEC)                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Supported SB 173.                                                                                         
RACHEL HANKE, staff to Senator Micciche                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Commented on SB 173 for the sponsor.                                                                      
BRAD JANORSCHKE, General Manager                                                                                                
Homer Electric Association                                                                                                      
Homer, Alaska                                                                                                                   
POSITION STATEMENT: Supported SB 173.                                                                                         
DALLIN BROOKS, Vice President                                                                                                   
North American Wood Pole Council                                                                                                
Vancouver, Washington                                                                                                           
POSITION STATEMENT: Supported SB 173.                                                                                         
ERIC ERIKSEN, Vice President                                                                                                    
Alaska Electric Light and Power (AEL&P)                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Supported SB 173.                                                                                         
PHIL STEYER, Director                                                                                                           
Government Relations                                                                                                            
Chugach Electric Association                                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Supported SB 173.                                                                                         
CRYSTAL ENKVIST, Executive Director                                                                                             
Alaska Power Association                                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Supported SB 173.                                                                                         
DON MCNAMARA                                                                                                                    
Oceanside Farm                                                                                                                  
Homer, Alaska                                                                                                                   
POSITION STATEMENT: Opposed SB 173.                                                                                           
DONNA RAE FAULKNER                                                                                                              
Oceanside Farm                                                                                                                  
Homer, Alaska                                                                                                                   
POSITION STATEMENT: Commented on SB 173.                                                                                      
ROBERT HIMSCHOOT                                                                                                                
Nushagak Electric and Telephone Cooperative                                                                                     
Dillingham, Alaska                                                                                                              
POSITION STATEMENT: Supported SB 173.                                                                                         
EDDIE TAUNTON, Director of Operations                                                                                           
Matanuska Susitna Electric                                                                                                      
Palmer, Alaska                                                                                                                  
POSITION STATEMENT: Supported SB 173.                                                                                         
ACTION NARRATIVE                                                                                                              
3:30:14 PM                                                                                                                    
CHAIR  CATHY   GIESSEL  called  the  Senate   Resources  Standing                                                             
Committee meeting  to order at 3:30  p.m. Present at the  call to                                                               
order   were   Senators    Coghill,   Bishop,   Stedman,   Meyer,                                                               
Wielechowski, and Chair Giessel.                                                                                                
            SB  86-ALASKA RAILROAD CORPORATION LAND                                                                         
3:30:36 PM                                                                                                                    
CHAIR GIESSEL announced  SB 86 to be up  for consideration. [CSSB
86(RES), version  30-LS0487\J, was before the  committee.] Public                                                               
testimony was opened at the last meeting.                                                                                       
3:31:32 PM                                                                                                                    
KARL  GOHLKE,  representing  self, Fairbanks,  Alaska,  supported                                                               
CSSB 86  (RES). He  said the  Alaska Railroad  Corporation (ARRC)                                                               
has  lost three  iterations of  seasoned employees  because of  a                                                               
loss in  revenue. A few factors  have contributed to the  loss in                                                               
revenue,  but the  biggest one  is  the slowdown  on North  Slope                                                               
production followed  by the closing  of the Flint  Hills Refinery                                                               
and the  loss of export contracts  for Usibelli Coal Mine.  SB 86                                                               
is a solution  that will allow the ARRC to  generate more revenue                                                               
and revitalize communities along the Railbelt.                                                                                  
3:34:19 PM                                                                                                                    
BARBARA  BLAKELY,  representing  herself, Sterling,  Alaska,  had                                                               
concerns  with SB  86. She  explained  that she  and her  husband                                                               
operate a business in Soldotna  and own a condominium in Whittier                                                               
Manor in  the City  of Whittier  and she sits  on its  board. She                                                               
referenced a  letter from her  board and  followed up with  a few                                                               
comments  and encouraged  them once  again  to consider  Whittier                                                               
Manor's situation when voting on this bill.                                                                                     
One  of their  concerns is  that with  no sale  of their  land or                                                               
long-term lease  to their association that  their property values                                                               
are decreasing  at an alarming  rate. When  the city gave  them a                                                               
draft  of the  15-year lease  to consider,  it included  a clause                                                               
that they  would have first right  of refusal. That makes  them a                                                               
little nervous. If  that land should ever be sold  or traded, the                                                               
Whittier  Manor  Condo Association  should  have  first right  of                                                               
MS.  BLAKELY  explained  that a  large  percentage  of  full-time                                                               
Whittier residents live  in Whittier Manor. It's  hard to imagine                                                               
the railroad ever kicking them out  of their homes. That makes it                                                               
hard  to  understand the  railroad  being  so adamant  about  not                                                               
selling to them. In Friday's  hearing she understood the railroad                                                               
to say it  wanted to sell property that is  not income producing.                                                               
