Legislature(2017 - 2018)ADAMS ROOM 519

03/28/2018 01:30 PM House FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Public Testimony --
Heard & Held
Heard & Held
-- Public Testimony --
Moved CSHJR 29(FIN) Out of Committee
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
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                                                                    
     Bills have been considered in Utah, Maine, Colorado,                                                                       
          "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                                                                    
Representative Tarr  replied the  individual was  online for                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
3:14:31 PM                                                                                                                    
AT EASE                                                                                                                         
3:15:55 PM                                                                                                                    

Document Name Date/Time Subjects
HB 219 Sectional for HFIN.pdf HFIN 3/28/2018 1:30:00 PM
HB 219
HB219 Transmittal Letter.pdf HFIN 3/28/2018 1:30:00 PM
HB 219
HJR 29 Secure Rural Schools Funding in Federal Omnibus Bill.pdf HFIN 3/28/2018 1:30:00 PM
HJR 29
HB 386 Draft Proposed CS Ver D 03.27.18.pdf HFIN 3/28/2018 1:30:00 PM
HB 386
HB 386 statute changes power point house finance.pdf HFIN 3/28/2018 1:30:00 PM
HB 386
HB 217 Alaska Grown 3-26-18.pdf HFIN 3/28/2018 1:30:00 PM
HB 217
HB 217 Version T 3-27-18.pdf HFIN 3/28/2018 1:30:00 PM
HB 217
HB 217 Alaska Grown Sponsor Statement 3.27.18.pdf HFIN 3/28/2018 1:30:00 PM
HB 217
HB 386 Sectional Analysis ver D 03.28.18.pdf HFIN 3/28/2018 1:30:00 PM
HB 386
HB 386 Sectional changes ver A to Ver D 03.28.18.pdf HFIN 3/28/2018 1:30:00 PM
HB 386
HB 217 Summary of Changes Version O to T.pdf HFIN 3/28/2018 1:30:00 PM
HB 217
HB217 Letters of Support 3.28.18.pdf HFIN 3/28/2018 1:30:00 PM
HB 217
HB 386 Letter of concern 3.28.18.pdf HFIN 3/28/2018 1:30:00 PM
HB 386
HJR 29 Dr. Wegner testomony.pdf HFIN 3/28/2018 1:30:00 PM
HJR 29
HB 217 Audit 2015.pdf HFIN 3/28/2018 1:30:00 PM
HB 217