Legislature(2017 - 2018)BUTROVICH 205

03/27/2017 03:30 PM RESOURCES

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Audio Topic
03:30:30 PM Start
03:31:46 PM Confirmation Hearing: Board of Game
03:39:36 PM Confirmation Hearing: Alaska Gasline Development Corporation
04:25:29 PM SB92
05:08:27 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Consideration of Governor's Appointees: TELECONFERENCED
Board of Game
- Stosh Hoffman
Alaska Gasline Development Corporation
- Hugh Short
- David Wight
- Warren Christian
-- Public Testimony on Appointees --
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                         March 27, 2017                                                                                         
                           3:30 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Cathy Giessel, Chair                                                                                                    
Senator John Coghill, Vice Chair                                                                                                
Senator Bert Stedman                                                                                                            
Senator Shelley Hughes                                                                                                          
Senator Kevin Meyer                                                                                                             
Senator Bill Wielechowski                                                                                                       
MEMBERS ABSENT                                                                                                                
Senator Natasha von Imhof                                                                                                       
COMMITTEE CALENDAR                                                                                                            
CONFIRMATION HEARING: BOARD OF GAME                                                                                             
     - HEARD                                                                                                                    
CONFIRMATION HEARING: ALASKA GASLINE DEVELOPMENT CORPORATION                                                                    
     - HEARD                                                                                                                    
SENATE BILL NO. 92                                                                                                              
"An Act relating  to abandoned and derelict  vessels; relating to                                                               
the registration  of vessels; relating  to certificates  of title                                                               
for  vessels;  relating  to  the  duties  of  the  Department  of                                                               
Administration;  relating  to the  duties  of  the Department  of                                                               
Natural  Resources; establishing  the derelict  vessel prevention                                                               
program;  establishing  the  derelict vessel  prevention  program                                                               
fund; and providing for an effective date."                                                                                     
     - HEARD & HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB  92                                                                                                                  
SHORT TITLE: VESSELS: REGISTRATION/TITLES; DERELICTS                                                                            
SPONSOR(s): SENATOR(s) MICCICHE                                                                                                 
03/10/17       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/10/17       (S)       RES, FIN                                                                                               
03/27/17       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
WITNESS REGISTER                                                                                                              
STANLEY "STOSH" HOFFMAN                                                                                                         
Bethel, Alaska                                                                                                                  
POSITION STATEMENT:  Appointee to the Board of Game.                                                                          
SAM ROHRER, President                                                                                                           
Alaska Professional Hunters Association (APHA)                                                                                  
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:  Supported Mr. Hoffman's appointment to the                                                               
Board of Game.                                                                                                                  
NICOLE BORROMEO, Executive Vice President and General Counsel                                                                   
Alaska Federation of Natives                                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Supported Mr. Hoffman's appointment to the                                                                
Board of Game.                                                                                                                  
WARREN CHRISTIAN                                                                                                                
North Pole, Alaska                                                                                                              
POSITION STATEMENT: Appointee to the Alaska Gasline Development                                                               
Corporation (AGDC) Board.                                                                                                       
DAVID WIGHT                                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Appointee to the Alaska Gasline Development                                                               
Corporation (AGDC) Board.                                                                                                       
HUGH SHORT, Vice Chair                                                                                                          
Alaska Gasline Development Corporation (AGDC) Board                                                                             
Girdwood, Alaska                                                                                                                
POSITION STATEMENT: Re-appointee to the Alaska Gasline                                                                        
Development Corporation (AGDC) Board.                                                                                         
PAUL KENDALL, representing himself                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Asked question of AGDC appointees.                                                                       
SENATOR MICCICHE                                                                                                                
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Sponsor of SB 92.                                                                                        
RACHEL LORD, Coordinator                                                                                                        
Statewide Alaska Clean Harbors Program                                                                                          
Department of Natural Resources (DNR)                                                                                           
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Provided supportive background for SB 92.                                                                
RACHEL HANKE, staff to Senator Micciche                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided a sectional analysis of SB 92.                                                                  
LINDA BRUCE, Attorney                                                                                                           
Legislative Legal                                                                                                               
Alaska State Legislature                                                                                                        
POSITION STATEMENT:  Answered questions related to SB 92.                                                                     
BRYAN HAWKINS, Harbormaster                                                                                                     
Alaska Association of Harbormasters & Port Administrators                                                                       
City of Homer, Alaska                                                                                                           
POSITION STATEMENT:  Commented on SB 92.                                                                                      
JOE MCCULLOUGH                                                                                                                  
Office of Boating Safety                                                                                                        
Department of Natural Resources (DNR)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Commented on SB 92.                                                                                      
ACTION NARRATIVE                                                                                                              
3:30:30 PM                                                                                                                    
CHAIR  CATHY   GIESSEL  called  the  Senate   Resources  Standing                                                             
Committee meeting  to order at 3:30  p.m. Present at the  call to                                                               
order  were Senators  Meyer, Stedman,  Hughes, Wielechowski,  and                                                               
Chair Giessel.                                                                                                                  
^Confirmation Hearing: Board of Game                                                                                            
              Confirmation Hearing: Board of Game                                                                           
CHAIR GIESSEL  announced the confirmation  hearing for  the Board                                                               
of Game (BOG)  and invited Mr. Hoffman, who  is being reappointed                                                               
to  a third  term, to  tell the  committee why  he would  like to                                                               
remain on the board.                                                                                                            
3:31:46 PM                                                                                                                    
STANLEY "STOSH"  HOFFMAN, Bethel, Alaska,  said he works  for the                                                               
Yukon Kuskokwim Health Corporation and  has been raising a family                                                               
in  Bethel for  the last  20 years.  Prior to  that, he  lived in                                                               
McGrath  for about  20 years.  Both  towns are  on the  Kuskokwim                                                               
River in western Alaska.                                                                                                        
MR. HOFFMAN  said he was  first appointed to  the BOG in  2008 by                                                               
Governor  Palin and  is  happy to  be part  of  the process  that                                                               
ensures  that Alaska  has fish  and game  forever. He  enjoys the                                                               
work and appreciates the opportunity to serve again.                                                                            
CHAIR GIESSEL asked what big issues the BOG is facing.                                                                          
MR. HOFFMAN  answered they are  currently dealing with  "Unit 13"                                                               
issues in  the Ahtna area on  the highway system; the  caribou in                                                               
northern Alaska and  Dall sheep issue is also hot  on the agenda.                                                               
Locally,  the board  has received  a  lot of  testimony about  an                                                               
escalating bear population.                                                                                                     
3:34:42 PM                                                                                                                    
CHAIR  GIESSEL  found no  questions  from  committee members  and                                                               
opened public comment.                                                                                                          
SAM  ROHRER, President,  Alaska Professional  Hunters Association                                                               
(APHA), Kodiak,  Alaska, supported Mr. Hoffman's  confirmation to                                                               
the Board  of Game. He  brings a unique perspective  from western                                                               
Alaska, and  while he is  extremely knowledgeable  on subsistence                                                               
