Legislature(2011 - 2012)BARNES 124
03/08/2011 10:15 AM House ECON. DEV., TRADE & TOURISM
| Audio | Topic |
|---|---|
| Start | |
| HJR19 | |
| HB160 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 160 | TELECONFERENCED | |
| *+ | HJR 19 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, INTERNATIONAL
TRADE AND TOURISM
March 8, 2011
10:19 a.m.
MEMBERS PRESENT
Representative Bob Herron, Chair
Representative Kurt Olson, Vice Chair
Representative Neal Foster
Representative Reggie Joule
Representative Wes Keller
Representative Cathy Engstrom Munoz
Representative Steve Thompson
Representative Berta Gardner
Representative Chris Tuck
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 19
Urging the United States Senate to ratify the United Nations
Convention on the Law of the Sea.
- MOVED CSHJR 19(EDT) OUT OF COMMITTEE
HOUSE BILL NO. 160
"An Act establishing and relating to the Alaska visitor industry
investment fund; relating to matching funds for state tourism
marketing contracts with qualified trade associations; and
providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HJR 19
SHORT TITLE: URGING US TO RATIFY LAW OF THE SEA TREATY
SPONSOR(s): ECON. DEV., TRADE & TOURISM
03/07/11 (H) READ THE FIRST TIME - REFERRALS
03/07/11 (H) EDT, RES
03/08/11 (H) EDT AT 10:15 AM BARNES 124
BILL: HB 160
SHORT TITLE: TOURISM MARKETING CONTRACTS/CAMPAIGNS
SPONSOR(s): ECON. DEV., TRADE & TOURISM
02/16/11 (H) READ THE FIRST TIME - REFERRALS
02/16/11 (H) EDT, FIN
03/01/11 (H) EDT AT 10:15 AM BARNES 124
03/01/11 (H) Heard & Held
03/01/11 (H) MINUTE(EDT)
03/08/11 (H) EDT AT 10:15 AM BARNES 124
WITNESS REGISTER
ROB EARL, Staff
Representative Bob Herron
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HJR 19 on behalf of
Representative Bob Herron, Chair, House Special Committee on
Economic Development, International Trade and Tourism.
REAR ADMIRAL CHRISTOPHER C. COLVIN
Commander
Seventeenth Coast Guard District
U.S. Coast Guard, Department of Homeland Security
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HJR 19.
REPRESENTATIVE PAUL SEATON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified in support of HJR 19.
REPRESENTATIVE MAX GRUENBERG
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified in support of HJR 19.
ED PAGE, Executive Director
Marine Exchange of Alaska (MXAK)
Juneau, Alaska
POSITION STATEMENT: Testified in support of HJR 19.
WALTER PARKER, President
Parker Associates Inc.; Senior Fellow
Arctic Infrastructure
Institute of the North
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HJR 19.
TERRY HARVEY, Staff
Representative Cathy Munoz
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
160.
JOHANNA BALES, Deputy Director
Anchorage Office
Tax Division
Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
160.
SUSAN BELL, Commissioner
Department of Commerce, Community & Economic Development (DCCED)
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
160.
ACTION NARRATIVE
10:19:36 AM
CHAIR BOB HERRON called the House Special Committee on Economic
Development, International Trade and Tourism meeting to order at
10:19 a.m. Representatives Herron, Keller, Olson, Munoz, and
Thompson were present at the call to order. Representatives
Tuck, Joule, Foster, and Gardner arrived as the meeting was in
progress. Representatives Seaton and Gruenberg were also
present.
HJR 19-URGING US TO RATIFY LAW OF THE SEA TREATY
10:20:19 AM
CHAIR HERRON announced that the first order of business would be
HOUSE JOINT RESOLUTION NO. 19, Urging the United States Senate
to ratify the United Nations Convention on the Law of the Sea.
10:20:41 AM
ROB EARL, staff, Representative Bob Herron, Alaska State
Legislature, introduced HJR 19 on behalf of the House Special
Committee on Economic Development, International Trade and
Tourism. Mr. Earl informed the committee the United Nations
(UN) Convention on the Law of the Sea (UNCLOS) comprises 320
articles and 9 annexes that define the rights and
responsibilities of nations and their use of the world's oceans,
establishing guidelines for businesses, the environment, and the
management of marine natural resources. The resolution urges
the U.S. Senate to ratify UNCLOS because it is important to
protect U.S. interests concerning the use and development of the
high seas off of Alaska. Furthermore, UNCLOS governs many
aspects of oceans such as mapping, environmental control, marine
scientific research, economic and commercial activities, and the
settlement of disputes related to ocean matters. Currently, 161
countries have signed UNCLOS and Senator Lisa Murkowski
encouraged the legislature to pass this resolution. The UN
Convention on the Law of the Sea allows coastal countries to
exercise sovereignty over their territorial sea, which may not
exceed 12 nautical miles, and foreign vessels are allowed
"innocent passage" in this zone. Another feature allows ships
and aircraft of all countries "transit passage" through straits
used for international navigation, although all coastal
countries have sovereign rights to the 200-nautical mile
exclusive economic zone (EEZ) with respect to natural resources
and certain economic activities, and to exercise jurisdiction
over marine science research and environmental protection. Mr.