Whittier  Manor  pays  lease  payments   regularly,  but  if  the                                                               
railroad's  intent  is to  make  money,  why  would they  turn  a                                                               
percentage of their lease income over to the City of Whittier?                                                                  
3:36:33 PM                                                                                                                    
SENATOR  COGHILL thanked  her for  bringing this  issue to  their                                                               
attention  and  asked  if  their  lease  is  held  by  the  condo                                                               
association or by the City  of Whittier, because language says to                                                               
offer  the leaseholders  the right  of first  refusal on  page 7,                                                               
line 4, subsection 2.                                                                                                           
MS. BLAKELY dropped off line.                                                                                                   
CHAIR  GIESSEL said  Senator Coghill  would  get back  to her  on                                                               
3:38:27 PM                                                                                                                    
CHAIR  GIESSEL   finding  no  further  comments,   closed  public                                                               
testimony on SB 86.                                                                                                             
SENATOR WIELECHOWSKI asked who has  title over this land: ARRC or                                                               
the State of Alaska (SOA).                                                                                                      
3:39:14 PM                                                                                                                    
BILL  O'LEARY, President  and  CEO,  Alaska Railroad  Corporation                                                               
(ARRC), answered that the railroad has title to the land.                                                                       
SENATOR WIELECHOWSKI  said he pulled  up the statute  45 U.S.C.S.                                                               
1203 (1982), which says "subject  to the provision of this title,                                                               
the  United  State shall  transfer  all  rail properties  of  the                                                               
Alaska  Railroad  to  the  state."  He asked  if  the  title  was                                                               
transferred to the ARRC sometime after that.                                                                                    
MR.  O'LEARY replied  this  was in  1982, and  the  ARRC was  not                                                               
created until  1984 or  85. That  is when  the transfer  from the                                                               
state occurred.                                                                                                                 
SENATOR WIELECHOWSKI  asked how  a sale  of property  would work.                                                               
Would  the state  have the  ability to  appropriate the  funds or                                                               
would the ARRC do as it wished with them?                                                                                       
MR. O'LEARY  replied that currently  it is envisioned  that those                                                               
monies would remain with the ARRC for its own purposes.                                                                         
SENATOR  WIELECHOWSKI asked  if the  timeframe for  the right  of                                                               
first refusal should be clarified in the statute.                                                                               
MR. O'LEARY answered  there is nothing in the bill  at this point                                                               
about a timeframe. He suggested using 60 or 90 days.                                                                            
3:42:12 PM                                                                                                                    
JOHN   COOK,  Chair,   Board   of   Directors,  Alaska   Railroad                                                               
Corporation  (ARRC), Fairbanks,  Alaska,  added it  is not  their                                                               
intent  to  sell  any  lands  currently  leased  by  an  existing                                                               
leaseholder unless  they want to do  it. And at a  minimum, there                                                               
is a 30-day public notice provision.  They have no desire to sell                                                               
income-producing lands  to a  third party who  would then  be the                                                               
SENATOR WIELECHOWSKI  stated that the state  has a constitutional                                                               
public  trust obligation  to  manage lands  in  the state's  best                                                               
interest, and  these are  state lands that  were conveyed  by the                                                               
U.S. government. Would he object  to have a requirement for state                                                               
and/or  local   review  before  any   proposed  sale,   lease  or                                                               
MR. COOK answered best interest  findings are in several areas of                                                               
the statute to  for the state to get fair  market value for these                                                               
lands.  Having  an  additional review  phase  beyond  the  public                                                               
notice will  delay transactions from  happening in  a "reasonably                                                               
timely manner."                                                                                                                 
3:44:13 PM                                                                                                                    
SENATOR  WIELECHOWSKI said  this language  protects the  railroad                                                               
but doesn't necessarily protect the people of Alaska.                                                                           
SENATOR STEDMAN said he understands  why the ARRC doesn't want to                                                               
deal with possible legislative  encumbrances, because it convenes                                                               
every winter and  not 365 days a year like  their board does, but                                                               
he didn't see where the  legislature historically has been overly                                                               
cumbersome  to the  railroad in  disposal of  properties, and  he                                                               
didn't   understand  why   they  can't   come  in   with  bundled                                                               
transactions or  why they  haven't brought  in projects  that are                                                               
"ripe" for economic development  earlier for legislative approval                                                               
for liquidation.                                                                                                                
MR. COOK  responded that there  are a number of  practical issues                                                               
with those  suggestions, but  telling the  public in  general and                                                               
commercial entities  (developers) that  a legislative  process is                                                               
involved  and that  means they  may or  may not  be able  to have                                                               
their land at the conclusion of  the legislature - maybe it won't                                                               
even happen  - has  served as  a deterrent  in the  past. Another                                                               
impediment is what  happens if someone comes to  the railroad and                                                               
expresses  interest in  a  piece of  property  that they  haven't                                                               
identified, and  it's on  day 89  of the  legislature or  the day                                                               
after  adjournment. It  ties  the railroad's  hands  in terms  of                                                               
being timely and responsive.                                                                                                    
SENATOR  STEDMAN asked  why the  legislature can't  pre-authorize                                                               
the railroad in  advance of any developer having  a proposal that                                                               
