HB 79-SUSITNA STATE FOREST; SALE OF TIMBER  2:23:58 PM CO-CHAIR SADDLER announced that the next order of business would be HOUSE BILL NO. 79, "An Act relating to the sale of timber on state land; establishing the Susitna State Forest; and providing for an effective date." 2:24:25 PM EDMUND FOGELS, Deputy Commissioner, Office of the Commissioner, Department of Natural Resources (DNR), introduced HB 79 on behalf of the administration, stating that the bill would establish a new state forest in the Susitna Valley. The new state forest would encompass 763,000 acres in a number of blocks throughout the Susitna Valley. The state forest proposal would ensure that these tracts of forest land would remain available for long-term forest management enabling more investment and access. This bill would also allow the Division of Forestry more flexibility to offer negotiated timber sales for the larger sales of 500,000 board feet or larger. Both of these provisions would give the state more tools to address the growing demand in Southcentral and in the Southeast and Interior Alaska for more timber sales and the growing demand for biomass energy. He indicated these provisions are recommendations in the final report from the Governor's Alaska Timber Jobs Task Force under critical elements of the governor's support to increase the economic contributions from our wise timber management. 2:25:47 PM JOHN "CHRIS" MAISCH, State Forester, Division of Forestry, Department of Natural Resources (DNR), stated that as Mr. Fogels said, this bill would create the Susitna State Forest and expand the DNR's authority to negotiate timber sales statewide. He provided background on timber sales, noting that DNR may offer timber sales, either competitively or through negotiation. The division's preferred way of offering timber sales is through competitive bid timber sales, but the negotiated sales provide the department the ability to tailor some sales to meet the needs of local processors in areas that lack competitive interest or where there is competitive from round log export in a region with constrained timber supply. For example, in Southeast Alaska it has long been the administration's policy to support and create jobs as opposed to just focusing on revenue generation. MR. MAISCH said that Section 1 amends AS 38.05.110, the authority to sell timber and material, particularly, timber. It would add subsection (c) to clarify that the commissioner of DNR may determine which applicable sale method is in the best interest of the state for each timber sale. MR. MAISCH reviewed the different authorities the department has under AS 38.05. He related that AS 38.05.115 applies to small negotiated sales, sales under 500,000 board feet. In Interior Alaska that would be on 10-15 acre parcels or less and in Southeast Alaska it could range from one acre on a good site to several acres. He characterized those as typically being small operators that have small sawmills or other operations that want to negotiate a sale. These contracts would be one year in length. 2:28:12 PM MR. MAISCH turned to AS 38.05.117 regarding the salvage sales related to forest resources and practices, for fire, insects, and disease. He said AS 38.05.118 pertains to large, negotiated sales. MR. MAISCH referred to AS 38.05.120, which are sales done by competitive or sealed bids or public auction, with the objective of obtaining the best price for the timber. MR. MAISCH referred to AS 38.05.123 as the value-added authority that allows for sales of up to 10 years in length, specifically targeted at encouraging and developing value-added manufacturing facilities. An excellent example of this would be the Superior Hardwoods, a mill located in Fairbanks. MR. MAISCH related that Section 2 will amend AS 38.05.118 (a) to clarify two sections of the current statute, including the Five- year Schedule of Timber Sales [AS 38.05.113] and the Forest Land Use Plan [AS 38.05.112], which are important parts of the public process. This means these two documents must be completed, even for large negotiated sales, which is just good business he said. 2:30:04 PM MR. MAISCH related the other change in Section 2 is the addition of wood fiber. The department has had interest in biomass and biomass sales and fiber. In response to a question, he acknowledged "fiber" is what he was referring to in this section. REPRESENTATIVE SEATON inquired whether fiber includes peat and if it would affect any actions the legislature took with respect to peat. MR. MAISCH answered no; that this definition of fiber does not include peat as described in current statute. He characterized fiber as being a woody material. Returning to the sectional analysis, he explained that Section 4 removes restrictions under AS 38.05.118 (c) that indicate negotiated sales of timber are only allowed in areas of high unemployment, excess manufacturing capacity [or exist within two years of the sale], and excess allowable cut. The department found these three criteria to be problematic when stacked together. He reiterated that this recommendation would strike all three criteria. 2:32:06 PM CO-CHAIR SADDLER asked whether the current restriction on negotiated sales requires all three elements must be present. MR. MAISCH answered that is correct. He specified that this is covered in regulation under 11 AAC 71.055. 