Legislature(2007 - 2008)CAPITOL 106

04/24/2007 05:15 PM House ECONOMIC DEV., TRADE, AND TOURISM


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05:19:54 PM Start
05:21:00 PM Presentation: the Economics of Sport Fishing
06:42:43 PM Presentation: Agrium's Economic Impact on the Kenai
07:13:28 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
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+ Agrium's Economic Impact on the Kenai TELECONFERENCED
+ The Economics of Sport Fishing TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
 HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, INTERNATIONAL                                                               
                       TRADE AND TOURISM                                                                                      
                         April 24, 2007                                                                                         
                           5:19 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mark Neuman, Chair                                                                                               
Representative Kyle Johansen                                                                                                    
Representative Bob Lynn                                                                                                         
Representative Andrea Doll                                                                                                      
Representative Mike Doogan                                                                                                      
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Carl Gatto                                                                                                       
Representative Vic Kohring                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION:  The Economics of Sport Fishing                                                                                   
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PRESENTATION:  Agrium's Economic Impact on the Kenai                                                                            
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                              
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
RICKY GEASE, Executive Director                                                                                                 
Kenai River Sportfishing Association                                                                                            
Soldotna, Alaska                                                                                                                
POSITION STATEMENT:  Provided the presentation by the Kenai                                                                     
River Sportfishing Association.                                                                                                 
                                                                                                                                
BRUCE KNOWLES                                                                                                                   
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT:  Testified during the hearing on the                                                                        
Economics of Sport Fishing.                                                                                                     
                                                                                                                                
GREG SUTTER, Owner                                                                                                              
Captain Greg's Charters                                                                                                         
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Testified during the hearing on the                                                                        
Economics of Sport Fishing.                                                                                                     
                                                                                                                                
BOB HOWARD, Owner                                                                                                               
Sea Nymph Charters;                                                                                                             
Chair, Board of Directors                                                                                                       
Homer Economic Development Commission                                                                                           
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Speaking on his own behalf, testified                                                                      
during the hearing on the Economics of Sport Fishing.                                                                           
                                                                                                                                
CHARLES PEARMAN, Owner                                                                                                          
Pristine Charters                                                                                                               
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the hearing on the                                                                        
Economics of Sport Fishing.                                                                                                     
                                                                                                                                
RON WILSON, Owner                                                                                                               
Ron's Riverboat Service and Susitna Landing;                                                                                    
Member, Board of Directors                                                                                                      
Mat-Su Convention and Visitor's Bureau                                                                                          
Willow, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the hearing on the                                                                        
Economics of Sport Fishing.                                                                                                     
                                                                                                                                
ROBERT MEALS, General Manager                                                                                                   
Tri River Charters                                                                                                              
Talkeetna, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the hearing on the                                                                        
Economics of Sport Fishing.                                                                                                     
                                                                                                                                
BILL MACKAY, Member                                                                                                             
Board of Directors                                                                                                              
Kenai River Sportfishing Association;                                                                                           
Senior Vice-President                                                                                                           
Alaska Airlines                                                                                                                 
Soldotna, Alaska                                                                                                                
POSITION STATEMENT:  Testified during the hearing on the                                                                        
Economics of Sport Fishing.                                                                                                     
                                                                                                                                
RON RAINEY, Member                                                                                                              
Board of Directors                                                                                                              
Kenai River Sportfishing Association                                                                                            
Soldotna, Alaska                                                                                                                
POSITION STATEMENT:  Speaking as  an individual, testified during                                                               
the hearing on the Economics of Sport Fishing.                                                                                  
                                                                                                                                
RIK BUCY, Chair                                                                                                                 
Board of Directors                                                                                                              
Kenai River Sportfishing Association                                                                                            
Soldotna, Alaska                                                                                                                
POSITION  STATEMENT:    Testified   during  the  hearing  on  the                                                               
Economics of Sport Fishing.                                                                                                     
                                                                                                                                
BOB PENNY, Member                                                                                                               
Board of Directors                                                                                                              
Kenai River Sportfishing Association                                                                                            
Soldotna, Alaska                                                                                                                
POSITION  STATEMENT:    Testified   during  the  hearing  on  the                                                               
Economics of Sport Fishing.                                                                                                     
                                                                                                                                
LISA PARKER, Manager                                                                                                            
Government & Public Relations                                                                                                   
Agrium U.S. Inc.                                                                                                                
Kenai, Alaska                                                                                                                   
POSITION  STATEMENT:   Provided the  presentation on  Agrium U.S.                                                               
Inc.                                                                                                                            
                                                                                                                                
