Legislature(1993 - 1994)
04/16/1993 07:55 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE April 16, 1993 7:55 p.m. TAPES SFC-93, #63, Side 1 (124-end) SFC-93, #63, Side 2 (575-end) SFC-93, #65, Side 1 (000-041) CALL TO ORDER Senator Drue Pearce, Co-chair, convened the meeting at approximately 7:55 p.m. PRESENT In addition to Co-chairs Pearce and Frank, Senators Jacko and Rieger were present. Senators Kelly, Sharp, and Kerttula did not attend. ALSO ATTENDING: Senator Lincoln; Senator Little; Attorney General Charlie Cole; Bruce Campbell, Commissioner, Dept. of Transportation and Public Facilities; John Sandor, Commissioner, Dept. of Environmental Conservation; Carl Rosier, Commissioner, Dept. of Fish and Game; Dusty Kaser, Chugach Alaska Corporation; Russell Heath, Alaska Environmental Lobby; Karl Becker, Cordova Commercial Fishermen in Prince William Sound; Willard E. Dunham, Chairman, Seward Association for the Advancement of Marine Science; Chip Thoma, Juneau Activist; and aides to committee members and other members of the legislature. PARTICIPATING VIA TELECONFERENCE: Anchorage - Rick Steiner, resident of Cordova, Alaska Kodiak - Mayor Jerome Selby Mary Forbes, Audubon Society Homer - David Stutzer, Kachemak Bay State Park System Advisory Board Kenai - Tom Wright, United Cook Inlet Drift Association Seward - Wayne Carpenter, Director, Seward Chamber of Commerce Larry Johnson, resident of Seward Valdez - Nancy Lethcoe, Alaska Wilderness Safaris and Alaska Wilderness Recreation Tour Association SUMMARY INFORMATION SB 165 - APPROP: ALYESKA SETTLEMENT/FY 93 SUPPLMNT A teleconference and discussion was had in conjunction with SB 183. SB 183 - APPRO: EXXON VALDEZ,CAPITAL BUDGET FY 94 Discussion was had with Attorney General Charlie Cole, Commissioner John Sandor, Senator Lincoln, those in the audience in Juneau, and participants from listed teleconference sites. Upon convening the meeting, Co-chair Pearce advised of a teleconference hookup for public testimony on SB 165 and SB 183. CHARLIE COLE, Attorney General, Dept. of Law, came before committee in response to a question from Senator Rieger. He explained that both the Seldovia Native Association and Cook Inlet Regional Corporation would be warranting title to land conveyed in the Kachemak Bay State Park purchase. Both organizations would further attest to the fact that there are no liens, encumbrances, defects, or third party interests in the property, except the timber agreement that is specified in greater detail. Senator Rieger raised questions regarding the interim conveyance of the lands from the federal government to the above-mentioned Native organizations and asked if it was sufficiently valid. The Attorney General said he was satisfied that the state would be receiving marketable title to the lands. Referring to the proposed visitor center within the park, Co-chair Frank noted plans for docks, hiking trails, public- use cabins, public moorings, etc, and suggested that the proposed $500.0 does not appear adequate for both the visitor center and other planned projects. He voiced concern that the state may end up with a park that is not very accessible or usable. JOHN SANDOR, Commissioner, Dept. of Environmental Conservation, came before committee acknowledging that the area could use additional funding. He explained that the Kachemak Bay Park Visitor Center Advisory Board has a substantial list of projects. However, the department has not yet developed a detailed amenities plan for areas within the spill. The intent is to work with communities and the visitor industry in developing facilities over a period of time. Attorney General Cole suggested that the visitor center should be "reasonably modest at the outset," because of costs associated with staffing. SENATOR GEORGIANNA LINCOLN next came before committee. She acknowledged that numerous individuals seeking to speak via teleconference had been waiting since early morning, and she said she would be brief. She referred to earlier introduced legislation for restoration projects and noted that it resulted from numerous teleconferences and input from those in oil-spill impacted areas in an attempt to ascertain their wishes for expenditure of the $50 million. SB 183 was later introduced. It does not include many of the projects of importance to residents of oil-spill areas. Co-chair Pearce observed that SB 183 is sponsored by the Governor. Projects therein were selected by the trustee council. Senator Lincoln reiterated that the list of projects developed by residents of the area does not mesh with projects selected by the trustees. Senator Lincoln referenced documentation evidencing that most of the injury from the EXXON VALDEZ oil spill occurred within Prince William Sound. Yet, an inordinate amount of funding in SB 183 would be expended elsewhere. Senator Lincoln further pointed to the $4.5 million in interest that has accumulated on the $50 million. Noting that the interest is not included within the bill, Senator Lincoln asked how it would be spent. She then questioned SB 183 expenditure of funds on both the oyster hatchery and sea life center at Seward. Further, sport and commercial fishermen have indicated opposition to the proposed Ft. Richardson Hatchery. There are sites within the spill area for hatchery operations. In her closing remarks, Senator Lincoln questioned whether SB 183 meets legal restrictions and the intended use of restoration