Legislature(2021 - 2022)BELTZ 105 (TSBldg)

02/18/2021 01:30 PM Senate TRANSPORTATION

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Audio Topic
01:36:15 PM Start
01:36:53 PM Overview: Statewide Aviation & International Airports
02:18:12 PM SJR9
03:03:00 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
"Statewide Aviation & International Airports"
by Deputy Commissioner John Binder
Moved SJR 9 Out of Committee
-- Invited & Public Testimony --
**Streamed live on AKL.tv**
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE TRANSPORTATION STANDING COMMITTEE                                                                          
                       February 18, 2021                                                                                        
                           1:36 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Robert Myers, Chair                                                                                                     
Senator Mike Shower, Vice Chair                                                                                                 
Senator Click Bishop                                                                                                            
Senator Jesse Kiehl                                                                                                             
MEMBERS ABSENT                                                                                                                
Senator Peter Micciche                                                                                                          
COMMITTEE CALENDAR                                                                                                            
OVERVIEW: STATEWIDE AVIATION & INTERNATIONAL AIRPORTS                                                                           
     - HEARD                                                                                                                    
SENATE JOINT RESOLUTION NO. 9                                                                                                   
Urging the  United States  Congress to  exempt cruise  ships from                                                               
certain  provisions  of the  Passenger  Vessel  Services Act  and                                                               
other applicable provisions of federal  law for the period during                                                               
which Canadian  ports are  closed to  cruise ships  carrying more                                                               
than 100  people; and urging  the President of the  United States                                                               
not to fine  or take actions against cruise ships  sailing to the                                                               
     - MOVED SJR 9 OUT OF COMMITTEE                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SJR 9                                                                                                                   
SHORT TITLE: URGE EXEMPTION FOR CRUISE SHIPS                                                                                    
SPONSOR(s): SENATOR(s) KIEHL                                                                                                    
02/10/21       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/10/21       (S)       TRA, L&C                                                                                               
02/18/21       (S)       TRA AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
WITNESS REGISTER                                                                                                              
JOHN BINDER, Executive Director                                                                                                 
Alaska International Airport System (AIAS)                                                                                      
Department of Transportation and Public Facilities (DOTPF)                                                                      
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Presented  a  PowerPoint  on   the  Alaska                                                             
International Airport System.                                                                                                   
PAULA TERREL, representing self                                                                                                 
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the  hearing on SJR  9 with                                                             
concerns that  the waiver in SJR  9 would increase the  number of                                                               
foreign  flagged cruise  ships to  Southeast Alaska,  potentially                                                               
increasing COVID-19 risks to residents.                                                                                         
KIMBERLY METCALFE, representing self                                                                                            
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT: Testified  in  opposition to  SJR  9 due  to                                                             
COVID-19  risks and  impacts of  the cruise  industry on  whales,                                                               
crowding, and emergency services.                                                                                               
RAY PRESTON, representing self                                                                                                  
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT: Testified  in  opposition to  SJR  9 due  to                                                             
COVID-19 risks highlighted by CDC.                                                                                              
KARLA HART, representing self                                                                                                   
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the  hearing on SJR  9 with                                                             
concern that  the cruise  industry adversely  impacts communities                                                               
and  the resolution  recommends suspending  enforcement or  fines                                                               
during  the  waiver  for an  industry  that  frequently  violates                                                               
environmental laws.                                                                                                             
SUSAN SCHRADER, representing self                                                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified with concern about  COVID-19 risks                                                             
to local residents.                                                                                                             
RORIE WATT, City Manager                                                                                                        
City and Borough of Juneau                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:  Testified  in  support of  SJR  9  for  the                                                             
economic benefits to the state.                                                                                                 
KATIE BOTZ, representing self                                                                                                   
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:  Testified  on  SJR 9  with  concerns  about                                                             
potential COVID-19 infections on board  cruise ships and risks to                                                               
CHRIS EICHENLAUB, representing self                                                                                             
Wasilla, Alaska                                                                                                                 
POSITION  STATEMENT: Testified  in support  of SJR  9 because  of                                                             
economic  benefits to  communities since  cruise ship  passengers                                                               
travel throughout Alaska.                                                                                                       
VIKKI JO KENNEDY, representing self                                                                                             
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified  during the discussion on  SJR 9 by                                                             
cautioning against  stopping the  progress of business  in Juneau                                                               
or elsewhere in Alaska.                                                                                                         
ACTION NARRATIVE                                                                                                              
1:36:15 PM                                                                                                                    
CHAIR  ROBERT MYERS  called  the  Senate Transportation  Standing                                                             
Committee meeting  to order at 1:36  p.m. Present at the  call to                                                               
order  were  Senators Bishop,  and  Chair  Myers. Senator  Shower                                                               
joined the  meeting shortly thereafter. Senator  Kiehl arrived as                                                               
the meeting was in progress.                                                                                                    
^OVERVIEW: STATEWIDE AVIATION & INTERNATIONAL AIRPORTS                                                                          
