HOUSE BILL NO. 217 "An Act relating to the Alaska Food, Drug, and Cosmetic Act; relating to the sale of milk, milk products, raw milk, and raw milk products; and providing for an effective date." 1:52:03 PM REPRESENTATIVE GERAN TARR, SPONSOR, provided a PowerPoint presentation titled "House Bill 217 Alaska Grown" (copy on file). She began on slide 2, "A Food Freedom Movement is Growing Across the United States and Locally": First state to pass policy was Wyoming in 2015 "Wyoming has had roaring success[,] and we continue to capitalize on those aspects," Lindholm tells me, "in fact the Agriculture committee for the State of Wyoming will spend the summer studying ways to expand on the Food Freedom Act." (Wyoming State Rep. Tyler Lindholm (R)) Bills have been considered in Utah, Maine, Colorado, Virginia "Food Freedom means more small farms." (Virginia Food Freedom) Alaska Farm Bureau $5 Alaska Challenge could raise $180 million for Alaska economy 1:56:41 PM Representative Tarr stated that her summary had been the goal of the bill starting out. She turned to slide 3, "Supporting Alaska Grown Products": 1) Increase direct producer to consumer sales 2) Support entrepreneurs 3) Create more opportunities for small scale producers 4) Strengthen our local food systems 5) Grow our local economies Representative Tarr shared that DEC had agreed to a one- year pilot program. The farmers wanted to provide a good high-quality product and would not knowingly do something to make someone sick. She shared that the changes had been a disappointment to her, but she would not give up. She read items from slide 3. 2:01:23 PM Representative Tarr stated that the version before the committee did three things. She looked at slide 4, "House Bill 217 Does Three Things": Gives farmers freedom from some civil liability for farm tours Gives DNR receipt authority for Alaska Grown logo Gives state, school districts and municipalities more flexibility to purchase Alaska grown produce - 15 percent procurement differential Representative Tarr looked at slide 5, "Alaska Farmers Market Sales": $1.25 million: Fairbanks $500,000: Homer $100,000 Kodiak $19,000: Mt. View 2:07:04 PM Vice-Chair Gara asked about the difference in the law for Alaska foods between the current system and the bill. Representative Tarr replied that there were restrictions on what qualified as an Alaska Grown product. She stated that there was some discussion regarding imported foods, especially with livestock imports. She remarked that in the livestock case, a certain percentage of its life had to be spent in Alaska for it to be considered Alaska Grown. She remarked that, with the Alaska Grown logo, it was trademarked. She explained that currently the Department of Natural Resources (DNR) did not have receipt authority to collect the money that would come from selling the logo. She remarked that the dollars would be reinvested into the Alaska Grown program. Representative Wilson looked at page 2, line 1, "to the extent practical, the commissioner shall sell only merchandise produced or manufactured in the United States?" She wondered whether one could sell things not manufactured in the United States, and still be considered Alaska Grown. Representative Tarr replied that it referred to where the t-shirts or sweatshirts with the Alaska Grown logo could be manufactured outside of the United States . Representative Wilson asked who decided to the extent practical. Representative Tarr replied the individual was online for testimony. JOHANNA HERRON, DEVELOPMENT SPECIALIST, DIVISION OF AGRICULTURE (via teleconference), replied that there were state procurement rules. She stated that the licensing agreements worked through agriculture non-profit organizations, who were allowed to receive a licensing agreement for merchandise sales. She stressed that the farmers were in need of wholesale pricing for marketing materials, and often were unable to purchase in small quantities. Representative Wilson gave an example of a t-shirt made in California or China. She asked if either would be acceptable as long as the finished product was done in Alaska. Ms. Herron answered that the effort was usually doing what they could to get the best price. 2:12:09 PM Representative Guttenberg asked about procurement requirements under the bill. Ms. Herron replied that the department was only interested at the current stage, so the merchandising was not a current focus. She did not believe they would change from the system currently. Representative Guttenberg was trying to divide the things the department was contracted out to do, and whether DNR was given receipt authority. He wondered whether money would come back into the program for sales of merchandise. Ms. Herron responded that the licensing agreements would still operate through their offices. She stressed that nothing would change with the way its operating agreements were done. 2:16:08 PM Representative Guttenberg stated he had gone through a lengthy regulatory review about milk. He asked if that program was in place. Representative Tarr answered that the cow share program was still in place. She shared that it was limiting in nature, but the goal was to put together a working group to bring all of the stakeholders