Earl advised that the state has much to gain from the
international recognition of the U.S. 200-mile EEZ and possible
extended continental shelf claims, and much to lose if it is the
only Arctic nation not to extend its ocean boundaries. He
called attention to the sponsor statement and supporting and
opposing documents provided in the committee packet. Referring
to HJR 19, he pointed out the following: beginning on page 1,
line 4, the resolution recognizes the fundamental concept that
all nations have freedom to navigation on the high seas;
beginning on page 1, line 10, the resolution indicates what
Alaska and the U.S. would gain from the extension of EEZ off of
the Arctic Slope; beginning on page 1, line 14, the resolution
indicates what the U.S. as a whole would gain; beginning on page
2, line 13, the resolution indicates that the U.S. has the most
to gain of any country from ratification of UNCLOS. Continuing
on page 2, line 23, the resolution indicates that the U.S.
cannot participate as a full cooperative partner with other
Arctic nations until ratification because it cannot finalize its
international boundaries with Canada. Beginning on page 3, line
24, the resolution indicates that the legislature passed a
similar resolution in 2009.
10:26:58 AM
CHAIR HERRON called attention to a map titled, "Potential
Extended Continental Shelf," which showed an area beyond the
U.S. 200-mile limit that could be added by the extension of
claims to the outer continental shelf, and cautioned that this
area has been targeted for use by China.
10:28:30 AM
REAR ADMIRAL CHRISTOPHER C. COLVIN, Commander, Seventeenth Coast
Guard District, U.S. Coast Guard, Department of Homeland
Security, said he would provide information on how accession to
UNCLOS would benefit the U.S. Coast Guard in the performance of
its missions, and in protecting the American people. Admiral
Colvin is responsible for directing Coast Guard operations
including search and rescue, maritime safety, environmental
protection, fisheries law enforcement, and military readiness in
Alaska and portions of the North Pacific Ocean, the Arctic Ocean
and the Bering Sea. Coast Guard aircraft and vessels monitor
more than 950,000 square miles off the Alaska coast to enforce
U.S. fisheries laws. The Coast Guard patrols an even larger
area of the North Pacific to stop large scale, high seas drift
netting, and other illegal fishing practices. Maritime safety
and environmental protection are also priority missions; in
fact, over 15 percent of the oil that America produces each day
transships through the Port of Valdez. Alaska is the world's
second most popular cruise destination, bringing nearly one
million passengers to its waters every year. The safety of
cruise ships and passengers is another critical mission.
Admiral Colvin's experience is extensive, including combat
operations, fisheries patrols in Alaska, and drug patrols in the
Caribbean. He also served as Chief of Staff and Chief of
Operations of the Coast Guard Atlantic Area, and as the Deputy
Director for Operations at the U.S. Northern Command. His
widespread maritime experience allows him to comment on the
beneficial effects that becoming party to UNCLOS would have on
U.S. Coast Guard missions. The UN Convention on the Law of the
Sea created a comprehensive legal regime that provides the Coast
Guard with the legal certainty and stability to exercise its
navigational rights and freedoms, to protect fisheries, to
control marine pollution, and to maintain a legal order of the
oceans against criminals and terrorists. From a Coast Guard
perspective, public order of the oceans is best established and
maintained by a stable, universally accepted law reflective of
U.S. national interest. The navigation provisions of UNCLOS are
reflective of customary international law.
10:33:37 AM
ADMIRAL COLVIN explained that one of the core foundations of
UNCLOS was codification of rights and responsibilities of states
as port states, flag states, and coastal states - the term
"states" is interchangeable with "nations" or "countries." In
addition, UNCLOS clarifies and delimits seaward territorial
claims by coastal states to ensure navigational freedoms while
at the same time recognizes U.S. interest as a coastal state
with sovereignty to protect its living and non-living marine
resources. The result is an appropriate balance between the
exclusive interests of coastal states and the interests of
maritime states. It limits the maximum breadth of the
territorial sea that a coastal state could claim to 12 nautical
miles. Our fishery conservation management interests, as
reflected in the Magnuson-Stevens Fishery Conservation
Management Act of 1977, were instrumental in the international
development of the concept of the 200-nautical mile EEZ. In the
EEZ all nations enjoy freedoms of navigation and overflight as
on the high seas, while the coastal state possesses sovereign
rights to protect and exploit the living and non-living marine
resources. The U.S., with the world's largest and richest EEZ,
is perhaps the greatest beneficiary of this concept. The U N
Convention on the Law of the Sea also calls for international
cooperation among states in preserving the world's high seas
fisheries. An example of such cooperation is the UN ban on high
seas drift net fishing and other illegal fishing practices.