CHRIS J. SONNICHSEN, Director                                                                                                   
Alaska Operations                                                                                                               
Agrium U. S. Inc.                                                                                                               
Kenai, Alaska                                                                                                                   
POSITION STATEMENT:  Answered a  question during the presentation                                                               
on Agrium U.S. Inc.                                                                                                             
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR MARK NEUMAN called the  House Special Committee on Economic                                                             
Development, International Trade and  Tourism meeting to order at                                                               
5:19:54 PM.  Representatives Lynn,  Doogan, Doll, and Neuman were                                                             
present at  the call to  order.  Representative  Johansen arrived                                                               
as the meeting was in progress.                                                                                                 
                                                                                                                                
^PRESENTATION:  THE ECONOMICS OF SPORT FISHING                                                                                
                                                                                                                                
5:21:00 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN announced that the  first order of business would be                                                               
a presentation by the Kenai River Sportfishing Association.                                                                     
                                                                                                                                
5:21:02 PM                                                                                                                    
                                                                                                                                
RICKY  GEASE,   Executive  Director,  Kenai   River  Sportfishing                                                               
Association  (KRSA),  informed  the  committee  that  KRSA  is  a                                                               
nonprofit fishery conservation organization  located on the Kenai                                                               
Peninsula, and  is dedicated  to keeping the  Kenai River  one of                                                               
the world's foremost  sport fishing rivers.  Mr.  Gease said that                                                               
sportfishing  in Alaska  is a  billion dollar  industry and  $650                                                               
million is earned  in the Kenai Peninsula Borough.   In addition,                                                               
sport fishing  provides 11,000 jobs  statewide with a  payroll of                                                               
$250 million.  Mr. Gease said that  one of the main points of his                                                               
presentation   today  is   to  emphasize   that  up-to-date   and                                                               
comprehensive  studies of  the economic  impact of  this industry                                                               
are needed.                                                                                                                     
                                                                                                                                
5:23:02 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN asked whether ice  fishing was included in the total                                                               
value of sportfishing.                                                                                                          
                                                                                                                                
MR. GEASE answered yes.   He continued his presentation by saying                                                               
that  sportsmen  pay for  conservation  in  Alaska by  purchasing                                                               
licenses  and  paying taxes  that  fund  facility bonds.    Total                                                               
revenue  to the  state for  fishing licenses  was $13  million in                                                               
1993 and  $21 million in  2006.   Taxes on outdoor  equipment for                                                               
angling  generate $16  million to  pay  for fishery  conservation                                                               
efforts  in  Alaska.   Anglers  are  ardent conservationists  and                                                               
spend time  and energy  to introduce children  and others  to the                                                               
enjoyment  of the  outdoors.   Mr.  Gease  explained that  public                                                               
access  and allocation  for anglers  is critical  to support  the                                                               
recreational  economy,   as  is   the  basic   infrastructure  of                                                               
boardwalks,  trails, and  boat  launches.   He  pointed out  that                                                               
anglers are  losing access  to rivers by  the closure  of private                                                               
boat launches.                                                                                                                  
                                                                                                                                
5:27:27 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN  asked about current  legislation that  provides for                                                               
public access to rivers, streams, and banks.                                                                                    
                                                                                                                                
5:27:51 PM                                                                                                                    
                                                                                                                                
MR. GEASE indicated  that the KRSA supports  the legislation that                                                               
would require the  Department of Natural Resources  (DNR) and the                                                               
Alaska Department  of Fish and  Game (ADF&G) to  prioritize river                                                               
systems that  need public  access, and  to purchase  and maintain                                                               
easements from private property owners.   He explained that it is                                                               
important for  legislators and  fishery managers  to be  aware of                                                               
the  size and  importance of  sport fishing  to the  recreational                                                               
economy and the  quality of life for citizens.   Fishing supports                                                               
tourism and provides recreation  and food for residents; however,                                                               
without  comprehensive economic  data the  central role  of sport                                                               
angling will be underestimated in public policy decisions.                                                                      
                                                                                                                                
5:30:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DOOGAN  asked whether  the state's 1993  study has                                                               
been updated.                                                                                                                   
                                                                                                                                
MR. GEASE answered no.                                                                                                          
                                                                                                                                
REPRESENTATIVE DOOGAN further  asked whether insufficient funding                                                               
is the cause of the lack of research.                                                                                           
                                                                                                                                
5:31:35 PM                                                                                                                    
                                                                                                                                
MR. GEASE  replied that the  systematic economic analysis  of the                                                               
data collected  is needed.   The number of visitors  and licenses                                                               
sold  can be  modeled to  determine their  economic value.   Some                                                               
studies are  in progress by  the ADF&G, the National  Oceanic and                                                               
Atmospheric Administration (NOAA), and  the University of Alaska,                                                               
Anchorage,  Institute of  Social and  Economic Research,  (ISER).                                                               
Further research is needed to  collect data on both sport fishing                                                               
and commercial fishing.                                                                                                         
                                                                                                                                
