SENATE RESOURCES COMMITTEE March 1, 1995 3:40 P.M. MEMBERS PRESENT Senator Loren Leman, Chairman Senator Steve Frank Senator Rick Halford Senator Robin Taylor Senator Georgianna Lincoln Senator Lyman Hoffman COMMITTEE MEMBERS ABSENT Senator Drue Pearce, Vice Chairman OTHER MEMBERS PRESENT Senator John Torgerson Representative Ivan Ivan COMMITTEE CALENDAR Western Alaska Community Development Quota Briefing: Karl Ohls, Executive Director HOUSE BILL NO. 121 (title am) "An Act relating to salvage sales of state timber and to negotiated sales of state timber in areas where there exists, or will exist in two years, a high level of unemployment, underutilized manufacturing capacity, and an underutilized cut of timber, timber that will lose substantial economic value due to insects, disease, or fire, or timber to be cleared for nonforest uses." PREVIOUS ACTION HB 121 - See Resources minutes dated 2/27/95. WITNESS REGISTER Karl Ohls, Executive Director Western Alaska Community Development Program 725 Christensen Dr., Suite 5 Anchorage, AK 99501 POSITION STATEMENT: Commented on the CDQ Program. Nels Anderson, Jr., Executive Director Bristol Bay Development Corp. (BBDC) POSITION STATEMENT: Commented on the CDQ Program. Justine Gunderson, Secretary-Treasurer Aleutian Pribilof Island Community Development Program Nelson Lagoon, AK 99695 POSITION STATEMENT: Commented on the CDQ Program. Agafon Krukoff Jr., Executive Director Central Bering Sea Fishermen's Association St. Paul, AK 99660 POSITION STATEMENT: Commented on the CDQ Program. Fred Phillip, Board Member Yukon Delta Fisheries Development Association POSITION STATEMENT: Commented on the CDQ Program. Eugene Asicksik, Acting Executive Director Norton Sound Economic Development Corporation POSITION STATEMENT: Commented on the CDQ Program. Ragnar Alsatrom, Board Member Yukon Delta Fisheries Development Association POSITION STATEMENT: Commented on the CDQ Program. George Owletuck Marshall, AK POSITION STATEMENT: Commented on CDQ Program. Jack Phelps, Legislative Aide Representative Williams State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Commented on HB 121. Tom Boutin Division of Forestry Department of Natural Resources 400 Willoughby Ave. Juneau, AK 99801-1724 POSITION STATEMENT: Commented on HB 121. Danny Carpenter P.O. Box 1430 Cordova, AK 99574 POSITION STATEMENT: Opposed HB 121. James Mykland P.O. Box 1241 Cordova, AK 99574 POSITION STATEMENT: Opposed HB 121. Jillianne De La Hunt, Attorney Trustees For Alaska Anchorage, AK POSITION STATEMENT: Opposed HB 121. Roger Siglin Environmental Center 169 Frog Pond Circle Fairbanks, AK 99712 POSITION STATEMENT: Opposed HB 121. Larry Paquin 966 Goldmine Trail Fairbanks, AK 99712 POSITION STATEMENT: Opposed HB 121. Sean McGuire 351 Cloudberry Fairbanks, AK 99709 POSITION STATEMENT: Opposed HB 121. Willy Dunne P.O. Box 15043 Fritz Creek, AK 99603 POSITION STATEMENT: Commented on HB 121. Larry Smith Kachemak Resource Institute 1520 Lakeshore Dr. Homer, AK 99603 POSITION STATEMENT: Commented on HB 121. Sandra Meske, President Alaska Women In Timber P.O. Box 1445 Ward Cove, AK 99928 POSITION STATEMENT: Supported HB 121. Eric Muench P.O. Box 6811 Ketchikan, AK 99901 POSITION STATEMENT: Supported HB 121. Terry Hermach P.O. Box 2493 Valdez, AK 99686 POSITION STATEMENT: Opposed HB 121. Tony Reinhart, Employee and Public Relations Manager Ketchikan Pulp P.O. Box 6600 Ketchikan, AK 99901 POSITION STATEMENT: Supported HB 121. ACTION NARRATIVE TAPE 95-18, SIDE A Number 001 CHAIRMAN LEMAN called the Senate Resources Committee meeting to order at 3:40 p.m. and said they would first receive a briefing by Karl Ohls of the Western Alaska Community Development Quota Program. KARL OHLS, Executive Director, said this program first started in December of 1992. It involves an allocation of federal fish - pollack in the Bering Sea. He said that Western Alaska has a very high rate of unemployment overall, social problems, and few opportunities for economic growth. They are located right next door to one of the world's richest fisheries resources. This program uses the fisheries resource to solve some of these problems. He said part of the contract is that people will be trained in skills for off-shore fishing where they will have an opportunity to work on vessels and displace foreign workers. A second advantage is that the villages get revenue from pollack sales and invest it in fisheries development projects to build an economy where none exists. MR. OHLS, noting that the program is very successful, said at the end of 1993, CDQ employment was 8% of the total economy in the region and 18% of the total private sector economy. He suspected that 1994 would be higher than that. Number 110 NELS ANDERSON, JR., Executive Director, Bristol Bay Economic Development Corporation (BBDC), said they have had 194 people on factory trawlers since 1992 who have brought