would  allow  them  to  do  a private  market  transaction  on  a                                                               
particular  parcel like  the  one  in Fairbanks  that  is up  for                                                               
residential  development.  Normally,  when there  is  developable                                                               
property  more  than  one entity  recognizes  it.  The  Fairbanks                                                               
property  has been  brought before  this committee  several times                                                               
and is a known development site.                                                                                                
3:49:12 PM                                                                                                                    
MR. COOK responded that Chena  Landing residential development is                                                               
an easy  transaction that would  work under the  scenario Senator                                                               
Stedman described, but  he develops commercial real  estate for a                                                               
living, and one never knows what  will walk through the door. For                                                               
instance,  one of  the transactions  he is  in negotiations  over                                                               
includes a fee  simple sale of a parcel near  Healy that would be                                                               
used for  a hotel development.  If pursued  it would be  a $30-40                                                               
million  private sector  investment.  That is  an opportunity  he                                                               
would  not have  been able  to contemplate  six months  ago. Some                                                               
would fit  into the scenario  Senator Stedman described  and some                                                               
just wouldn't.                                                                                                                  
SENATOR VON  IMHOF said this  bill has  a three-year sunset  as a                                                               
built-in limitation.  However, she offered that  maybe they could                                                               
limit the  number of  transactions over the  next three  years to                                                               
three deals (hypothetically) just for  a sense of a pilot project                                                               
type of  finite timeframe  and activity.  But she  is comfortable                                                               
with the three-year sunset.                                                                                                     
3:51:31 PM                                                                                                                    
SENATOR  COGHILL  moved  to  report  CSSB  86(RES),  version  30-                                                               
LS0487\J,  from  committee  with individual  recommendations  and                                                               
attached zero fiscal note.                                                                                                      
SENATOR  WIELECHOWSKI   objected.  He   commented  that   he  has                                                               
significant  concerns  with this  bill  and  agreed with  Senator                                                               
Stedman that  he didn't understand why  these properties couldn't                                                               
be bundled and  come before the legislature for  approval. It has                                                               
been  done  many  times  in  the  past.  He  worries  this  is  a                                                               
significant amount  of land  - 18,000  acres -  some of  which is                                                               
prime real  estate all across Alaska.  The State of Alaska  has a                                                               
trust  obligation under  the Alaska  Constitution to  manage that                                                               
for the best  interests of the people of Alaska.  The statute, 45                                                               
U.S.C.S. 1203, specifically provides  that this land was provided                                                               
to the State of Alaska.                                                                                                         
A 2009 Supreme Court case,  Southeast Alaska Conservation Council                                                               
v. State  of Alaska, is very  similar to this one.  In that case,                                                               
the  legislature  passed  two  pieces  of  legislation  conveying                                                               
250,000 acres  to the University  of Alaska and the  net proceeds                                                               
were to  be used for  an endowment  trust. A lawsuit  ensued, and                                                               
the  Supreme Court  held that  it  was an  illegal dedication  of                                                               
state assets and violated the state dedicated funds clause.                                                                     
3:53:53 PM                                                                                                                    
He cited  a Legislative Legal  opinion stating a provision  in 45                                                               
U.S.C.S.  1207  says:  "Revenues  generated  by  the  state-owned                                                               
railroad  shall  be  retained  and  managed  by  the  state-owned                                                               
railroad for railroad and related  purposes." He wasn't sure that                                                               
applies to  land but had  asked for  a legal opinion.  However, a                                                               
1984 Attorney  General's opinion concluded dedication  of land to                                                               
the railroad to allow  them to do with as they  please would be a                                                               
violation of the  dedicated funds clause of  the Constitution. He                                                               
is worried about the future  impacts of this legislation, because                                                               
the state  would be giving  up its authority of  this potentially                                                               
significant right  of way.  The railroad may  never have  to come                                                               
before the legislature again on this.                                                                                           
SENATOR WIELECHOWSKI  said a process  is in place  for management                                                               
of this  land, and  it has  worked in the  past. There  should be                                                               
some  state  and local  review  of  a  proposed sale,  lease,  or                                                               
encumbrance and there  should be some sort of  timeframe on right                                                               
of  first refusal.  Probably  15 or  30 days  is  not enough  for                                                               
someone  to  come  up  with  a significant  amount  of  money  to                                                               
purchase land. As Senator Von  Imhof mentioned, maybe there could                                                               
be a pilot project.                                                                                                             
3:56:05 PM                                                                                                                    
SENATOR  WIELECHOWSKI removed  his  objection and  said he  would                                                               
mark an "N" on the bill report.                                                                                                 
CHAIR  GIESSEL, finding  no  further  objections, announced  that                                                               
CSSB  86(RES)  had  moved  from  the  Senate  Resources  Standing                                                               
3:56:19 PM                                                                                                                    
At ease                                                                                                                         
          SB 173-LIABILITY: PESTICIDES & UTILITY POLES                                                                      
3:58:04 PM                                                                                                                    
CHAIR  GIESSEL  announced  consideration  of SB  173.  This  bill                                                               
proposes   aligning  Alaska   with   liability  protections   for                                                               