5:33:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN asked how the  value of the sport fishing                                                               
industry was determined without comprehensive economic data.                                                                    
                                                                                                                                
MR.  GEASE answered  that  information from  the  2001 study  was                                                               
adjusted for inflation.                                                                                                         
                                                                                                                                
5:34:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN  observed that, based on  the increase in                                                               
tourism in Ketchikan, the $1 billion estimate may be low.                                                                       
                                                                                                                                
5:34:36 PM                                                                                                                    
                                                                                                                                
MR. GEASE affirmed that this is  an issue that concerns the KRSA.                                                               
The  North  Pacific  Fishery  Management  Council  (NPFMC)  needs                                                               
information  on the  recent growth  of the  industry to  properly                                                               
determine fish allocations.                                                                                                     
                                                                                                                                
5:34:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN noted that  KRSA is providing information                                                               
primarily from Southcentral Alaska.                                                                                             
                                                                                                                                
MR. GEASE confirmed  that the information is from  the upper Cook                                                               
Inlet.  He  continued to say that a lack  of information leads to                                                               
un-informed  public   policy  and   that  the  central   role  of                                                               
sportfishing will  not be  given proper  weight in  public policy                                                               
decisions.    Mr.  Gease  pointed out  that  the  growing  Alaska                                                               
retirement community now contributes  over $2 billion annually to                                                               
the state's  economy and retirees  want access to fish  and game.                                                               
Mr. Gease concluded by saying  that more economic information and                                                               
representation on regulatory boards  and commissions will bring a                                                               
balance and fairness to decisions.                                                                                              
                                                                                                                                
5:37:37 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN opened the hearing for public testimony.                                                                           
                                                                                                                                
BRUCE KNOWLES, speaking as an  individual, informed the committee                                                               
that Cook  Inlet provides three  percent of the  annual statewide                                                               
sockeye harvest.   Yet, this run controls the  livelihood of Cook                                                               
Inlet.  Mr.  Knowles explained that fish move  through inlet, and                                                               
the catch includes all types of fish.   The ADF&G can not make an                                                               
accurate  forecast in  a timely  manner.   He expressed  his hope                                                               
that a new  genetic study will publish results by  late summer or                                                               
early fall.   It must be  determined when the sockeye  are coming                                                               
north through the  central district.  The  northern district will                                                               
be below  escapement goals for sockeye  this year.  In  fact, the                                                               
northern district  is suffering  from the forecasted  low returns                                                               
of  sockeye and  anglers  are  fishing for  other  species.   Mr.                                                               
Knowles said  that there has not  been a study of  value in upper                                                               
Cook Inlet  for chum or pink  salmon.  A viable  study is needed.                                                               
He  continued to  say  that  the sport  fishing  industry in  the                                                               
northern district  relies on the  hatcheries, but  the hatcheries                                                               
will have to stop putting fish  in due to delays in construction.                                                               
Mr. Knowles  opined that  the average Alaskan  is called  a sport                                                               
fisherman, but really is a consumption user.                                                                                    
                                                                                                                                
5:43:16 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN  asked why the  hatcheries are behind  schedule with                                                               
the stocking of fish.                                                                                                           
                                                                                                                                
5:43:28 PM                                                                                                                    
                                                                                                                                
MR. KNOWLES  responded that  there is  a shortage  of appropriate                                                               
water and land available.                                                                                                       
                                                                                                                                
5:44:13 PM                                                                                                                    
                                                                                                                                
GREG  SUTTER,  owner of  Captain  Greg's  Charters, informed  the                                                               
committee that the available economic  studies on tourism and the                                                               
sportfishing industry  are outdated.   Because the  sport fishing                                                               
industry  attracts  visitors  to  the state,  it  is  related  to                                                               
tourism,  and  is  also  a   safe  industry  based  on  renewable                                                               
resources.    Mr.  Sutter  noted   that  Alaska  has  five  major                                                               
industries;  oil,  minerals,   tourism,  timber,  and  commercial                                                               
fishing.   He  stressed  the need  to update  the  data of  sport                                                               
fishing's  economic  impact  on  the state  as  fishery  managers                                                               
restrict and levy  moratoriums on fishing.   Mr. Sutter explained                                                               
that encouraging tourism  helps the local and state  economy.  He                                                               
further  explained  that  50  percent  of  the  growth  from  his                                                               
sportfishing  business is  invested in  the local  economy.   Mr.                                                               
Sutter  urged  members  to  support   a  comprehensive  study  of                                                               
Alaska's fishing industry.                                                                                                      
                                                                                                                                
