Legislature(2017 - 2018)BARNES 124

03/27/2017 01:00 PM RESOURCES

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Audio Topic
01:08:13 PM Start
01:08:49 PM Confirmation Hearing(s):|| Alaska Gasline Development Corporation Board of Directors
01:52:56 PM Commissioner-designee - Department of Natural Resources
02:43:04 PM HB155
03:09:01 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Confirmation Hearings: TELECONFERENCED
- AK Gasline Development Corporation Board of
-- Public Testimony --
- Commissioner, AK Dept. of Natural Resources,
Andy Mack
-- Public Testimony --
Heard & Held
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
          HB 155-AK MENTAL HEALTH TRUST LAND EXCHANGE                                                                       
2:43:04 PM                                                                                                                    
CO-CHAIR  JOSEPHSON announced  that the  final order  of business                                                               
would be HOUSE BILL NO. 155,  "An Act authorizing a land exchange                                                               
in which  certain Alaska  mental health  trust land  is exchanged                                                               
for certain  national forest  land and relating  to the  costs of                                                               
the exchange; and providing for an effective date."                                                                             
2:43:28 PM                                                                                                                    
REPRESENTATIVE DAN ORTIZ, Alaska  State Legislature, as the prime                                                               
sponsor, introduced  HB 155.   He explained  that the  bill would                                                               
authorize a land exchange between  the Alaska Mental Health Trust                                                               
Authority  ("Trust") and  the U.S.  Forest Service  (USFS).   The                                                               
bill would  be a triple  win, he  said, because it  would protect                                                               
viewsheds,  enhance  the  timber  industry,  and  help  fund  the                                                               
Trust's mental  health programs.   Lands vital to  the recreation                                                               
and tourism  industries would be  protected, such  as Ketchikan's                                                               
Deer Mountain,  while at  the same time  the exchange  would make                                                               
available  other   lands  of  comparable  value   to  the  timber                                                               
industry.   Projects would be  created, he continued,  that would                                                               
act as  a "bridge" in  the industry until young-growth  timber is                                                               
ready   to  be   logged,  which   would  address   Representative                                                               
Rauscher's question about  what can be done  to stimulate logging                                                               
in the  state.  Because  the bill would allow  for time-sensitive                                                               
logging  it would  help  sustain the  timber  industry, which  is                                                               
beneficial to Southeast  Alaska's economy.  The  Trust would gain                                                               
resources and revenue  from the timber industry  to fund programs                                                               
that  serve some  of the  most  vulnerable people  in Alaska,  he                                                               
said.    The Trust  provides  funding  to programs  and  services                                                               
across  the  state  that  benefit  people  with  mental  illness,                                                               
developmental disabilities, Alzheimer's  disease, traumatic brain                                                               
injuries,  and substance  abuse  disorders.   He  noted that  the                                                               
Alaska Mental Health Trust Land  Office has been working with the                                                               
U.S. Forest Service, communities,  and interest groups to conduct                                                               
an administrative land  exchange between the Trust  and the USFS.                                                               
Additionally, he explained, U.S.  Senator Lisa Murkowski and U.S.                                                               
Senator Dan  Sullivan have introduced similar  legislation in the                                                               
U.S. Congress with  Senate Bill 131, and  U.S. Representative Don                                                               
Young introduced  [House Resolution] 513.   Also, Senator Stedman                                                               
has introduced parallel  legislation [SB 88] in  the Alaska State                                                               
Senate.   Overall,  he said,  HB 155  would increase  revenue for                                                               
mental  health  programs and  the  timber  industry, while  still                                                               
protecting iconic lands used for recreation and tourism.                                                                        
REPRESENTATIVE BIRCH  asked whether an assessment  of the mineral                                                               
value and other economic assessments  have been done on the lands                                                               
that would be exchanged.                                                                                                        
REPRESENTATIVE ORTIZ  assured the  committee the Trust  would not                                                               
trade away lands for less valuable lands.                                                                                       
2:48:15 PM                                                                                                                    
REPRESENTATIVE JOHNSON  requested the  sponsor to expound  on why                                                               
he thinks the Trust would not trade for lands of lesser value.                                                                  
REPRESENTATIVE  ORTIZ responded  that the  Trust was  established                                                               
initially with  land grants across  the state and  its activities                                                               
are funded  through the monetization  of these lands.   The Trust                                                               