issues,  that one  issue does  not define  him. He  supports wide                                                               
uses of the resources provided they  can be done in a sustainable                                                               
way.  He  approaches issues  with  an  open  mind and  is  always                                                               
willing  to consider  other viewpoints.  He is  widely respected,                                                               
knowledgeable on the issues, and  most importantly, he is willing                                                               
to serve.                                                                                                                       
3:36:15 PM                                                                                                                    
NICOLE BORROMEO,  Executive Vice  President and  General Counsel,                                                               
Alaska Federation  of Natives,  Anchorage, Alaska,  offered "full                                                               
support"  for Mr.  Hoffman's  confirmation.  He is  knowledgeable                                                               
about  subsistence and  commercial issues  and brings  a balanced                                                               
approach to game management.                                                                                                    
CHAIR  GIESSEL,  finding  no   further  comments,  closed  public                                                               
SENATOR HUGHES said it didn't  relate to his appointment, but she                                                               
was looking  at some  pictures from the  mid-80s when  her family                                                               
lived in  Bethel and realized  he was about  the age of  her son,                                                               
and asked if he went to high school with him.                                                                                   
MR.  HOFFMAN answered  no; he  attended McGrath  High School  and                                                               
didn't leave McGrath until 1992.                                                                                                
SENATOR HUGHES thanked him for serving.                                                                                         
^Confirmation Hearing: Alaska Gasline Development Corporation                                                                   
  Confirmation Hearing: Alaska Gasline Development Corporation                                                              
3:39:36 PM                                                                                                                    
CHAIR  GIESSEL  announced  the confirmation  hearings  for  three                                                               
appointments  to  the   Alaska  Gasline  Development  Corporation                                                               
(AGDC). She  said this  board was  formed in  2014 because  of SB                                                               
138.  In  the  years  since,  the  project  personnel  and  board                                                               
composition  have experienced  some  dynamic  turnover. So,  they                                                               
have the latest  two new individuals up for  confirmation and one                                                               
who is  up for reappointment.  She welcomed Mr. Christian  to the                                                               
table  to tell  them  why he  is interested  in  serving on  this                                                               
3:40:21 PM                                                                                                                    
WARREN  CHRISTIAN, appointee  to the  Alaska Gasline  Development                                                               
Corporation (AGDC) Board,  North Pole, Alaska, said  he has lived                                                               
in  Alaska for  over  40 years  and  worked in  the  oil and  gas                                                               
industry  for  over 30  years,  specializing  in Arctic  pipeline                                                               
construction. He  started as a  welder helper and worked  his way                                                               
through the  company and finally  became president. For  the last                                                               
10  years  he   has  been  president  of   Doyon,  Associated,  a                                                               
partnership  between   Doyon  Limited  and   Associated  Pipeline                                                               
Company. Over  the years he has  had the great opportunity  to be                                                               
part of  the planning and  development of many  pipeline projects                                                               
including   Alpine,   Badami,   Northstar,  Tarn,   Melt   Water,                                                               
ExxonMobil's  Point  Thomson  project,  and  ConocoPhillips  CD-5                                                               
MR. CHRISTIAN said  he is currently president of  the North Slope                                                               
Contractors Association, president  of the Mechanical Contractors                                                               
of  Fairbanks,  and  past  president   of  the  TAPS  Contractors                                                               
Association.  He is  familiar with  negotiating labor  agreements                                                               
with the unions  and construction agreements with  the majors. He                                                               
has  also been  involved in  the training  of Alaskans  and is  a                                                               
trustee of  the Joint Apprenticeship  Training Committee  for the                                                               
Plumbers and Pipefitters. He is  also a trustee for the Fairbanks                                                               
Pipeline Training  Center. He  is a member  of the  Alliance, the                                                               
RDC, and  the Fairbanks  Chamber of Commerce;  he is  a certified                                                               
project   management  professional   and   a  certified   welding                                                               
inspector. He  serves on  the AGDC  Technical Committee  where he                                                               
has been actively engaged with the management team.                                                                             
MR. CHRISTIAN  said he believes  his experience and  history will                                                               
help and bring some valuable  Alaska Arctic knowledge to the team                                                               
and he is very willing to serve.                                                                                                
CHAIR GIESSEL thanked him and asked when he was first appointed.                                                                
MR.  CHRISTIAN answered  he was  appointed in  September and  his                                                               
first meeting was in October.                                                                                                   
CHAIR GIESSEL asked how he feels the project is progressing.                                                                    
MR. CHRISTIAN replied that they  had just received the update and                                                               
he has  had to go through  a "massive amount" of  information. He                                                               
believes the project  is heading in the direction  that the Wood-                                                               
MacKenzie  reported when  the majors  figured the  project wasn't                                                               
commercial  with the  way  it was  structured.  It recommended  a                                                               
possibility of  making it  commercial and  those were  the third-                                                               
party  tolling and  third-party finance,  along with  the federal                                                               
tax exemption. Now  the project is heading in  that direction and                                                               
is progressing the FERC process.  He is very involved, because it                                                               
could  add costs  to the  project by  adding stipulations  to the                                                               
permits. They will file for FERC ahead of the June scheduling.                                                                  
CHAIR  GIESSEL asked  if  he had  ever been  involved  in a  FERC                                                               
permit process before.                                                                                                          
MR.  CHRISTIAN answered  that  he had  been  involved in  certain                                                               
aspects of it and had to  provide information such as air quality                                                               
and construction information, but he  has not dealt directly with                                                               
the FERC agency. It's always been through the producers.                                                                        
3:44:51 PM                                                                                                                    
CHAIR  GIESSEL  noted  that  he  projects  that  the  application                                                               
process will be completed in the next three months.                                                                             
MR. CHRISTIAN responded  that they will start by  filing a formal                                                               
application to FERC.                                                                                                            
CHAIR GIESSEL asked  how many questions he had  to answer related                                                               
to the initial filing.                                                                                                          
MR. CHRISTIAN replied  about 3,000 questions, but  they won't all                                                               
be  answered at  that point.  The questions  have been  separated                                                               
into  different  categories:  questions that  can't  be  answered                                                               
until  FEED (front  end engineering  and design),  questions that                                                               
will  be answered  during  the 18-month  FERC  process, and  some                                                               
questions that will be answered in the beginning.                                                                               
CHAIR GIESSEL asked who is answering those questions.                                                                           
MR. CHRISTIAN replied that a  technical team within AGDC and some                                                               
third-party contractors are answering those questions.                                                                          
CHAIR  GIESSEL asked  if he  had ever  worked with  any of  those                                                               
third-parties before.                                                                                                           
MR.  CHRISTIAN answered  that he  hadn't worked  with the  third-                                                               
party contractor, but  he had worked with some of  the members of                                                               
the AGDC team in the past.                                                                                                      
CHAIR  GIESSEL asked  if  he  knows how  firm  the  plans are  to                                                               
purchase the ConocoPhillips export facility in Nikiski.                                                                         
MR. CHRISTIAN  answered at this  point the  AGDC is not  going to                                                               
put a bid in for the ConocoPhillips' AKLNG plant.                                                                               
3:46:37 PM                                                                                                                    
SENATOR COGHILL joined the committee.                                                                                           
CHAIR  GIESSEL asked  Mr. Christian  if  he had  looked over  the                                                               
"bullet line" (ASAP) plans.                                                                                                     
MR. CHRISTIAN  answered yes; he  had looked at the  design basis,                                                               
the cost estimates,  and the assumptions around  that line, along                                                               
