Legislature(1995 - 1996)
02/28/1996 08:03 AM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 344 - VALUE-ADDED TIMBER SALES; MARKETING Number 1230 CO-CHAIRMAN WILLIAMS said at the February 21, 1996, House Resource Committee meeting, a committee substitute, CSHB 344(RES) was adopted. He said the meeting today is a continuation of discussion on CSHB 344(RES) and he repeated that he is not intending to move this bill today. ELIZABETH WEST, Director of Communications, Alaska Forrest Association, testified via teleconference from Ketchikan. She said the Alaska Forest Association (AFA) represents the timber industry throughout Alaska and supports legislation which continues to improve economic opportunities by making timber resources of Alaska available for production of value-added commodities. The AFA thanked the Governor for introducing HB 344 and said they appreciate the concept of a grounding forest products industry in interior Alaska. She commended the House Resources Committee for working with the industry to develop the CSHB 344(RES) to succeed in the established goals and the AFA supports this legislation. She said the language of CSHB 344(RES), which included a maximum level of 10 million board feet, allows the industry a steady and reliable supply of timber. She said this justifies investment in the hardwood industry within the Tanana basin while maintaining a moderate harvest elsewhere. She said because this is the maximum limit, the AFA believes that the commissioner will take wide use of this consideration. MS. WEST said also approved of the changes made in CSHB 344(RES) in the definition of high value-added products which will bring jobs creating stability for families and communities. She said value- added products open future possibilities for the timber industry. She said the AFA believes CSHB 344(RES) is a practical solution encouraging responsible harvest of the timber resources from the interior forests in the state. She said the employment opportunities it creates will aid the state's economy. Number 1700 DUANE ANDERSON testified via teleconference from Palmer. He said he moved to Palmer because of the future for value-added wood products and the possibility that this industry might occur. He said HB 344 does not create a resource basis which is dependable or harvestable. He said, on the Kenai Peninsula there are over 75 individual wood processors, and in the Aramat Valley there are at least 25 processors. He said a 1980 study was conducted by the state of Alaska, in conjunction with the federal government, which stated that there were over 200 (indiscernible) of one type or another within the railbelt. He said the numbers of processors makes HB 344 impossible to be done in a fair and equitable manner for all involved parties. He said the proposed amendments to HB 344 would change the definition of value-added. He referred to page four and cited the language which specified commercially dried lumber. He said this is an expensive process and is not always a beneficial process. He referred to another section of CSHB 344(RES), which he said, states that plywood is not included in the value-added definition. He challenged anyone to show him how plywood and veneer is not the best and the most logical product for the species of wood located in the state of Alaska. He said the drafter of HB 344 was not familiar with the timber industry in Alaska. Number 1700 REPRESENTATIVE OGAN said that veneer, plywood, finger-jointed lumber and house logs have been added to the value-added definition in CSHB 344(RES). Number 1759 MR. ANDERSON said CSHB 344(RES) is headed in the wrong direction and that within five years the legislature will find that this bill would not work. He said he does not feel comfortable with all the value judgments the state agencies would have to make under CSHB 344(RES). Number 1824 STEVE KALLICK, Director, Alaska Rainforest Campaign and Member, Governor's Board of Forestry, testified via teleconference from Anchorage. He said HB 344 was the joint result of the timber industry and environmental agencies work and added that the committee substitute adopts some of the revisions that the Board of Forestry suggested. However, he urged the committee to go back to the original version of HB 344 which the Board of Forestry proposed. He said the changes incorporated into CSHB 344(RES) have been symbolic, and do not add to HB 344, but detract and cause opposition. He said the Governor does not wish to administer HB 344 in a different way than the Board of Forestry recommendations. He said CSHB 344(RES) incorporates minor changes, but he said that the amount of timber in the interior creates discomfort. MR. KALLICK said the way in which HB 344 and HB 212 have been developed should be seen as a model of how legislation should be developed. He said a process which allows the different factions to work together can and will work, but needs the respect of the legislature. Number 2000 RON LONG, Representative, Seward Port Commerce Advisory Board, testified via teleconference from Seward. He said he was pleased to see the results of the committee substitute which included language which makes CSHB 344(RES) more realistic. He said CSHB 344(RES) includes a mechanism to provide