is bound  to act  in its own  best interest, he  said, so  it can                                                               
further  the goals  for  which  it was  founded.    If the  Trust                                                               
currently controls lands that  offer large monetization potential                                                               
through  mining, he  wouldn't think  the Trust  would trade  away                                                               
that land  because it would  go against the Trust's  basic tenant                                                               
to maximize the potential of the lands it has been given.                                                                       
REPRESENTATIVE RAUSCHER drew attention  to the bill, beginning on                                                               
page 1, line 14, and continuing  to page 2, lines 1-2, which name                                                               
the  Southeast communities  of  Wrangell,  Sitka, Juneau,  Meyers                                                               
Chuck, Petersburg, and  Ketchikan.  He inquired  whether the bill                                                               
is specific to "an area only."                                                                                                  
REPRESENTATIVE ORTIZ  answered it  is his understanding  that the                                                               
lands that  would be exchanged  with USFS are primarily  lands in                                                               
Southeast Alaska and so in that  sense it is region specific.  In                                                               
further  response to  Representative Rauscher,  he said  the bill                                                               
could not  apply to other lands  in the state, but  affects lands                                                               
illustrated by maps in the  committee packet describing the lands                                                               
that are  part of this  exchange.   He said his  understanding is                                                               
that all the  lands described on those maps  are within Southeast                                                               
REPRESENTATIVE TALERICO  offered his  understanding that  for the                                                               
exchange to  happen, a bill  must be  passed by the  Alaska State                                                               
Legislature  as well  as an  action by  Congress to  authorize an                                                               
exchange between USFS and the Trust.                                                                                            
REPRESENTATIVE ORTIZ  responded yes, the legislature  needs to do                                                               
what it  needs to do on  the state's end, but  the exchange won't                                                               
happen  unless Congress  also passes  federal legislation.   They                                                               
both must happen for this exchange to take place.                                                                               
REPRESENTATIVE TALERICO  opined moving HB 155  forward would help                                                               
with the decision-making in Congress.                                                                                           
REPRESENTATIVE ORTIZ agreed.                                                                                                    
2:53:04 PM                                                                                                                    
REPRESENTATIVE  RAUSCHER inquired  whether this  has been  vetted                                                               
through all the important channels.                                                                                             
REPRESENTATIVE ORTIZ said yes.                                                                                                  
REPRESENTATIVE PARISH  noted the letters of  opposition propose a                                                               
federal  buyout  of  the  land  [instead  of  an  exchange],  but                                                               
observed  that a  buyout  would  not create  jobs  in the  timber                                                               
industry, which is  one of the primary benefits of  the bill.  He                                                               
asked whether  there is something  the legislature would  need to                                                               
do  to accommodate  a  buyout option  if at  a  federal level  it                                                               
became a possibility.                                                                                                           
REPRESENTATIVE ORTIZ  replied he is  not prepared to  answer that                                                               
question at  this time.   He  agreed that  a buyout  option might                                                               
help  the Trust  and the  tourism  industry, but  not the  timber                                                               
industry, which is the third part of his "win-win-win."                                                                         
REPRESENTATIVE PARISH inquired  as to how many  "job years" would                                                               
be enabled  under the  bill, job  years meaning  one job  for one                                                               
REPRESENTATIVE ORTIZ deferred  to Mr. Wyn Menefee  for an answer.                                                               
The bill is about making  timber offerings more of a possibility,                                                               
he said, but it is out of his realm to quantify how much.                                                                       
CO-CHAIR JOSEPHSON announced that a  sectional analysis of HB 155                                                               
will be presented at the bill's  next hearing and that a proposed                                                               
committee substitute  will also  be discussed at  that time.   He                                                               
then invited Mr. Menefee to provide a presentation on the bill.                                                                 
2:55:50 PM                                                                                                                    
WYN  MENEFEE, Deputy  Director, Alaska  Mental Health  Trust Land                                                               
Office,  Office  of  the   Commissioner,  Department  of  Natural                                                               
Resources  (DNR), provided  a  PowerPoint presentation  entitled,                                                               