utilities with other states. The  subject is pesticides and power                                                               
3:58:29 PM                                                                                                                    
SENATOR  MICCICHE, Alaska  State Legislature,  sponsor of  SB 173                                                               
said this bill  came about from an incident  when an enthusiastic                                                               
federal employee  discovering some pesticide seepage  in the area                                                               
of a  utility pole during  a highway  project. It was  brought to                                                               
his  attention that  Alaska law  doesn't match  federal law.  The                                                               
reason for bringing  this forward is the  financial protection of                                                               
nearly  every Alaskan  ratepayer who  depends upon  a utility  to                                                               
have electricity delivered to their  home, business, or facility.                                                               
SB 73 conforms  Alaska law with federal law with  respect to wood                                                               
poles treated with a pesticide  registered with the Environmental                                                               
Protection Agency (EPA). He commented:                                                                                          
     Yes,  the feds  are ahead  of  us on  this. Just  think                                                                    
     about  the potential  liability across  the country  if                                                                    
     every utility  pole that has seepage  of this pesticide                                                                    
     is required to be a cleanup site.                                                                                          
He explained  that every  wooden pole is  factory treated  with a                                                               
preservative pesticide,  which prolongs  the service life  of the                                                               
pole  by  protecting  it  from   organisms  that  compromise  its                                                               
structural integrity.  It would  be logical  to assume  that soil                                                               
coming in direct contract with  that treated pole would have some                                                               
traces of that preservative.                                                                                                    
4:00:51 PM                                                                                                                    
SENATOR  MICCICHE said  SB 173  matches  federal law  that has  a                                                               
specific  exemption for  the application  of a  pesticide product                                                               
registered   under  the   Federal  Insecticide,   Fungicide,  And                                                               
Rodenticide  Act   (FIFRA).  It  clarifies  and   eliminates  the                                                               
assumption of liability and remediation  costs for trace elements                                                               
including a federal exemption within Alaska statutes.                                                                           
He said  that the Department of  Environmental Conservation (DEC)                                                               
is  working with  utility companies  so that  they can  provide a                                                               
best  practice guidance  for use,  replacement,  and disposal  of                                                               
preservative-treated utility poles to  reduce or eliminate future                                                               
contamination  when  poles are  retired.  This  bill is  narrowly                                                               
drafted to  apply only to  wood utility pole  installed, removed,                                                               
or  used  by public  utilities  in  connection with  providing  a                                                               
utility service in the state.                                                                                                   
SENATOR WIELECHOWSKI asked  if any studies have been  done on the                                                               
impacts of pentachlorophenol on the  health fish or humans or the                                                               
ability of pentachlorophenol to migrate through the ground.                                                                     
KRISTIN  RYAN,   Director,  Division  of  Spill   Prevention  and                                                               
Response (SPAR), Department  of Environmental Conservation (DEC),                                                               
Anchorage,  Alaska,  answered yes,  The  EPA  had done  extensive                                                               
testing on pentachlorophenol,  which is the product  that is used                                                               
to treat  utility poles so  that they  last longer. That  data is                                                               
available.   Because   it   is  a   registered   pesticide,   the                                                               
manufacturer   is   required   to   submit   updated   toxicology                                                               
information (for all pesticides) to  the EPA every five years. It                                                               
is a  very thorough process to  assure that they are  used in the                                                               
safest  way possible  and serve  only the  purpose that  they are                                                               
intended  to  serve.  This  product  is  classified  as  a  human                                                               
carcinogen and it is harmful to fish.                                                                                           
However, Ms. Ryan said, the question  is if the product leaks off                                                               
the pole  in quantities to  cause harm  to human health  or other                                                               
species, and  that is  a varied question,  and the  department is                                                               
getting data on that now.  The technology used reduces the amount                                                               
of leeching  on the  poles if they  have been  treated correctly.                                                               
The  EPA has  decided that  it can  be used  in a  situation with                                                               
limited impact upon the environment  as long as it's not leeching                                                               
off the pole.                                                                                                                   
SENATOR WIELECHOWSKI asked for any  information she could provide                                                               
on  the health  effects  and contamination  issues with  streams,                                                               
rivers, and  drinking supplies.  He also asked  if any  states or                                                               
countries that have banned pentachlorophenol for this use.                                                                      
MS. RYAN  answered she  was not  aware of  anyone who  had banned                                                               
pentachlorophenol,  which is  not the  drug, PCP  (the department                                                               
uses  the shorthand  "Penta" to  distinguish). The  manufacturing                                                               
process is  really key to  making sure the product  doesn't leech                                                               
from the pole.  It's about making sure  the manufacturing process                                                               
follows  EPA  guidelines,  which  is   the  whole  point  of  EPA                                                               
regulating the product.                                                                                                         
SENATOR STEDMAN asked  her to explain the  difference between the                                                               
old creosote  poles and the  new ones that are  pressure injected                                                               
and how they interplay in this bill.                                                                                            
MS. RYAN answered that she  wasn't prepared to provide a detailed                                                               
comparison to the  committee today, but she would  see what could                                                               
be  found  and provide  it  later.  From a  general  perspective,                                                               