     OVERVIEW: STATEWIDE AVIATION & INTERNATIONAL AIRPORTS                                                                  
1:36:53 PM                                                                                                                    
CHAIR  MYERS announced  that the  business  before the  committee                                                               
would  be   an  Overview:  Statewide  Aviation   &  International                                                               
1:37:29 PM                                                                                                                    
JOHN  BINDER, Executive  Director,  Alaska International  Airport                                                               
System   (AIAS),   Department   of  Transportation   and   Public                                                               
Facilities (DOTPF), Anchorage, Alaska,  began a PowerPoint on the                                                               
Alaska  International Airport  System. He  reviewed the  missions                                                               
for  the  Department  of  Transportation  and  Public  Facilities                                                               
(DOTPF),  Alaska International  Airports System  (AIAS), and  the                                                               
Statewide  Aviation (SWA)  on slide  2. The  department's overall                                                               
mission   is  to   keep  Alaska   moving   through  service   and                                                               
infrastructure.  The   Alaska  International   Airports  System's                                                               
(AIAS) specific  mission is to  keep Alaska flying  and thriving.                                                               
The Statewide Aviation's (SWA) mission  is to sustain and improve                                                               
the quality of life throughout Alaska, he said.                                                                                 
1:37:58 PM                                                                                                                    
SENATOR SHOWER joined the meeting.                                                                                              
1:38:04 PM                                                                                                                    
MR.  BINDER  explained  that   the  Statewide  Aviation  Division                                                               
consisted of all  the airports the state owns except  for the Ted                                                               
Stevens Anchorage International Airport  (AIAS) and the Fairbanks                                                               
International Airport.                                                                                                          
1:38:24 PM                                                                                                                    
MR. BINDER highlighted that although  AIAS lies within DOTPF, the                                                               
international system  does not  use any state  funds and  none of                                                               
its revenue flows to the  state. AIAS is self-sustaining with its                                                               
rates  and  fees'  structure   charging  tenants,  airlines,  and                                                               
concessionaires to completely funding the airport, he said.                                                                     
MR.  BINDER   briefly  reviewed  the  operating   agreement  with                                                               
carriers on slide  6. DOTPF has an operating  agreement that will                                                               
expire  in  2023.  That  agreement  currently  has  35  signatory                                                               
carriers.  He reported  that these  signatory carriers  have more                                                               
say into  how the airport  uses its operating and  capital funds.                                                               
The  department  must receive  airline  approval  for any  larger                                                               
expenditures.  Since these  carriers share  the financial  risks,                                                               
signatory  carriers receive  slightly  reduced  rates on  landing                                                               
fees and rental fees. However,  the signatory carriers are billed                                                               
for any  shortfalls. AIAS also  has the authority to  issue bonds                                                               
for large capital budget projects although  it has not done so in                                                               
many years.                                                                                                                     
1:41:11 PM                                                                                                                    
SENATOR SHOWER  recalled that  when the  North Pole  refinery was                                                               
open, most of  the jet fuel was shipped outside  Alaska. He asked                                                               
for the source of most of the aviation fuel for AIAS.                                                                           
1:41:50 PM                                                                                                                    
SENATOR KIEHL joined the meeting.                                                                                               
1:42:35 PM                                                                                                                    
MR. BINDER  answered that  AIAS does  not buy  or sell  fuel. The                                                               
airport has a tank farm but  it is a fuel consortium comprised of                                                               
airlines. He  acknowledged that a  larger percentage  of aviation                                                               
fuel  previously came  from sources  within Alaska.  He explained                                                               
that  fuel comes  to  the  airport via  a  pipeline connected  to                                                               
Nikiski or from  one connected to the port.  Most carriers obtain                                                               
jet  fuel  from  the   international  market.  However,  carriers                                                               
purchase their  own fuel, barge it  to the Port of  Anchorage and                                                               
transport it  to the  port via  the pipeline,  where the  fuel is                                                               
placed  into the  airport's tank  farm, he  said. The  consortium                                                               
then tracks fuel  usage and distribution by  carrier. The airport                                                               
receives  flowage  fees  for every  gallon  pumped  through  that                                                               
system  since  the  airport owns  the  infrastructure,  he  said.                                                               
However,  he  stated  he  was   unsure  of  the  fuel  quantities                                                               
purchased in the state and how that would impact revenue.                                                                       
SENATOR SHOWER characterized the changes  in cost as an invisible                                                               
result of the North Slope refinery shutting down.                                                                               
1:44:43 PM                                                                                                                    
SENATOR BISHOP  explained that part  of the reduction was  due to                                                               
reduced throughput  in the pipe. He  said the state did  not have                                                               
enough royalty  in kind  (RIK) to service  all the  refineries in                                                               
the state.                                                                                                                      
1:45:17 PM                                                                                                                    
MR.   BINDER  reviewed   the  annual   revenue  and   operations,                                                               
maintenance  and debt  costs on  slide  7. He  reported that  the                                                               
airport received about  $150 million in total  revenues with just                                                               
over $120  million in operating  costs. He directed  attention to                                                               
the pie  chart on  the right  of slide 7.  Revenues do  not match                                                               
expenditures  because  the chart  does  not  reflect the  airport                                                               
funded capital  costs. He  highlighted that  the chart  refers to                                                               
the projects the  airport solely funds and the  match for Federal                                                               
Aviation Administration (FAA) funding.                                                                                          