"HB  155 -  Alaska Mental  Health  Trust Land  Exchange with  the                                                               
USFS."  Displaying  slide 2, he explained that  the Alaska Mental                                                               
Health Trust ("Trust")  is a perpetual trust with  the purpose of                                                               
improving  the  lives  of  its  beneficiaries.    The  Trust  has                                                               
programs that it funds to  help create a comprehensive integrated                                                               
mental health  program in  Alaska, as  the enabling  Act dictated                                                               
for it  to do.   For example, he said,  the Trust puts  about $20                                                               
million a year  in projects and activities at  state agencies and                                                               
nonprofits, has  provided about $3  million in grants  since 2013                                                               
in Southeast Alaska, approved $10  million to help fund Medicare,                                                               
and a sundry of other things.                                                                                                   
MR. MENEFEE turned to slide 3,  and noted that the Trust puts out                                                               
money to  help mental health.   It needs money to  do that, which                                                               
leads to the  Alaska Mental Health Trust Land  Office (Trust Land                                                               
Office).  The job  of the Trust Land Office, he  said, is to make                                                               
money off  the non-cash assets  of the  Trust and to  improve the                                                               
lives of  the beneficiaries.   The  land office  manages multiple                                                               
asset  classes  and  timber  is   one  of  those  asset  classes.                                                               
Although he  is within the  Department of Natural  Resources, the                                                               
Trust Land  Office basically acts  as a contractor to  the Alaska                                                               
Mental Health Trust Authority and manages the Trust's lands.                                                                    
MR. MENEFEE  provided slide 4,  that illustrated Trust  lands are                                                               
managed according  to [four] principles  as follows:   make money                                                               
by  maximizing  long-term  revenue  from the  land;  protect  and                                                               
improve the  corpus; encourage diverse revenue-producing  uses of                                                               
trust land;  manage trust land.   He said timber harvest  is just                                                               
one aspect  of a  diverse portfolio, and  the land  exchange will                                                               
help  diversify the  Trust's portfolio  and increase  the Trust's                                                               
revenue stream,  which will directly benefit  beneficiaries.  The                                                               
land exchange will protect the  corpus by not allowing the timber                                                               
assets  to become  devalued, which  could happen  "if the  timber                                                               
industry goes  away."  The Trust  cannot sell timber if  there is                                                               
nobody to  buy it,  he said,  and revenue would  be lost  at that                                                               
point.  It is very important  to sell timber to a timber industry                                                               
while it still exists.                                                                                                          
MR. MENEFEE displayed slide 5,  "Land Distribution," and said the                                                               
map  depicts  the  Trust's approximate  land  holdings  that  are                                                               
located throughout Southeast Alaska.                                                                                            
MR. MENEFEE addressed slide 6, that  was a map showing that about                                                               
18,000 acres  of Trust lands  are adjacent to the  communities of                                                               
Wrangell,   Petersburg,  Sitka,   Juneau,   Meyers  Chuck,   [and                                                               
Ketchikan].  The  Trust also holds land in No  Name Bay, he said.                                                               
The U.S. Forest Service has about  20,000 acres of remote land on                                                               
Prince of  Wales Island  and Shelter  Cove.   The reason  for the                                                               
different  acreages, he  explained,  is that  it  is an  expected                                                               
amount  of acreages  that are  being offered;  however, it  is an                                                               
equal value land  exchange, which means that after  the lands are                                                               
appraised, an  equal value exchange  must be  done and so  at the                                                               
end it won't be those acreages.   Those acreages are being put on                                                               
the table and it  is specific to just those parcels.   It is done                                                               
in  two phases,  he  continued.   The  first  phase is  exchanged                                                               
within one year.   The key about rushing through  the first year,                                                               
giving a  smaller amount exchange, is  the need to get  timber to                                                               
market.  The rest is exchanged  within two years and this is when                                                               
parcels may be adjusted to equalize the value.                                                                                  
MR. MENEFEE brought attention to  slide 7 depicting two maps, one                                                               
entitled, "Trust Land  To Be Exchanged in  Southeast Alaska," and                                                               