Each year the Coast Guard patrols the North Pacific to conduct
boardings and inspections under the UN Convention on the Law of
the Sea on the Conservation and Management of Highly Migratory
Fish Stocks in the Western and Central Pacific Ocean. Over two
dozen nations participate in this effort, which is a direct
outcome of UNCLOS. It also provides a comprehensive framework
for the prevention, reduction, and control of maritime
pollution. The Coast Guard conducts a wide-ranging port-state-
control program to purge our waters of substandard ships, and is
assisting other nations in doing the same. The UN Convention on
the Law of the Sea carefully balances the rights of coastal
states to adopt certain measures to protect the marine
environment adjacent to their shores, with the right of a flag
state to set and enforce standards and requirements concerning
the operation of its vessels. Moreover, it does all this
without unduly burdening international maritime navigation and
seaborne trade.
10:36:38 AM
ADMIRAL COLVIN continued, saying that the Coast Guard relies
heavily on the navigational freedoms and overflight rights
codified in UNCLOS. These protections allow the use of the
world's oceans to meet changing national security requirements.
In this regard, worldwide mobility requires undisputed access
through international straits and archipelagic waters. The UN
Convention on the Law of the Sea ensures that our Coast Guard
cutters will have their sovereign immunity protected wherever in
the world they may be operating. In addition, UNCLOS limits a
nation's territorial sea to no more than 12 nautical miles,
beyond which all nations enjoy a high seas navigation regime
that includes the freedom to engage in law enforcement
activities. Also, UNCLOS codifies the right to operate freely
beyond a nation's territorial sea, and protects this right by
limiting excessive maritime claims that can have the effect of
creating maritime safe havens for drug traffickers and other
criminals. Each year nations have questioned the authority of
the Coast Guard to contest excessive maritime claims because the
U.S. is not a party to UNCLOS. Furthermore, UNCLOS contains
effective provisions for dealing with illegal activities at sea.
For example, Article 108 requires international cooperation in
the suppression of the transport of illegal drugs. The U.S. has
aggressively pursued bilateral agreements with many nations that
border drug transit zones as well as states with large
registries, to facilitate the effective interdiction of vessels
suspected of transporting illegal drugs and the eventual
prosecution of the drug traffickers. During discussions with
these nations, we emphasize UNCLOS's call for cooperation and
premise each agreement on concepts codified within UNCLOS.
Articles 100-107 detail the international legal principles
dealing with acts of piracy at sea. Other provisions prohibit
the transport of slaves, the operation of stateless vessels, and
other activities in violation of international norms. The UN
Convention on the Law of the Sea also contains provisions that
enhance our ability to interdict foreign-flagged vessels off our
own coasts, and codifies a coastal state's right to establish a
12-natical mile contiguous zone just beyond the territorial sea,
where it may exercise control to prevent and punish
infringements of its customs, immigration, fiscal, and sanitary
laws. Adoption by the U.S. of an expanded contiguous zone has
doubled the area where we can exercise these increased
authorities. The benefits of the contiguous zone against
traffickers surreptitiously shipping their illicit products to
U.S. shores are clear. As the lead federal agency for maritime
safety and security, the Coast Guard believes that U.S.
accession to the 1982 UNCLOS would benefit the Coast Guard in
its effort to improve maritime safety and ensure the security of
our maritime borders, thus promoting homeland security. The UN
Convention on the Law of the Sea recognizes that various UN
subsidiary bodies may serve as competent international
organizations for the further development of certain aspects of
the law of the sea. The International Maritime Organization
(IMO) has always been recognized as the competent international
organization for maritime safety and marine environmental
protection. More recently, it has assumed a similar role in
port facility and vessel security. The Coast Guard has worked
at the IMO to amend the International Convention for the Safety
of Life at Sea (SOLAS) for vessel and port facility security to
enhance maritime domain awareness through Long Range
Identification and Tracking (LRIT) of vessels bound for U.S.
ports and waters, and to increase the operational effectiveness
of the Convention for the Suppression of Unlawful Acts against
the Safety of Maritime Navigation (SUA Convention). The
negotiations necessary to support efforts such as these take
place in the context of the overwhelming number of nations at
IMO being parties to UNCLOS. Because of this fact, UNCLOS
provides the framework for the discussions and agreements.
Although we have enjoyed success in the international security
agreements so far, those negotiations have not been easy, and
the fact that the U.S. is not a party to UNCLOS, when the
overwhelming number of our international partners are parties,
has repeatedly placed us in a difficult negotiating position at
IMO and other forums. Admiral Colvin summarized, saying he
could not express an Administration or Coast Guard position on
HJR 19; however, he opined the provisions of UNCLOS fairly
balance the interest of coastal nations to control activities
off their coast with the freedom of navigation and overflight
rights of all nations. The practical effect for the U.S. is to
control economic activities within the world's largest EEZ,
while enabling our forces and merchant vessels to freely operate
in every part of the globe. The UN Convention on the Law of the
Sea guarantees our military and transportation industries'
critical navigation and overflight rights, and U.S. fisherman
enjoy exclusive fishing out to 200 nautical miles. In the view
of the Coast Guard, UNCLOS greatly improves its ability to
protect the American public as well as its efforts to manage
ocean resources and to protect the marine environment. Becoming
a party to UNCLOS would significantly enhance its global
position in maritime affairs.