5:48:59 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN expressed his intention  for the committee to review                                                               
sport and commercial fishing quotas.                                                                                            
                                                                                                                                
5:49:48 PM                                                                                                                    
                                                                                                                                
BOB  HOWARD,   owner,  Sea  Nymph   Charters;  chair,   board  of                                                               
Directors,  Homer Economic  Development Commission,  informed the                                                               
committee  that he  is testifying  as a  concerned citizen.   Mr.                                                               
Howard  said that  his interest  is in  seeing that  Homer has  a                                                               
strong economy that  will improve the standard of  living for its                                                               
residents.   Sport fishing  is an  important economic  element in                                                               
Homer.  Homer operates an  enhanced salmon fishery and supports a                                                               
salt  water  fleet  of  120  vessels.    The  fleet  provides  an                                                               
estimated  $9  to  $10  million to  the  charter  businesses  and                                                               
additional millions  to the local  economy for  support services.                                                               
Mr. Howard expressed his belief  that sport fishing is a reliable                                                               
and  sustainable  component  of  Homer's  tourism  economy.    He                                                               
stressed the need to increase  the allocation of sustainable fish                                                               
stocks  for sport  fishing  and  to ensure  access.   Mr.  Howard                                                               
concluded  by  saying  that comprehensive  economic  analysis  is                                                               
necessary  to  understand  how   to  best  utilize  this  natural                                                               
resource.                                                                                                                       
                                                                                                                                
5:52:36 PM                                                                                                                    
                                                                                                                                
CHARLES   PEARMAN,   owner,   Pristine  Charters,   stated   that                                                               
discussions of  allocations between commercial and  sport fishing                                                               
in Southeast  and Southcentral  continue without  sufficient data                                                               
on  the economic  impacts  on  the communities.    He noted  that                                                               
Kodiak  has  experienced closures  of  processing  plants due  to                                                               
shorter processing  seasons and  community fish tax  revenues are                                                               
declining.    Mr.  Pearman said  that  recreational  fishing  and                                                               
tourism are  the only areas  of growth  in the private  sector in                                                               
Kodiak.    Extensive  economic  data  is  needed  to  make  sound                                                               
decisions.   He concluded by  saying that  Kodiak is a  small and                                                               
remote part  of the  statewide fishery  and economic  analysis is                                                               
critical  so  that  sound  allocation  decisions  can  take  into                                                               
consideration the impact of closures to the community.                                                                          
                                                                                                                                
5:56:12 PM                                                                                                                    
                                                                                                                                
RON  WILSON,  owner  of  Ron's   Riverboat  Service  and  Susitna                                                               
Landing, stated that he is also  on the board of directors of the                                                               
Mat-Su Convention and Visitor's Bureau.   Mr. Wilson informed the                                                               
committee  that  sport  fishing   generates  a  large  volume  of                                                               
business  for the  tourism industry  in his  community.   He said                                                               
that his  clientele is  70 percent Alaskans  and that  tourism is                                                               
growing at  7 percent to  8 percent per  year.  Mr.  Wilson added                                                               
that  sport fishing  is also  very important  to the  consumptive                                                               
user.                                                                                                                           
                                                                                                                                
5:59:04 PM                                                                                                                    
                                                                                                                                
CHAIR  NEUMAN  asked about  the  effect  of the  sockeye  fishery                                                               
closure.                                                                                                                        
                                                                                                                                
5:59:31 PM                                                                                                                    
                                                                                                                                
MR. WILSON  responded that  customers want  to catch  red salmon.                                                               
However, escapement  goals are lowered  each year but  have never                                                               
been met in  his community.  He stated that  fish are intercepted                                                               
by  drift and  set netters  during the  commercial openings.   He                                                               
concluded by saying  that there is a need for  a commercial fleet                                                               
and the fishery study will indicate  the source and status of the                                                               
fish.                                                                                                                           
                                                                                                                                