pentachlorophenol, if applied correctly, is  less likely to leave                                                               
the pole  and contaminate the  surrounding environment,  which is                                                               
why utilities are required to use this product.                                                                                 
4:09:49 PM                                                                                                                    
SENATOR  STEDMAN said  these poles  are  being used  in a  marine                                                               
environment, and  he wanted to  know how this bill  protects them                                                               
in that case. He didn't want to leave any groups out.                                                                           
MS. RYAN responded  the she would research that issue,  but he is                                                               
on  the  right  track  that  this is  preferred  method  in  many                                                               
situations. The  state of  Vermont did  an extensive  analysis of                                                               
the use of wood poles: the  best places, the best conditions, and                                                               
what should be done if they  have to be removed. They have shared                                                               
those best practices  with the Alaska Energy  Authority (AEA) and                                                               
asked to have  a dialogue about whether they  would be applicable                                                               
practices in Alaska, too. That dialogue has just started.                                                                       
SENATOR WIELECHOWSKI  said language on  page 1, line  8, provides                                                               
an  exemption  for release  of  a  pesticide registered  under  7                                                               
U.S.C.  136(a) and  asked  her perspective  on  limiting that  to                                                               
pentachlorophenol instead of the entire gamut.                                                                                  
MS. RYAN replied that the intent  of the bill is to be consistent                                                               
with  federal  law,  and  that   is  how  the  federal  exemption                                                               
currently exists.  Pesticides add a pollutant  to the environment                                                               
for a specific purpose. That  obviously is in conflict with other                                                               
federal laws  that say  you cannot  pollute the  environment. The                                                               
fix  is that  if you  apply  pesticides that  are approved  under                                                               
FIFRA,  that is  meeting federal  law and  is, therefore,  exempt                                                               
from other laws that say  you cannot pollute the environment. The                                                               
catch  is   that  use  of   products  registered   under  Federal                                                               
Insecticide,  Fungicide, and  Rodenticide  Act  (FIFRA) are  very                                                               
4:13:58 PM                                                                                                                    
RACHEL   HANKE,  staff   to   Senator   Micciche,  Alaska   State                                                               
Legislature,  provided  a short  sectional  analysis  of SB  173.                                                               
Section  1  adds  a  new   section  to  Title  9  under  Actions,                                                               
Immunities,  Defenses, and  Duties  that releases  the state  and                                                               
persons from liability  for costs and damages for  the release of                                                               
a  pesticide registered  under the  FIFRA that  is used  to treat                                                               
wood utility poles.                                                                                                             
Section 2 adds cross-references to the new section in Title 46.                                                                 
4:14:42 PM                                                                                                                    
BRAD  JANORSCHKE, General  Manager,  Homer Electric  Association,                                                               
Homer, Alaska  supported SB  173. He said  it affects  all public                                                               
utilities  in  Alaska, and  the  issue  comes  from the  lack  of                                                               
statutory clarity regarding the treatment of wood utility poles.                                                                
Recent events  on the Kenai  Peninsula have raised  potential for                                                               
soils surrounding each pole to  be treated as a contaminated site                                                               
when it is  removed from service. He explained  that over 250,000                                                               
treated utility poles  have been installed all  over Alaska. They                                                               
are less  expensive than  steel, fiberglass,  or concrete,  are a                                                               
renewable  resource,  and  blend  in with  the  environment  more                                                               
readily than the other options.  Today the poles are treated with                                                               
pentachlorophenol (Penta), an  EPA registered pesticide. Properly                                                               
applied,  Penta  treated  poles  are  supposed  to  have  minimal                                                               
pesticide  migration from  the pole  to the  environment directly                                                               
surrounding  the   pole.  It  is   the  minimal   migration  that                                                               
potentially  makes the  site  contaminated  under current  Alaska                                                               
law.  If it  were  characterized as  a  contaminated site,  Homer                                                               
Electric  has been  informed  the  cost to  remove  and a  single                                                               
utility pole from service and  mitigate the site would cost about                                                               
The  provisions  of  AS  46.03.822(a) if  strictly  read  can  be                                                               
interpreted  as making  a public  utility  that installs  treated                                                               
poles liable for  cleanup of any residual  preservative a retired                                                               
or existing  utility pole.  This liability  does not  exist under                                                               
federal law or in any other state, as far as he is aware.                                                                       
MR. JANORSCHKE  said the purpose  of the proposed  legislation is                                                               
to bring Alaska in alignment with  the rest of the country; it is                                                               
drafted  narrowly  and  intended  to  apply  potential  liability                                                               
stemming  from installing  or removing  a wood  utility pole.  He                                                               
said  HEA  has  been  actively engaged  with  the  Department  of                                                               
Environmental Conservation  (DEC) for  two years. His  concern is                                                               
not  with DEC  but  the law  that they  are  required to  operate                                                               
under. He closed saying:                                                                                                        
     As an aside, kudos to  ADEC as they have recently taken                                                                    
     a  positive step  forward by  inviting  members of  our                                                                    
     state-wide organization  (Alaska Power  Association) to                                                                    
     participate  in the  development and  implementation of                                                                    
     best  management practices  for the  handling, storage,                                                                    
     use,   and  retirement   of   treated  utility   poles,                                                                    
     something that  has been successfully  been done  in at                                                                    