one  entitled, "National  Forest Service  Land to  be Exchanged."                                                               
He  said  the   exchange  is  a  consolidation   [of  Trust  land                                                               
3:00:55 PM                                                                                                                    
MR. MENEFEE  turned to slide  8, and  stated that the  Trust Land                                                               
Office expects  to receive between  $40 and $60 million  over the                                                               
next 20  years from timber sales  from these parcels if  they are                                                               
acquired through  this exchange.   Right now, he  advised, trying                                                               
to cut timber on the lands  currently owned by the Trust does not                                                               
go well    last  year's Deer Mountain  episode being  an example.                                                               
The communities do  not want the Trust cutting  timber.  However,                                                               
he  continued, the  resources of  the  Trust are  supposed to  be                                                               
managed solely  for the interests  of the Trust, which  means the                                                               
public can be ignored in that sense.   Even if the public says it                                                               
doesn't like  it, if it  is in the  best interests of  the Trust,                                                               
the Trust is  supposed to still do  it.  But, he  said, the Trust                                                               
is trying  to work it out  by doing this exchange,  so timber can                                                               
be cut where there is no opposition.                                                                                            
MR. MENEFEE stated that the Trust  sees the land exchange and the                                                               
selling of the  timber as a sustainable thing  because trees grow                                                               
back, and  another harvest  will provide  revenue in  the future.                                                               
The land exchange will protect  the timber and tourism industries                                                               
because  it  protects  the  viewsheds  while  giving  the  timber                                                               
industry  the capability  of having  timber to  market, which  is                                                               
critical right  now, because the  timber industry is  failing due                                                               
to lack  of timber.   He  said the  timber industry  has multiple                                                               
layers of  great economic impact because  it includes stevedores,                                                               
equipment rental, maintenance,  purchases, transportation, timber                                                               
fellers, and  cruisers.   Timber harvest  on the  exchanged lands                                                               
would  be  done  in  an environmentally  responsible  manner,  he                                                               
maintained,  because  the Trust  must  follow  the Alaska  Forest                                                               
Resources and Practices Act.                                                                                                    
MR. MENEFEE addressed  slide 9.  He explained that  the Trust has                                                               
been working on  this exchange for 10 years.   The Trust tried to                                                               
do it administratively and entered  into an agreement to initiate                                                               
with USFS  to exchange these very  lands.  The problem,  he said,                                                               
is that USFS's estimate of how much  it would cost to get it done                                                               
and  how long  it  would  take goes  well  past  when the  timber                                                               
industry would fail in Alaska.   "We're the only ones with timber                                                               
that  potentially could  be brought  to market  right now  in any                                                               
amount that will keep the timber  industry alive," he stated.  He                                                               
reiterated  that  he  is  concerned  about  the  timber  industry                                                               
because  if the  timber industry  is  not viable,  the Trust  has                                                               
nobody to  sell its timber to,  and that is the  devaluing of its                                                               
MR. MENEFEE stated  that the Tongass Futures  Roundtable [a group                                                               
of stakeholders  convened by  USFS, Alaska  Region] had  about 35                                                               
entities,   everything   from    governments   to   boroughs   to                                                               
conservation groups,  and they  all came out  with the  same idea                                                               
that the exchange is a good  idea for the communities, the timber                                                               
industry, and the  Trust.  In working through  this exchange, the                                                               
Trust has  worked with conservation  groups and  other interested                                                               
parties.    The  Trust  has  modified  boundaries  and  addressed                                                               
concerns to try to make the  exchange successful.  The only group                                                               
that  has expressed  concern  in  recent time,  he  said, is  the                                                               
Southeast Alaska  Conservation Council (SEACC).   Primarily SEACC                                                               
has expressed concern  about a litigation it has on  No Name Bay.                                                               
He assured  the committee that  the Trust  has clear title  in No                                                               
Name Bay,  can go forward  with the  exchange, and that  there is                                                               
nothing  in  the  litigation  that would  stop  the  Trust  going                                                               