10:43:23 AM
ADMIRAL COLVIN, in response to Chair Herron's question regarding
China, said in January a top Chinese admiral stated that because
one-fifth of the world's population lives in China, China is
entitled to one-fifth of the resources that lie in the
international waters of the Arctic. He presented a map which
showed unknown Chinese operations on the Chukchi Plateau and
Northwind Ridge. In fact, China is "very transparent" in its
Arctic policy which is two-fold: maritime transportation of
goods to market, and energy.
10:44:46 AM
CHAIR HERRON observed the English name of the Chinese icebreaker
is Snow Dragon.
ADMIRAL COLVIN explained China's goal in 2010 was to go to the
North Pole, but the ship deviated to the Chukchi Plateau on the
way. He then displayed a map of the Arctic showing unclaimed
areas, the extended continental shelf claims, and EEZs. He
stressed there is nothing illegal under international law about
where the Chinese have been operating, and it is within their
rights to drill for oil in the Chukchi Plateau, unless the U.S.
makes an extended continental shelf claim.
10:46:12 AM
REPRESENTATIVE KELLER asked how changes are made to UNCLOS in
the future.
ADMIRAL COLVIN said he was not an expert on how rules of UNCLOS
would be amended.
10:46:45 AM
REPRESENTATIVE KELLER assumed the process would be an
international consensus and the U.S. would be one vote out of
all who ratify.
ADMIRAL COLVIN acknowledged that there are legitimate concerns
by those who oppose UNCLOS with regards to adjudicating U.S.
claims by an international body; however, not signing UNCLOS
means the U.S. gives up potential sovereignty over the ocean
bottom.
REPRESENTATIVE KELLER advised the U.S. would no longer be able
to collect intelligence in territorial waters.
10:48:11 AM
ADMIRAL COLVIN said there will be no change in the collection of
intelligence and the signing of UNCLOS has no bearing on this
issue. He expressed his understanding that nations doing Arctic
research are required to provide their results to the UN.
REPRESENTATIVE JOULE asked whether there is time sensitivity to
acceptance of UNCLOS.
10:49:30 AM
ADMIRAL COLVIN advised that once a nation ratifies, it has 10
years to establish an extended continental shelf claim. For
example, Russia has made claims beyond its continental shelf.
Claims up to 350 miles are justified fairly easily, but beyond
that there must be science to demonstrate that the continental
shelf belongs to the claimant. Russia has extended its claim to
the Lomonosov Ridge which extends to the North Pole. Admiral
Colvin said this may be a legitimate claim, as Russia has done a
lot of science to prove that Lomonosov is part of its
continental shelf. However, after 10 years, UNCLOS concluded
that the claim was not supported, although Russia was granted a
3-year extension to do so. In further response to
Representative Joule, Admiral Colvin clarified that once it
ratified UNCLOS, the U.S. would have a 10-year period to make a
claim to the area that China has shown an interest in, and he
did not know whether the claim could be adjudicated in a shorter
timeframe; however, the maximum of time for a claim to the
Chukchi Plateau would be 10 years.
10:52:46 AM
REPRESENTATIVE GARDNER asked whether there were reasons to
oppose ratifying UNCLOS in addition to those already discussed.
ADMIRAL COLVIN offered that repeated opposition is due to the
perception that the U.S. will give up sovereignty to an
international body, but "the reality is almost the exact
opposite." By not signing UNCLOS, the U.S. gives up potential
sovereignty over, for example, the Chukchi Plateau and Northwind
Ridge. He agreed that there may be concerns about having claims
adjudicated before an international body, but the only other
choice would be wartime activities.
REPRESENTATIVE KELLER provided website locations for
organizations that oppose ratification.
10:55:46 AM
REPRESENTATIVE PAUL SEATON, Alaska State Legislature, recalled
he was the prime sponsor of a resolution on the same topic
passed by the legislature and submitted to Congress in 2009.
Representative Seaton called attention to a document provided by
U.S. Senator Lisa Murkowski's staff and included in the
committee packet titled, "Eight National Security Myths: United
Nations Convention on the Law of the Sea." He pointed out that
"Myth 3" deals with intelligence activities and the report
concluded "that it did not constrain the United State's
intelligence gathering at all." Furthermore, during
Representative Seaton's recent trip to Washington D.C., U.S.
Senator Roger Wicker addressed legislators, suggesting that the
administration should use all efforts to extend jurisdiction and
economic claims to oil and gas resources. In addition, the
document indicates that if a country does not agree with a
dispute resolution, it can refuse to accept that provision.
CHAIR HERRON referred to the previous resolution and asked why
Senator Murkowski asked for another.
REPRESENTATIVE SEATON opined she asked because of the importance
of the oil and gas reserves that have been identified in the
Arctic. Alaska should make clear that it still wants to extend
its jurisdiction for access to the resources for economic
development purposes.
11:00:49 AM
REPRESENTATIVE MUNOZ asked how much of the rest of the U.S. is
affected by UNCLOS.
11:01:09 AM
REPRESENTATIVE SEATON responded that affected areas are limited
to where the continental shelf goes further out, such as Guam,
the Gulf of Alaska, and the Mariana Islands.