     least one other state.                                                                                                     
4:19:10 PM                                                                                                                    
SENATOR  STEDMAN said  in his  area [Ketchikan]  they have  to do                                                               
"off  island disposal"  and ship  contaminants  to Washington  on                                                               
special  barges.  He  asked  how the  Knik  and  Fairbanks  areas                                                               
dispose of their retired utility poles.                                                                                         
MR. JANORSCHKE answered  that for the Kenai Peninsula  it is very                                                               
common to retire  poles that are 40 years old;  often they can be                                                               
in great  shape. They  have a  waiting list  of members  who take                                                               
used poles. The unusable ones get taken to the landfill.                                                                        
SENATOR  STEDMAN  asked  what would  be  done  with  contaminated                                                               
material if this bill doesn't pass.                                                                                             
MR.  JANORSCHKE   answered  that   he  has   been  told   by  his                                                               
environmental consultant that they  would be required to excavate                                                               
the area and  bag the soil. It  would have to get  shipped to the                                                               
Lower 48  for processing which is  the bulk of the  $30K per pole                                                               
SENATOR WIELECHOWSKI  asked if Penta  is the only  pesticide they                                                               
use on their poles.                                                                                                             
MR. JANORSCHKE replied that it is  the only one to his knowledge.                                                               
It's possible that there may be some old poles with creosote.                                                                   
SENATOR  WIELECHOWSKI  said he  would  like  to know  what  other                                                               
utilities use going forward.                                                                                                    
4:22:49 PM                                                                                                                    
DALLIN BROOKS, Vice President, North  American Wood Pole Council,                                                               
Vancouver,  Washington, supported  SB 173.  Today, there  are 160                                                               
million wood  poles in North America.  It is the backbone  of our                                                               
country's  energy infrastructure,  because  growing a  tree is  a                                                               
simple  process. Once  it is  made into  a pole,  preservative is                                                               
applied. A pole  also stores carbon, offsetting  fossil fuel use,                                                               
and provides  a protection against  weather. Wood poles  have low                                                               
environmental impact  when compared  to composite  materials such                                                               
as steel, fiberglass, and concrete.  It uses less energy and less                                                               
resources, so it is important to keep our forests sustainable.                                                                  
Furthermore,   wood  won't   corrode,   Mr.   Brooks  said,   and                                                               
preservative treatment  protects it  against the  natural enemies                                                               
of insects,  moisture, and fungi. With  a responsible maintenance                                                               
program, wood poles  cost less than 4 percent per  decade and can                                                               
last  75  years  or  longer.  Wood  poles  boast  a  low  thermal                                                               
expansion co-efficient  and low  electrical conductivity.  In the                                                               
case of  a utility  pole, this means  a thermally  stable product                                                               
that requires less insulating hardware.                                                                                         
Due  to the  insulating properties  of wood,  birds can  rest and                                                               
perch on a wood cross  arm without being electrocuted. Wood poles                                                               
allow  for   easy  climbing  using   techniques  that   are  well                                                               
understood  by linemen  and  uses equipment  that  is common  and                                                               
inexpensive.  Because  wood  poles don't  have  special  climbing                                                               
hardware, a  lineman can  quickly attach gaffs  and climb  a pole                                                               
without  delay,  snow  or  shine,  and  surveys  show  that  they                                                               
overwhelmingly prefer to climb a wood pole.                                                                                     
MR.  BROOKS said  the strength  and resilience  of wood  with the                                                               
penetration  of  protective  treatments  enables  wood  poles  to                                                               
withstand demanding service conditions  like the ones experienced                                                               
in Alaska.                                                                                                                      
MR. BROOKS  closed saying that  they as an industry  support this                                                               
bill to  ensure that wood poles  have a level playing  field with                                                               
other  materials as  they continue  to be  installed and  removed                                                               
corresponding  to   the  changing  infrastructure   demands.  The                                                               
preservative does move  down the pole over time; that  is what it                                                               
is intended  to do as  the ground  line is where  most biological                                                               
attacks  happen. Extensive  studies have  been conducted  to show                                                               
that while protecting  the wood pole from  targeted organisms the                                                               
pole offers minimal risk to humans and the environment.                                                                         
He was once  asked by a reporter  why wood poles are  used in the                                                               
21st  Century, and  the answer  is  simple: they  are the  lowest                                                               
cost, lowest  environmental impact, best performing  product that                                                               
is  out there  today. And  wood poles  will be  used in  the 22nd                                                               
century,  because the  wood poles  they install  today will  last                                                               
that long,  and the wood poles  that are going to  last that long                                                               
will have a new tree grown in that time to replace it.                                                                          
4:26:59 PM                                                                                                                    
SENATOR BISHOP  asked what he  does for research  and development                                                               
(R&D) in preservatives in looking forward to the 21st Century.                                                                  
MR. BROOKS answered  that the industry continues to  work hard to                                                               
improve  its  products  and  research   is  done  mainly  through                                                               
environmental   performance   co-ops.   But  by   nature,   these                                                               
preservatives are  intended to target  organisms to  prevent them                                                               
from degrading and decaying the wood.                                                                                           
SENATOR WIELECHOWSKI  asked if  the EPA had  done any  testing on                                                               