funds. TELECONFERENCE Co-chair Pearce noted the limited, three-hour teleconference window, asked that those wishing to testify keep their testimony brief, and advised of a fax number for transmission of written testimony. JEROME SELBY, Mayor, Kodiak, Alaska, first testified via teleconference. He explained that soon after the settlement was reached, the city established a committee that subsequently assembled a list of restoration projects. That document was submitted to the trustees and has essentially been ignored since only two projects have been funded. Mr. Selby cited need for $7.5 million for a fisheries industry technology center for analysis of the impact of the spill, $1.0 million for purchase of Dept. of Fish and Game weir sites in the Kodiak area, and $9 million for acquisition of critical habitat in the Afognak area. The $17.5 million total is a modest request from an area that absorbed in excess of 50% of the damage from the oil spill. The spill also impacted 17 of the 22 publicly owned cultural resource sites in the Kodiak Island Borough. The area also lost a $100 million fishery. In his closing remarks, Mayor Selby noted that projects for the Kodiak area contained within SB 165 and SB 183 amount to $3.2 million out of a total of $102 million. He then asked if it is appropriate that the area that absorbed over 50% of the spill receives only 3% of the funds. He further questioned whether research grants contained within SB 183 were needed or could legally be funded. Mayor Selby suggested that the only thing that approaches the damage caused by the spill is the treatment the area is presently receiving by way of exclusion from restoration funding. DAVID STUTZER, Kachemak Bay State Park Citizens' Advisory Board, next testified from Homer, Alaska. He explained that the board passed a resolution in support of the $7 million for the buy-back of park land and timber and mineral rights. Speaking to the proposed $500.0 for a visitor center, Mr. Stutzer asked that the committee consider appropriating the funding to other capital improvement projects. The state division of parks does not have funding to man and maintain the facility. TOM WRIGHT, United Cook Inlet Draft Association, next spoke from Kenai, Alaska. He said that the Association, consisting of 585 permit holders, does not support the majority of the projects within SB 183 since little would be spent to restore resources impacted by the spill. SB 183 is not the result of public input. Most of the proposed expenditures are directed toward tourism/recreation projects. Mr. Wright voiced support for sections of SB 183 that are duplicated in HB 10, pointing specifically to the $3 million for acquisition of conservation easements along the Kenai River and the fishery industrial technology center at Kodiak. The Association also supports the $7 million for Kachemak Bay State Park as well as the Main Bay Hatchery upgrade. Mr. Wright next reiterated comments by Senator Lincoln that the Ft. Richardson Hatchery is not supported by commercial fishermen nor is it totally supported by sport fishermen. Instead of spending $4 million for a hatchery to raise trout for interior Alaska, the Association requests that funding be used for summer workers in the Cook Inlet System and a long-term research program for the Susitna River system. RICK STEINER, a resident of Cordova, next testified from Anchorage. He noted that expenditure of settlement moneys has enormous implications. The world is watching to see how the state will attempt to restore resources impacted by the most damaging oil spill in human history. Mr. Steiner said he was awed by his initial reading of SB 183 since it has little to do with environmental restoration. He suggested that the U.S. Dept. of Justice, which collected the settlement on behalf of the state, should closely monitor expenditure. He stressed that SB 183 should move no further. Mr. Steiner acknowledged that upgrades to the Main Bay Hatchery as well as the oyster hatchery are legitimate projects. Many projects, however, such as the Seward Sea Life Center and the Ft. Richardson Hatchery, have little to do with restoration. WAYNE CARPENTER, Director, Seward Chamber of Commerce, Seward, Alaska, next spoke via teleconference. He advised of substantial inquiry and assessment associated with the drafting of SB 165 and SB 183. Governor Hickel and his staff visited the Seward area to assess needs relating to the sea life center. Mr. Carpenter recommended support for the bill. He cited the deaths of thousands of sea birds, disappearance of sea lions (70% are gone from Resurrection Bay and the Gulf of Alaska), and lack of salmon returning to spawning grounds as indications that the impact of the spill and other environmental degradation on marine environments is unknown. The marine mammal research and rehabilitation center will provide a much needed facility. Mr. Carpenter commended inclusion of the fishery industrial technology center at Kodiak. He then urged support for the legislation. LARRY JOHNSON, local businessman, Seward Alaska, next testified in support of SB 183. He attested to need for a responsible balance between capital investment and land acquisition. He indicated that the proposed Seward Sea Life Center meets both the language and intent of the settlement. NANCY LETHCOE, Valdez, Alaska, next spoke on behalf of Alaska Wilderness Safaris (a business operated by Mrs. Lethcoe and her husband). She