REPRESENTATIVE MAX GRUENBERG, Alaska State Legislature,
disclosed that he is not an expert in this subject, and informed
the committee that a number of past U.S. presidents have
recommended ratification of UNCLOS. In 2004, ratification was
unanimously endorsed by the U.S. Senate Committee on Foreign
Relations, and urged again in 2007 by a majority of the members
in its report. He expressed his support of UNCLOS, but noted
that dissenting members of the Senate Committee on Foreign
Relations raised the issue of taxation - an opposing argument
that has not been raised so far - and because Representative
Gruenberg was asked to provide arguments on both sides, he read
from their dissent:
Taxes: Article 13, imposes direct "fees" on United
States corporations engaged in deep, in seabed mining.
Article 82, requires "payments" of up to 7 percent per
drilling on the outer continental shelf (OCS) the
United States would be assessed for 7 percent of any
oil, natural gas, or other resources derived by OCS
exploration. The payments would be made directly to
the [UN Convention on the Law of the Sea] authority
... which would redistribute the money to the other
signatory nations. We believe it is unwise to create
an international organization with taxing authority.
REPRESENTATIVE GRUENBERG then explained that the majority report
states however, that the understanding ties these related
provisions together to make clear that no assent contributions
could be decided by the assembly without the agreement of the
U.S. in the finance committee. He then called attention to a
document in the committee packet titled, "The Senate Should
Approve the Law of the Sea Convention Now," and read:
Myth: The Convention gives the UN its first
opportunity to levy taxes.
Reality: This is not the UN and there are no taxes on
individuals or corporations concerning oil/gas
production within 200 miles of shore. The United
States gets exclusive sovereign rights to seabed
resources within the largest such area in the world.
There are no finance related requirements in the
Extended Economic Zone concerning oil/gas production
beyond 200 miles of shore. The U.S. is one of a group
of countries potentially entitled to extensive
continental shelf beyond its EEZ. Countries that
benefit from the extended continental shelf have no
requirements for the first five years of production in
the cycle. In the sixth year of production, they are
to make payments equal to 1 percent of production
increasing by 1 percent a year until capped at 7
percent in the twelfth year of production. If the
U.S. were to pay royalties it would be because U.S.
oil and gas companies are engaged in successful
production beyond 200 miles. But if the treaty is not
passed, U.S. companies will likely not be willing or
able to engage in oil/gas activities in such areas ...
concerning mineral activities, in the deep seabed,
which is beyond U.S. jurisdiction, an interested
company would pay an application fee for the
administrative expenses of processing the application.
Any amount that did not get used for processing the
application would be returned to the applicant. The
Convention does not set forth any royalty requirements
for production; the United States would need to agree
to establish any. In no event would any payments go
to the UN, but rather would be distributed to
countries in accordance with the formula to which the
United States would have to agree.
REPRESENTATIVE GRUENBERG pointed out that the aforementioned
response is to the argument first raised by the minority.
However, he opined the real argument is the sovereignty
argument, and whether the U.S. would be submitted to binding
arbitration or adjudication. In similar cases in the past, the
U.S. has chosen binding arbitration, and Representative
Gruenberg asked Admiral Colvin whether UNCLOS would affect how
the U.S. deals with the Somali pirates. The answer was "no,"
because the rule of law in Somali would have to be established.
Representative Gruenberg observed this explains why UNCLOS is
important: There must be a binding mechanism for resolving
disputes in order to avoid lawless anarchy. The Somali example
is not "a paradigm example of how we want to live ... we will
have to arm ourselves in perpetuity because nobody else will
help us; it will be every country for itself." He gave another
example of the third branch of government established by the
U.S. Constitution as a mechanism for resolving disputes; without
the third branch of government - the courts - there would be
constant disputes between states and no unified, organized
system of law. Furthermore, in Alaska, there is also a unified
court system throughout the state, that gives up a certain
amount of independence, but which allows residents to live
freely, without fear.
11:12:38 AM
REPRESENTATIVE KELLER asked whether Representative Gruenberg was
concerned about "activists leveraging the treaty for
accomplishing ends, that we may not be interested." For
example, there is potential for UNCLOS to be used by activists
to enforce environmental protection issues.
11:13:59 AM
REPRESENTATIVE GRUENBERG acknowledged that anything is possible.
He understood that the U.S. has sidebars to allow it to opt out
in certain circumstances to prevent action that is against its
national interest. As a matter of fact, he recalled early in
the 1970's, there was legislation to establish a deep seabed
mining protocol, but it was not pursued, and UNCLOS will allow
that to go forward.