with the AKLNG project.                                                                                                         
CHAIR GIESSEL  asked Mr.  Christian if,  based on  his experience                                                               
with gas pipelines, he thinks it is a viable project.                                                                           
MR. CHRISTIAN  replied that  he believes  that only  one pipeline                                                               
will  be  built.  They  have  looked at  the  evaluation  of  the                                                               
different size  pipes - the  48-inch pipe, the 42-inch  pipe, and                                                               
the ASAP 36-inch  pipe with multiple trains - to  see which would                                                               
bring the  most return. In doing  so, they had to  normalize some                                                               
things from the ASAP pipeline to  the AKLNG pipeline, such as its                                                               
termination point,  and looked at  additional demands  above what                                                               
Cook Inlet can  supply. He didn't believe those  demands are high                                                               
at this  point, because  infrastructure is not  in place,  but if                                                               
they  built the  ASAP  line as  currently  designed that  project                                                               
would  have  to  be  subsidized.  He  added  that  both  projects                                                               
complement  each  other.  The Supplemental  Environmental  Impact                                                               
Statement  (SEIS)  for  the  ASAP will  also  benefit  the  AKLNG                                                               
project, so the market will determine the final pipe size.                                                                      
3:49:53 PM                                                                                                                    
DAVID WIGHT, Alaska Gasline  Development Corporation (AGDC) Board                                                               
appointee,  Anchorage,  Alaska,  related  that he  had  lived  in                                                               
Alaska since  2000 and he  has a 41-year background  in petroleum                                                               
engineering  and management  for two  major companies:  Amoco and                                                               
BP.  He has  some Alaska  experience involving  Amoco engineering                                                               
activities in  the Cook  Inlet between 1975  and 1979.  From 2000                                                               
until the end of 2005  he had responsibility for Alyeska Pipeline                                                               
Service  Company as  the CEO  and  president. About  half of  his                                                               
industry career  has been involved  in gas, gas  development, gas                                                               
processing, and facilitating development  of LNG and pipelines to                                                               
monetize gas resources.                                                                                                         
MR. WIGHT  said he feels  his most pertinent  experience relative                                                               
to  what they  are doing  in  Alaska now  is his  eight years  in                                                               
Trinidad  and  Tobago  where  he  was one  of  two  parties  that                                                               
initiated  discussions with  the  government and  market for  LNG                                                               
development.  He  led the  team  that  negotiated the  commercial                                                               
terms, both  with the  government and with  the market,  and lead                                                               
the  team  that  developed  and  built the  first  LNG  plant  in                                                               
Trinidad and  Tobago. He also  managed and  led the team  for the                                                               
second  and third  LNG trains  in Trinidad  and Tobago  before he                                                               
moved to Alaska to be involved with the TAPS pipeline.                                                                          
The reason he wants to be  involved in this project is because he                                                               
has a life-long  interest in resource development.  He thinks gas                                                               
development comes with its own  challenges and his experience and                                                               
interest is there.  And as an Alaskan, he truly  believes the gas                                                               
resources need  to be monetized  while we still have  the benefit                                                               
of substantial infrastructure related to the oil production.                                                                    
3:53:36 PM                                                                                                                    
CHAIR GIESSEL asked if he thinks this is a viable project.                                                                      
MR. WIGHT answered  that the project can be viable,  but it's not                                                               
a given. It  has significant market and cost  challenges, but the                                                               
state and  the AGDC has  put together  the right group  of people                                                               
with the benefit of years  of study and technical and engineering                                                               
work by the  major companies. He said the cost  structure of this                                                               
project will  be a challenge  as well  as finding the  market and                                                               
the financing, but there are possibilities.                                                                                     
CHAIR GIESSEL asked  if the state project and  the three producer                                                               
projects are competing with each other.                                                                                         
MR. WIGHT replied  that is an interesting question,  and the four                                                               
participants will  have to figure  out how to work  together. All                                                               
of the gas  has to be sold in the  marketplace together and there                                                               
are  several dozen  other  projects  trying to  get  to the  same                                                               
3:57:28 PM                                                                                                                    
CHAIR GIESSEL said in the  original legislation that created this                                                               
project AGDC named  the Department of Natural  Resources (DNR) as                                                               
the marketing lead and asked how  much interaction he, as a board                                                               
member, has had with a marketing team from the DNR.                                                                             
MR. WIGHT replied  that he is fairly new to  the board and hasn't                                                               
personally  had any  interaction with  a DNR  marketing team  and                                                               
can't address the status of that interface.                                                                                     
CHAIR GIESSEL  thanked him  and invited Mr.  Short to  the table.                                                               
She said it is his third appointment to the board.                                                                              
3:58:37 PM                                                                                                                    
HUGH SHORT,  Vice Chair,  Alaska Gasline  Development Corporation                                                               
(AGDC) Board, Girdwood,  Alaska, said it is an honor  to serve in                                                               
this role. He  related that he had attended ME  school in Bethel,                                                               
referencing  Senator  Hughes earlier  remark.  He  has worked  in                                                               
finance for most  of his career. He was at  Alaska Growth Capital                                                               
for seven years, five of which  he was president and CEO. He made                                                               
investments  across the  four  major sectors  in  the economy  in                                                               
Alaska. He  spent three years  as chairman  of the board  for the                                                               
Alaska Industrial  Development and  Export Authority  (AIDEA) and                                                               
the  Alaska  Energy Authority  (AEA).  In  2013, he  left  Alaska                                                               
Growth Capital and started PT  Capital and raised an initial $125                                                               
million  in  private equity  funding.  Currently  PT Capital  has                                                               
investments  in  Alaska,   as  well  as  Iceland,   and  is  very                                                               
interested in furthering the deployment of their capital.                                                                       
He said his  role on the board  for the last couple  of years has                                                               
been somewhat  of a moving  target. When he first  arrived, there                                                               
was a  whole slew of new  board members, save for  Dave Cruz, who                                                               
was from the  initial board, and they worked  closely to maintain                                                               
the continuity  both of the  project and the  personnel, ensuring                                                               
that they abide by SB 138 and move the project forward.                                                                         
MR. SHORT  speculated that no  one in 2015 expected  the extended                                                               
period of  low commodity  prices. Over that  period of  time, the                                                               
project  partners -  ExxonMobil,  ConocoPhillips, and  BP -  made                                                               
decisions based  on their own  financial and  strategic direction                                                               
to not move forward with a FEED decision.                                                                                       
At that  point, AGDC  and the state  started a  conversation with                                                               
each of the  three parties to be able to  put together transition                                                               
agreements and  started taking a  "hard look" at  the third-party                                                               
tolling approach in  the Wood MacKenzie study. It  is a different                                                               
approach  than   the  equity  model  that   had  previously  been                                                               
implemented. The major  difference between the two  is the equity                                                               
model  generally  has  each   equity  participant  finance  their                                                               
portion of the project and  contribute that money to the project.                                                               
This means  they may have debt  or may have all  equity, but it's                                                               
essentially   their  contribution.   In  a   third-party  tolling                                                               
situation, the whole  project bears the cost of the  debt and the                                                               
cost  of the  overall structure.  The one  benefit with  a third-                                                               
party  model   is  that  with  the   entrance  of  infrastructure                                                               
investors,  a reduced  hurdle rate  on the  return on  equity, as                                                               
well as  any potential  benefits that may  occur from  tax exempt                                                               
status  reduces the  overall tariff  and makes  the project  more                                                               