together. Another question was how people would be contacted if there was an illness outbreak. Representative Guttenberg thanked her for the bill. He believed Alaska needed to establish a stronger foothold on food security in state. Representative Tarr answered that the program would bring $188 million into the economy. She asked for a reminder of the remainder of the question. Representative Guttenberg complied. Representative Tarr stated that the Farm Bureau was working with her office, and the expected fiscal impact was zero. 2:21:07 PM Co-Chair Seaton asked about the third bullet on the sponsor statement. He thought the statement may have been to a previous bill draft. He wondered about the word "shall." Representative Tarr answered that the current statute included the language "shall" and that the 15 percent gave more flexibility in procurement rules. Co-Chair Seaton remarked that when raw milk had been looked at four years back - there was no prohibition on selling raw milk, but a person had to use dye in the milk to indicate it was raw. He stated that ere no way for parents to know non-pasteurized milk was being served. He wondered about anti-bacteria resistant bacteria. 2:25:04 PM Representative Tarr answered there had been numerous conversations about the topic over the years. She shared that there could state-built processing facilities if there were capital funds, but run as a private business. She remarked that there was only one dairy in the state. Vice-Chair Gara asked for clarification that the raw milk component had been removed from the bill. Representative Tarr answered in the affirmative. Vice-Chair Gara wanted to support the bill. He asked if the bill had been run by school districts. Representative Tarr replied that she understood that it would be eligible for any food purchases made by the district. She remarked that there could be also a supplemental action, if the food was provided by the federal government. She stated that the Sitka School District was using local funds to purchase local fish. Vice-Chair Gara asked about the known cost to the school district. Representative Tarr answered that it was known. She remarked that the scale of purchases allowed for flexibility, because there were multiple types of food going into one meal. She used the example of pairing cheap pasta with more expensive carrots. Vice-Chair Gara felt that the school may end up paying more, because the cost of the Alaska Grown products was 8 percent more than the alternative. He wanted to be convinced that it would not cost more, or he wanted the school districts to announce that they would not be bothered by the increased cost. He restated that he did not understand how the cost would remain the same. Representative Tarr replied that the amount available to spend on the food purchases would not change. She stated that the change was the ability to purchase Alaska Grown products. 2:32:47 PM Vice-Chair Gara understood the bill as reading that an Alaska Grown product would be an additional 15 percent. Representative Tarr replied that typical procurement rules for state purchasing expressed that one must purchase the lowest cost item. She stated that the product preference statute allowed for flexibility to buy a more expensive product. She stated that, after the audit, it was seen that 7 percent was not enough of a differential to cover the difference between Alaska Grown products and the products that could be purchased from outside. She stated that the statute gave a little more flexibility in the overall price, if the Alaska Grown products were found. She stressed that more farmers should be on the list, and should have products available at the right quantity, at the right time, and at the right price. She stressed that there were many pieces that must function together in order for it to be successful. 2:34:05 PM Representative Wilson stressed that the 15 percent was the maximum differential. She agreed with Representative Gara's concern about the additional cost. She wondered about changing "shall" to "may." She felt that the change may provide the choice to the districts. Representative Tarr replied that the previous version of the bill had the word, "may." She stated that, after conversations with farmers, there was a realization that changing "shall" in the original product preference statute to "may", could be seen as "backsliding." She agreed to consider that change. Representative Wilson surmised that a statute change would not be needed, because the department had a one-year trial. She wondered whether internet sales would include products other than produce. Representative Tarr replied that it was all the products allowed under the cottage food exemptions. She stated that it was removed, because of the pilot program. She shared that Title 17 was pretty broad, as related to the responsibilities of the commissioner. She stated that it broadly said, "can regulate food." She wanted to see a consistent statewide policy in statute, rather than pilot programs. Representative Wilson recalled that there was already internet sales for cottage businesses. Representative Tarr answered that there had been some products available online, but not the number of products that were currently sold. 2:37:04 PM Representative Pruitt wondered how the stat would mandate that the districts spend more, and how $100 would procure what was needed. He did not understand how the bill would not increase costs, or cause the schools to not provide enough food. Representative Tarr answered that they did not know there were food purchases that would meet the requirement. Representative Pruitt asked what the audit specified the percentage should be. Representative Tarr answered that it had varied based on the product. Items such as potatoes, broccoli, and other were widely produced in Alaska were cheaper. 