11:15:24 AM
ED PAGE, Executive Director, Marine Exchange of Alaska (MXAK),
stated he served 30 years in the Coast Guard and retired to
serve as the Executive Director of MXAK 10 years ago. He
explained MXAK is a non-profit maritime organization established
to provide information and communication services to aid safe,
secure, efficient, and environmentally responsible maritime
operations. The marine industry, including the membership in
MXAK that is comprised of passenger vessel operators, tankers,
container ships, tugs, tows, and ports, believes that UNCLOS
should be ratified by the U.S. in the best interest of the U.S.
maritime industry in Alaska, and to assure environmentally sound
maritime operations. His experience with maritime operations
around the world shows that the Coast Guard has a positive
impact when it has an oversight role. Losing the ability to
explore the resources adjacent to the U.S. EEZ will allow
vessels from other nations to access these waters, and will
cause an elevated level of risk. Mr. Page concluded that
endorsing UNCLOS is in the best interest of the U.S. maritime
industry and for Alaska's development, business opportunities,
safety, and environmental protection.
11:17:47 AM
CHAIR HERRON observed some are unaware of MXAK's outstanding
aspects such as transponders to locate shipping. He praised its
service to the state and asked whether ships could still "show
up someplace, where nobody knows they came," as happened in
Tuktoyaktuk, Northwest Territories, Canada, in 1999.
MR. PAGE advised that international law requires ships to have
transponders; in fact, now MXAK observes and tracks foreign
flagged vessels that are near our shores, and provides
instantaneous information to the Coast Guard and the state.
11:19:42 AM
WALTER PARKER, President, Parker Associates Inc.; Senior Fellow,
Arctic Infrastructure, Institute of the North, pointed out that
the resolution looks good, and he heard through the Arctic
Council that the situation in the Chukchi and Beaufort Seas is
going to become very serious with Russia regarding the seabed
and fisheries problems. He referred to written information
submitted to the committee on the fisheries' issues. Mr. Parker
cautioned that Congress may not take up this issue, the issue of
icebreakers, or of providing the Coast Guard the budget needed
to "do the job up there," and he expressed his concern that the
situation will become more serious because of new alliances
between Russia and the Scandinavian nations. There will be a
lot of shipping through Bering Straits and UNCLOS is needed to
provide strong regional organization, and to enforce the traffic
rules. Mr. Parker agreed with the previous speakers in support
of the resolution, and noted that he served as one of the two
Alaska delegates to the third Law of the Sea Convention and has
been working on the issue for a long time. He stated UNCLOS is
desperately needed.
11:24:37 AM
CHAIR HERRON closed public testimony and turned attention to
page 3, line 5, of the resolution. He offered a conceptual
amendment to delete the following words, "a diplomatic blight on
its reputation." Hearing no objection to the conceptual
amendment, it was so ordered. The resolution was before the
committee.
11:26:28 AM
REPRESENTATIVE KELLER said he was very concerned about the
resolution and it is not enough to support it just because it
passed last year. This issue has been around since 1994, and
there are many arguments for and against. He requested that the
committee hold the resolution until there is further thought and
reflection on the issues. For whatever reason, he said he was
not notified of, nor asked about, this committee bill, and does
not want to be considered a sponsor of the resolution.
Representative Keller urged the committee not to move too
quickly, and promised to keep an open mind toward all of the
issues.
11:28:09 AM
CHAIR HERRON acknowledged he decided that this committee is the
appropriate committee to begin deliberations on the resolution.
Although dependent on the wishes of the members, he expressed
his intent to move the resolution to the next committee of
referral.
11:29:06 AM
REPRESENTATIVE JOULE moved to report HJR 19, 27-LS0608\M, as
amended, out of committee with individual recommendations and
the accompanying fiscal note.
11:29:52 AM
REPRESENTATIVE KELLER objected. He expressed his concerns about
U.S. sovereignty and national security issues, and re-stated the
need for more study. For example, it has been reported that a
submarine must stay on the surface with its flags flying when in
territorial waters.
CHAIR HERRON said his intent is for a full discussion and
pointed out that opposing arguments are provided in the
accompanying documents; the resolution is in response to a
request by Senator Lisa Murkowski.
REPRESENTATIVE GARDNER expressed her complete support for this
important resolution, but she indicated that she would support
the request from a committee member for further time.
11:33:04 AM
A roll call vote was taken. Representatives Joule, Olson,
Munoz, Foster, Thompson, and Herron voted in favor of HJR 19.
Representatives Gardner, Tuck, and Keller voted against it.
Therefore, HJR 19(EDT) was reported out of the House Special
Committee on Economic Development, International Trade and
Tourism by a vote of 6-3.
11:33:09 AM
The committee took an at-ease from 11:33 a.m. to 11:35 a.m.
11:35:45 AM
CHAIR HERRON advised he requested the co-chairs of the next
committee of referral to hear additional testimony on HJR 19
from resource development entities.
HB 160-TOURISM MARKETING CONTRACTS/CAMPAIGNS
11:36:05 AM
CHAIR HERRON announced that the final order of business would be
HOUSE BILL NO. 160, "An Act establishing and relating to the
Alaska visitor industry investment fund; relating to matching
funds for state tourism marketing contracts with qualified trade
associations; and providing for an effective date."
CHAIR HERRON stated his intent to discuss and hold the bill for
amendments that are not ready at this time and to hear related
discussion by the House Finance Committee. He called attention
to Amendment 1, labeled 27-LS0509\I.1, Bannister, 2/28/11, which
read:
Page 2, line 27:
Delete "$2,700,000 [AT LEAST"
Insert "at least $2,700,000 ["
CHAIR HERRON, in response to Representative Joule, said work
draft Version I was before the committee. In response to
Representative Tuck, he clarified that "the $2.7 will become the
floor, rather than the ceiling."