1:46:06 PM                                                                                                                    
CHAIR MYERS asked if airport funds for AIAS are commingled.                                                                     
MR. BINDER explained  that revenue from both  airports flows into                                                               
the  International  Airport  Revenue  Fund  (IARF),  which  is  a                                                               
single, separate fund used by the  system as a whole. He directed                                                               
attention  to the  pie  chart on  the  left side  of  slide 7  to                                                               
landing fees.  Landing fees represented  about 40 percent  of the                                                               
revenue.  He offered  to  discuss  landing fees  as  part of  the                                                               
COVID-19  discussion later  in  the  presentation. The  remaining                                                               
non-aeronautical revenue  categories are drastically  impacted by                                                               
passenger activity, he said.                                                                                                    
1:47:09 PM                                                                                                                    
SENATOR SHOWER asked where the surplus $26.9 million was spent.                                                                 
MR.  BINDER   after  further   clarification  on   the  question,                                                               
explained  that  the difference  in  revenues  compared to  costs                                                               
reflected  the airport  funded capital  projects during  FY 2020,                                                               
including solely  funded airport  projects and  the match  to any                                                               
FAA grants.                                                                                                                     
SENATOR SHOWER  asked if  the department  rolled over  any excess                                                               
funds or if the funds were depleted each year.                                                                                  
MR. BINDER responded that any  surplus would be rolled over. This                                                               
allows the  airport to lower its  fees for the upcoming  year, he                                                               
said.  He reported  that this  year the  airport was  $10 million                                                               
short due to the dramatic  reduction in airline passenger travel.                                                               
AIAS used  federal CARES  fund to make  up the  difference rather                                                               
than backfill carrier fees, he said.                                                                                            
1:48:34 PM                                                                                                                    
SENATOR KIEHL asked him to elaborate on the AIAS fund balance.                                                                  
MR.  BINDER  explained  that  AIAS  carried  a  significant  cash                                                               
balance  due to  the substantial  outstanding bond  debt of  $350                                                               
million.  AIAS was  dependent on  international air  cargo, which                                                               
can dramatically  fluctuate. The  AIAA coordinates this  with its                                                               
signatory carriers, which  means AIAS usually has  a year's worth                                                               
of cash  on hand, he  said. This  provides some cushion  to carry                                                               
the airport  forward in case  of a  downturn and still  allow for                                                               
debt repayment, he said.                                                                                                        
1:49:40 PM                                                                                                                    
SENATOR  SHOWER  asked  if  AIAS has  considered  options  if  it                                                               
experiences another weak travel year.                                                                                           
MR. BINDER explained  that DOTPF received $33  million in initial                                                               
CARES funding in early summer  specifically allocated to AIAS. As                                                               
previously mentioned, AIAS  used $10 million to  make the airport                                                               
system whole,  which left  about $22 or  $23 million  to backfill                                                               
any shortfall. He  anticipated cargo would begin  to decrease but                                                               
it  has not  yet happened.  However, passenger  comeback has  met                                                               
DOTPF's expectations. He estimated about  90 to 95 percent of the                                                               
FY 2019  seat capability was  already scheduled for  this summer.                                                               
He  related his  understanding  that the  airlines  seemed to  be                                                               
optimistic  about  increased  passenger numbers,  even  with  the                                                               
cruise industry  cutbacks. Although  airlines were  not operating                                                               
at full capacity  yet, tourist companies in the  Lower 48 related                                                               
that  people were  booking stateside  travel destinations  rather                                                               
than European  travel destinations. Alaska  is still high  on the                                                               
destination list  so AIAS  has been  fairly optimistic  about the                                                               
upcoming tourism  season, he said.  The airport also  has another                                                               
$18  million in  CRRSA funds  to fall  back on  so AIAS  feels it                                                               
could survive  for a  few years based  on its  projected activity                                                               
1:52:29 PM                                                                                                                    
SENATOR  BISHOP  asked  for  the  percentage  of  freight  versus                                                               
passenger landing fees.                                                                                                         
MR. BINDER explained that the landing  fee rates are the same for                                                               
freight  and passenger  planes. Fees  are based  on the  aircraft                                                               
size. He  offered to break  out the  landing fees by  airline and                                                               
report back to the committee.                                                                                                   
SENATOR  BISHOP expressed  an interest  in any  increases in  air                                                               
freight and freezer expansion data.                                                                                             
1:53:34 PM                                                                                                                    
SENATOR SHOWER explained that  the industry initially anticipated                                                               
it  would bypass  Anchorage but  found it  was self-defeating  to                                                               
carry  extra   fuel  rather  than  cargo.   Thus,  cargo  flights                                                               
discovered  it  was  cost  effective to  stop  in  Anchorage  and                                                               
refill. He  offered his view  that Alaska would not  experience a                                                               
drop off in air cargo from Asia.                                                                                                
1:54:59 PM                                                                                                                    
MR. BINDER  discussed the cargo  and passenger activity  on slide                                                               
8. He  described the  chart as  a breakout  between international                                                               
and  domestic  cargo  and  passenger   flights.  The  light  blue                                                               
dominating the  chart represented international cargo,  the green                                                               
represented   the   domestic   passenger   travel,   the   purple                                                               
represented  international passenger  travel, and  the dark  blue                                                               