pentachlorophenol to determine  whether it is toxic  to humans or                                                               
MR.  BROOKS answered  yes,  EPA has  done  extensive testing  and                                                               
found that it  is very low risk. He offered  to share quotes from                                                               
the EPA reregistration eligibility decision.                                                                                    
4:28:51 PM                                                                                                                    
SENATOR WIELECHOWSKI asked if they found it was toxic to humans.                                                                
MR.  BROOKS in  reply read  from  page 30  of the  reregistration                                                               
eligibility decision:                                                                                                           
     Because    of    the    demonstrated    tendency    for                                                                    
     pentachlorophenol   to   absorb   to  soils   and   the                                                                    
     moderately  rapid degradation  of the  compound in  the                                                                    
     environment,  it  is  not   likely  that  ground  water                                                                    
     contamination  will  result  in the  usage  of  utility                                                                    
He said there are other instances  of stating there is no concern                                                               
for mammals or humans.                                                                                                          
SENATOR WIELECHOWSKI asked for a copy of the decision.                                                                          
CHAIR GIESSEL asked  him to provide it to the  committee aide who                                                               
would distribute it to the full committee.                                                                                      
4:29:25 PM                                                                                                                    
SENATOR WIELECHOWSKI asked  if there are any  instances of ground                                                               
water or well water contamination from Penta.                                                                                   
MR. BROOKS  replied that  he knows of  two instances  in Vermont,                                                               
where utility poles were installed  right next to a shallow well,                                                               
which is why Vermont now has the best management practices.                                                                     
SENATOR WIELECHOWSKI asked if that  instance was from an isolated                                                               
pole or group of poles.                                                                                                         
MR.  BROOKS replied  that it  was an  isolated incident  from the                                                               
installation of one pole.                                                                                                       
SENATOR WIELECHOWSKI  asked if  trace amounts  were found  in the                                                               
water or a significant amount.                                                                                                  
MR. BROOKS replied trace amounts.                                                                                               
CHAIR  GIESSEL asked  him to  provide the  information about  the                                                               
Vermont incident.                                                                                                               
MR. BROOKS  said he would  be happy to, but  it is mostly  in the                                                               
Vermont Study report that is available.                                                                                         
4:30:46 PM                                                                                                                    
SENATOR  WIELECHOWSKI  asked if  other  states  or countries  ban                                                               
MR. BROOKS answered  that he is aware of other  countries that do                                                               
not use pentachlorophenol  and ban it. Europe has  never used it;                                                               
it uses other preservatives.                                                                                                    
SENATOR WIELECHOWSKI asked how many countries have banned it.                                                                   
MR. BROOKS said he didn't know; it is up to each country.                                                                       
SENATOR  WIELECHOWSKI asked  if there  is a  Stockholm convention                                                               
that discusses this issue.                                                                                                      
MR. BROOKS answered yes.                                                                                                        
SENATOR WIELECHOWSKI asked to get a copy.                                                                                       
MR. BROOKS replied that he would do that.                                                                                       
4:31:58 PM                                                                                                                    
CHAIR GIESSEL opened public testimony.                                                                                          
ERIC  ERIKSEN,  Vice  President, Transmission  and  Distribution,                                                               
Alaska  Electric,  Light  and   Power  (AEL&P),  Juneau,  Alaska,                                                               
supported SB 173.  He said this is their 125th  year of operating                                                               
in Juneau and  over that time they have  provided safe, reliable,                                                               
renewable, low-cost,  electric service  to the  community. Juneau                                                               
has over 4500 poles supporting over  200 miles of power lines. It                                                               
is  his opinion  that treated  wood utility  poles have  been and                                                               
will  be the  best  performing solution  for carrying  electrical                                                               
conductors for the foreseeable future.                                                                                          
SENATOR STEDMAN  asked if there  are any rain forest  issues with                                                               
this preservative versus desert areas.                                                                                          
MR. ERICKSON answered he was not aware of any issues.                                                                           
4:34:56 PM                                                                                                                    
PHIL  STEYER, Director,  Government  Relations, Chugach  Electric                                                               
Association, Anchorage,  Alaska, supported  SB 173. He  said they                                                               
are  a member-owned  electric co-operative  providing service  to                                                               
about  68,000  members at  84,000  metered  locations. They  have                                                               
about  900  miles  of overhead  distribution  line  supported  by                                                               
treated wooden poles.                                                                                                           
CRYSTAL  ENKVIST, Executive  Director,  Alaska Power  Association                                                               
(APA), Anchorage,  Alaska, supported  SB 173. She  explained that                                                               
APA is the statewide trade  association for electric utilities in                                                               
Alaska. The members  provide power to a half  million Alaskans in                                                               
all parts of the state.                                                                                                         
MS.  ENKVIST said  Alaska has  hundreds of  thousands of  utility                                                               
poles  that  use a  pentachlorophenol  regulated  by FIFRA.  Each                                                               
year,  many  utility  poles  are retired  and  removed  from  the                                                               
ground.   The  EPA   through   its   FIFRA  regulations   provide                                                               
significant oversight  of pesticide distribution, sale,  and use.                                                               