voiced opposition to SB 183 and the fact that no hearings on the bill were had by Senate Resources or Senate Judiciary. Mrs. Lethcoe further attested to the lengthy wait associated with testifying, noting that many who had been waiting since morning left prior to commencement of the current meeting. End, SFC-93, #63, Side 1 Begin, SFC-93, #63, Side 2 Mrs. Lethcoe explained that she and her husband have operated their business for 18 years. They were operating in Valdez before the pipeline terminal opened. Independent travelers pay hundreds of dollars a day for a truly wilderness experience--wild land with no manmade structures. Prince William Sound is one of the few coastal areas of undeveloped wilderness in the United States that is accessible to the boating public. Today, it looks much the same as it did when the Revolutionary War was fought. Its purity is a scarce and valuable resource. Prior to the spill, the Lethcoes operated a small, profitable, family-operated business. The spill changed that. Income from the business was down 50%. Last year, it recovered to approximately 80%. Mrs. Lethcoe said that federal courts have consistently ruled in favor of oil companies and against tourism businesses. For that reason, and because of the hours, emotional toll, and effort involved, the Lethcoes elected not to pursue a suit against Exxon but to devote their energies to ensuring that restoration projects did not hurt their business more than the spill. Mrs. Lethcoe termed the proposed legislation "one of our worst nightmares." It would deprive the business of access to the natural resources upon which the business was built. It does not advance but reduces wilderness tourism by introduction of marinas, cabins, and other development within Prince William Sound. Mrs. Lethcoe voiced objection to use of restoration funds for elimination of the wilderness resource upon which their business depends. Mrs. Lethcoe further suggested that the proposed road to Whittier would not be built for Alaskans but for mass out- of-state tourism companies. She urged that the legislation not pass from committee. MARY FORBES, Audubon Society, Kodiak, Alaska, next voiced disappointment in the proposed legislation. While some projects are supported, by and large the legislation appears to be an "inappropriate way of using restoration money." She suggested that reimbursement moneys to be used for construction of the road to Whittier would be better placed within the Dept. of Environmental Conservation or Dept. of Fish and Game where resource-related budgets have been slashed. Ms. Forbes voiced support for the Kachemak Bay buy-back but suggested that other pieces of legislation (SB 53 and HB 76) would accomplish the same. Ms. Forbes expressed further disappointment that the consensus work from last year and efforts relating to HB 10 and SB 98 have been ignored by the Governor. She further voiced her understanding that while the trustees are to oversee disbursement of civil settlement moneys, use of criminal settlement moneys is left to state determination. Co-chair Pearce called for additional teleconference testimony. There was no indication from the various sites that additional people wished to speak. The Co-chair directed that testimony be taken from those in the audience in Juneau. DUSTY KASER, Chugach Alaska Corporation, came before committee in support of SB 165, particularly the docks at Tatitlek and Chenega and the road from Cordova to Shepard Point. In discussions with the Governor, Native organizations agreed it made sense for the Dept. of Transportation and Public Facilities to build the Shepard Point road. All projects within the bill are badly needed and wanted by communities involved. Mr. Kaser noted that Tatitlek and Chenega were heavily impacted by the spill. Part of the intent behind the Alyeska settlement is to alleviate the impact by providing needed facilities and direct economic benefit via jobs. SB 165 provides grant funds to Chugach Alaska Corporation to construct the proposed docks. Chugach and impacted village corporations share common shareholders--all tied to local councils. All have vested interested in timely, economical, and environmentally safe completion of the projects. Chugach Alaska is better able to meet community needs, desires, and priorities because it works directly with those impacted by the spill. Further, the facilities are to be built on Native land. That includes the road from Cordova to Shepard Point. Mr. Kaser explained that Chugach Alaska would serve only as project manager on the dock construction. Since funding would flow as a grant, it would not be necessary for Chugach to follow the state procurement code. That provides flexibility; the process will move faster; and each dollar will go further. It is hoped that construction can begin this year, providing the permitting process does not delay the effort. Mr Kaser said there would also be less administrative cost. Engineering and construction would be accomplished by recognized industry leaders. Chugach can be selective in terms of who bids on projects while the state would not be able to do so. It will also maximize the use of local hire and subcontracting to ensure that the largest portion of funds remains within the community. Further, if the $7.2 million for each of the projects is not totally utilized on one, excess funds can be utilized on the other. Construction of the docks will be to state