economic for the  long term. As they move  through 2017, probably                                                               
the biggest  question he has to  answer as a board  member is the                                                               
economic feasibility of that model.                                                                                             
4:04:13 PM                                                                                                                    
On the other side  of the deal is the cost of  project. It is not                                                               
feasible  at a  $45-65 billion  build; that  cost must  come down                                                               
substantially. The team  has been working very  diligently to try                                                               
to do that.                                                                                                                     
The other  piece of this  is the  FERC filing. For  background he                                                               
said, in  2011 he  was appointed to  the Alaska  Energy Authority                                                               
Board (AEA) and became chairman.  At that point, Governor Parnell                                                               
and   the  legislature   supported  the   FERC  filing   and  the                                                               
construction of  the Susitna  Watana hydroelectric  project. Over                                                               
the  course  of three  years,  $170  million  was spent  in  that                                                               
process. A  new governor  came and the  project was  defunded and                                                               
they stopped  just short  of a  FERC filing.  If a  license would                                                               
have been issued, it would have  been a marketable asset that the                                                               
state could have  recouped some expenses on.  It was shortsighted                                                               
to not  complete the process and  get the value out  of that FERC                                                               
license.  He hopes  that  AGDC is  successful  in finding  buyers                                                               
working with  the project partners  in building this, but  at the                                                               
very least  the FERC license is  a piece of paper  and a document                                                               
that is a very important asset for the project.                                                                                 
4:06:07 PM                                                                                                                    
SENATOR COGHILL asked with the  major oil companies stepping back                                                               
and the  state taking the lead,  if he thought the  state has the                                                               
capacity  to  look at  it  like  a big  buyer  would  for an  LNG                                                               
facility and  get good  numbers for  the cost  of money  for both                                                               
sides, or: "Are  we going to fool ourselves  with hardware costs,                                                               
MR.  SHORT   answered  those  numbers  could   be  squeezed  into                                                               
something unrealistic, and that  would affect the financing plan.                                                               
AGDC's strategy is twofold: one is  in order to get the best cost                                                               
estimate and to move this  project towards a feasible build size,                                                               
bringing on  board an Engineering, Procurement,  and Construction                                                               
(EPC) contractor who has experience  in the construction of these                                                               
types of  projects and  sitting alongside  is an  important role.                                                               
They are  currently working on  identifying an EPC  contractor to                                                               
play that role  to ensure they are looking  at realistic numbers,                                                               
focused on reducing costs but without being foolhardy.                                                                          
He believes there is a strategy  for ASAP, but the issue there is                                                               
the less gas  you put through the more expensive  it is per unit,                                                               
and  it's  highly  likely  that  at  42-inch  pipe  is  the  most                                                               
feasible. The question then becomes is  there a way to scale into                                                               
a 42-inch build  that reduces your costs but as  you get more gas                                                               
increases the flow. Creative solutions  are being considered such                                                               
as  starting  the  LNG  facility  with  one  train,  very  little                                                               
compression,  and being  able to  somehow get  the Gas  Treatment                                                               
Plant (GTP) to a more efficient  and less cumbersome build. A lot                                                               
more work needs  to be done on  that to come up  with the correct                                                               
4:09:38 PM                                                                                                                    
SENATOR COGHILL  said it's important  to watch that, but  it also                                                               
looks like one of the cornerstones  is the ability to get federal                                                               
tax relief for  the project. It's a  commercial project performed                                                               
by a government  and he wanted to know how  they would explain to                                                               
the public  that this is for  state use but we're  really selling                                                               
it commercially  (which would  void that  tax exemption).  And is                                                               
the tax exemption something that is even realistic?                                                                             
MR. SHORT replied that there are  two key levers in the financing                                                               
strategy. The  first lever gets  more bang  for your buck  and is                                                               
the  third-party tolling  infrastructure  financing. That  allows                                                               
you to bring  down the overall hurdle rate for  an investor. That                                                               
is where you  will get most of your drive  versus an equity model                                                               
where  one partner  may have  a 13  percent hurdle  rate, another                                                               
partner may  have a 15  percent hurdle rate, and  another partner                                                               
might have a  12 percent hurdle rate,  but at the end  of the day                                                               
those have  to be blended together  to get to a  feasible project                                                               
where everyone hits the green light.                                                                                            
He explained  further that one gets  the most bang by  being able                                                               
to finance this  project from those various hurdle  rates down to                                                               
a  hurdle  rate  where  investors  want  to  invest  and  get  an                                                               
infrastructure rate of return.                                                                                                  
The second driver, which is less  of a reduction in tariff is the                                                               
tax  exempt  status  on  federal income.  That  requires  an  IRS                                                               
(Internal Revenue Service) private  letter ruling, which requires                                                               
a finance  plan to  be fully  baked and  fully put  together, and                                                               
that has  not occurred yet.  So, it's  very important to  get the                                                               
project infrastructure financing.  It's secondarily important for                                                               
them to  achieve a tax-exempt  status if  feasible, but if  it is                                                               
not possible  to qualify, we  need to  take that into  account on                                                               
the finance package side. They don't  have a clear answer on that                                                               
right now, but hopefully they will soon.                                                                                        
4:12:41 PM                                                                                                                    
CHAIR GIESSEL  said she heard  that they  will be applying  for a                                                               
FERC license  in June and the  AGDC president said by  the end of                                                               
this year  the economics  and viability of  this project  will be                                                               
known,  and yet  Mr. Short  hadn't  applied for  the IRS  private                                                               
letter ruling  yet, because the  financial plan is not  in place.                                                               
She  asked what  the chances  are of  achieving that  end-of-year                                                               
deadline for project viability.                                                                                                 
MR. SHORT  replied that the  submission date for the  FERC permit                                                               
is  actually April.  It  has been  moved up,  and  there is  some                                                               
optimism about the focus on  infrastructure and energy of the new                                                               
administration in  D.C. The  private letter  ruling for  the tax-                                                               
exempt  status is  important  for the  project  financing. If  it                                                               
doesn't happen, it increases the tariff  and that has to be dealt                                                               
with somehow. If  they had to choose between the  two, they could                                                               
probably live without the tax-exempt status.                                                                                    
4:15:20 PM                                                                                                                    
CHAIR  GIESSEL said  her  district  wants to  know  how much  the                                                               
citizens of Alaska will have to  pay to see this pipeline come to                                                               
MR. SHORT said  that answer is being put together  now. There are                                                               
two options to consider:                                                                                                        
1. Establish an amount of equity  necessary to be able to finance                                                               
the project  out of the state's  accounts. Where that is  has not                                                               
been determined, and it is premature to answer that.                                                                            
2. The  state of Alaska could  bond for an equity  portion of the                                                               
pipeline construction,  but that  scenario is  not ready  to roll                                                               
out to the legislature.                                                                                                         
MR.  SHORT said  the  board had  spent  eight months  negotiating                                                               
transition agreements  from point A  to point  B and it's  been a                                                               
frustrating process, because  a lot of the work has  been done in                                                               
executive  session. They  are  now at  point B  and  the team  is                                                               