materials that people need to build houses in Alaska. He referred to Mr. Kallick's testimony and said last week, members of the environmental community were pleased by the changes in CSHB 344(RES). He supported CSHB 344(RES). Number 2055 FRANK AGE, Owner, Pacific Rim Cedar, Incorporated, testified via teleconference from Vancouver, Washington. He said he is the owner of a sawmill located in Wrangell. He said the timber industry in Southeast Alaska is failing because there is no supply. He said he is considering shutting down his operation in Wrangell because of this reason. He said he supports any bill which acknowledges concern and works to keep sawmills operating in Alaska. He then cited the lackluster attitude of the federal government. He said CSHB 344(RES) is not crafted to fit everyone's needs. He said there are some vague areas where the commissioner has the responsibility to decide how much of the wood should be used for high value-added processing, but that he trusts the commissioner to made that decision. He said there is not one person who can decide how each and every log should be used, cut and processed and what products should be made from it. He said the market dictates those decisions on a day to day, year to year basis, but he assumes the commissioner will use this information in his decision making. Number 2133 MR. AGE supported CSHB 344(RES) and encouraged public support for legislation relating to the continuing operations of the timber industry. Number 2196 REPRESENTATIVE OGAN asked Mr. Anderson to call him in his office regarding his testimony. Number 2220 ERIK HOLLAND testified via teleconference from Fairbanks. He said he commiserated with Mr. Age regarding the timber industry. He said in interior Alaska, the public does not want a large scale forestry industry. He said he was sending a fax indicating this sentiment and added that the response to HB 310 a few years back also indicates this feeling. He said the public is interested in helping small, local loggers and timber processors. He cited Gale Teaster (ph.) and Bob Kite (ph.) as examples of these type of processors. He said they utilize a small amount of the forest resource and create high value added wood to the local market. Number 2282 MR. HOLLAND said these local timber processors are being outbid for resource by export driven markets. He said the state has not accommodated their need for smaller amounts of wood in a timely manner. The processors have said that they need easier access to smaller amounts. He said the way in which CSHB 344(RES) is drafted, he believed it would simply increase the amount of logs going over seas. He said he is interested in conservation and not for industrial forestry. He said Southeastern Alaskan solutions might not work in interior Alaska. He said in the interior, there is a unique opportunity to build a sustainable high value added industry where small areas of woodland would suffice. Number 2363 STUART PECHEK testified via teleconference from Fairbanks. He said when HB 344 was submitted last spring, it appeared that there was a bill that truly accessed the economic needs and the desire for a local value added industry. He said it balanced the concern of many residents to a desirable level of logging in the Tanana Valley State Forest. He said he agreed with CSHB 344(RES) in general and appreciate the work involved, but that key loopholes have been added and that it overlaps HB 212. He said the use and abuse of loopholes make many voters, like himself, leery of their inclusion in CSHB 344(RES). He said one of those loopholes is located in Section 2.A of the original language of five million board feet instead of ten million seems adequate, especially with the long term ten year contracts. He questioned the minimal number of contracts, in this case, two per region is mandated by the state government. He said he is interested in helping the local and state economies, not to subsidizing the markets when the demand might not be there. He said this is especially true when the government is preaching fiscal responsibility. He referred to Section 2C, the second part, which he felt should be eliminated or defined to mean where pulp or chip describes the other value added products is described under the small scale local operations. He said his experience dictates that pulp operations require large volumes of wood. TAPE 96-25, SIDE B Number 000 MR. PECHEK said there is a tremendous wilderness opportunities located in the Tanana Valley. He said CSHB 344(RES) would work, but he concluded that the original HB 344 fits that intent to a greater degree. Number 035 DAN RITZMAN, Lobbyist, Northern Alaska Environmental Lobby (NAEL), testified via teleconference from Fairbanks. He said commercial logging is just one of the large number of forest resources and uses and mentioned that it is not the most economically viable one to the state of Alaska. He mentioned the other forest resources; fish, wildlife, water quality, scenic beauty, wilderness, subsistence, recreation, sport and commercial fishing and tourism. He said these resources would be damaged by large scale and sustainable logging. He said these uses provide both economic and non-economic benefits and should not be threatened by a single and