home close to half a million dollars in wages. They have a vocational technical training program that moves people into marine fishery jobs and have a scholarship program which will be self supporting at the end of 1995. Since a lot of the limited entry permits have been leaving the Bristol Bay region, the BBDC set up a permit brokerage so that they could be involved directly with the movement of permits within the region, directing those permits between Bristol Bay residents, Mr. Anderson said. They need to set up a Bristol Bay Permit Revolving Loan Fund to enable residents to finance the permits. The CDQ Program is supposed to sunset December 31, 1995. They, of course, hope it will continue. Many good things have happened; 1,600 jobs have been created since 1992. Having people work in the winter is unprecedented in his region. As they are maturing, they are finding ways to use the program more fully. He noted that this program isn't a drain on the federal or state treasury. It allocates a national resource directly to an area that's been neglected for about 100 years. Number 190 JUSTINE GUNDERSON, Secretary Treasurer, Aleutian Pribilof Island Community Development Association, said you can actually see the development in her communities, some of which she highlighted - harbor development, a gear storage warehouse, a comprehensive training, employment, and education program, and building some off- shore boats. She said one of the most important things is that the money they receive is coming from the private sector, not government, and they are seeing it in their communities. AGAFON KRUKOFF JR., Executive Director, Central Bering Sea Fishermen's Association, said they finished the boat harbor on St. Paul using CDQ funds matched by state funds. They are also using the money for training in trade schools that are fisheries related. CDQ funds have enabled a lot of employment to open up, he said. This program is the tool that will make the rural Alaska people, especially in the coastal communities, be a key part of the industry that is out there. SENATOR LINCOLN asked him to comment on how positive the CDQ is to all of Western Alaska communities. MR. KRUKOFF replied that most rural Alaskan communities have suffered because of the lack of jobs and the social impacts that result - like alcohol and drug abuse. The CDQ is enabling them to bring jobs to their people which indirectly helps the other social problems. Number 354 FRED PHILLIPS, Board Member, Coastal Villages Fishing Cooperative, summarized some of their major programs which are in the areas of creating employment opportunities through developing local fisheries infrastructures and participation in the fisheries. They also have scholarship programs in fishery related areas. EUGENE ASICKSIK, Active Executive Director, Norton Sound Economic Development Corporation, said they also have an education- employment training program and a loan program. They have targeted getting fishermen back into the "fishing stream" through developing herring markets. Number 434 SENATOR LINCOLN asked him to comment on the reduction of bycatch with the CDQ Program. MR. ASICKSIK said one of their agreements with one fish company is that if they feel the company is catching too much bycatch of salmon (which the village members depend on), they will move their fishing operation. SENATOR TAYLOR commented that he had not heard any opposition to the reauthorization of this program. MR. ASICKSIK said he hadn't heard of any criticism openly. RAGNAR ALSTROM, Board Member, Yukon Delta Fisheries Development Association, said that the Yukon Delta has a very high unemployment rate. With their pollack royalty they pursue aggressively a job training and employment program on factory trawlers which has been very successful. The heart of their program, however, is to bring employment to the people who live on the Delta. They have invested in a small boat fleet which has brought a good amount of wages for its workers. REPRESENTATIVE IVAN said another positive impact the CDQ Program had is that the villages within the group sit down and develop their business plans together. He said it affects non-CDQ villages, as well, by providing jobs. Number 542 SENATOR HOFFMAN said that he was aware of a number of communities that would like to participate in the CDQ Program now and asked if this could be addressed at reauthorization. MR. OHLS replied that the criteria that the State and the North Pacific Council decided on were those communities that were within 50 miles of the Bering Sea coast. He knows of some communities that have extended their programs to other communities that are farther away, however. It would be up to the Council to change that requirement. He said the reauthorization probably would extend the program as it exists today. MR. OHLS concluded that each group has taken a slightly different strategy