2:32:35 PM REPRESENTATIVE SEATON asked whether this provision would only apply to sales greater than 500,000 board feet. MR. MAISCH agreed that is correct. This change would only affect the large negotiated sales under the authority in AS 38.05.118. MR. MAISCH related that Sections 5, 6, and 7 are basically "housekeeping" changes that address when the sections become effective. More specifically, he stated that Sections 1, 2, and 4 will have an immediate effective date and the other sections will become effective on July 1, 201[4]. REPRESENTATIVE SEATON referred to Section 2, to the requirements of Forest Land Use Plans, and asked whether that relates to the setbacks from streams. MR. MAISCH answered that the Forest Land Use Plan (FLUP) relates to AS 38.05.112, which requires the state to do a site-specific plan for each timber sale. This section would address many of the other multiple uses that occur in an area. However, this sections does not address stream setbacks or buffers, which are covered under the state Forest Practices Act (FPA) under Title 41. Further, this law applies to state, municipal, and private land with respect to how timber sales are conducted and the act is designed to protect fish habitat and water quality. The FLUP would address anadromous streams, high-value resident streams in the sales areas and what types of buffers and protections would be put in place as part of the timber sale effort, but the FPA is found in a different section of statute. REPRESENTATIVE SEATON asked for further clarification that if the bill passed it won't override the FPA in any way. MR. MAISCH acknowledged that is correct, that this does not affect the state FPA or weaken any protections for water quality or fish habitat. 2:35:17 PM CO-CHAIR SADDLER asked for further clarification on the public notice requirements for large, negotiated sales. MR. MAISCH answered that the standard public notice is called a "940 notice" which is a standard notice process that the state undergoes for any type of activity that would affect not only timber sales but any type of sales of materials. This includes web-based noticing, print-based noticing, and often will be in local newspapers. 2:36:10 PM REPRESENTATIVE SEATON asked for further clarification on the 500,000 board feet and the acreage. MR. MAISCH responded that the number of acres will depend on the productivity of the site. For example, the boreal forest in Interior Alaska is less productive, so the acreage would be greater than in Southeast Alaska. In Interior Alaska, the approximate average would be 6,000-8,000 board feet per acre and in southern Southeast Alaska an average old growth stand would be approximately 28,000 board feet per acres, but second growth stand can be up to 80,000 board feet per acre. He reiterated that those sales only run for one year at a time since the sales are considered small. A typical operator that mills or manufacturers less than a half million board feet is usually a one to two person operation with many of them consisting of family-owned businesses. In response to a question, he repeated the board feet per area. In Interior Alaska it could range from 5,000 - 8,000 board feet per acre, but it could go as high as 25,000 per acres; however, the average would be approximately 6,000 board feet per acre. In southern Southeast Alaska, the average for old growth is around 26,000-28,000 board feet per acre. REPRESENTATIVE SEATON asked whether the one year timeframe wouldn't be very practical for a person setting up biomass for heating. MR. MAISCH answered that the proposed changes are under AS 38.05.118, for the large negotiated sales whereas the ones under AS 38.05.115 are considered the small negotiated sales. The aforementioned changes only affect the authority under AS 38.05.118, which can be up to 25 years in length and can be negotiated. The sales under AS 38.05.115 would cover sales one year or less and can also be negotiated. Everything else about the sales would essentially be the same. 2:39:28 PM REPRESENTATIVE SEATON qualified he is in agreement with doing this, but is still trying to figure if lease sales longer than one year can be let for smaller units interested in biomass. MR. MAISCH answered yes; that the applicant can apply and it becomes part of the best interest finding in Section 1 in which the commissioner has the ability to determine the type of sale method best fits the potential purchaser. In those instances, the department would suggest to a smaller operator to seek authority under AS 38.05.118 since it can be up to 25 years in length or the authority under AS 38.05.123 for up to 10 years in length. Finally, the sale could be done under a competitive bid process without any real time limit, he said. He indicated the default method would be the competitive bid process. 2:41:08 PM MR. MAISCH referred to Section 4 to the Susitna State Forest provision. He characterized this as the "meat" of the bill and establishes 763,000 acres of lands in 33 different parcels. He referred to a map in members' packets. The aforementioned area encompasses two area plans, the Matanuska-Susitna Area Plan and the Southeast Susitna Area Plans. These plans were updated in the past few years and made specific recommendations on forestry classified lands. Lands are classified as forestry, agricultural, and other types of uses. The concept of a state forest was discussed extensively in the two area plan updates. This set the stage for this proposal. The purpose is to legislatively designate a state forest to ensure that large tracts of land will remain available for long-term forest management, provide a sustainable supply of timber, and have a strong state timber base. He indicated that the state forests are managed on a multiple-use sustained yield principle as indicated in Alaska's Constitution and as embodied in various statutes. MR. MAISCH said one of the key