frequently incompatible use. He said when logging is to occur on public lands, however, the NAEL agrees with the basic premise that it makes no sense to export revenue creating chips and therefore jobs out of the state. He said job creation at any cost is not acceptable. He said to make sure that the state will require the monitoring of individual logging sales and the cumulative effect of logging on nearby private and other public lands be analyzed. Number 102 MR. RITZMAN referred to page two, line eight, Section 2, the change from the five million to ten million board feet is not acceptable to many people in the interior especially when coupled with the ten year contract. He said two independent surveys, done last winter, showed that the Fairbanks community does not support contracts longer than five years. He said ten year contracts are not needed to encourage the types of value added industry. He cited examples of the timber industry contracts in Southeast Alaska that are five to seven years in length. He said the small value added industries in the interior have said they need a three year supply in order to obtain the loan. Number 139 MR. RITZMAN referred to line 17, and said the language was ambiguous. He interpreted it as meaning that there must be two of these contracts, if this is the case, he said he is against it. Number 153 MR. RITZMAN referred to SubSection C, which seems to say that one of these contracts a small percentage of the woods, say 10 percent could go to high value added and the other 90 percent would go to other value added products such as pulp, chips, et cetera. He said he did not see pulp and chips as value added. Number 203 MARK WHEELER, Lobbyist, Alaska Environmental Lobby, Incorporated (AEL), was next to testify. He said his organization represents 20 environmental organizations throughout the state of Alaska. He said the AEL supports the concepts behind the original legislation introduced by the Governor, but have specific concerns regarding CSHB 344(RES). He said changes in CSHB 344(RES) misrepresent the recommendations of the Board of Forestry and depart from the original intent of the bill. The intent of HB 344 was to help small high value-added processors acquire a stable timber supply. He said the CSHB 344(RES) does not support this intent. MR. WHEELER said adding value to timber cut in Alaska creates jobs that stay in Alaska. However, job creation at any cost is not acceptable. He said the state needs to guarantee the protection of all uses of the forest before signing off on negotiated timber products. Number 235 MR. WHEELER specified specific concerns with CSHB 344(RES). He said ten years is too long for negotiated contracts. He said allowing contract obligations, rather than sound resource policies is dangerous when doing forest management. He said contracts should be limited to three years, as small value-added operations in the interior have indicated that they need a three year guaranteed supply to acquire loans. Number 263 MR. WHEELER said that at least 70 percent of the timber should undergo high value added processing. He said the commissioner should also ensure that the maximum percentage feasible above 70 percent is dedicated to high value added products. MR. WHEELER said ten million board feet is much too large for a negotiated contract. The CSHB 344(RES) ignored the Board of Forestry's recommendation to keep the maximum cut at five million board feet per year. He said a cut of ten million board feet on the boreal forest would astronomically increase the current rate of logging. He said considering a different level of productivity on state forests across Alaska would mean that logging levels would not need to be determined on a specific, regional basis. MR. WHEELER said the CSHB 344(RES) does not clearly limit the number of contracts per region. He said the CSHB 344(RES) misrepresents the recommendations of the Board of Forestry on this matter. He said there should be a strict limitation of the number of negotiated contracts on each region of the state. Number 316 REPRESENTATIVE OGAN questioned page four, Section 2, line 21, and said that high value added wood product means kiln dried or commercially dried lumber, he asked if there was lumber which was beetle killed whether or not that could be used as a dimensional lumber product. He said we are importing 100 percent of dimensional lumber to the state. Representative Nicholia joined the committee meeting. Number 383 THOMAS H. BOUTIN, State Forester, Director's Office, Division of Forestry, Department of Natural Resources, was next to testify. He said it was his recollection that the term commercially dried was put in because some people are air drying lumber such as a company in Nitilchik. He said it doesn't matter how the log started out, because dimensional lumber is sold as 19 or less, unless it is sold as MC 15 which gives it another $15 a thousand. He said boards are usually sold at 12 percent of moisture content or less. He said a green tree is usually 45 percent moisture when it is cut. Number 420 MR. BOUTIN said the beetle killed trees have wet spots so they still have to be dried to get rid of these wet spots and any type of drying would qualify under this term, commercially dried.