on economic growth in Western Alaska which he thought was one of the positive aspects of the program. Each group is under pressure to perform. The state made it very clear that those who weren't successful would lose their quota and it would be given to those who were successful. He said the state and legislature have supported this program since it started. TAPE 95-18, SIDE B Number 001 SENATOR LEMAN said that he has been impressed with the results from the CDQ Program. SENATOR LINCOLN asked if there was anything the legislature could do to make this program even more successful. MR. OHLS replied that so far they have been very happy with the state's response and would like their continuing support. GEORGE OWLETUCK, Marshall resident, said the upper villages on the Yukon River are being left out of the CDQ Program. Salmon fishing has not been very good lately and they would like the opportunity to have a CDQ Program. SENATOR TAYLOR pointed out that these federally dictated programs lack local input to the extent that some people get left out. SRES 3/1/95 HB 121 SALVAGE TIMBER SALES SENATOR LEMAN announced HB 121 to be up for consideration. JACK PHELPS, Legislative Aide to Representative Williams, said the intent of HB 121 and the substance of the bill is to provide another management tool to the Division of Forestry to deal with salvage timber. It doesn't mandate any action on the part of the Department. It simply expands the range of options available to DNR so they can respond to forest health situations. Salvage sales would still be subject to forest land use plans just like any other sale. What this bill does mean, he said, is that in salvage situations timber can be available within four to six months instead of two to three years, but there would still be ample opportunity for public involvement. The Forest Land Use Plan required under these provisions would have to support the best interest finding that is required by the bill. Habitat protection is no more at risk with salvage sales than it is with any other sale of State timber under current law. TOM BOUTIN, Director, Division of Forestry, said they had a proposed amendment. It would make two changes. The first is in Section 1 (a), line 10 where they insert "dead or dying" before "timber" and they delete "stands". He said they still have the same ability to have salvage sales without them having been in the five-year plan for the two-prior years which he thought was the sole intent in Section 1(a). He suggested deleting Section 1(b), because the Division of Forestry very rarely does negotiated sales. He said they do one or two a year in McGrath where there is no competitive interest whatsoever. Occasionally they do agriculture parcels in Delta by negotiated sale for junk timber that someone just wants to get rid of, and no one has an interest in, but the party that wants to clear the timber. There is not a disadvantage to having a competitive sale. He said this neutralized some opposition to the bill. SENATOR TAYLOR asked him why he searched out the opposition. MR. BOUTIN replied that it was worth trying to really find out what the opposition is concerned with and seeing if it can be accommodated. SENATOR TAYLOR asked him if the administration would support the bill without the changes. MR. BOUTIN said he understood that the Administration would not support the bill without the changes. Number 401 SENATOR TAYLOR said he was concerned with inserting "dead or dying" because they are talking about an infestation of epidemic proportions upon a large drainage. He was surprised that he would use that kind of language when the treatment they are trying to accomplish is the eradication of that epidemic. MR. BOUTIN replied that if this bill was giving them the ability to sell the timber at all, he would share his concern, but all section 1(a) does is give them the ability to exempt the Division from having the sale in the five-year plan for the two-prior years. They are really trying to address situations where there is a certain urgency. People are concerned that they will use that urgency in some other way. SENATOR TAYLOR noted that Alaska has a forest base that is 25% larger in volume than all the forested lands in Alberta, Canada. Alberta, today, has 32,000 people directly employed in a timber industry base on a sustained yield basis using exactly the same boreal forest that we have in Alaska. He said that the Division of Forestry does not deal with large timber sales and he wanted to know what they were going to do to treat over a billion board feet of desecrated timber that's been left to rot by several administrations and their colleagues who did everything to make certain that that timber wasn't harvested. SENATOR TAYLOR said he has not offered amendments to this bill, because he wanted to give the department the greatest opportunity to do negotiated sales, to