Legislature(1995 - 1996)

02/28/1996 08:03 AM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                
 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
 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              
 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
 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               
 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                
 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.                  

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