working  long  hours  to  come  up with  good  answers  to  these                                                               
4:17:21 PM                                                                                                                    
SENATOR  MEYER  asked  if  it  wouldn't  make  sense  to  have  a                                                               
legislator on  the board, even  as an ex-officio member,  to help                                                               
sell the project to the legislature.                                                                                            
MR.  SHORT   noted  that  he  had   appreciated  Senator  Giessel                                                               
attending all  or most their  meetings; it has been  very helpful                                                               
from a  communication standpoint. But  he, as a board  member and                                                               
appointee of  the governor, has a  specific job to do  and didn't                                                               
have an opinion as to whether it is good or bad idea to do that.                                                                
CHAIR  GIESSEL,  finding  no  further  questions,  opened  public                                                               
comment on the three AGDC appointees.                                                                                           
4:20:24 PM                                                                                                                    
PAUL KENDALL,  representing himself,  Anchorage, Alaska,  said he                                                               
called to ask one of the  appointees where he could find the main                                                               
line data that includes material and  labor. He wanted to look at                                                               
those  numbers, because  he  just didn't  see  this gas  pipeline                                                               
going forward.  The first thing  that comes  to his mind  is will                                                               
that pipeline carry hydrogen, and  if it won't, the whole project                                                               
will have to be reconsidered.                                                                                                   
CHAIR  GIESSEL,  finding  no   further  comments,  closed  public                                                               
testimony  and   said  in  accordance  with   AS  39.05.080,  the                                                               
Resources  Committee reviewed  the following  and recommends  the                                                               
appointments be  forwarded to a joint  session for consideration:                                                               
Board   of  Game   -  Stosh   Hoffman,  Bethel;   Alaska  Gasline                                                               
Development  Corporation -  David Wight,  Anchorage; Hugh  Short,                                                               
Girdwood;  and  Warren  Christian,  North  Pole.  This  does  not                                                               
reflect an  intent by any of  the members to vote  for or against                                                               
the confirmation of the individuals during any further sessions.                                                                
4:25:04 PM                                                                                                                    
At ease                                                                                                                         
         SB  92-VESSELS: REGISTRATION/TITLES; DERELICTS                                                                     
4:25:29 PM                                                                                                                    
CHAIR  GIESSEL  announced  consideration  of  SB  92  offered  by                                                               
Senator  Micciche.  She  said   Alaska's  coastal  highways  have                                                               
turnouts  that  have  become ship  graveyards,  and  hundreds  of                                                               
derelict vessels pose public  safety, environmental, and economic                                                               
burdens. Finding  the right balance between  the public interest,                                                               
rights of property owners, and  the balance sheets of communities                                                               
in the state are addressed by this legislation.                                                                                 
SENATOR MICCICHE, Alaska State  Legislature, Juneau, Alaska, said                                                               
SB 92 is  really that simple. He said his  staff would provide an                                                               
overview and  Ms. Lord  would provide  a presentation  that would                                                               
reveal the reason for this legislation.                                                                                         
4:26:32 PM                                                                                                                    
RACHEL   LORD,  Coordinator,   Statewide  Alaska   Clean  Harbors                                                               
Program,  Homer, Alaska,  provided supportive  background for  SB                                                               
92. She  said that  this program  is now  run through  the Marine                                                               
Exchange  in Juneau  and through  it, she  worked for  years with                                                               
harbormasters around  the state  and with the  Alaska Association                                                               
of Harbormasters and Port Administrators.                                                                                       
She started off with a story  about two vessels - the F/V Leading                                                               
Lady and the  F/V Kupreanof - that had been  kicked out of Kodiak                                                               
and  denied entrance  to several  other ports.  This led  to both                                                               
vessels sinking  in Kachemak Bay  on state tideland  waters where                                                               
they were anchored, which left a  sheen of oil in close proximity                                                               
to commercial oyster farms.                                                                                                     
On January  18, the  Coast Guard raised  the vessels  and removed                                                               
pollutants with  their authority  ending at  that point.  When it                                                               
became clear that  the owner and responsible party  was not going                                                               
to remove the  vessels themselves, DNR impounded  the vessels and                                                               
moved them to  Homer. One was demolished; the  other was returned                                                               
to the  owner after  payment of  $11,500 to  DNR even  though the                                                               
price  tag was  at least  $40,000 for  DNR and  $400,000 for  the                                                               
Coast Guard; and she didn't know the cost for DEC.                                                                              
This is not a singular story,  Ms. Lord said. Alaska has an aging                                                               
fleet of vessels and outdated  statutes. By 2025 the Alaska fleet                                                               
will include  roughly 3,100 vessels  between 28 and 59  feet that                                                               
are more  than 45 years  old. The  Alaska fleet also  includes 75                                                               
passenger vessels,  tugs, and  barges over 50  years old.  A 2014                                                               
McDowell  Group  Report  on  trends   and  opportunities  in  the                                                               
maritime  sector  considered it  a  positive  highlight for  ship                                                               
building  opportunities,  but  an   excerpt  from  the  executive                                                               
summary paints a different picture of derelict vessels.                                                                         
MS. LORD said the F/V Leading  Lady and F/V Kupreanof are classic                                                               
examples of  boats across Alaska.  The current reality is  one in                                                               
which it is all too easy to  pass on an expensive and aging boat.                                                               
And  the cost  of maintaining  a boat  only increases  over time.                                                               
With the help from the Derelict  Vessel Task Force, DNR has begun                                                               
a  derelict  vessel  data  base  of 200  vessels,  but  it  isn't                                                               
complete.   Case   studies   have   shown   that   agencies   and                                                               
municipalities are  hamstrung to  effectively prevent  and manage                                                               
derelict  vessel, and  the public  ultimately pays  the price  in                                                               
money,  environmental damage,  navigational hazards  and loss  of                                                               
aesthetics.  Alaska's  waters are  too  often  a default  dumping                                                               
An  incident  in  2012  catalyzed  the formation  of  an  ad  hoc                                                               
Abandoned  Ad  Derelict Vessel  Task  Force  for the  state  that                                                               
identified  major barriers  and solutions  to improving  derelict                                                               
vessel  prevention and  management in  Alaska and  these are  all                                                               
captured within SB 92. Participation  in the Derelict Vessel Task                                                               
Force  was open  to anyone  interested she  said and  presented a                                                               
list of agencies  at the table. The municipal law  firm of Birch,                                                               
Horton,  Bitner, and  Cherot provided  pro bono  legal assistance                                                               
for  this  effort. They  represent  Kodiak,  Cordova, Homer,  and                                                               
other  communities and  have spent  significant time  on derelict                                                               
vessel cases  and ordinances to protect  their communities. Their                                                               
help, along with  the work of all the other  people at the table,                                                               
and substantial  research from other  states was  instrumental to                                                               
navigating potential solutions for  the myriad of problems raised                                                               
by derelict vessels around Alaska.                                                                                              
MS.  LORD said  it was  an honor  to work  with these  people and                                                               
facilitate  their work.  The  task force  met  for nine  full-day                                                               
meetings  over  the course  of  two  years and  identified  major                                                               
problems that were addressed by SB 92.                                                                                          
4:32:48 PM                                                                                                                    
A major barrier  to effectively dealing with  derelict vessels is                                                               
a  lack of  clarity  in  current law.  The  course  of action  is                                                               
different if one declares a  vessel derelict versus abandoned and                                                               
the  impoundment hearing  processes  are not  clear  nor are  the                                                               
notice  requirements. The  definition  of the  vessel owner  also                                                               
leaves ambiguity. SB 92 addresses  these issues and provides much                                                               
more clarity in AS 30.30, the derelict vessel statutes.                                                                         