take care of treatment of epidemics that have some affect. MR. BOUTIN reiterated that they have done a good job of neutralizing opposition, and where they haven't neutralized it, they have gone to court and won. The best place to do it is before you get to court and he thought this bill with the suggested changes would further that goal. Number 334 SENATOR LEMAN asked him to comment on his fiscal note. MR. BOUTIN said it gives a number of options depending on the interpretation. He said if this bill contemplates an increase in timber productivity, then there's a proportional increase in cost, etc. SENATOR LINCOLN asked him which fiscal note he assumed his Department would go with. MR. BOUTIN said he supposed the sponsors of the bill did not contemplate increasing the amount of timber volume or substituting salvage sales and had assumed number one, but he didn't really know what the case was and laid out some options. Number 283 DANNY CARPENTER, 15-year resident of Alaska, said the demise of salmon runs on the West Coast is very real and it is directly related to development and resource extraction. He believes in development, but not with inconsequential effects on other profitable industries. HB 121 is written as an employment bill for a small group of people and, secondly, to provide material for saw and chip mills at, undoubtedly, a discount rate; and, lastly, a solution to the spruce bark beetle epidemic. He said if you're serious about containing the epidemic, transporting infested timber to healthy areas or chipping trees and distributing beetles and larvae in a healthy area is not a great idea. He also could not see how they could tell two years in advance which timber might be affected. He suggested researching whether current forestry procedures have been put into affect and if not, why not. He concluded saying that the salvage sales would directly impact the health and habitat of his area to provide a few jobs for some loggers in Senator Taylor's area. Number 230 JAMES MYKLAND, Cordova resident, said he spent the first 20 years of his life in Washington State and the last 24 years in the Prince William Sound area as a commercial fisherman. MR. MYKLAND said he opposed HB 121 as written. Large volume timber sales should be offered competitively and with public notice. The Commissioner of Natural Resources in this bill is given unchecked power. He noted that no reforestation is required within the salvage areas in HB 121. MR. MYKLAND said that watershed protection should be the number one priority of the DNR, not timber sales or resource development. In Washington he saw large scale loss of fish and wildlife habitat. In his opinion, that is one of the main reasons that the resources on the West Coast States have been decimated. They are almost non- existent. The value of our forests is not just in the standing trees. SENATOR TAYLOR said he just checked with the State Forester and reforestation would be required on these sales and then commented that, on the average in Alaska, forest fires burn 15,000 acres a year in just the Tanana Valley. There is no one responsible for reforesting it. It's just charred and lays there. There are 1,000 acres a year harvested which is all reforested as part of the contract. He commented that it sounded like they would probably be happier if the billion board feet and who knows how many hundred thousand acres of dead and dying trees would burn up. JUILLIANNE DE LA HUNT, Trustees for Alaska, said she was testifying on behalf of Kris Balliet who was concerned that the public process was being circumvented in this bill. She asked the Committee to consider that leading experts in the field do not consider the spruce bark beetle an epidemic, but part of a natural forest process. Cutting in salvage sales involves cutting a large number of green trees. It's not a treatment for bark beetles, even if it were an infestation. The existing Forest Practices Act has provisions that would allow DNR to do exactly what it appears this Committee is concerned with. SENATOR TAYLOR asked her who pays her wages. MS. DE LA HUNT said Trustees For Alaska is funded from many sources including many individual Alaskans. Number 89 ROGER SIGLIN, Environmental Center, said it was clear that they need to get the legislature out of the timber managing business. He thought that most of the environmental community supports logging, but not at the expense of other values. He urged them to make sure there was a fair process established that would adequately represent everyone's values and interests. LARRY PAQUIN, Fairbanks resident, opposed HB 121, because it attempts to circumvent existing forest management laws - The Forest Practices Act and the five-year harvest schedules. This bill makes a mockery of forest management, since the Commissioner can waive the two-year public notice for the 500,000 board feet limit if