things that happens with state forests [is public participation]. Seven different communities held public meetings in 2009, including Glacier View, Willow, Wasilla, Sutton, Talkeetna, Anchorage, and Trapper Creek. Six additional open houses were held to discuss the area plans. In 2012, 12 meetings were held in communities such as Houston, Talkeetna, Wasilla, as well as coming before the Matanuska- Susitna Borough Assembly, and providing two "webinars" to provide outreach to those "off the grid" who couldn't travel to meetings held on the road system. In 2013, the department held 10 additional meetings and had a booth at the Palmer State Fairgrounds, at the Cook Inlet Region Economic Development Summit held in Anchorage. Additionally, the department used a variety of media to highlight the state forest concept. He characterized the outreach as being an extensive outreach to the public and the communities. He said that the state forest is about developing access and giving communities a "working landscape." The state forest supports economic development, the communities, and doing "good things" in the environment, which hinges on the Forest Practices Act. 2:44:34 PM MR. MAISCH related that currently, the department has built about 17 miles of all-season road in the state classified lands and 23 miles of all winter roads. This winter the department will be working on the Little Susitna Access Project that will build a winter road over to the Little Susitna River and an ice bridge will cross and continue on to the Fish Creek blocks to a point in which the department will offer a timber sale on state land. Additionally, the road will provide access to borough agriculture disposal land. MR. MAISCH reported that this summer the department will begin work on an "all-season" portion to take the current road to the banks of the Little Susitna River, and undertake engineering work for a permanent bridge crossing. MR. MAISCH related he has heard concern expressed that this will be a "lock up" and multiple use or access will be restricted. He pointed out how the department manages other state forests to illustrate how state forest lands are managed, including the Tanana Valley State Forest, the Haines State Forest, and the Southeast State Forest. The other state forests demonstrate that the state forests are very friendly for a wide variety of multiple uses, in particular, motorized use. In fact, the road systems represent a very friendly environment for motorized uses of all kinds. Motorized use has been allowed in appropriate areas on road systems that are designed for logging truck traffic that can certainly support all-terrain vehicles and other types of motorized recreational uses. 2:46:16 PM MR. MAISCH pointed out that state forests are very much used for hunting access and some groups in the Matanuska-Susitna valley want a bigger state forest. He vouched for the state forest in Fairbanks that now has several hundred miles of roads is extensively used for all types of recreational activities. MR. MAISCH related that this is an opportunity to use a piece of state-owned land as an engine to help develop the region's economy and access. In Fairbanks a multi-million dollar mill operates due to the state forest, Superior Pellet, LLC, that has operated for five years producing wood pellets and compressed wood logs. He characterized this as a great example to use low- quality wood fiber to produce a high-quality product. This means the high-quality logs can be used by sawmills. He offered his belief that the same type of scenario would play out in the Matanuska-Susitna valley. 2:47:50 PM REPRESENTATIVE SEATON asked whether roads exist in areas that may be subject to disposal. He asked whether a process exists so any culverts will be maintained as fish-passable standards upon transfer, MR. MAISCH answered that if the division builds those crossing structures, they will be compliant with the FPA. If the roads are forestry roads, the roads will typically have easements so the road will be maintained as a forestry road. One exception would be in an unincorporated area in which the borough has not yet formed and may select land. He couldn't envision any instance in the Matanuska-Susitna valley that would move to some other type of ownership if it was designated in the state forest. More specifically, to answer the question, the DOT&PF, the borough, or a road service area are possibilities, but they would need to comply with the same types of standards with which the division must also comply. 2:49:44 PM CO-CHAIR SADDLER asked what the response from local governments has been. MR. MAISCH answered that the division has held several meetings with the Matanuska-Susitna Borough, including three meetings before the full assembly. Last year a resolution was brought before the MSB by Mayor DeVilbiss, but did not pass. The DNR has been working to identify any issues, but the assembly just generally did not support it. Some individual members strongly supported the resolutions. 2:50:44 PM REPRESENTATIVE SEATON asked whether any of the boundaries changed based on the public process. MR. MAISCH answered yes; in terms of the area planning process, some significant changes were made. Less acreage was classified as forestry acres and the plans were split into two area plans. The City of Houston had expressed concern about a parcel within the city limits that could potentially block some access for recreational development. The DNR proposed removing that parcel from the bill, which can be incorporated into a proposed committee substitute at a later point, he said. [HB 79 was held over.]