11:38:59 AM
REPRESENTATIVE MUNOZ asked for the total amounts collected in
the three tax areas of vehicle rental tax (VRT), recreational
tax, and corporate tax associated with tourist activities.
TERRY HARVEY, Staff, Representative Cathy Munoz, Alaska State
Legislature, referenced a fiscal note from the Department of
Revenue (DOR) that indicated $7.3 million in VRT in 2009, and $8
million in 2010. He deferred to DOR for details.
11:40:28 AM
JOHANNA BALES, Deputy Director, Anchorage Office, Tax Division,
Department of Revenue, informed the committee the effective date
of the legislation is July 1, 2011, thus for this calculation
the division would look at revenues received in 2009-2011. The
division has data for 2009-2010, and for VRT the state collected
$7.3 million in 2009, $8 million in 2010, and estimates $7.5
million will be collected in fiscal year 2011 (FY 11).
Furthermore, for tourism corporate income tax the state
collected approximately $21.4 million in 2009, $5.1 million in
2010, and estimates $5.5 million will be collected in 2011.
Total revenue collected and estimated for three years is
approximately $54.8 million, and 30 percent of that is $16.4
million. Ms. Bales advised the first amount directed into the
sub fund in the general fund would become the "floor" for future
years.
REPRESENTATIVE MUNOZ asked whether the industry-to-state match
is a 70 percent to 30 percent split.
MS. BALES deferred the question to DCCED.
11:43:00 AM
MR. HARVEY said his understanding is that currently the industry
is operating under a 70 percent state and 30 percent industry
match. In response to Chair Herron, he said this arrangement
will expire at the end of this fiscal year.
11:43:34 AM
REPRESENTATIVE MUNOZ recalled that this year the governor made a
larger commitment to the tourism industry and asked for that
percentage.
MR. HARVEY stated that the governor has proposed an additional
$7 million; however, he was unsure of what percentage that would
be.
REPRESENTATIVE KELLER surmised this may be viewed as
unconstitutional because it may be dedicated funds.
MR. HARVEY explained this is an annual amount of money that is
subject to appropriation and identified in statute as funds
based on revenue from the tourism industry, and thus is not
considered a dedicated fund. He suggested hearing further
testimony on this issue from the commissioner of DCCED.
11:45:16 AM
REPRESENTATIVE KELLER described the reason for his interest,
saying that the proceeds are for a particular purpose, and
requested a review of the criteria by legal services.
CHAIR HERRON indicated he would direct staff to obtain a
response from Legislative Legal and Research Services,
Legislative Affairs Agency. In response to Representative
Olson, he said a response would also be obtained from the
Attorney General, Department of Law, and distributed to the
committee.
REPRESENTATIVE GARDNER observed that if the funding is subject
to appropriation each year, the legislature could refuse or
change the amount. She surmised the bill simply makes a
recommendation for what future legislators should appropriate.
MR. HARVEY agreed, and asked for the viewpoint of the
commissioner of DCCED.
11:47:22 AM
REPRESENTATIVE GARDNER turned to the amendment, and asked
whether passage of the amendment means that if the marketing
campaign is $10 million, the industry is paying less, and if the
marketing campaign is $5 million, the industry is paying more.
11:48:04 AM
SUSAN BELL, Commissioner, Department of Commerce, Community &
Economic Development (DCCED), concurred with Representative
Gardner's statement, and said the bill addresses visitor
industry-generated revenues, to make a connection between the
health of the visitor industry, restoring its growth, and
establishing a fund that preserves the legislature's power of
appropriation in Section 2, subsection (a).
REPRESENTATIVE GARDNER then asked for the historical cost of the
marketing campaign contract.
COMMISSIONER BELL advised last year there was a 60 percent
increase in the state contribution from $9 million to $16
million, bringing the total ATIA marketing contract to $18.7
million. She reviewed the contract process and the decline in
tourism visitors, and said increasing the state's marketing
program was a significant piece in restoring visitor interest in
Alaska. Thus, the total marketing campaign has grown from a
state contribution of about $9 million and an industry
contribution of $2.7 million, to a state contribution of $18.7
million.
11:50:55 AM
REPRESENTATIVE GARDNER understood that according to the original
bill draft, matching funds would be about $9.35 million;
however, if the amendment passes, matching funds would be $2.7
million, which is a savings to the qualified trade organization
of about $5.65 million in the year under discussion.
11:51:33 AM
COMMISSIONER BELL said correct. She further noted that the
current 70 percent to 30 percent match will sunset and become a
50 percent to 50 percent match; however, since the time of the
original contract in 1999, there has been a change in the
composition of taxes and fees on the industry. For example, VRT
now brings in between $7-$8 million annually, and there is
income from a suite of taxes and fees enacted by the Alaska
Shipping Tax Initiative of 2006, Ballot Measure 2. Although
revenue from the ballot measure has been "rolled back," the
landscape of the state collection of industry-related taxes and
fees has changed. In addition, the industry trade organization
collects the fees from its members.