he suspects state timber is being underutilized, or if a high level of unemployment exists. TAPE 95-19, SIDE A MR. PAQUIN said this legislation would set a bad precedent for forest management in the future. He was concerned that forests be managed responsibly and for sustained yield management for future generations. This is all that those people who oppose HB 121 are asking for, he commented. SEAN MCGUIRE, Fairbanks resident, said that Jan Dahl wants the Committee to consider her request for having fiscal notes for all three of the resource agencies - ADF&G, DEC, and DNR. He challenged the idea of using the term "waste." He said the trees do not go to waste, they fall down and replenish the soil. It is even crucial to the health of the soil. He did not like the idea that one person in DNR could make a decision to sign a 25-year contract. He thought it was a loop hole and that someone would someday use it. MR. MCQUIRE said it seems that the Republicans are basically supporting logging interests that generally represent a tiny fraction of Alaskans. The perception is beginning to be that the Republicans are doing this to the detriment of most Alaskans. WILLY DUNNE, Fritz Creek resident, noted that four people who could have testified on Monday could not make it back today. He said he is a hunter and fisherman and he has a strong interest in the use of our forest resources. He is not opposed to timber harvest. He noted this bill is opposed by commercial fishermen, loggers, timber operators, log home builders, and conservation groups around the state. Section 1 of this bill does not increase timber supply so much as just speeding up the process of disposing of timber. Section 2 could generate long term timber supply under negotiated contracts, but a 25-year negotiated contract would not exactly be a salvage sale. He didn't know of anyone in DNR who would say that logging improves forest health problems. In fact, many biologists and forest ecologists feel that insects and fire are a natural part of a forest ecosystem. He asked them to consider amendments to this bill to make it more palatable to the public. If the true intent of the bill is salvage, the perception is that it would do something more than that. Number 102 LARRY SMITH, Kachemak Resource Institute, said they try to interface the economy with ecology, because they don't operate well without each other. MR. SMITH said he is also a home builder and he thought the best wood to use for this purpose was five-year old standing dead wood that has had time to reach ambient moisture levels. 30-year old standing dead wood is even better, he said. Piecemeal revisions to the Forest Practices Act coming through the legislature are exactly that, he said, and proposed establishing a special committee on forest resources, perhaps supported by a working group, to resolve the issues. He said that a total review was promised when the Title 38 and 41 revisions in the Forest Practices Act were made law by the 1990 legislature. Back then he sponsored the beetle control language, including the amendments making salvage a requirement. There needs to be a thorough fiscal review, because he didn't think DNR and ADF&G have the resources to properly deal with the issues. The last 12 salvage sales are cases in point. He emphasized if they are going to remove the time for audit in the five-year schedules for collecting extra local knowledge about impact on resources and for the agencies to do the work the Forest Practices Act requires, they would have to put significant up-front money into this legislation so the same work can be done on an accelerated basis. He said they would be trashing wetlands, fish resources, and noted that the Corps of Engineers are exempted from permitting nationally for logging work in wetlands which caused a big problem in the head waters of the Ninilchik River where, he explained, a new anadromous fish stream was discovered. Number 234 SANDRA MESKE, Alaska Women In Timber, supported HB 121. She said they are in favor of multiple use management of our state lands. She stated that ignoring the problems caused by the extensive spruce bark beetle infestation on state lands does not provide multiple use or proper management of our natural resources. Recreationalists, wildlife, local economies, and resource industries all suffer under mismanagement. HB 121 offers a solution to this management crisis. ERIC MUENCH, Ketchikan, supported HB 121. He said it gives DNR the necessary flexibility to deal with insect outbreaks and control the loss of value. In over 30 years in Alaska, he has seen several instances where the delay of salvage for as little as two years has either lowered the revenues and volume recovery of a sale or made it necessary to "sweeten the pot" of a sale by including green timber at a salvage price. He said deterioration of the wood starts as soon as the