standards. Chugach is agreeable to state review of design and construction inspection to ensure that those standards are met. RUSSELL HEATH, Alaska Environmental Lobby, next came before committee, voicing opposition to SB 183. He suggested that it violates both the intent and spirit of the Exxon criminal settlement in that the purpose of settlement moneys is "exclusively for restoration projects." SB 183 makes only a token nod to that intent because only $15 million would be expended on such projects. Most of the money would be spend on concrete. Mr. Heath stressed that the EXXON VALDEZ oil spill was a crime against nature. The criminal settlement was paid in restitution for that crime to, in a small way, repair the catastrophic damage done to animals, plants, land, and sea in the oil impacted area. The best and most effect way to return Prince William Sound and other impacted areas to pre- spill health is to protect them from further threats and damage. Nature is the best restorer. The natural working of the ecosystem will replenish plant and wildlife populations. There is nothing that can be done, at this point, that would be more effective than letting nature take its course. For nature to do that, critical and productive habitat must be protected from further destruction. If additional habitat is lost, it will be more difficult for wildlife populations to recover. For that reason, environmental and other groups statewide overwhelmingly support acquisition of habitat as the best use of criminal settlement moneys. Most of the moneys allocated by SB 183 will be spent on tourist facilities and hatcheries. Building tourist facilities is not restorative, and there are more cost effective ways of restoring damaged fish populations than hatcheries that will require subsidies for many years. The Kachemak buy-back, habitat acquisition on the Kenai, and restoration of subsistence resources fulfill the intent of the settlement and are the only projects the environmental community supports. Mr. Heath voiced objection to the lack of public process associated with the bill. Few of the people, organizations, and communities affected by the spill were consulted in development of the legislation. Opportunity for the people of Alaska to review and influence the bill has been extremely limited by the fact that it was waived from two prior committees and rapidly scheduled in Senate Finance. In his closing remarks, Mr. Heath reiterated statewide support for habitat acquisition and requested that the bill be redrafted to comply with the true intent of the criminal settlement. KARL BECKER, a commercial fisherman in Prince William Sound, next came before committee. He advised of many individuals in Cordova who wished to speak via teleconference. However, due to the lateness of the hour, many had to leave the site to provide for their families. He asked that an additional day of testimony be scheduled for SB 183. Mr. Becker stressed that the bill reflects little public input from oil impacted areas and contains little to restore damaged resources and services. He observed that SB 98 conforms closely to the needs and interests of those living in the region affected by the spill. It does so because of the lengthy public process by which it was developed. Mr. Becker urged committee members to respect that history of public input through passage of SB 98. Senator Kelly asked who introduced SB 98, and Senator Lincoln advised that it is her bill. WILLARD E. DUNHAM, Chairman, Seward Association for the Advancement of Marine Science, next came before committee. He voiced support for the Alaska Sea Life Center at Seward. Much time and effort was spent by the Governor in development of the project. Mr. Dunham also pointed to multiple hearings on the subject as part of last year's legislation. He further noted that Seward is the only first class city that received oil on its beaches as the spill traversed along the west side of Prince William Sound, along the Kenai Peninsula up to Cook Inlet, out to Kodiak, and then along the Aleutian Chain. The facility has been in the planning stage for over twenty years and has undergone much evolution in response to documented scientific need. There is no place to study marine mammals (or a holding lab) north of Santa Cruz, California. The sea life center would provide the opportunity to conduct both research and rehabilitation as well as public education. The aquarium would be fully funded and require no additional moneys from the state. An exhibit for the sea life center at the great Alaska sportsman show in Anchorage gathered 504 names in support of the facility. CHIP THOMA, Juneau Activist, next came before committee. He voiced objection to the administration's handling of both the Exxon and Alyeska settlements, suggesting that the state settled for between 10 to 50 cents on the dollar. Speaking to the Alyeska settlement contained within SB 165, Mr. Thoma suggested that it is approximately $450 million short in terms of Alyeska's liability. He further suggested that the administration has taken a "cavalier attitude" toward settlement without investigating actual damage to resources. The result of inappropriate settlements is a cynical bill-- SB 183--which does not address damage to Prince William Sound and Kodiak. Mr. Thoma suggested that Governor Hickel has a naive attitude toward natural resources. He then voiced support for the Kachemak Bay buy-back but