represented state domestic cargo.  He said international cargo is                                                               
the primary revenue driver for  AIAS. Typically, about 40 percent                                                               
of  air  cargo  is  shipped   on  passenger  planes.  During  the                                                               
pandemic, as  flights were cancelled, this  cargo was transferred                                                               
to air cargo planes, which greatly benefitted AIAS.                                                                             
1:56:44 PM                                                                                                                    
MR. BINDER  turned to slide  9 and discussed the  primary revenue                                                               
drivers. AIAS's landing  fees are based on  the certified maximum                                                               
takeoff  weight  (CMGTW), which  tends  to  be the  best  revenue                                                               
predictor. He directed attention to  the chart. He said each line                                                               
on  the  chart  is  progressively higher,  that  the  green  line                                                               
depicts FY  2020 and the  magenta line FY 2021.  He characterized                                                               
landing fees  as being really  strong and very beneficial  to the                                                               
MR. BINDER turned to slide  10, related to passenger activity. He                                                               
said  about 60  percent of  airport  revenue is  related to  non-                                                               
aeronautical   activities,  such   as   concessions  within   the                                                               
terminal,  rental cars  and airport  parking.  Thus, the  airport                                                               
experienced revenue shortfalls  for FY 2020 even  though AIAS had                                                               
a strong air cargo market.                                                                                                      
1:58:13 PM                                                                                                                    
MR. BINDER  discussed capital funding  on slide 11.  He explained                                                               
that the  airport normally  receives about  $40 million  from the                                                               
Federal  Aviation  Administration (FAA),  with  the  match at  12                                                               
percent. He  said the  CARES Act covered  100 percent  of federal                                                               
share. FY 2020 was down due  to the North South Runway Project He                                                               
reported that  FY 2021 was a  more normal year. He  reported that                                                               
the   supplemental  budget   also  provided   additional  federal                                                               
1:59:28 PM                                                                                                                    
MR. BINDER  reviewed the economic  opportunities on slide  12. He                                                               
related that  AIAS has  five big  cargo development  proposals in                                                               
Anchorage,  including  constructing  the Alaska  Cargo  and  Cold                                                               
Storage  facility   this  summer.   He  related   these  projects                                                               
represented an  attempt to  take advantage of  the uptick  in air                                                               
cargo. He  highlighted the passenger transfer  rights that Alaska                                                               
and  Hawaii airlines  have  had  for many  years.  This year  the                                                               
contracts added  provisions for international  passenger transfer                                                               
rights.  Although  passengers  cannot  disembark  and  remain  in                                                               
Alaska,  they  may transfer  to  other  flights. For  example,  a                                                               
foreign carrier flying  from Asia to Mexico could  land in Alaska                                                               
and transfer its passengers to  other flights headed to Canada or                                                               
the  Caribbean.  He  compared it  to  Reykjavik,  Iceland,  which                                                               
serves as a hub for many international flights.                                                                                 
2:01:05 PM                                                                                                                    
SENATOR  SHOWER  referred to  the  line  item  on slide  12  that                                                               
identified economic opportunities for  seafood export to Asia. He                                                               
related  his  understanding  that the  Alaska  Seafood  Marketing                                                               
Institute had considered seafood export  to Asia but found it was                                                               
not viable. He asked for any  new information or analysis on this                                                               
MR.  BINDER  answered  that  he  would  provide  information  but                                                               
suggested that it would be  mostly anecdotal. Asian marketers and                                                               
companies  regularly contact  AIAS and  request more  seafood but                                                               
several  impediments   need  to  be  addressed.   First,  Alaskan                                                               
processors typically  remove the heads  and freeze the  fish, but                                                               
the Asian companies  and markets want their fish  live and whole.                                                               
MR. BINDER stated  that secondly, rural Alaska has  not been able                                                               
to transport sufficient  quantities of fish to  Anchorage to make                                                               
it worthwhile  for planes to  land. He explained that  this issue                                                               
was  somewhat alleviated  when Alaska  Airlines began  flying its                                                               
freight  planes to  rural Alaska.  If Alaska  Airline and  Lynden                                                               
Transport were  able to  transport enough  fish to  Anchorage, it                                                               
could meet  the Asian market  demand for fresh fish  and seafood,                                                               
he said. He  clarified that he was not suggesting  that the state                                                               
develop  any seafood  processing or  warehouse in  Anchorage, but                                                               
that  AIAS  could  track  the activity  and  connect  buyers  and                                                               
sellers to take advantage of the opportunity.                                                                                   
2:03:27 PM                                                                                                                    
MR.  BINDER reviewed  statewide aviation  on slide  13. Statewide                                                               
aviation is  the rural Alaska  system, which covers  all aviation                                                               
outside  of  Anchorage  or  Fairbanks.  Alaska  has  certificated                                                               
airport  hubs under  the Federal  Aviation Administration  (FAA).                                                               
These hubs  are basically  any airport  where Alaska  Airlines or                                                               
other jets fly,  which provide a huge lifeline  to communities in                                                               
rural Alaska.                                                                                                                   
2:04:07 PM                                                                                                                    
MR. BINDER  reviewed the  rural system scope  and scale  on slide                                                               
14. General funds primarily fund  the rural airport system, which                                                               
is not  self-sustaining, he  said. He  outlined the  rural system                                                               
operating budget on  slide 15. He said a $49.4  million CARES Act                                                               
grant was a  huge boon for the system. The  intent of the federal                                                               
grant  was to  offset any  lost revenue  and to  cover additional                                                               