tree dies, and that dead trees are more of a fire hazard than live ones. TERRY HERMACH, Valdez, said he was a 20-year resident of Alaska and spent 20 years in Oregon before that. He thought Senator Taylor's vision of Alaska is very similar to what he left behind there which wasn't a very pretty sight, he said. Every time it rained the streams turn chocolate brown and the salmon runs are zero. He very much opposed HB 121 as a very short-sighted bill. He accused DNR of showing gross negligence in management of state lands in the past and asked how they could expect them to do better in the future. He said that right now DNR has slated a timber sale for the city limits of Valdez even though the vast majority of the people are opposed to it. The other example was Oil Lease Sale 79 on the Copper River Flats which shows a total disregard for the livelihood of other industries. TROY REINHART, Employee Relations and Public Affairs Manager for Ketchikan Pulp, supported HB 121. To put this in perspective, he said, last year on the Tongass National Forest, where there is truly a large scale forest products industry, 600,000 trees were harvested. The Society of American Forestry estimates that this year on the Kenai Peninsula 20 million trees died. This is a tremendous forest health problem; this isn't a question of the economy; it's just the right thing to do, he said, adding that he is a professional forester. Ketchikan Pulp Co. and the Alaska Forest Association support this bill. Contrary to what the state forester said, the environmental groups that he deals with do not want to cut one tree whether it's dead or alive. Number 390 SENATOR TAYLOR offered the amendment proposed by DNR, but he objected for purposes of discussion. SENATOR LINCOLN said one of the questions raised in Jan Dahl's memo was regarding fiscal notes. MR. BOUTIN said the fiscal note "event" had come about last night and he has not contacted the other agencies today. SENATOR LINCOLN asked if ADF&G and DEC had testified on this issue. MR. PHELPS said they had numerous conversations with ADF&G about this bill and their concerns were whether habitat was adequately protected and that centered around the question of whether Forest Land Use Plans would continue in effect even if there were some salvage sale that took place. Working with the forester, they were able to assure ADF&G that that was the case. Because of those assurances, the department has put forward neither a position paper nor a fiscal note. The fiscal note from DNR, until very recently, was $0, he explained, because they didn't see that it required them to do anything new. SENATOR LINCOLN moved to adopt DNR amendment #2. SENATOR TAYLOR objected. SENATOR LINCOLN asked if the sponsor objected to using the terminology "dead and dying." REPRESENTATIVE WILLIAMS explained that the reason he disliked using "dead and dying" is that there are areas in the forest where there are dead trees and there might be one or two live trees the insects haven't gotten to, yet. In order to "manage" a timber stand, it would be easier to cut the live trees also, because you have to build a road through it to get to some of the dead and dying trees. MR. PHELPS added that it doesn't make sense to confine all your harvest to the trees that are actually dead or dying and you open serious litigation possibilities, if under the law, you could only log dead or dying trees in the process of a timber sale. SENATOR FRANK said he thought they needed a letter of intent to the Department of Natural Resources. MR. BOUTIN said a letter of intent along the lines of the first part of amendment #2 would go a long way to appease the people who are concerned they would abuse the language of "timber stands." SENATOR FRANK proposed dividing the amendment into a letter of intent and an amendment regarding the negotiated sale. SENATOR LEMAN asked if anyone objected to dividing the amendment. SENATOR LINCOLN asked the sponsor if he agreed to work with the department on a letter of intent. REPRESENTATIVE WILLIAMS said he did agree. SENATOR LINCOLN, then, withdrew amendment #2. Number 522 SENATOR TAYLOR moved to adopt amendment #1. There were no objections and the sponsor said he accepted it and it was so ordered. SENATOR FRANK moved to asked DNR to work with Representative Williams in writing a letter of intent. There were no objections and it was so ordered. SENATOR TAYLOR said he also wanted to adopt the committee fiscal note of March 1, 1995 (assumption #1 in a previously received fiscal note from DNR). There were no objections and it was so ordered. SENATOR TAYLOR moved to pass SCSHB 121 from committee with individual recommendations. He added that he thought it was necessary to adequately fund the department if they are going to do any volume of sales. There were no objections and it was so ordered. SENATOR LEMAN adjourned the meeting at 5:55 p.m.