suggested that it represents a visual back-drop for the ride to Homer rather than primary habitat. He stressed that habitat should be acquired for fish and wildlife purposes rather than for visual effect. In his closing remarks, Mr. Thoma termed SB 183 a concrete bill rather than restoration or preservation legislation. It is not in the spirit of settlement terms calling for acquisition of equivalent resources. He suggested that the Clinton administration would ensure acquisition of valuable migratory resources within Alaska and the Lower Forty-eight states. At this point in the hearing, Co-chair Pearce redirected attention to the teleconference network and advised of additional testimony. NANCY LETHCOE again testified from Valdez, Alaska, speaking as president of the Alaska Wilderness Recreation Tour Association which represents over 300 members. She said that the Association board supports SB 98 and HB 10. It does not support SB 183. She stressed that the proposed road to Whittier does not represent restoration. It is, instead, a road for the out-of-state cruise ship industry. Mrs. Lethcoe further voiced opposition to additional sections of the bill including the Alaska Sea Life Center, saying that it represents another "type of mass-tourism development project that benefits out-of-state companies" rather than in-state Alaskans. Further, the Association's sport fishing membership has expressed opposition to the Ft. Richardson Hatchery. The Association supports provisions for the buy-back in Kachemak Bay. That project is also included in SB 98 and HB 10. The Association also supports acquisition of habitat along coastal areas and Afognak Island. Acquisition of Seal Bay was included in three previous bills dealing with criminal settlement moneys, but it is not included in SB 183. Mrs. Lethcoe urged that SB 183 not pass from committee. RICK STEINER, resident of Cordova, Alaska, again testified from Anchorage. He reiterated earlier comments that many who wished to testify via teleconference lost out by attrition. He further advised that the process behind the proposed bill is flawed. The moneys were collected by the U.S. Dept. of Justice in federal court for a specific purpose--compensation for environmental damage inflicted by the spill. Expenditure of those moneys is to be for environmental restoration rather than sea life centers, hatcheries, etc. He stressed that SB 183 should not go any further. At the request of Co-chair Pearce, ATTORNEY GENERAL CHARLIE COLE again came before committee. The Co-chair asked if projects to be funded within SB 165 and SB 183 meet consent decree requirements. Mr. Cole responded, "Yes." He acknowledged considerable testimony in favor of acquisition of habitat. The trustee council is interested in acquiring threatened habitat and has looked at a number of parcels, including a 21,000 acre tract at Seal Bay. The reply to inquiries relating to the purchase price brought a response of more than $50 million. The state would thus not be able to acquire much habitat if it spent the entire $50 million, plus interest. Attorney General Cole next directed attention to proposed amendments. Co-chair Pearce noted an initial amendment, designated Amendment No. 1, by Co-chair Frank. Mr. Cole referenced Amendment No. 2 which he explained would place oversight of feasibility documentation for the Alaska Sea Life Center at Seward in the "Office of the Governor, Office of Management and Budget" rather than the Dept. of Administration. Co-chair Pearce voiced concern that construction not commence prior to preparation of a financing package as well as information on how the center will be operated. She further suggested that placing oversight over a project sought by the Governor within his office makes the arrangement "awfully close." Co-chair Pearce suggested that the committee work with the Attorney General on appropriate language. Pointing to Amendment No. 3, the Attorney General explained that it would delete "substantial, ongoing" from language calling for a lapse of moneys back into the fund if substantial, ongoing work on the grants for the Alaska Sea Life Center, Main Bay Hatchery, and restoration of subsistence resources in unincorporated rural communities has not begun by December 1, 1994. Referencing Amendment No. 4, Co-chair Pearce noted that it reflects language worked out between Co-chair Frank and the Dept. of Environmental Conservation. It would add "or public research institutions" to language relating to research funding for private entity programs directed toward prevention, containment, cleanup, and amelioration of oil spills. Attorney General Cole explained that Amendment No. 5 would add "and related facilities" to language providing for the Kachemak Bay State Park visitor center. Senator Kelly voiced concern that projects may enter the actual construction phase before they are fully funded. He specifically pointed to the Alaska Sea Life Center and noted past requests for $36 million. He then asked if construction is expected to commence based on the $12.5 million appropriated in SB 183. End, SFC-93, #63, Side 2 Begin, SFC-93, #65, Side 1 Co-chair Pearce noted lack of continued availability of teleconference lines for further discussion at this time. She then announced that the committee would again meet at 9:00 a.m. tomorrow. Bills to be heard at that time have been posted. ADJOURNMENT The meeting was adjourned at approximately 9:15 p.m.