Legislature(2011 - 2012)BARNES 124

03/08/2011 10:15 AM ECON. DEV., TRADE & TOURISM


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 160 VISITOR INDUSTRY INVESTM'T FUND/MARKETING TELECONFERENCED
Heard & Held
*+ HJR 19 URGING US TO RATIFY LAW OF THE SEA TREATY TELECONFERENCED
Moved CSHJR 19(EDT) Out of Committee
+ Bills Previously Heard/Scheduled 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