6:02:08 PM                                                                                                                    
                                                                                                                                
ROBERT MEALS,  General Manager, Tri  River Charters,  stated that                                                               
he  has been  in  the  sport fishing  business  for  25 years  in                                                               
Talkeetna.   Mr. Meals said that  in the last ten  years business                                                               
in  Talkeetna  has changed  from  servicing  Alaska residents  to                                                               
providing  charters  for  out-of-state  tourists.    Two  tourism                                                               
companies have  built large lodges  and are bringing  in tourists                                                               
from all  over the world.   His  business provides income  to the                                                               
fishing guides  and is completely  dependent on  the availability                                                               
of fish.   Mr. Meals pointed out that in  the fall, fisherman are                                                               
limited to two  sockeye salmon that have a value  to his business                                                               
of $75 per fish.   He added that 90 percent  of his clients catch                                                               
and  release and  have  no impact  on the  resource.   Mr.  Meals                                                               
expressed his belief  that the allocation of the  resource is out                                                               
of  balance and  that fishery  management  needs to  look at  the                                                               
overall economic  impact.  His  community should be able  to meet                                                               
its yearly  escapement goals.   He concluded by saying  that Cook                                                               
Inlet needs  to get  a higher  sport fish  priority and  the last                                                               
users should  never be shut off  from the supply of  fish because                                                               
tourism is the most valuable use of the resource.                                                                               
                                                                                                                                
6:07:52 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN invited testimony from the audience.                                                                               
                                                                                                                                
BILL   MACKAY,   member,   board  of   directors,   Kenai   River                                                               
Sportfishing    Association;   senior    vice-president,   Alaska                                                               
Airlines,  stated  that  Alaska  Airlines  serves  20  cities  in                                                               
Alaska,  all  of which  support  one  sport fishery  or  another.                                                               
Thousands of anglers  from around the world and  around the state                                                               
travel to  the sport fishing  centers.  Mr. MacKay  stressed that                                                               
sport fishing is  an important and viable  industry that supports                                                               
aviation  and   other  industries  throughout  the   state.    He                                                               
supported documentation of  the impact that sport  fishing has on                                                               
the economics of Alaskan communities.                                                                                           
                                                                                                                                
6:10:15 PM                                                                                                                    
                                                                                                                                
RON RAINEY, member, board of  directors, Kenai River Sportfishing                                                               
Association,  informed  the  committee  that  he  is  a  25  year                                                               
resident  of Alaska  and is  testifying  as an  individual.   Mr.                                                               
Rainey stated  that his last job  was running a fishing  lodge on                                                               
the Kenai River.  He opined  that the Kenai Peninsula is becoming                                                               
a  retirement community.   Retirees  provide a  tax base  for the                                                               
community  with no  impact  on  schools.   He  stressed that  the                                                               
allocation of fish is important  to encourage retirees to stay in                                                               
Alaska.   Mr.  Rainey  said that  it is  also  very important  to                                                               
maintain  balanced representation  on  the  fisheries boards  and                                                               
commissions.                                                                                                                    
                                                                                                                                
6:12:37 PM                                                                                                                    
                                                                                                                                
RIK  BUCY, Board  Chair,  Kenai  River Sportfishing  Association,                                                               
stated that he operates a  large scale retail business, employing                                                               
between 200 and 260 workers, since  1984.  Mr. Bucy said that his                                                               
business is most  profitable during the summer  months because of                                                               
sport  fishing.   When the  fishery  is closed,  he must  lay-off                                                               
employees.   Mr. Bucy confirmed that  the tax base on  land along                                                               
the  Kenai River  has  increased dramatically  due,  in part,  to                                                               
retirees  who  are  staying  in Alaska  because  of  the  fishing                                                               
opportunities.                                                                                                                  
                                                                                                                                
6:14:52 PM                                                                                                                    
                                                                                                                                
BOB PENNY,  member, board of directors,  Kenai River Sportfishing                                                               
Association,  informed   the  committee  that  the   single  most                                                               
important act  to affect tourism  and economic development  is to                                                               
increase the amount  of fish available in Cook Inlet.   He stated                                                               
that Cook  Inlet is only  allowed 15  percent of the  harvest and                                                               
the  commercial take  is 85  percent.   He opined  that fisheries                                                               
management  in  Southcentral  should   be  changed  to  give  the                                                               
priority to the  public for personal use.  Mr.  Penny stated that                                                               
surplus  fish, after  personal and  tourism use,  should be  made                                                               
available for commercial harvest.                                                                                               
                                                                                                                                
6:18:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DOOGAN recalled  that 1989  was his  best fishing                                                               
year due to the closed commercial fishery.                                                                                      
                                                                                                                                
6:18:55 PM                                                                                                                    
                                                                                                                                
MR.  PENNY added  that, in  2004, the  assessed value  of private                                                               
land on the Kenai River was  $335 million dollars due to the fish                                                               
in the river.                                                                                                                   
                                                                                                                                
6:19:50 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN challenged committee members  to talk with the sport                                                               
fishing industry.                                                                                                               
                                                                                                                                
6:21:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DOLL asked  whether  the  sport fishing  industry                                                               
utilizes a trade association for advertising.                                                                                   
                                                                                                                                