Current statutes  restrict enforcement  of derelict  vessel laws.                                                               
One  of DNR's  biggest tools  is  to write  trespass notices  and                                                               
those are clearly not enough  enforcement. The current penalty of                                                               
$500 is both not enough and not enforceable.                                                                                    
MS. LORD  said she has  noticed news articles on  derelict vessel                                                               
cases  and  that the  comments  are  resoundingly in  support  of                                                               
response  efforts  and  often  ask why  state  laws  aren't  more                                                               
stringent and they clamor for owner liability.                                                                                  
In  2015  representatives from  DNR  and  DEC participated  in  a                                                               
nationwide derelict vessel workshop  held by National Oceanic and                                                               
Atmospheric  Administration  (NOAA).  They  noted  that  everyone                                                               
around  the country  agreed: there  is never  going to  be enough                                                               
money to remove  all derelict vessels. The investment  in a point                                                               
person or program  alone is proving to be  instrumental in making                                                               
progress  on  preventing  and better  managing  derelicts.  As  a                                                               
facilitator,  every few  months  she  gets a  phone  call from  a                                                               
community or  village somewhere in  Alaska asking for  advice and                                                               
assistance  on a  derelict vessel  case. Alaska  agency employees                                                               
are doing  this work in  different offices around the  state with                                                               
varying  levels  of familiarity  with  derelict  vessel laws  and                                                               
background.  SB  92  proposes   establishing  a  derelict  vessel                                                               
program at DNR  allowing for the streamlining  of derelict vessel                                                               
work  around the  state to  improve efficacy  and reduce  overall                                                               
costs. She  believes this will be  a big step forward  for Alaska                                                               
to curb the dumping of vessels in our waters.                                                                                   
Vessel disposal must  be addressed at some point,  Ms. Lord said,                                                               
and while  this isn't necessarily the  job of the state  it would                                                               
be beneficial  to start looking  for vessel disposal  options and                                                               
solutions  including conversations  with the  private sector  and                                                               
municipalities. In  other states,  people are  seeing that  it is                                                               
far cheaper  to remove a vessel  from the water before  it sinks.                                                               
This  could  be different  in  Alaska;  however, any  sunken  and                                                               
abandoned vessel in Alaska is going to be enormously costly.                                                                    
MS.  LORD  explained  that under  the  proposed  derelict  vessel                                                               
prevention  program,  the state  will  have  some opportunity  to                                                               
begin asking these questions and  considering a suite of possible                                                               
solutions. Without insurance, when a  vessel is abandoned or left                                                               
to  sink  on  state  waters,  it can  be  impossible  to  find  a                                                               
responsible party. A  few harbors around the  state are beginning                                                               
to  require   insurance  of  some   kind  and  many   others  are                                                               
considering it.                                                                                                                 
Under SB 92, a vessel over  30 feet that is engaged in commercial                                                               
activity  and  on the  water  for  more  than  90 days  would  be                                                               
required  to  carry a  marine  insurance  policy. If  someone  is                                                               
considering  a  long-term commercial  venture  on  the water  and                                                               
insurance  policy  will  protect  the public  in  the  event  the                                                               
commercial endeavor  does not work  out as planned.  This happens                                                               
often unfortunately.                                                                                                            
Finally, one of the hurdles  to holding vessel owners responsible                                                               
is  establishing ownership.  With the  Challenger, a  70-year old                                                               
96-foot long tugboat  that sank in Gastineau Channel  in 2015 the                                                               
bill of  sale was written up,  but the current and  former owners                                                               
disagreed on  who actually owned  the vessel. While that  will be                                                               
up to  the Coast  Guard to  deal with, they  carried a  nearly $2                                                               
million  bill  for  dealing  with that  case.  Our  agencies  and                                                               
harbors face this  run-around on a regular basis.  SB 92 proposes                                                               
establishing  more  universal  registration  requirements  and  a                                                               
titling system  for vessels  similar to  motor vehicles.  Done in                                                               
other  states,  these are  some  common-sense  solutions to  help                                                               
improve accountability.                                                                                                         
4:37:05 PM                                                                                                                    
MS. LORD said  just looking at the Challenger  case that happened                                                               
in  Juneau, an  excerpt from  an Empire  indicated that  "gosh we                                                               
really need  to do  something." It went  through some  ideas like                                                               
requiring vessel  registration and  insurance. At the  very least                                                               
DNR could be granted the simple  authority to levy fines on those                                                               
who  pollute Alaska's  waters. SB  92  proposes addressing  these                                                               
She said  in 2013 a Washington  State official said, "We  need to                                                               
find a  way to  keep these  vessels from  being abandoned  in our                                                               
waterways, and  that means holding  owners accountable.  Too many                                                               
people  get  in  over  their  heads, and  their  dreams  of  ship                                                               
renovation or making  money from scrap become a  nightmare of the                                                               
citizens of this state and the marine environment."                                                                             
The quote concludes  saying. "A hole in the water  into which you                                                               
pour your money is a famous  definition of a boat. To the maximum                                                               
extent possible,  we must ensure  the taxpayers are not  the ones                                                               
doing the pouring."                                                                                                             
4:38:18 PM                                                                                                                    
MS. LORD  said the 16th Legislature  knew this was a  problem and                                                               
passed  HCR 53  in 1990  saying that  many abandoned  vessels are                                                               
grounded on the  coast of Alaska and they are  a problem that the                                                               
state doesn't have  the financial or statutory  resources to deal                                                               
with, and  that communities around  the state are  also suffering                                                               
from widespread  abandoned vessels.  The resolution  concludes by                                                               
requesting  that  the  problems  posed by  abandoned  vessels  be                                                               
studied   with  recommendations   brought  forth   to  the   17th                                                               
Legislature   for  legislation   necessary  to   remedy  existing                                                               
problems and prevent future ones.                                                                                               
Today she  finds herself with the  30th Legislature and SB  92 is                                                               
necessary  to  move forward  on  better  managing and  preventing                                                               
derelict vessels  around Alaska  and she  looks forward  to their                                                               
conversation and forward movement on this bill.                                                                                 
4:39:50 PM                                                                                                                    
RACHEL   HANKE,  staff   to   Senator   Micciche,  Alaska   State                                                               
Legislature, Juneau, Alaska, provided  a sectional analysis of SB                                                               
Section 1  requires that a  boat placed  on state waters  must be                                                             
titled as  well as  registered and numbered  as required  in this                                                               
Section  2 removes  Coast Guard  certificate  exception and  adds                                                             
language  that requires  certificate of  number on  a barge  that                                                               
operated on water for more than 60 consecutive days.                                                                            
SENATOR  STEDMAN  asked  how a  documented  and  an  undocumented                                                               
vessel  are  going  to  be   treated  differently,  referring  to                                                               
language on page 1, line 8.                                                                                                     
MS. HANKE said  some vessels are documented with  the Coast Guard                                                               
and it is  the intention that those be documented  with the state                                                               
as well.                                                                                                                        
MS. LORD  added that was  true and  that 26 other  states require                                                               
all documented  vessels to be  registered with the state  DMV, as                                                               
well. Washington  is one of those  states. Given the size  of the                                                               
problem they  suggest expanding  the registration  requirement to                                                               
include  documented  boats,  because  that will  help  the  state                                                               
better  identify ownership  when  a boat  is  abandoned on  state                                                               