2:41:40 PM Representative Pruitt asked how the bill gave flexibility if it specified an entity "shall" purchase something. He thought it appeared they were mandating something. Representative Tarr answered that flexibility would enable paying up to 15 percent more. She did not want to do anything that was overly burdensome for school districts. She explained that the topic had not received substantial attention. Vice-Chair Gara presented an idea. He spoke to the consideration of the term "may", and whether that would lose the 8 percent protection. He asked about keeping the language at 8 percent shall, and adding "may" go up to 15 percent. 2:46:24 PM Representative Tarr answered that the language had been in an earlier bill version. She was supportive of the language. She preferred the language over a blanket "may." Vice-Chair Gara asked why the language had been changed. Representative Tarr answered that the intention was not to spend more money, but to spend what was available. Vice-Chair Gara was looking for guidance from the sponsor, but he did not want to render the bill ineffective. Representative Tarr answered that she was fine with the change. Vice-Chair Gara had hesitancy that his proposal would gut the bill. He would think about it further. Representative Tarr believed the concerns were fair. 2:52:08 PM Co-Chair Seaton MOVED to ADOPT the proposed committee substitute for HB 217, Work Draft 30-LS0593\T (Bruce/Wayne, 3/26/18). There being NO OBJECTION, it was so ordered. Co-Chair Foster read the list of available testifiers online. Representative Tarr indicated there were 2 people online for invited testimony. Co-Chair Foster OPENED Public Testimony. AMY SEITZ, ALASKA FARM BOROUGH, SOLDOTNA (via teleconference), relayed that the Alaska Farm Bureau strongly supported the bill. She spoke of the benefits of the bill if passed. She indicated that HB 217 provided additional tools to the farmers' tool box. She thought the legislation would play a role in the expansion of the Alaska Grown program. She talked about the increased interest of touring farms. 3:00:49 PM Ms. Seitz continued to address the bill. She spoke in support of the legislation. ROBBI MIXON, DIRECTOR, LOCAL FOODS, HOMER FARMER'S MARKET ASSOCIATION/KENAI PENINSULA AND ANCHORAGE FOOD HUB (via teleconference), spoke in support of the bill. She spoke to the online sales component of the bill. There had been a conversation on agreements to move forward. figure out the best approach. She attested to the value of Alaskan grown. 3:05:51 PM Co-Chair Foster CLOSED public testimony. CHRISTINA CARPENTER, DIRECTOR, DIVISION OF ENVIRONMENTAL HEALTH, DEPARTMENT OF ENVIRONMENTAL CONSERVATION, ANCHORAGE (via teleconference), thanked the bill sponsor and committee for their efforts in promoting local food sales. She shared that the department looked forward to working with Ms. Mixon and the Alaska Food Hub, on the pilot program that would allow online sales of homemade cottage food products. She agreed to continue to report on the successes of that program during the current growing season. She thanked the committee for the opportunity to speak. Representative Wilson queried the current allowances online, and what the program would change. She wondered what products would be allowed in the pilot program. Ms. Carpenter replied that, currently, any producer who had a permit through the Department of Environmental Conservation (DEC) could sell their products online. She stated that the pilot program would allow cottage food producers to sell through the Food Hub website. She stated that they would not be subject to the DEC permit. Representative Wilson asked how the department would manage the success of the program after the one-year period ended. Ms. Carpenter replied that it was part of the variance process with the Alaska Food Hub. She remarked that DEC would request from the Alaska Food Hub was an end-of-year close-out report. Representative Wilson requested the information for tracking. 3:09:59 PM Representative Pruitt was looking at the audit and report conclusions. He read from the audit. Representative Pruitt did not see anything in the report conclusions to indicate the amount given was a barrier. He stated there were portions of the current draft that were a mandate on schools. He thought it appeared to be logistical hurdles. Representative Tarr answered that it had not been a question asked by the audit, which was the reason it did not answer the question. They wanted to understand how the current 7 percent statute was working. HB 217 was HEARD and HELD in committee for further consideration. 3:14:31 PM AT EASE 3:15:55 PM RECONVENED