6:21:46 PM                                                                                                                    
                                                                                                                                
MR.  GEASE  responded that  the  majority  of marketing  is  done                                                               
through the internet  and through the cruise lines.   In addition                                                               
to  the   Alaska  Travel   Industry  Association   (ATIA),  local                                                               
convention  and visitor's  boroughs,  and  chambers of  commerce,                                                               
sport  fishing  services   advertise  through  direct  marketing.                                                               
Sport  fishing   charters  and  lodges  also   benefit  from  the                                                               
advantage of repeat Alaskan, and out-of-state, customers.                                                                       
                                                                                                                                
6:24:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DOLL further  asked for  a typical  percentage of                                                               
advertising costs for a small sport fishing charter business.                                                                   
                                                                                                                                
6:24:23 PM                                                                                                                    
                                                                                                                                
MR. GEASE  replied that  the advertising  costs are  dependent on                                                               
many variables.                                                                                                                 
                                                                                                                                
6:24:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DOLL asked for the cost of joining ATIA.                                                                         
                                                                                                                                
6:24:54 PM                                                                                                                    
                                                                                                                                
MR. GEASE  answered that the  ATIA provides  consistent statewide                                                               
advertising.      Enrollment    is   voluntary,   and   different                                                               
organizations have different enrollment levels.                                                                                 
                                                                                                                                
6:25:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DOLL  noted  that   one  sport  fishing  business                                                               
reported the majority of his clientele is from Alaska.                                                                          
                                                                                                                                
6:26:16 PM                                                                                                                    
                                                                                                                                
MR. GEASE  affirmed that sport  fishing serves locals  who choose                                                               
to live, work, and retire in Alaska.                                                                                            
                                                                                                                                
6:26:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LYNN asked  whether commercial  or sport  fishing                                                               
brings in the most money to Alaska.                                                                                             
                                                                                                                                
6:27:57 PM                                                                                                                    
                                                                                                                                
MR. GEASE  replied that in  Cook Inlet  sport fish return  is ten                                                               
times over the commercial catch.   He recalled that the ex-vessel                                                               
value of 20,000  king salmon caught in the  commercial fishery in                                                               
the set-nets generates about $500,000  of economic activity.  Mr.                                                               
Gease stated  that the  introduction of  farmed fish  can support                                                               
the  economics  of  the  commercial  industry.    The  commercial                                                               
industry's focus on the quantity, not  quality, of fish is in the                                                               
process of reorientation so both  industries can begin to produce                                                               
a  quality product.    Mr.  Gease concluded  by  saying that  the                                                               
rivers must have meaningful and predictable pulses of fish.                                                                     
                                                                                                                                
6:31:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHANSEN  requested  written information  on  the                                                               
Cook Inlet  sport and commercial  fishing industries.   He stated                                                               
that the  commercial fleet  has recognized  the need  to increase                                                               
the quality  of the  fish catch.   Representative  Johansen noted                                                               
that the fishing industries in Southeast work together.                                                                         
                                                                                                                                
6:32:50 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN  noted that Southeast  maintains a  large commercial                                                               
and sport fishing industry.                                                                                                     
                                                                                                                                
6:33:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN clarified  that the issue is  to balance both                                                               
sport and commercial industries.                                                                                                
                                                                                                                                
6:34:09 PM                                                                                                                    
                                                                                                                                
MR.  GEASE  assured the  committee  that  the KRSA  will  provide                                                               
comprehensive  information  on  the   upper  Cook  Inlet  fishing                                                               
industry.                                                                                                                       
                                                                                                                                
6:34:47 PM                                                                                                                    
                                                                                                                                
MR. PENNY  stated that, 20  years ago, three regional  studies by                                                               
Jones  & Stokes  Associates, Inc.  consulting firm  revealed that                                                               
the economic  value of sport  caught fish is  14 to 18  times the                                                               
value of commercially caught fish.   He added that the Cook Inlet                                                               
fishery  provides  three  percent  of  the  statewide  commercial                                                               
harvest and sixty-five percent of the public fishery.                                                                           
                                                                                                                                
6:36:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN asked for the source of the report.                                                                     
                                                                                                                                
MR. GEASE responded  that the KRSA compiled the data  but did not                                                               
create or collect  the economic data.  He noted  that much of the                                                               
data is out-dated.                                                                                                              
                                                                                                                                
6:37:48 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 6:37 p.m. to 6:40 p.m.                                                                       
                                                                                                                                
CHAIR NEUMAN announced that the  final order of business would be                                                               
a presentation by Agrium U.S. Inc.                                                                                              
                                                                                                                                