lands or municipal harbors.                                                                                                     
SENATOR  STEDMAN  said  that documentation  database  is  already                                                               
available   and  suggested   getting   more  information   before                                                               
increasing regulatory burdens unnecessarily.                                                                                    
4:43:18 PM                                                                                                                    
MS. HANKE said  section 3 states that a boat  is exempt from this                                                             
title if  it operates in the  state for less than  90 consecutive                                                               
days and has  a valid certificate of number;  barges that operate                                                               
for less  than 60  days with  a valid  certificate of  number are                                                               
also exempt.                                                                                                                    
Section  4 adds  a new  section which  directs the  Department of                                                               
Administration  (DOA) to  adopt regulations  and create  a system                                                               
for  certification  of titles.  An  individual  who purchases  an                                                               
undocumented  boat is  required  to apply  for  a certificate  of                                                               
title within 30 days.                                                                                                           
Section 5 adds cross-references.                                                                                                
Section 6 increases motorized boat  registration for a three-year                                                               
period from $24 to $30, adds  a barge registration fee of $75 for                                                               
a three-year period, and adds a boat title fee of $20.                                                                          
Sections 7 & 8 add definitions.                                                                                                 
SENATOR STEDMAN remarked that this bill has some issues.                                                                        
CHAIR GIESSEL agreed  and added that they would  be addressing it                                                               
for quite a while.                                                                                                              
SENATOR STEDMAN  said language on page  4, line 6, talks  about a                                                               
barge  and asked  if that  is  a freight  barge and  if it  would                                                               
include a fuel barge.                                                                                                           
MS. LORD said the intention is to include all barges.                                                                           
MS.  HANKE said  sections 9  & 10  clarify and  simplify existing                                                               
4:45:15 PM                                                                                                                    
Section 11  provides that a  person found guilty of  abandoning a                                                               
vessel is guilty  of a class B misdemeanor that  is punishable by                                                               
one or more of  the following: a fine of no  less than $5,000 and                                                               
no more  than $10,000, up  to 90 days  in jail, or  forfeiture of                                                               
the vessel.                                                                                                                     
SENATOR STEDMAN  asked her to  elaborate on who would  be exposed                                                               
to the classification of misdemeanor and the fine.                                                                              
MS.  LORD replied  it would  expose the  person who  violates the                                                               
4:47:30 PM                                                                                                                    
LINDA  BRUCE,   Legislative  Legal,  Alaska   State  Legislature,                                                               
clarified that a  person could be found guilty  of violating this                                                               
section if  they store or leave  a derelict vessel on  the waters                                                               
of the state (section 9) without  the consent of the state agency                                                               
or municipality or  dock at any private  property without consent                                                               
of the owner.                                                                                                                   
SENATOR STEDMAN said  all submerged lands are owned  by the state                                                               
and are its  navigable waters. He said the curious  issue is that                                                               
some people own derelict vessels and  let them sink in the harbor                                                               
or take them out  and let them sink on the  beach, and they don't                                                               
have $5,000.  One of the biggest  challenges is that a  boat ends                                                               
up going to  the lowest economic common denominator  in its final                                                               
SENATOR MICCICHE  said reminded  the committee that  this section                                                               
is amended, but  it was always a misdemeanor  that was punishable                                                               
by a fine  of not less than  $500 or more than six  months, or by                                                               
both. It  was changed to  a higher fine,  but a lower  time. They                                                               
don't want  to be the  heavy hand of law,  but the spirit  of the                                                               
bill is to  make someone accountable other  than the municipality                                                               
or state for a vessel sinking in one of our harbors.                                                                            
MS.  HANKE   said  section   12  allows   the  department   or  a                                                               
municipality  to report  violations to  the Attorney  General for                                                               
Section 13  adds new a  section which allows an  aggrieved person                                                               
to  file a  civil injunction.  Civil penalties  of not  more than                                                               
$1,000 can  be imposed for  each violation. Each day  a violation                                                               
occurs constitutes a separate violation.                                                                                        
Section   14   allows   the   department   to   provide   written                                                               
authorization  for  a  vessel  to  be left  within  30  days  and                                                               
clarifies language.                                                                                                             
Section  15 states  that at  least  30 days  before impounding  a                                                               
vessel,  the impounding  authority  shall post  a  notice on  the                                                               
vessel, and  on the  state's or  municipality's website.  It adds                                                               
language to allow use of an  address on file with the Coast Guard                                                               
or Department  of Administration and moves  notice specifications                                                               
to section (b).                                                                                                                 
Section   16  adds   new   subsections   that  establish   notice                                                               
specifications  and  defines  the procedure  for  pre-impoundment                                                               
hearings.  The owner  can file  within  15 days  after the  post-                                                               
marked date of the notice.                                                                                                      
Section  17  adds  a  new   section  to  establish  notice  of  a                                                               
disposition procedure.                                                                                                          
Section 18  provides clear guidelines  for dealing with  a vessel                                                               
after being impounded by the state or a municipality.                                                                           
Section  19  removes the  requirement  that  an interested  party                                                               
taking  possession of  a vessel  pay expenses  incurred and  post                                                               
4:48:00 PM                                                                                                                    
SENATOR STEDMAN said the 30-day  notification in Section 18 seems                                                               
short for finding someone, and asked why it is so short.                                                                        
SENATOR  MICCICHE answered  that  this bill  was  processed by  a                                                               
large  stakeholder group  that deals  with these  issues all  the                                                               
time,  and if  those timelines  are not  appropriate it's  in the                                                               
members'  hands, but  he  hoped they  would  allow a  stakeholder                                                               
BRYAN HAWKINS, Harbormaster,  Alaska Association of Harbormasters                                                               
& Port Administrators,  City of Homer, Alaska,  said the timeline                                                               
for impoundment  was thoroughly researched by  the attorneys that                                                               
provided the  pro bono help  for this  task force. It's  a 30-day                                                               
notice of  intent of impoundment  and then another 30  days takes                                                               
place before the second notice of impoundment is delivered.                                                                     
4:53:35 PM                                                                                                                    
MS.  HANKE said  section  20 establishes  the  procedure for  the                                                               
immediate impoundment  of derelict vessels that  pose an imminent                                                               
threat to safety.                                                                                                               
Section  21 adds  new a  section that  states the  individual who                                                               
owns an  impounded vessel is  responsible for all  costs incurred                                                               
in the process.                                                                                                                 
4:53:59 PM                                                                                                                    
Section  22  adds  a  section that  will  require  insurance  for                                                             
commercial vessels  over 30 feet  in length and are  operating on                                                               
state waters  or docked  at state or  municipal harbors  for more                                                               
than 90 days.                                                                                                                   
SENATOR  STEDMAN said  in  trying  to deal  with  the expense  of                                                               
derelict  vessels in  the  harbor,  harbormasters have  indicated                                                               
that insurance companies require a  survey every few years to get                                                               
coverage.  If  the boat  can't  pass  the survey,  the  insurance                                                               
company won't  insure it.  All that's  required is  a requirement                                                               