expenses the airports incurred during COVID-19.                                                                                 
MR.  BINDER explained  that  since  the state  does  not own  the                                                               
terminals at  rural airports, COVID-19  did not  adversely affect                                                               
DOTPF's rural  airport program last  year. This allowed  DOTPF to                                                               
free up  general funds for  other purposes, he said.  He directed                                                               
attention to the bullet related  to revenues. First, DOTPF rented                                                               
lease  lots  at  airports,  which resulted  in  $6.9  million  in                                                               
revenue. Secondly, the  state collected aviation fuel  tax on jet                                                               
fuel  and  aviation gas  and  this  revenue  flowed back  to  the                                                               
department into the Highways and  Aviation Fund to fund aviation.                                                               
Next,  he   turned  to  system  sustainability.   The  department                                                               
experienced more  freeze and  thaw events  and erosion  this past                                                               
year.  Rather than  clear  ice off  the  runways, the  Southcoast                                                               
Region's approach  was to stay  ahead of the weather.  The region                                                               
used  federal AIP  funding to  perform  its standard  maintenance                                                               
activities to  relieve some  of the burden  on the  general fund.                                                               
However,  it does  pull some  funding from  capital projects,  he                                                               
said.  He  remarked that  the  state  continues to  provide  free                                                               
aviation  services  to  Alaskans   at  all  its  rural  airports.                                                               
However, in other  parts of the world, landing fees  or user fees                                                               
are charged for these services.                                                                                                 
2:06:44 PM                                                                                                                    
SENATOR SHOWER asked whether the  $49.4 million CARES Act funding                                                               
could be used beyond FY 2020.                                                                                                   
MR. BINDER  answered that  CARES Act funding  was provided  via a                                                               
standard FAA grant with a  four-year performance period. The only                                                               
caveat  was that  funding  must be  used  for aviation  expenses.                                                               
DOTPF used  these to  replace aviation  general funds  within the                                                               
region's highways  and aviation  components for  FY 2020.  He was                                                               
unsure  of the  amount  but he  recalled that  it  was about  $14                                                               
million for FY  2020. Doing so allowed the department  to free up                                                               
general funds  in FY 2021  and FY 2022.  He added that  this also                                                               
applied to the CRRA funds.                                                                                                      
2:08:22 PM                                                                                                                    
SENATOR BISHOP asked if DOTPF would  be able to use CARES funding                                                               
for specific construction projects in rural villages.                                                                           
MR. BINDER  answered that FAA  specifically required  these funds                                                               
be  used  for operating  expenses  but  the construction  project                                                               
qualified  as  a   capital  expense  so  those   funds  were  not                                                               
available. He suggested that the  state could steer general funds                                                               
to free up funds for construction projects.                                                                                     
SENATOR  BISHOP  offered  to discuss  this  further  outside  the                                                               
committee meeting.                                                                                                              
2:09:09 PM                                                                                                                    
MR.  BINDER reviewed  a  list  of the  AIP  rural system  capital                                                               
improvement projects  (CIP) on  slide 16.  He estimated  that the                                                               
rural  system's  AIP annual  average  CIP  at approximately  $132                                                               
million. One advantage Alaska's DOTPF  has is the flexibility and                                                               
readiness to accept additional  discretionary federal funds while                                                               
some other  states lack  that ability, he  said. He  related that                                                               
the non-DOTPF airports in Juneau,  Wasilla, and Kenai experienced                                                               
small capital improvement funding in  FY 2020. However, DOTPF was                                                               
able  to  provide rural  airport  funding.  He characterized  the                                                               
overall  2020 funding  as  being great.  In  addition, since  the                                                               
funding did not require state  match and was all federal funding,                                                               
it saved  the department  $10 million. Further,  the state  has a                                                               
few essential  air service airports that  fall under economically                                                               
distressed  communities that  qualify for  a 5  percent match  of                                                               
project eligible costs.                                                                                                         
2:10:54 PM                                                                                                                    
MR. BINDER stated  that slide 17 listed some of  the locations of                                                               
major projects  in FY 2021  to FY  2022. He advised  members that                                                               
DOTPF  construction projects  were not  affected by  COVID-19. He                                                               
offered to provide details on individual projects to members.                                                                   
2:11:38 PM                                                                                                                    
MR.  BINDER reviewed  unmanned aircraft  systems (UAS)  on slides                                                               
17-18. He reported  that Alaska was one of the  top states in the                                                               
country in  terms of UAS.  It began  when FAA selected  Alaska as                                                               
one  of  seven test  sites.  The  Alaska Center  UAS  Integration                                                               
ACUASI  handled testing,  integration, and  trials. For  example,                                                               
Poker Flats  integrated with Fairbanks International  Airport for                                                               
unmanned cargo  operations. DOTPF took  on the role  as statewide                                                               
program coordinator, working with  state departments and agencies                                                               
to train  pilots, tracking systems, coordinating  with tribes and                                                               
communities  throughout the  state.  He stated  that the  coastal                                                               
launch  program  was  coming  to fruition  and  would  reap  huge                                                               
dividends for all departments.                                                                                                  
2:13:30 PM                                                                                                                    
CHAIR MYERS remarked  that he would like to have  DOTPF come back                                                               
to  present  more  details  in   terms  of  economic  development                                                               
2:14:07 PM                                                                                                                    