6:40:44 PM                                                                                                                    
                                                                                                                                
^PRESENTATION:  AGRIUM'S ECONOMIC IMPACT ON THE KENAI                                                                         
                                                                                                                                
6:42:43 PM                                                                                                                    
                                                                                                                                
LISA PARKER, manager, Government  & Public Relations, Agrium U.S.                                                               
Inc.,  informed  the  committee   that  the  information  she  is                                                               
presenting  is a  "forward-looking  statement".   Ms Parker  said                                                               
that Agrium  has been in business  since 1931 as a  subsidiary of                                                               
Cominco  Ltd. Fertilizers.    Agrium today  is  a compilation  of                                                               
companies and is  publicly traded company on the  Toronto and New                                                               
York  Stock Exchanges.    Ms. Parker  continued  to explain  that                                                               
Agrium reaches  throughout the  value chain  and 2006  sales were                                                               
$4.3  billion.   Agrium maintains  a diverse  portfolio, with  50                                                               
percent  of   the  profits  from   the  nitrogen   industry  from                                                               
international and North American markets.                                                                                       
                                                                                                                                
6:44:39 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN  asked whether  border crossings  into Canada  are a                                                               
problem for Agrium.                                                                                                             
                                                                                                                                
6:44:55 PM                                                                                                                    
                                                                                                                                
MS.  PARKER  responded  that  since  [the  terrorist  attacks  of                                                               
September 11,  2001] there  is more security  for truck  and rail                                                               
transportation.  She continued to  say that Agrium is the largest                                                               
North American agricultural retailer in  the U. S., and maintains                                                               
400  retail facilities.    In  addition, Agrium  is  a leader  in                                                               
advanced technologies and  holds a patent for  ESN, a controlled-                                                               
release environmentally friendly product for commodity crops.                                                                   
                                                                                                                                
MS.  PARKER assured  the committee  that Agrium  is committed  to                                                               
Alaska  and will  try  to  continue to  operate  the facility  in                                                               
Kenai.   The Kenai  complex is  valued at $1  billion and  is the                                                               
fourth  largest private  employer on  the Kenai  Peninsula.   The                                                               
Agrium plant  is a large  economic engine in  Southcentral Alaska                                                               
and for every  thousand cubic foot (Mcf) of natural  gas used the                                                               
plant generates $9.35 in economic  value.  The Kenai complex pays                                                               
the competitive  market price  for natural  gas but  is operating                                                               
today  at  50  percent  of  plant capacity,  due  to  the  supply                                                               
shortage of  natural gas.   Presently, Agrium is  negotiating for                                                               
natural   gas  contracts   beyond   2007,  to   keep  the   plant                                                               
operational.   The  plant is  forecasted to  consume about  14 to                                                               
14.5 billion cubic feet (Bcf) of natural gas in 2007.                                                                           
                                                                                                                                
6:50:42 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN asked  whether Ms. Parker would  comment on Alaska's                                                               
exportation of  natural gas when  Agrium needs 53 Bcf  to operate                                                               
at full capacity.                                                                                                               
                                                                                                                                
6:51:56 PM                                                                                                                    
                                                                                                                                
MS.  PARKER responded  that the  liquefied natural  gas (LNG)  is                                                               
exported  to Japan  by  approval  of a  license  from  the U.  S.                                                               
Department of  Energy.  The license  will expire in 2009,  and an                                                               
extension of the license, to 2011, has been requested.                                                                          
                                                                                                                                
6:52:24 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN  asked for further information  regarding the export                                                               
of LNG.                                                                                                                         
                                                                                                                                
6:52:43 PM                                                                                                                    
                                                                                                                                
CHRIS J.  SONNICHSEN, Director, Alaska  Operations, Agrium  U. S.                                                               
Inc.,  informed  the  committee   that  the  state  endorsed  the                                                               
extension  of the  export license  with  conditions.   The U.  S.                                                               
Department  of  Energy,  Department  of  Fossil  Energy,  is  the                                                               
authority  that will  review the  extension of  the license.   He                                                               
said  that Agrium  is negotiating  with  all of  the natural  gas                                                               
producers and will pay competitive rates.                                                                                       
                                                                                                                                
6:55:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN  asked whether there is  a difference between                                                               
the past and current state administrations.                                                                                     
                                                                                                                                
6:55:45 PM                                                                                                                    
                                                                                                                                
MS. PARKER  replied that the previous  administration was focused                                                               
on  encouraging  exploration  in   Cook  Inlet  and  the  current                                                               
administration is presently gathering data.                                                                                     
                                                                                                                                
6:56:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DOOGAN  expressed his understanding that  there is                                                               
a market to  support operating the plant at peak  capacity but an                                                               
insufficient supply of natural gas feedstock.                                                                                   
                                                                                                                                