forward.   He  related  that  in its  testimony  on  SB 88,  [the                                                               
companion bill] in  the other body, SEACC said it  wanted No Name                                                               
Bay to go to  USFS.  He further related that  SEACC has stated it                                                               
would  like to  have the  Trust's lands  purchased.   However, he                                                               
continued, $40 million-$60 million  doesn't seem to be available,                                                               
and the Trust  does not have other options that  compare with the                                                               
proposed exchange.                                                                                                              
3:05:34 PM                                                                                                                    
MR.  MENEFEE continued  to  slide  10, and  noted  USFS owns  the                                                               
majority of  land [in Southeast  Alaska].   He said the  areas on                                                               
the map  colored in  brown or  tan cannot be  cut, and  the areas                                                               
colored in  green could be cut,  which is a small  portion of the                                                               
forest.   The U.S. Forest Service  used to be the  primary seller                                                               
of timber  in Southeast  Alaska; however, when  USFS cut  back on                                                               
the amount of timber sold  each year, the timber industry started                                                               
failing  and  the  number  of   jobs  declined.    The  Trust  is                                                               
attempting  to bridge  the interim  while USFS  transitions to  a                                                               
sustainable young-growth  harvest.  It  is critical right  now to                                                               
get timber to  market during that two-year period,  he added, and                                                               
that  is why  the  state  and federal  legislation  needs to  get                                                               
MR.  MENEFEE moved  to  slide  11, and  explained  that both  the                                                               
federal and  state legislation need  to pass and  are compatible.                                                               
The federal  legislation directs  USFS to complete  the exchange,                                                               
he  said,  and the  state  legislation  allows  the Trust  to  go                                                               
forward with  the exchange.     Passage of  both the  federal and                                                               
state  legislation would  enable consummation  of this  exchange,                                                               
get the  lands appraised and  surveyed, and get timber  to market                                                               
within the two-year timeframe.                                                                                                  
MR.  MENEFEE  turned  to  slides  12 and  13,  and  concluded  by                                                               
pointing out that there are many  supporters of the exchange.  He                                                               
reiterated  that  the  bill   is  a  positive  revenue-generating                                                               
exchange that would  help improve the lives  of beneficiaries and                                                               
would help  communities by preserving jobs,  economies, viewsheds                                                               
and watersheds.   He urged for the passage of HB 155.                                                                           
REPRESENTATIVE BIRCH  asked whether an appropriate  assessment of                                                               
minerals has been done on the  lands currently owned by the Trust                                                               
to assure that there is not another gold mine within.                                                                           
MR.   MENEFEE  acknowledged   assessing   mineral  potential   is                                                               
difficult.   However, to the  best of the Trust's  knowledge from                                                               
surveys that have been done, there is not a mineral potential                                                                   
that would be lost.                                                                                                             
3:09:01 PM                                                                                                                    
[HB 155 was held over.]                                                                                                         

Document Name Date/Time Subjects
HB155 Invited Testimony-Wyn Menefee.pptx HRES 3/27/2017 1:00:00 PM
HB 155
HB155 Sectional Analysis 03.07.17.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB155 Sponsor Statement 03.07.17.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB155 Summary of Changes ver O to ver U.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB155 ver. O 03.07.17.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB155 ver. U 3.8.17.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB155 Invited Testimony-Wyn Menefee.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB155 Supporting Document-Bob Weinstein Letter.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB155 Additional Document-AMHTFA Fact Sheet.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB155 Supporting Document-AFA Letter.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB155 Supporting Document-Federal Legislation.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB155 Supporting Document-Letters Compiled.pdf HRES 3/27/2017 1:00:00 PM
HB 155
Andy Mack Resume' June 2016. AM1_Redacted.pdf HRES 3/27/2017 1:00:00 PM
Hugh Short_Redacted.pdf HRES 3/27/2017 1:00:00 PM
Warren Christian_Redacted.pdf HRES 3/27/2017 1:00:00 PM
HB 155 Public Comments.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB 155 Letter of Comment - Knight.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB 155 Letter of Comment- Slenkamp.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB155 Additional Document-AMHTFA Fact Sheet.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB155 Additional Document-SEACC Comments on No Name Bay.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB155 Opposing Document-Doug Rhodes Letter.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB155 Additional Document-Maps as of 3.3.17.pdf HRES 3/27/2017 1:00:00 PM
HB 155
HB155 Fiscal Note - DNR-MHTLA 3.27.17.pdf HRES 3/27/2017 1:00:00 PM
HB 155