MR. BINDER highlighted the UAS  benefits to Alaskans on slide 20.                                                               
For example,  DOTPF used  drones at Atigun  Pass to  monitor snow                                                               
loads, initiate avalanches, to conduct  bridge, runway, and tower                                                               
2:14:56 PM                                                                                                                    
MR. BINDER  reviewed the  photographs on  slide 21  to illustrate                                                               
the division's cost savings by using unmanned aircraft.                                                                         
             SJR 9-URGE EXEMPTION FOR CRUISE SHIPS                                                                          
2:18:12 PM                                                                                                                    
CHAIR MYERS announced  that the final order of  business would be                                                               
SENATE JOINT RESOLUTION  NO. 9 Urging the  United States Congress                                                               
to exempt cruise  ships from certain provisions  of the Passenger                                                               
Vessel Services  Act and other  applicable provisions  of federal                                                               
law  for the  period during  which Canadian  ports are  closed to                                                               
cruise  ships  carrying more  than  100  people; and  urging  the                                                               
President  of the  United  States  not to  fine  or take  actions                                                               
against cruise ships sailing to the state.                                                                                      
2:18:42 PM                                                                                                                    
SENATOR KIEHL,  speaking as  sponsor, said  the pandemic  has hit                                                               
Alaska hard  economically. He expressed  concern that  the cruise                                                               
industry may not come to Alaska  this summer. In 2019, about 2.25                                                               
million  visitors came  to  Alaska. Of  those,  1.2 million  were                                                               
passengers  on  cruise  ships.  The  tourism  sector  brought  $4                                                               
billion in economic activity in  Alaska. He directed attention to                                                               
language  in   the  resolution  that  highlights   this  economic                                                               
activity. In  2020, the  tourism figures  dropped close  to zero.                                                               
While some businesses closed, others  have held on due to federal                                                               
help from  the CARES Act  [Coronavirus Aid, Relief,  and Economic                                                               
Security Act].  Seasonal employees were  not hired last  year and                                                               
were relying  on pandemic  unemployment assistance.  He cautioned                                                               
that these businesses  would not survive without  a cruise season                                                               
this year.                                                                                                                      
SJR 9  asks Alaska's Congressional  Delegation and  the executive                                                               
branch  of  the federal  government  to  take  steps to  make  it                                                               
possible for  Alaska to have a  cruise ship season this  year. He                                                               
noted  that  he  worked  with  members  of  the  delegation  when                                                               
drafting  the resolution  who suggested  the  language should  be                                                               
broad enough to allow it the flexibility to address this issue.                                                                 
SENATOR KIEHL  said this resolution  is not a call  for permanent                                                               
changes  to  federal  laws,  lasting  changes  in  federal  rules                                                               
designed to protect American steel  or shipbuilding jobs or allow                                                               
for unlimited cruise ship passengers  in the future. Instead, SJR
9 requests  a waiver limited to  the 2021 cruise ship  season, he                                                               
2:25:21 PM                                                                                                                    
SENATOR SHOWER said he appreciates  SJR 9 and supports efforts to                                                               
get Alaska's businesses operational.  Many businesses were caught                                                               
off guard by the pandemic, could  not manage, and closed. He said                                                               
his  interest stems  from  the  fact that  his  district has  two                                                               
ports.  He  expressed  concern that  fear  mongering  related  to                                                               
COVID-19 caused people  not to book cruise  ship travel. Further,                                                               
the  state highlighted  COVID-19  issues to  the  extent that  it                                                               
added  to  people's  concern  about   travel.  In  addition,  the                                                               
administration  put  some development  projects  on  hold to  the                                                               
extent that  the state might  struggle economically.  Many cruise                                                               
passengers fall into the vulnerable  COVID-19 category. Since the                                                               
CDC can protect  passengers, the cruise industry  could have been                                                               
operating.  Instead,  the  cruise  ship industry  was  shut  down                                                               
nationally and in Canada. He  offered his view that people needed                                                               
to let go of fear to allow the state to open up.                                                                                
2:29:17 PM                                                                                                                    
SENATOR KIEHL  offered his  view that  many passengers  will feel                                                               
safe due to protocols in place  on cruise ships. In addition, two                                                               
vaccines are being  offered and more are in  the planning stages,                                                               
he said.                                                                                                                        
2:30:25 PM                                                                                                                    
CHAIR MYERS opened public testimony on SJR 9.                                                                                   
2:31:17 PM                                                                                                                    
PAULA TERREL, representing self,  Juneau, Alaska, stated that she                                                               
previously  served on  the Juneau  Visitor  Industry Task  Force,                                                               
which  dealt almost  exclusively with  the cruise  ship industry.                                                               
However, she is speaking on her  own behalf today, she said. This                                                               
resolution  supports  the  waiver  exemption  provisions  of  the                                                               
Passenger  Vessel  Services   Act,  specifically  from  requiring                                                               
foreign flagged vessels  to stop in a non-USA  port. Cruise ships                                                               
destined for  Alaska must  stop in Canada,  which has  closed its                                                               
ports  until 2022.  Although this  resolution  was the  sponsor's                                                               
attempt to help businesses that  have suffered economic hardships                                                               
from  last year  cruise  ship season  last year,  it  is not  the                                                               
solution. Under  the waiver, foreign  flagged cruise  ships could                                                               
travel  in international  waters  and  directly access  Southeast                                                               
Alaska. She was uncertain how  many large cruise ships would take                                                               
advantage of  this opportunity  since some  cruise lines  are not                                                               