SB 173 will ensure that  Alaska's public utilities will not incur                                                               
significant regulatory  expenses from the legal  use of federally                                                               
regulated pesticides on  wood utility poles. It  aligns state law                                                               
with federal statutes  so that the Alaska  electric utilities may                                                               
follow  best  management  practices consistent  with  what  other                                                               
utilities  follow across  the nation.  This legislation  benefits                                                               
Alaskan  consumers   who  would   eventually  have  to   pay  for                                                               
remediation and removal through their utility bills.                                                                            
MS.  ENKVIST  noted  that Sylvia  Mitchell,  President  and  CEO,                                                               
Inside Passage Electric Co-operative,  was planning on testifying                                                               
today in person in support of SB 173, but she became ill.                                                                       
4:38:59 PM                                                                                                                    
DON MCNAMARA, Oceanside Farm, Homer,  Alaska, did not favor using                                                               
any  pesticide or  herbicide and  did not  support SB  173. "Just                                                               
because you've  been polluting forever  doesn't mean you  have to                                                               
keep on polluting forever, he  said." He suggested using concrete                                                               
poles  and said  wire  should be  underground whenever  possible,                                                               
because it won't blow  over in a storm, a tree  won't fall on it,                                                               
and  maintenance will  be a  lot less.  Existing poles  should be                                                               
grandfathered in and new poles should be outlawed.                                                                              
DONNA RAE FAULKNER, Oceanside Farm,  Homer, Alaska, repeated that                                                               
they use  organic methods  and whenever  the issue  of pesticides                                                               
comes  up they  are concerned.  As a  ratepayer, she  appreciates                                                               
Senator  Micciche trying  to protect  them  financially. She  has                                                               
concerns about  what specific costs  and damages are  possible if                                                               
ground  water is  contaminated  and  would be  happy,  as a  rate                                                               
payer,  to  support  mitigating that  situation.  Protecting  the                                                               
environment and public health is really important.                                                                              
4:42:48 PM                                                                                                                    
ROBERT HIMSCHOOT,  Nushagak Electric and  Telephone Co-operative,                                                               
Dillingham, Alaska,  supported SB 173. The  co-operative provides                                                               
electric and  telephone service to  Dillingham and  Alignagik and                                                               
have  about  1450  meters  in the  system.  The  current  statute                                                               
creates an unintended liability.                                                                                                
The  advantages of  wood  poles  have been  well  spelled out  in                                                               
today's  testimony.  Nushagak  has   about  1500  wood  poles  in                                                               
service.  At $30,000  per  pole, it  would cost  a  total of  $45                                                               
million to  retire and  mitigate them. Part  of the  problem then                                                               
becomes how to  distribute that cost to the members.  When a line                                                               
is put in service the cost  is depreciated so that all ratepayers                                                               
uniformly pay for  it. So, that sort of liability  would apply to                                                               
only  present and  future ratepayers.  There are  attachment fees                                                               
from telecommunication providers, too.  The depreciated amount of                                                               
the poles is used to come up with  a fair use access fee and they                                                               
would be adversely affected, too.                                                                                               
4:46:08 PM                                                                                                                    
EDDIE   TAUNTON,   Director   of   Operations,   MatSu   Electric                                                               
Association  (MEA), Inc.,  Palmer, Alaska,  supported SB  173. He                                                               
said MatSu Electric  is a co-operative that  serves almost 65,000                                                               
meters and 51,000  members from Eagle River to  Trapper Creek and                                                               
over to  the Matanuska Glacier. MEA  has over 4300 miles  of line                                                               
of which 2100  are overhead. They bring power to  each member and                                                               
a majority  of those  lines are  held up  by an  estimated 45,000                                                               
wood power  poles. These poles  are essential to serve  the needs                                                               
of their  members and drive  commerce in their region.  He listed                                                               
some of  the benefits  electricity brings to  a household.  To do                                                               
this  safely  and  economically  it  is  imperative  that  Alaska                                                               
utilities  are  allowed  to  use  treated  poles  to  ensure  the                                                               
structural  integrity of  their equipment.  He said:  "We believe                                                               
the use  of the EPA-approved wood  preservative pentachlorophenol                                                               
is essential and responsible."                                                                                                  
MR. TAUNTON  said environmental studies have  shown that properly                                                               
treated poles  are expected to  have minimal  pesticide migration                                                               
from the pole  to the environment directly  surrounding the pole.                                                               
Their members should not face  an unfair burden. The co-operative                                                               
should be held  to the same standards as federal  law and that of                                                               
other states including California, Oregon, and Washington.                                                                      
4:48:35 PM                                                                                                                    
CHAIR GIESSEL thanked Mr. Taunton.  Finding no further testimony,                                                               
she  closed it  and noted  that the  additional information  from                                                               
SPAR Director Ryan and Mr. Brooks would be forthcoming.                                                                         
SENATOR STEDMAN  stated that the  legislature should take  up the                                                               
subject   of  cost   containment   for  processing   contaminated                                                               
materials because it  is ridiculous to ship  something from Homer                                                               
to eastern Washington for disposal.                                                                                             
CHAIR GIESSEL held SB 173 in committee.                                                                                         
4:51:12 PM                                                                                                                    
CHAIR GIESSEL  adjourned the Senate Resources  Standing Committee                                                               
meeting at 4:51 p.m.