6:57:03 PM                                                                                                                    
                                                                                                                                
MS. PARKER  answered yes,  and continued  her presentation.   The                                                               
Agrium plant  can produce sufficient  product to  supply in-state                                                               
markets for  ammonia and urea,  and exports grossed  $160 million                                                               
in  2006.   She pointed  out that  Agrium was  the state's  third                                                               
largest exporter,  even while operating  at 50  percent capacity.                                                               
Ms. Parker stressed  that Agrium wants to  continue production in                                                               
Alaska at  the Kenai plant but  it must close the  facility later                                                               
this   year  without   additional   supplies   of  natural   gas.                                                               
Therefore,  it  has  begun  the  development  of  a  gasification                                                               
project that will capitalize on  the long-term supply of low cost                                                               
coal.   The  project will  bring Usibelli  Coal Mine,  Inc., coal                                                               
from Healy by rail and barge  to Nikiski.  The coal will generate                                                               
power and will  be processed through a gasifier  that will derive                                                               
nitrogen, hydrogen,  and carbon dioxide (CO2)  for the production                                                               
of ammonia  and urea.  Excess  CO2 will be used  for enhanced oil                                                               
recovery.   Ms. Parker stated that  the power plant is  needed to                                                               
produce  120 megawatts  of electricity  to  support the  expanded                                                               
facility.   Homer Electric Association  Inc. (HEA) is  taking the                                                               
lead on  the power  project that will  also produce  excess power                                                               
for the  community.  The  project was  begun in October  of 2004,                                                               
and the feasibility  study is completed.  Phase  Two is front-end                                                               
engineering  design  and  permitting;  Phase  Three  is  detailed                                                               
engineering and final permitting;  Phase Four is construction and                                                               
the start-up scheduled for 2009.                                                                                                
                                                                                                                                
7:04:19 PM                                                                                                                    
                                                                                                                                
MS.  PARKER  explained  that  the  Phase  One  feasibility  study                                                               
included work  with Usibelli Coal  Mine, Inc., to  examine design                                                               
and permitting  possibilities.   The U.  S. Department  of Energy                                                               
has determined that  the project is feasible.  She  said that the                                                               
partnership  with  HEA,  and  final  engineering  and  permitting                                                               
studies are  in progress.   In addition,  the Usibelli  Coal Mine                                                               
has verified  that it can supply  the three million tons  of coal                                                               
needed  each   year.    Finally,  environmental   permitting  and                                                               
financing  arrangements  are underway.    In  fact, HB  229  will                                                               
provide  authority for  the Alaska  Railroad Corporation  to seek                                                               
tax-free bonds to finance the project.                                                                                          
                                                                                                                                
7:06:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DOOGAN  observed that the advantage  of the Alaska                                                               
Railroad  Corporation  bonds  is  low  cost  financing,  but  the                                                               
Internal  Revenue Service  (IRS) may  refuse permission  to issue                                                               
tax-exempt bonds.  He asked  whether the project can proceed with                                                               
alternative financing.                                                                                                          
                                                                                                                                
7:07:26 PM                                                                                                                    
                                                                                                                                
MS.  PARKER answered  yes.   The  gasification  project will  use                                                               
other financing, if necessary.                                                                                                
                                                                                                                                
7:07:47 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN  recalled that the  Alaska Railroad  Corporation has                                                               
set precedence for issuing bonds  for projects that are important                                                               
to the welfare of the state.                                                                                                    
                                                                                                                                
7:08:24 PM                                                                                                                    
                                                                                                                                
MS.  PARKER pointed  out that  the coal  gasification project  is                                                               
estimated to begin production in 2011,  or 2012.  In the interim,                                                               
Agrium  will need  a  source of  natural gas  to  keep the  plant                                                               
operational  up to  the conversion  to  coal.   She concluded  by                                                               
saying that  Agrium will decide in  July about the future  of the                                                               
gasification conversion.                                                                                                        
                                                                                                                                
7:10:41 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN  stated that the  loss of  Agrium would result  in a                                                               
loss  of 200  jobs  in  Kenai, with  average  annual salaries  of                                                               
$80,000.                                                                                                                        
                                                                                                                                
7:10:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN asked whether the  use of coal will bring                                                               
controversy to the project.                                                                                                     
                                                                                                                                
7:11:41 PM                                                                                                                    
                                                                                                                                
MS. PARKER  responded that  the completed  environmental analysis                                                               
determined that the project could  be permitted.  She stated that                                                               
clean coal technology is available and that the air and water                                                                   
quality standards are within reach.                                                                                             
                                                                                                                                
7:13:28 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN observed that the energy industry is looking to                                                                    
diversify.                                                                                                                      
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Special Committee on Economic Development, International Trade                                                                  
and Tourism meeting was adjourned at 7:14 p.m.                                                                                  

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