foreign flagged,  such as Norwegian  Cruise Lines.  However, many                                                               
residents,  including  herself, desire  to  limit  the number  of                                                               
cruise ships and passengers visiting Southeast Alaska.                                                                          
MS. TERREL related  that foreign flagged vessels  are exempt from                                                               
certain   taxes  and   enjoy   other   financial  benefits.   She                                                               
acknowledged  that   strict  CDC  guidelines   would  potentially                                                               
minimize COVID-19 but  she was unsure how  safe communities would                                                               
be.  She  urged members  to  seek  options for  supporting  local                                                               
businesses other than this this waiver.                                                                                         
2:35:54 PM                                                                                                                    
KIMBERLY METCALFE,  representing self,  Juneau, Alaska,  spoke in                                                               
opposition to  SJR 9  because she has  concerns about  the issues                                                               
related  to   the  foreign-flagged  cruise  ship   industry.  She                                                               
specifically  spoke against  the waiver  exemption provisions  of                                                               
the Passenger  Vessel Services Act that  requires foreign-flagged                                                               
vessels to stop in a Canadian  or other non-USA port. Last month,                                                               
Transport Canada reported  that Canada decided to  extend the ban                                                               
on cruise ship travel until February 28, 2022, because:                                                                         
     Cruise vessels  in Canadian waters  pose a risk  to our                                                                    
     health  care systems.  The  government  of Canada  will                                                                    
     continue to evaluate the situation  and make changes as                                                                    
     necessary  to  ensure  the health  and  safety  of  all                                                                    
     Canadians.  Should the  COVID-19 pandemic  sufficiently                                                                    
     improve to  allow resumption  of these  activities, the                                                                    
     Minister of  Transport has the  ability to  rescind the                                                                    
     interim orders.                                                                                                            
MS  METCALFE  said  this  ban emphasizes  that  Canada  puts  its                                                               
citizens first.  COVID-19 provides  an opportunity for  SE Alaska                                                               
to explore  its relationship with the  cruise industry, including                                                               
effects on whales, crowding, and emergency services, she said.                                                                  
2:39:08 PM                                                                                                                    
RAY  PRESTON,   representing  self,  Juneau,  Alaska,   spoke  in                                                               
opposition to SJR 9 due to  COVID-19 risks highlighted by CDC. He                                                               
said SJR  9 ignored the  risk to  Alaskans by offering  a waiver,                                                               
yet Canada  issued the  ban to protect  its citizens.  He offered                                                               
his view  that this resolution  ignored the pandemic in  favor of                                                               
revenue  from  the  cruise  industry. It  also  ignored  the  CDC                                                               
[Centers  for  Disease  Control and  Prevention]  guidelines.  He                                                               
quoted from the CDC's website:                                                                                                  
     CDC recommends  that all people avoid  travel on cruise                                                                    
     ships,  including  river   cruises,  worldwide.  That's                                                                    
     because the chance of getting  COVID-19 on cruise ships                                                                    
     is high since  the virus appears to  spread more easily                                                                    
     between people  in close quarters  aboard ships.  It is                                                                    
     especially  important  that  people with  an  increased                                                                    
     risk of severe illness put  off travel on cruise ships,                                                                    
     including river cruises.                                                                                                   
MR.  PRESTON  concluded  by  stating  that  he  hoped  that  this                                                               
resolution would not pass.                                                                                                      
2:41:22 PM                                                                                                                    
KARLA HART,  representing self,  Juneau, Alaska,  highlighted her                                                               
concern  that the  cruise industry  has more  physical impact  in                                                               
Alaska but  SJR 9  does not recommend  any enforcement  or fines.                                                               
She related  that she operated  tourism businesses in  Juneau for                                                               
ten  years. The  cruise industry  has the  biggest voice  and the                                                               
most  visitors yet  it also  has the  greatest adverse  impact on                                                               
communities. She expressed  concern that SJR 9  lumped cruise and                                                               
other  visitors  together.  She said,  "Tourism  does  not  equal                                                               
cruise tourism. According to the  2016 Alaska Visitors Statistics                                                               
Program  (AVSP), visitors  spend $2  billion in  Alaska. However,                                                               
cruise passengers only account for  one-third of it. Further, SJR
9  urges  the  President  of   the  United  States  to  not  take                                                               
enforcement  actions against  cruise ships  sailing to  the state                                                               
while  the Canadian  ports are  closed to  the cruise  ships. She                                                               
surmised  that the  sponsor likely  intended  this resolution  to                                                               
refer to  the Passenger Vessel  Services Act  but it does  not do                                                               
so.  She urged  the committee  to amend  this language  since the                                                               
cruise industry has a long history of environmental violations.                                                                 
2:44:12 PM                                                                                                                    
SUSAN SCHRADER,  representing self, Juneau,  Alaska, acknowledged                                                               
that  local businesses  catering to  cruise ship  passengers were                                                               
severely hurt during  the pandemic as were  other businesses. She                                                               
commended the City  and Borough of Juneau (CBJ)  for its COVID-19                                                               
mitigation and  vaccination efforts. She referred  to the sponsor                                                               
statement  that   cited  the  CDC's  stringent   COVID-19  safety                                                               
protocols for  responsible cruising in American  waters. However,                                                               
she does not trust the  foreign-flagged cruise industry to follow                                                               
the protocols or any US law, she said.                                                                                          
MS.  SCHRADER suggested  that the  committee consider  the cruise                                                               
ships   as  huge   assisted-living  facilities   with  passengers                                                               
congregating in  bars, restaurants,  and night  clubs for  over a                                                               