that the  vessel in the  harbor has  to show proof  of insurance.                                                               
The issue  then becomes  where they  go when they  go out  of the                                                               
The requirement for the insurance  policy to show cost of removal                                                               
needs  to be  looked at,  he  said, because  that could  possibly                                                               
start incurring  additional insurance  costs to the  boat owners.                                                               
For instance, the  Juneau Harbor Department requires  him to have                                                               
insurance, and  if he doesn't it  would put him into  another fee                                                               
structure. If  the boat isn't  insurable that would tip  them off                                                               
to a problem.                                                                                                                   
SENATOR MICCICHE said  one can look at the bill  as a snapshot in                                                               
time today  or one  can look  at it as  a comprehensive  plan for                                                               
vessels that are 100 percent  shiny off-the-line with the thought                                                               
of  when  they  become  derelict  vessels,  which  is  where  the                                                               
exposure  lies for  municipalities and  the state.  That is  when                                                               
they want them dealt with.                                                                                                      
4:58:39 PM                                                                                                                    
MS.  HANKE   said  section  23  simplifies   the  guidelines  for                                                               
identifying a derelict vessel.                                                                                                  
Section 24 directs  the department to establish  and administer a                                                               
derelict  vessel prevention  program. It  establishes the  duties                                                               
and powers of the department and establishes a program fund.                                                                    
Section 25 adds "floating facility" to the definition of vessel.                                                                
Section 26 adds definitions.                                                                                                    
Section 27 names this chapter the "Derelict Vessels Act."                                                                       
Sections  28 &  29  add sections  to Title  37,  which allow  for                                                               
registration  and   titling  receipts,  civil   penalties,  money                                                               
received  from  sales,  donations,   and  other  receipts  to  be                                                               
deposited into the Derelict Vessels Program Fund.                                                                               
Section 30 removes  repealed sections, which will  allow the fund                                                               
to remain without federal funding.                                                                                              
Section 31 repeals sections.                                                                                                    
Section 32  directs the Department  of Natural Resources  and the                                                               
Department of Administration to  adopt necessary regulations, and                                                               
these regulations take affect  under the Administrative Procedure                                                               
4:59:52 PM                                                                                                                    
Section  33  requests  the  revisor of  statutes  to  change  two                                                               
Sections 34-37 establishes effective dates.                                                                                     
SENATOR STEDMAN asked  if "floating facilities" on  page 14, line                                                               
15, include float houses.                                                                                                       
5:00:23 PM                                                                                                                    
MS. BRUCE  answered that "floating  facility" is broad  enough to                                                               
encompass float houses.                                                                                                         
5:00:59 PM                                                                                                                    
MS. LORD commented  that the term "floating facility"  is used in                                                               
DNR's management  area plans. Those  plans include  float houses,                                                               
float camps,  floating structures within that  floating facility.                                                               
It is  important that float  houses are explicitly  covered under                                                               
this bill  and if  the definition of  floating facility  does not                                                               
fully cover that, then an expanded definition should be found.                                                                  
SENATOR  STEDMAN   asked  how  section  22   requiring  insurance                                                               
interplays with float houses.                                                                                                   
5:02:28 PM                                                                                                                    
JOE MCCULLOUGH,  Office of Boating Safety,  Department of Natural                                                               
Resources (DNR), Anchorage, Alaska,  answered the didn't know how                                                               
they intersect, but  the definition of "vessel"  is anything used                                                               
for  transportation on  the water.  He didn't  know that  a float                                                               
house would necessarily meet that  unless it was moving around on                                                               
the water. If it's anchored up  and people are just living in it,                                                               
and it's  not used  for transportation,  it's not  going to  be a                                                               
boat or a vessel.                                                                                                               
SENATOR STEDMAN  said line 15  on page 14 changes  the definition                                                               
of "vessel."                                                                                                                    
CHAIR  GIESSEL said  she was  certain that  the bill  sponsor and                                                               
Senator Stedman would be in touch with him.                                                                                     
SENATOR MICCICHE  said the numbering and  registration provisions                                                               
have  an  exemption  for  a   boat  that  is  not  equipped  with                                                               
mechanical propulsion  and then it  would have  to be 30  feet or                                                               
longer  to be  in  the insurance  section. It  would  have to  be                                                               
engaged in commercial activity. So,  he thinks there are a couple                                                               
of ways  that float  houses are  left out of  the bill,  but that                                                               
could be clarified.                                                                                                             
5:05:21 PM                                                                                                                    
SENATOR  HUGHES said  she lives  in  a district  where one  might                                                               
think  derelict vessels  are not  an issue:  Chugiak and  Palmer.                                                               
However,  a ship  built  in 1912  in Seattle  was  brought up  to                                                               
Ketchikan and  used as a  fish tender  there and in  Port Graham.                                                               
After the  earthquake, it  was used to  rescue 43  individuals on                                                               
Kodiak  Island  when there  was  concern  about a  tsunami.  Then                                                               
sometime in the  80s, Till Wallace from Chugiak saw  it in Homer.                                                               
Even though  it was  quite old  at the time,  he brought  it into                                                               
Chugiak where it now resides  along the old Glenn Highway between                                                               
the Birch  Wood exists.  It's become  somewhat of  an icon  and a                                                               
place where folks  take photographs. She asked if  they should be                                                               
concerned about if a community  really wants a derelict vessel or                                                               
will someone be fined $5,000.                                                                                                   
SENATOR MICCICHE  said it sounds  like that vessel is  on private                                                               
property  and this  bill does  not deal  with vessels  on private                                                               
SENATOR HUGHES responded  that it was recently  moved to property                                                               
owned by the volunteer fire  and rescue department, and therefore                                                               
may be on public land. If it is, would it then apply?                                                                           
SENATOR MICCICHE said  he would do further  research, although he                                                               
was  comfortable  with  "no."  The   intent  is  to  protect  our                                                               
waterways from  state and municipal expense  in removing derelict                                                               
SENATOR HUGHES said she would like to reassure her community.                                                                   
CHAIR GIESSEL found  no further questions for  the bill's sponsor                                                               
and held SB 92 in committee.                                                                                                    
5:08:27 PM                                                                                                                    
CHAIR GIESSEL adjourned the Senate Resources Committee meeting                                                                  
at 5:08 p.m.                                                                                                                    

Document Name Date/Time Subjects
Agenda - 3 - 27 - 17.pdf SRES 3/27/2017 3:30:00 PM
1. Board of Game Fact Sheet.pdf SRES 3/27/2017 3:30:00 PM
Board of Game
RES Hoffman - Game, Board of.pdf SRES 3/27/2017 3:30:00 PM
Board of Game
Alaska Gasline Development Corporation Fact Sheet.pdf SRES 3/27/2017 3:30:00 PM
Alaska Gasline Development Corporation
Alaska Gasline Development Corporation Board - Resume - Christian - 3 - 23 - 17.pdf SRES 3/27/2017 3:30:00 PM
Alaska Gasline Development Corporation
Alaska Gasline Development Corporation Board - Resume - Short - 3 - 23 - 17.pdf SRES 3/27/2017 3:30:00 PM
Alaska Gasline Development Corporation
Alaska Gasline Development Corporation Board - Resume - Wight - 3 - 23 - 17.pdf SRES 3/27/2017 3:30:00 PM
Alaska Gasline Development Corporation
SB92 Ver. D.PDF SRES 3/27/2017 3:30:00 PM
SB 92
SB92 Sponsor Statement .pdf SRES 3/27/2017 3:30:00 PM
SB 92
SB92 Sectional Analysis.pdf SRES 3/27/2017 3:30:00 PM
SB 92
SB92 Support Document-AML Resolution.PDF SRES 3/27/2017 3:30:00 PM
SB 92
AGDC Board - Support for Christian - Doyon Ltd - 3 - 24 - 17.pdf SRES 3/27/2017 3:30:00 PM
Alaska Gasline Development Corporation
SB92 Support Document-AAHPA Resolution 9.28.2016.pdf SRES 3/27/2017 3:30:00 PM
SB 92
SB92 Support Document-City of Ketchikan Resolution 11.10.2016.pdf SRES 3/27/2017 3:30:00 PM
SB 92
SB92 Support Document-City of Seward Resolution 11.21.2016.pdf SRES 3/27/2017 3:30:00 PM
SB 92
SB92 Presentation by Rachel Lord.pdf SRES 3/27/2017 3:30:00 PM
SB 92
SB92 Comment-Murgas.pdf SRES 3/27/2017 3:30:00 PM
SB 92
SB92 Comment-Murgas Image.pdf SRES 3/27/2017 3:30:00 PM
SB 92