REPRESENTATIVE KELLER, observing that the industry's need is
measured by the number of visitors to Alaska, asked for the
length of time required to judge the marketing campaign's
success.
11:53:43 AM
COMMISSIONER BELL related the travel industry feels the state's
marketing efforts are insufficient. Her experience was that the
state's marketing investment in the '90s was higher; in fact,
the state's investment has dropped, and the market and
competition has changed due to the terrorist attacks of
September 11, 2001, and the response to the economic decline by
other tourism destinations. Commissioner Bell confirmed that
DCCED monitors the volume of visitors to indicate the health of
the industry, and she concluded that the state's previous
marketing budget of $11 million is insufficient "to achieve the
presence that we wanted."
REPRESENTATIVE KELLER suggested "a sunset on this" would ensure
that the effectiveness is measured.
COMMISSIONER BELL indicated there are tools to assess the
success of the marketing plan such as a sunset, the power of
appropriation, and the legislature's ability to question DCCED.
11:56:18 AM
REPRESENTATIVE THOMPSON referred to the proposed transportation
highway bill that would be funded by a percentage of VRT.
COMMISSIONER BELL affirmed that there is a proposed bill
competing for a percentage of VRT revenue, but she was unsure of
the percentage affected.
11:57:18 AM
REPRESENTATIVE GARDNER pointed out that between 2009 and 2010,
corporate income tax related to tourism went down about 75
percent, and VRT went down about 10 percent. She asked whether
a large portion of VRT is not tourism-related.
COMMISSIONER BELL explained that VRT is collected at the time of
sale; however, corporate income taxes are affected by other
factors. She deferred to Ms. Bales for details.
11:58:38 AM
REPRESENTATIVE OLSON relayed his growing concern that the
proposed legislation codifies a level of expectation that may
not be sustained. He opined the funding of this program and
others may still be best handled on a year-by-year basis.
REPRESENTATIVE KELLER observed that VRT would include cars
rented for purposes other than tourism. He asked whether an
exemption for other uses would avoid a "dedicated fund"
situation.
12:00:30 PM
CHAIR HERRON asked for the administration's stand on the
proposed committee substitute (CS) for HB 160.
12:01:20 PM
COMMISSIONER BELL informed the committee the governor was
briefed on the proposed CS; in fact, the governor continues to
consider a healthy visitor industry a priority and "he still
remains comfortable with it."
HB 160 was heard and held.
12:02:09 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Economic Development, International Trade
and Tourism meeting was adjourned at 12:02 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 160 - ATIA and ASMI Comparison.pdf |
HEDT 3/1/2011 10:15:00 AM HEDT 3/8/2011 10:15:00 AM |
HB 160 |
| HB 160 - Corporate Income Tax Collection Table.pdf |
HEDT 3/1/2011 10:15:00 AM HEDT 3/8/2011 10:15:00 AM |
HB 160 |
| HB 160 - Travel Industry Marketing FAQs.doc |
HEDT 3/1/2011 10:15:00 AM HEDT 3/8/2011 10:15:00 AM |
HB 160 |
| HB 160 -Sectional Analysis.pdf |
HEDT 3/1/2011 10:15:00 AM HEDT 3/8/2011 10:15:00 AM |
|
| HB 160 - Visitor_Industry_Impacts_3_30.pdf |
HEDT 3/1/2011 8:00:00 AM HEDT 3/8/2011 10:15:00 AM |
HB 160 |
| HB160 Sponsor Statement Final.pdf |
HEDT 3/1/2011 8:00:00 AM HEDT 3/8/2011 10:15:00 AM |
|
| HB160-Fiscal Note-CCED-DED-02-25-11.pdf |
HEDT 3/1/2011 8:00:00 AM HEDT 3/8/2011 10:15:00 AM |
|
| CS HB 160 (Version I).pdf |
HEDT 3/1/2011 8:00:00 AM HEDT 3/8/2011 10:15:00 AM |
|
| HB 160 -- Letters of Support 3.1.11.pdf |
HEDT 3/1/2011 10:15:00 AM HEDT 3/8/2011 10:15:00 AM |
HB 160 |
| HJR 19 - 06_08_08_arcticboundaries.pdf |
HEDT 3/8/2011 10:15:00 AM |
HJR 19 |
| HJR 19 - Economic Benefit.doc |
HEDT 3/8/2011 10:15:00 AM |
HJR 19 |
| HJR 19 - Polar Law Textbook (Law of the Sea Chapter).pdf |
HEDT 3/8/2011 10:15:00 AM |
HJR 19 |
| HJR 19 - Projected U.S.continental shelf.doc |
HEDT 3/8/2011 10:15:00 AM |
HJR 19 |
| HJR 19 - Sponsor Statement (LOST).pdf |
HEDT 3/8/2011 10:15:00 AM |
|
| HJR19 - Zero Fiscal Note.pdf |
HEDT 3/8/2011 10:15:00 AM |
HJR 19 |