week. She expressed concern that  passengers pose risks for local                                                               
residents,  ports  of  call,  and  their  home  communities.  She                                                               
offered her view that any  approval to stop in Alaska communities                                                               
should be  based on  the best science  available and  reflect the                                                               
will of the local residents. She  offered her view that SJR 9 was                                                               
badly misguided.                                                                                                                
2:47:19 PM                                                                                                                    
At ease                                                                                                                         
2:47:55 PM                                                                                                                    
CHAIR MYERS reconvened the meeting.                                                                                             
2:47:59 PM                                                                                                                    
SENATOR  SHOWER  related  his   understanding  that  people  have                                                               
concerns about COVID-19. However,  testing standards can mitigate                                                               
the  effects  to  protect  citizens. He  offered  his  view  that                                                               
communities can  take precautions  to protect their  citizens yet                                                               
still  allow  cruise  ships. He  cautioned  people  that  federal                                                               
funding to communities will run  out. He solicited solutions from                                                               
testifiers that would  allow people to work and for  the state to                                                               
have  a viable  economy.  He  pointed out  that  Alaska has  been                                                               
devastated by job losses and closed businesses due to COVID-19.                                                                 
2:49:27 PM                                                                                                                    
RORIE  WATT, City  Manager,  City and  Borough  of Juneau  (CBJ),                                                               
Juneau, Alaska,  spoke in support  of SJR  9. He stated  that not                                                               
having ships  in port last  summer was devastating to  Juneau. He                                                               
stated that the city government,  local businesses, and neighbors                                                               
and friends were hurting. He pointed  out that this issue was not                                                               
limited  to Juneau.  The  lack  of the  cruise  ship industry  in                                                               
Alaska affects  Southeast Alaska  and Interior Alaska  since many                                                               
visitors  disembark  from  cruise  ships  and  travel  throughout                                                               
Alaska, he said.                                                                                                                
2:50:26 PM                                                                                                                    
KATIE  BOTZ,   representing  self,   Juneau,  Alaska,   said  she                                                               
respected  what Senator  Kiehl is  trying to  do by  keeping tour                                                               
businesses  open. She  characterized downtown  Juneau as  a ghost                                                               
town last  summer. She asked  the committee to  consider amending                                                               
the  resolution to  enforce stricter  CDC  guidelines to  protect                                                               
2:52:40 PM                                                                                                                    
CHRIS EICHENLAUB,  representing self,  Wasilla, Alaska,  spoke in                                                               
support of  SJR 9 due  to the  economic benefits from  the cruise                                                               
industry  throughout Alaska.  In fact,  he said  he supports  any                                                               
bill that  will open the state  up and allow things  to return to                                                               
normal. He suggested that businesses  could decide to stay closed                                                               
if the owner has concerns about COVID-19.                                                                                       
2:54:51 PM                                                                                                                    
VIKKI JO KENNEDY, representing self,  Juneau, Alaska, agreed with                                                               
the prior testifier  that businesses could decide  to stay closed                                                               
if the owner  has concerns about COVID-19.  She cautioned against                                                               
stopping  the progress  of  business in  Juneau  or elsewhere  in                                                               
2:57:25 PM                                                                                                                    
CHAIR MYERS closed public testimony on SJR 9.                                                                                   
2:57:39 PM                                                                                                                    
SENATOR  KIEHL,  speaking as  sponsor,  said  he appreciates  the                                                               
robust  comments. He  clarified  that Congress  has authority  to                                                               
waive the  provisions of  the Passenger  Vessel Services  Act and                                                               
change federal  laws. He  pointed out  that the  CDC requirements                                                               
included  laboratory  testing  on  board  each  cruise  ship  for                                                               
passengers and crew and isolation  for those who test positive to                                                               
limit spread. The CDC included  requirements for shoreside COVID-                                                               
19 testing for  passengers and crew, including  for crew changes.                                                               
He said local  port agreements provide local  control and include                                                               
shoreside health  care providers. He  offered his view  that this                                                               
was a rigorous  and thorough approach to COVID-19  that will also                                                               
allow the possibility of economic  activity. He acknowledged that                                                               
issues arise. However, nothing in SJR 9 affects local control.                                                                  
3:01:05 PM                                                                                                                    
CHAIR  MYERS  noted there  were  no  amendments and  solicited  a                                                               
3:01:19 PM                                                                                                                    
SENATOR SHOWER  moved to  report SJR  9, work  order 32-LS0503\B,                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal note(s).                                                                                                                 
CHAIR MYERS  found no objection and  SJR 9 was reported  from the                                                               
Senate Transportation Standing Committee.                                                                                       
3:01:40 PM                                                                                                                    
At ease                                                                                                                         
3:02:41 PM                                                                                                                    
CHAIR MYERS reconvened the meeting.                                                                                             
3:03:00 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair   Myers  adjourned   the  Senate   Transportation  Standing                                                               
Committee meeting at 3:03 p.m.                                                                                                  

Document Name Date/Time Subjects
SJR 9 Sponsor Statement 2.10.2021.pdf STRA 2/18/2021 1:30:00 PM
SJR 9 Support Testimony as of 2.17.2021.pdf STRA 2/18/2021 1:30:00 PM
SJR 9 Opposition Testimony as of 2.17.2021.pdf STRA 2/18/2021 1:30:00 PM
DOT Aviation & Airports Presentation 2.18.pdf STRA 2/18/2021 1:30:00 PM
SJR9 Fiscal Note.pdf STRA 2/18/2021 1:30:00 PM